Tuesday, August 5, 2014

Is a baseball complex a public good?


Baseball [picture from commons.wikimedia.com]
[ADDED 8/8/14: My Economics colleague Rick Eichhorn points out that a baseball complex cannot by definition be a public good, because it cannot be, in economist-speak, "non-rival and non-excludable." So to be precise, I am asking: Can a baseball complex provide a public good, that being economic vitality, from which all (baseball players or not) benefit, and which the market on its own cannot provide? As you will see from the following, I am dubious. Quite dubious, really.]

The Iowa Transportation Commission recently awarded a $1.266 million RISE (Revitalize Iowa's Sound Economy) grant to a baseball/softball complex planned northeast of Marion, on State Route 13 near County Home Road. The grant is in addition to a $750,000 grant from the City of Marion, and Linn County's effective donation of the (county-owned) land. The business owners hope to raise an additional $4.5 million in public funds, in all amounting to somewhat more than half the cost of the $11 million project. The rest of the funding would be raised from private sources.

PMBF president Jack Roeder, formerly general manager of the Cedar Rapids Kernels minor league baseball team, projects the 17 fields will host local leagues, travel tournaments for high school prospects, and (at the specially constructed Miracle Field) games for people with physical disabilities. They anticipate 120,000 visitors annually, half from out of the area, $25 million in direct spending, and creation of 200 full- and part-time jobs.

It is a good idea to take claims of future economic benefit with a grain or two of salt. There are unknowns beyond this:
  1. Is there a shortage of baseball/softball facilities in the area? The complex would add to an existing stock of area ball parks, including Diamonds Sports Complex in Cedar Rapids, which consists of four diamonds and is also located on Route 13, about eight miles south of the proposed Prospect Meadows Ball Fields location.
  2. Could the project have been done without public funds? The non-profit West Michigan Sports Commission just opened a similar, though smaller, facility in Grand Rapids, funded entirely with corporate, private and non-profit money.
  3. Will the development exacerbate sprawl, which Marion has already done to a fare-thee-well? The RISE grant is for road-building, at a time when the region (just like most of the country) is having a difficult time keeping up with maintenance of existing infrastructure.
  4. Is travel baseball a good idea, or does it put excessive strain on young arms as they chase the dream of professional contracts or college scholarships?
Besides not knowing the answers to any of those questions, I have to admit to rather blinkered vision. If you've spent any time on this blog you've detected a strong bias towards downtown and neighborhood development. (I like trails, too, but don't talk about them as much.) I don't spend much mental energy on either amateur baseball or on Farthest Marion. So take that into account when you read the following.

There is a role for government in economic development. But just because markets do fail from time to time doesn't mean everything we don't have is the result of a market failure. Iowa State University economist David Swenson, in a paper explaining the origins and use of tax increment financing (not yet a factor in the ball field case), lists five factors encouraging state and local governments to go beyond traditional regulation and service provision, beginning in the 1980s: (1) rural household dislocation and out-migration, (2) large losses in traditional manufacturing capacity, (3) absence of economic diversification, (4) statewide depopulation, and (5) erosion of small town commerce and social institutions (pp. 2-3). Not all of these pertain to metropolitan Cedar Rapids, of course, but enough do that we participate in the nationwide scramble for new enterprises. This scrambling is not always well-advised or fiscally efficient. Again Swenson:
[T]remendous increases in competition for capital development among the states and cities have led states and local governments to use more types and greater inducements to support growth.... It has now evolved that for any city or state to be competitive, there must be a substantial "standing offer" of incentives on the table or business will look elsewhere.... As the economic development process is informationally asymmetric, that is, the firm has all of the knowledge and the awarding governments only know what the firm tells them, one must assume that all governments, state and local, frequently make inefficient decisions regarding public subsidy of development, and that public resources are therefore not used for the best purposes (pp. 4-5).
How, then, should local governments approach economic development? Adam Smith, in his brilliant and authoritative though occasionally ponderous Wealth of Nations, published in 1776, recognized the existence of market failures. In Book V, he explains it is the duty of the sovereign to erect public works and institutions, which are unprofitable to private investors but needed by society. (For example, roads and bridges are needed to facilitate commerce, and schools are needed to promote the instruction of youth.) But even so, he is ambivalent about government activity in this area, fearing that officials will respond to political power rather than to genuine social need. Funding public works through user fees such as bridge tolls, for example, ensures bridges "can be made only where that commerce requires them, and consequently where it is proper to make them" (V.i.iii, Art. 1). The genuineness of social need is a matter of perception, of course, which gets us away from the mechanistic operations of the economic marketplace and puts us in danger of manipulation.

