Loss of a handful of one-off events fails to disrupt world’s 30th largest economy

This, mind you, is shocking news. The News & Observer and PolitifactNC just had to report that, blast it, Lt. Gov. Dan Forest is right about HB2’s lack of economic impact, specifically when he said this in Texas in support of a similar measure there:

If you look at the most extreme instances of economic impact, by the media and by the universities and the people who come out and say “This is the impact,” that most extreme impact equates to one-tenth of 1 percent of our annual GDP.

They were forced to “green light” Forest’s quote.

Locker Room readers will recall that WRAL also looked into it once — and had to admit that the actual impact was but “a tiny fraction of the state’s overall economy.”

I explained then:

As has been discussed here, North Carolina has the 30th largest economy in the world (if you count U.S. states among the nations). The amount of unseen, unremarked-upon, untallyable economic activities that goes into an economy of such magnitude is unfathomable.

It is foolishness veering on hysteria to think that a handful of discrete, one-off events not occurring would derail it in any palpable way.

Nevertheless, the PolitifactNC/N&O’s evaluation of Forest’s quotation still makes the same mistakes as WRAL’s evaluation — which is not good coming from self-appointed judges of whether a thing is True or False.

For sake of space I’m only going to focus on the main two here:

1. Taking economic impact estimates at face value.

As I have discussed frequently, most recently in my newsletter urging people to “Apply some good horse sense to ‘economic impact’ studies,” economic-impact figures are habitually overblown.

Economic impact estimates from conventions and conferences and sporting events are especially notorious for wildly inflated figures. …

 

2. Assuming economic impact on a city applies fully to the state.

Even if one were to grant at face value the economic impact figure to Charlotte of losing the NBA All-Star Game or the economic impact figure to Raleigh of losing a convention, one could not apply those figures to North Carolina without proof that any and all attendees would be from out-of-state and would otherwise have no alternative economic activities planned in North Carolina.

Only new, out-of-state economic activity counts for the state. Someone spending time and money in, say, High Point instead of Charlotte doesn’t.

Texas, by the way, has the world’s 10th largest economy.

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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