Commentary

Who studies the studies?

A spate of studies has surfaced, of late, testifying to the all the jobs, wages and taxes Virginia Beach’s proposed arena deal will generate.

Meanwhile, other studies over the port’s economic impact on the region and the state have clashed.

These studies are impressive and astounding – and yet, on closer inspection, they are confounding. 

Economists are neither immune to the vagaries of politics, nor are they indifferent to their pocketbooks.

Never have I known an economic impact study that didn’t cater to the wishes of those who paid for it. 

These studies aren’t conjured in a vacuum.

Before the wise and sage economists wave their magic wands, they sit with their patrons, who always have a definite goal in mind – make it big, glorious and beneficial.

Have you ever known an economic impact study that is independent of its patron?

Economists want you to think they possess arcane knowledge.

They have become our priests who study bones or the flights of birds and predict an outcome.

Nonsense.

No one can predict the future.

Economists pick a model, plug in the variables – jobs, income and a spurious and yet unchallenged predictor called the multiplier – and the model spits out the impact.

It’s like putting coins in a machine for a drink. Put in 50 cents and you get 12 ounces. Put in a $1.00 and you get 15 ounces.

The studies are coin-fed.

Take for example the studies on the port. Economist James Koch issues an economic study on the port.

Lo and behold, his study highlighted a less impressive economic impact by the port than the study done by professors at the College of William & Mary commissioned by the Virginia Port Authority.

His patron: Virginia Secretary of Transportation, Sean Connaughton, who is pressing for privatization of Virginia’s state-owned marine terminals.

And the VPA is the patron of the College of William and Mary study. 

Koch’s study cuts through the hyperbole of port officials.

The William & Mary study inflates the port’s impact on the state.

So which study is more accurate?

Neither one has a degree of independence and therein is the flaw of these studies.

Ask an economist why the numbers are different and you will get these responses: we have always done it that way or they abruptly change the subject.

And you get the impression that they consider you an obnoxious neophyte or just incredibly stupid because you can’t grasp the mechanics of these studies.

To justify the arena deal, the Virginia Beach Development Authority commissioned two studies – one by Koch and another by economist Christine Chmura, principal of Chmura Economics & Analytics, who has made a career of catering to the McDonnell administration and justifying his programs with dazzling economic details.  

Koch readily admits that he used numbers by the very firms that have a vested interest in having the arena built.

Chmura also used numbers supplied by Comcast-Spectacor, one of the principals in the arena deal.

The brazen indifference to criticism prompts one to question the validity of the studies and the credibility of the economists.  

The studies – nothing more than educated guesses based on accepted models – avoid the crucial element of a deal: what’s the cost?

What’s the net gain? What does government gain once the costs are calculated?

Take at look at the blog, Field of Schemes, a keen and caustic examination of these deals.