Monday, March 31, 2008

BHI testifies on Cape Wind proposal

On March 13, 2008, BHI researcher Michael Head testified before the Mineral Management Services hearing at the University of Massachusetts, Boston. His testimony follows:
I am Michael Head from the Beacon Hill Institute, the research arm of the Economics Department at Suffolk University. My testimony will focus on those sections of the DEIS that deal with economics.

Still no Cost-Benefit Analysis
The DEIS does not include a social cost-benefit analysis that would systematically weigh the social costs against the social benefits of the project, a serious omission. Presidential Executive Order 12866 states that “each agency shall … propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs.” The Cape Wind proposal should not be exempt from this test.

Our updated research shows that the Cape Wind project is not economically viable, showing that the economic costs would exceed the economic benefits by $700 million in 2008 dollars.

Tourism could well be hurt
The DEIS asserts that “the proposed action is located far offshore and is not expected to affect tourism.” This conclusion is too optimistic and in the context of Cape Cod, which is heavily dependent on tourism would, on balance, be hurt by the Cape Wind project. In our 2003 study 62% of a sample of tourists surveyed believed that the turbines lessened the area’s appeal as a vacation destination.

Property Values May Decrease
The DEIS states that “currently available information does not support any firm conclusion with respect to the wind facility’s effect on property values.”

However, based on surveys undertaken by the Beacon Hill Institute in 2003:

• Home owners believe that the windmill project will reduce property values by 4.0%, and waterfront property by 10.9%
• Forty-nine percent of area realtors also expected property values to fall.
This translates into between a $1.76 and $2.54 billion loss in property values.

Employment Effects
DEIS also predicts secondary induced employment benefits resulting in an additional 206 to 622 jobs in Massachusetts. These effects are overstated.

In fact, the reduction in tourism brought about by the Cape Wind project would lead to a reduction in employment of about 700 jobs.

Friday, March 28, 2008

On details, BHI leads the way

Seeking to address a nearly $20 billion infrastructure shortfall, Governor Deval Patrick, Senate President Therese Murray and House Speaker Salvatore DiMasi expressed an interest in reforming the state's costly police detail system at a press conference yesterday. Excessive police detail costs have been identified in the past by a 2004 Beacon Hill Institute study, Police Details: Protection or Perks?

Here's a November 2007 Globe op-ed by David Tuerck on police details.

Tuesday, March 4, 2008

BHI's contribution to the Center for the American Experiment's Symposium: What does it mean to be an urban conservative?

Location, Location, Location
David G. Tuerck

To consider what it means to be an “urban” conservative, it’s necessary to ask what distinguishes a conservative of this variety from any other. There are already plenty of varieties to consider -- social conservatives, neoconservatives, libertarians, and so on. How, we may ask, does it benefit the lexicon to add this new one?

We can attempt an answer by recognizing that location choices are similar in important respects to choices we make in the marketplace for ordinary products. Urbanites differ from other Americans insofar as they are willing to pay for amenities that only cities can offer. New York City, that most urban of all locations, offers an endless list of amenities: symphony, opera, museums, Broadway shows, jazz clubs, churches, sporting events, lectures —- you name it. People who live or work in New York City pay for these amenities by putting up with the congestion, taxes and general mayhem that go with living or working there.

To be sure, people don’t live or work in cities merely because of the amenities they provide. Some people, who would prefer the suburbs or the country, simply have no choice. Yet as we transition to a service economy and as electronic communication makes location less and less important a consideration for running a business, it’s the amenities that cities provide that will increasingly explain the attraction they hold for people.

So what is an urban conservative? Quite simply, it’s someone who is willing to pay for the amenities offered by a city and who happens also to be conservative. The mere fact that one enjoys world class opera or sports does not bear at all on one’s ideological orientation. It bears merely on the sacrifices, in the form of suburban or rural comforts, that one is willing to make in order to enjoy these amenities.

Yet there are aspects of the urban culture that can prove challenging and troubling to a conservative.

Consider what it means to be an urban social conservative. Probably, as some argue, there is a greater concentration of gays in the “creative class” that makes up the art scene in a big city. The prominence of the gay lifestyle in cities like San Francisco is troubling to social conservatives. Social conservatives are appalled that Massachusetts now permits same-sex marriages.

Neoconservatives likewise feel uncomfortable with the anti-war sentiment that is dominant in cities like Boston, New York, and San Francisco.

Libertarians oppose the government subsidies that go to support the arts, sports stadiums, and rapid transit in the cities.

Is it philosophically possible, then, for an individual to be both conservative and happily ensconced in the city? The answer is yes, provided that he understands and acts upon a theorem handed down many years ago by economist Charles Tiebout. According to the Tiebout theorem, the ability to "vote with one’s feet" is the key to unraveling the otherwise knotty problem of providing "public goods" (including concert halls and sports stadiums) without coercing the support of people who don’t necessarily benefit from their provision.

If government subsidies are necessary in order to make the amenities offered by a locality economically viable, then the simple answer is for the locality to finance the subsidies out of local taxes. As long as the cost of subsidizing some amenity is borne by local taxpayers, even the most hardcore libertarian could feel comfortable supporting the taxes and enjoying the amenity. If not, he could vote with his feet and move to a different locality that neither imposes the taxes nor provides the amenity.

If the urban conservative doesn’t want the Metropolitan Opera badly enough to pay New York City taxes, he can move to Nashville, where the Grand Ole Opry gets along fine without government subsidies. It’s necessary only that New Yorkers pay for the Met and that Tennesseans do not. Similarly, social conservatives or neoconservatives can readily move from Boston to, say, Houston, where the ideological climate is more to their liking, provided only that Houston isn’t compelled to become like Boston in terms of its social and ideological mores.

David G. Tuerck is executive director of the Beacon Hill Institute (www.beaconhill.org) and chairman and professor of economics at Suffolk University (www.suffolk.edu) in Boston.

Reprinted from What does it mean to be an urban conservative? by the Center for the American Experiment

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