by Frank Lewis
Like two drunks ready to back up their boasts about which could better withstand a punch, Nashville and Cleveland are scrambling to stake their futures on the assumption that a shiny new "medical mart" will lure new conventioneers and their expense accounts. (Tradeshow Week has the background on both cities'
delusions dreams.) Nashville Scene (no relation) notes that there, like here, skepticism is in short supply.
"But for all of the public conversation about a new convention center over the last couple of years, a skeptical analysis by one of the state's top economists has gone virtually unnoticed," Nashville Scene reports. "Bill Fox at the University of Tennessee, who comments frequently on regional economics and public finance, published (with two UT colleagues) a piece two years ago in that coffee table staple State Tax Notes on the issue of whether new and expanded convention centers are a good idea from economic and finance perspectives."
From Fox's analysis:
[P]ublic funding of a venture intended to benefit private businesses effectively shifts the risk of the project from the private sector to the public sector. Taxpayers will primarily shoulder shortfalls, if they occur, with higher than expected general funding obligations. The track record for recent projects indicates many new or expanded centers perform well below expectations because increases in supply continue to far exceed growth in demand, which suggests higher than anticipated subsidies.
Virtually everything from Fox's analysis applies to Cleveland as well. Read the whole thing here.
Both cities claim to have the medical cred to make their marts the place for wanna-be Houses and Cuddys to schmooze while shopping for machines that go ping. But there's a big difference in their approaches to getting there. As Nashville Scene (and, coincidentally, former Cleveland Scene) editor Pete Kotz notes, "Cleveland is throwing a billion dollars in welfare to a private company to create its mart. Nashville's would be self-financed by Market Center. … We're way too broke to offer the welfare Cleveland is throwing around. But it's far easier and cheaper to get something done here."
Both cities claim to be better positioned to win this race. Both are guessing. And in Cleveland's case, gambling a mountain of taxpayer money on that one drunken punch. — Frank Lewis