A few of the assumptions made in arguing economic disaster from the Bathroom Bill

Projecting huge economic losses to the state from HB2 is apparently so easy, an after-school news-clipping temp job can do it in a number of weeks. How is that?

Part is the fact that reporters are essentially wearing “KEEP CALM and GIVE US YOUR BIGGEST NUMBER TO RUN ON” shirts. I wrote earlier this month that (emphasis added):

one would be hard-pressed to imagine any “financial impact” figure that would strike [media] as too large to be believable. HB2 will cost the state millions? Tens of millions? Hundreds of millions? Something in the billions?

It doesn’t seem that local media are inclined toward skepticism as they ought to be, not when politics is involved, and especially not in an election year. You’d think the bigger the part-timer’s number, the more dubious, but it seems clear that in this media environment, the bigger, the better.

For example, newly minted Rep. Chris Sgro says the economic losses to North Carolina from HB2 are already at $500 million. Rep. Grier Martin projects that the “cost could get in the billions.”

Assumptions for a hasty conclusion

Another part is all the assumptions such a hastily assembled model needs in order to spit out big numbers quickly for maximum headline-blaring impact. (Not the transparently self-serving, insulting, and question-begging assumptions that the bill is based in “hatred,” “bigotry,” and so forth; economic assumptions.)

Such as: any company that says it was considering moving to North Carolina absolutely was going to make that move, and its reason for not making a move is and can only be HB2. It cannot be the company had other reasons not to choose North Carolina that were suited to the company’s bottom line, because that would suggest the company, after making a business decision, is attempting to score cheap public-relations points on the side.

This also means believing the company is choosing no longer to serve its bottom line because it is taking a stand on principle. Granted, it would have to be a brand-new principle. For it to be a sudden principled stand against things staying the way they have been in North Carolina, then the company couldn’t have had this principle last month or before while considering the state.

And in many cases it’s a principle that can’t exist for them beyond the borders of North Carolina. Either they’re doing business in one of the 29 other U.S. states and 10,000 U.S. cities with the same discrimination protections as North Carolina, or they’ve established a business footprint in some of the other nations in the world with a more Dark Ages approach toward matters of sexuality, gender, human rights, child slavery, and so forth. Or both.

Or this: when a musical act known primarily for selling recordings on vinyl chooses to cancel a concert, North Carolinians who would have spent money enjoying it instead remove that cash from their family budgets and burn it. That way it can’t filter its way into the state’s economy through other channels.

This also requires believing the musical act is taking a principled stand against its own financial best interest and isn’t interested in reaping cheap PR in their twilight. It necessitates believing that these principles also cropped up within the last month. And wouldn’t you know it, it also requires believing their principles are hermetically sealed within the boundaries of North Carolina so they can perform elsewhere.

And this: under no circumstance can it be envisioned that other companies, entertainers, tourists, or people from out of state thinking of moving would be influenced positively to come to North Carolina based in part on HB2. Not even from those many other states, let alone those barbaric cultures.

And of course: any “economic impact” figure based on these assumptions and generated by noneconomists for immediate media amplification is empirically sound and fully trustworthy.

Media want someone to project the impact on an entire state of a single piece of legislation that doesn’t change taxes or incentives? That’d be a tall, time-consuming task for an economist, let alone a pundit who thinks “demand curve” is how Tarzan calls a pitch. That’s why these assumptions are necessary.

Jon Sanders / Director of Regulatory Studies

Jon Sanders studies regulatory policy, a veritable kudzu of invasive government and unintended consequences. As director of regulatory studies at the John Locke Foundation, Jo...

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