Friday, October 18, 2013

ABC News on the cost of the shutdown (they're clueless)

ABC News on the cost of the shutdown

This is quite bad.  First, here's an excerpt:
- $3.1 billion in lost government services. Although furloughed workers will get their back pay,  taxpayers won’t see the products.  (Source: I.H.S.)
-  According to the U.S. Travel Association:  There has been $152 million per day in all spending related to travel lost because of the shutdown. As many as 450,000 American workers supported by travel may be affected.
-   According to the National Park Service: They welcome more than 700,000 people per day usually in October and visitors spend an estimated $32 million per day impact in communities near national parks and contribute $76 million each day to the national economy.  Those revenues were lost.
Let's go through each point.  The government services only are worth $3.1 billion if that's the value that they add to society.  Some might argue that the lack of government interference (from the EPA, for example) would have improved the economy.

While travel might be affected, will those who forgo travel choose not to spend that money anywhere in the USA?  If that money will still be spent, just not on traveling, then the lack of travel on the USA economy doesn't matter, as people will spend that money elsewhere.

I've discussed national parks a lot (because these studies are often so biased and wrong).  Money not spent at national parks is likely spent instead at state parks, local amusement parks, or elsewhere in the USA.  Again, the net impact on the USA economy is zero.

This story shows the dangers of economists publicizing economic impact stories that are biased and/or wrong.  Journalists aren't trained to spot bad economic impact studies, or to think about the fact that one industry loses, another one often wins making the overall economic impact approximately zero.

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