Smith's argument remains valid today, even as the scope of government necessarily has expanded greatly since 1776 in order to keep pace with economic and technological change. Faced with this reality, we can either deny any governmental efficacy and reject its role entirely, or tolerate its great inefficiencies and hope that occasionally the interests of the powerful will coincide with ours, or figure out some way of making government work efficiently in the general interest. That's a tall order, but here are a couple of suggestions by way of procedures that I think will improve governmental responsiveness:
  1. Empower metropolitan regional governments (see Calthorpe and Fulton, ch. 4). Political arrangements should be scaled to reflect the realities of people's lives and our economies. Regional planning and revenue-sharing will reduce the ability of private interests like Physicians Clinic of Iowa to play municipalities off against each other, so that a win for Cedar Rapids (or Hiawatha) is a win for the whole region. It thus eliminates one of the main drivers of sprawl.
  2. Economic gardening (see Hamilton-Pennell; Marohn, pt. 2). Rather than having other taxpayers subsidize the creation of new businesses, what can we do to enhance the success of existing businesses? By providing technical and information assistance to small businesses, Littleton, Colorado (which pioneered this approach 25 years ago) has grown its economy without special subsidies or breaks. As Chuck Marohn of Strong Towns points out, this involves an accumulation of small efforts and results, none of which is individually photogenic. But where tried it has brought results at a much lower cost than falling for the big promises of those who happen to be politically well-placed. Marohn concludes: [B]y the way, we'll still be bringing jobs and new businesses in from outside the community. The only difference will be that we won't be paying them to come -- they will want to be here. If we are successful -- and we will be -- they will be paying us to come here.
I oppose public funding for Prospect Meadows Ball Fields, for the same reason that I opposed the $10 million local governments are sinking into redoing Westdale Mall. They are substantial public investments without a public goods rationale, responding to the political influence of private power rather than to genuine social need. I'm ambivalent about the $250 million extension of Route 100, but find the public goods arguments I've heard so far to be weak.

Our common life in the next century requires a role for government, but only if it's done right. We simply must find a better way.

SOURCES

Peter Calthorpe and William Fulton, The Regional City: Planning for the End of Sprawl (Washington: Island Press, 2001).

"City of Marion Pledges Support for Prospect Meadows Ball Fields," Cedar Rapids Gazette, 22 February 2013, http://thegazette.com/2013/02/22/city-of-marion-pledges-support-for-prospect-meadows-ball-fields/

Pat Evans, "Sports Complex Forecasts $20M Economic Impact," Grand Rapids Business Journal, 1 August 2014, http://www.grbj.com/articles/80252-sports-complex-forecasts-20m-economic-impact

Christine Hamilton-Pennell, Strengthen Your Local Economy Through Economic Gardening (ICMA Press, 2010). An excerpt is here; more information on the "Growing Local Economies" website [http://growinglocaleconomies.com/economic_gardening].

Chuck Marohn, "From the Mayor's Office," Strong Towns, 22 March 2012, http://www.strongtowns.org/from-the-mayors-office-strateg/

Rick Smith, "Cedar Rapids' Prospect Meadows Project Receives $1.3 Million," Cedar Rapids Gazette, 10 June 2014, http://thegazette.com/subject/news/cedar-rapids-prospect-meadows-project-receives-13-million-20140610?utm_source=thegazette&utm_medium=web&utm_campaign=discovery

David Swenson, "Tax Increment Financing in Iowa: Background, Research and Recommendations," presentation to the House Ways and Means subcommittee, 27 February 2012, http://www.econ.iastate.edu/research/other/p14935

1 comment:

  1. I think the land should be left as-is because of all the animals and insects who would be displaced.

    ReplyDelete

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