Links 2024-02-13 - Infuriation

I wish there weren't things like this, but there are.

Yesterday I took a break from sharing things that get my blood pressure up. That break is over, lol.

Here are four items each of which rankles me. At least the third item has some hopefulness attached to it.

First, Alex Tabarrok revisits something he first wrote about 6 years ago: Get out of jail free cards, so to speak. Where is Serpico when we need him?

“Courtesy cards,” are cards given out by the NYC police union (and presumably elsewhere) to friends and family who use them to get easy treatment if they are pulled over by a cop.

Second, a recent paper by J.C. Bradbury, Dennis Coates, and Brad Humphreys gives a nice overview of the economics profession’s consensus on the local impact of spending public funds on professional sports. <spoiler alert: the effect is negative>

The reason this rankles me as long-time readers know is that this is one of the tides I try in vain to stop. Here is the abstract (emphasis added):

Local governments routinely subsidize sports stadiums and arenas using the justification that hosting professional franchises produces economic development and social benefits in the community. The prevalence of venue subsidies generated an extensive and vibrant research literature, which spans over 30 years and includes more than 130 studies. We chronicle this body of research from early studies of tangible economic impacts in metropolitan areas, using basic empirical methods, through recent analyses that focus on sublocal and nonpecuniary effects and employ more sophisticated empirical methods. Though findings have become more nuanced, recent analyses continue to confirm the decades-old consensus of very limited economic impacts of professional sports teams and stadiums. Even with added nonpecuniary social benefits from quality-of-life externalities and civic pride, welfare improvements from hosting teams tend to fall well short of covering public outlays. Thus, the large subsidies commonly devoted to constructing professional sports venues are not justified as worthwhile public investments. We also investigate the paradox of local governments continuing to subsidize sports facilities despite overwhelming evidence of their economic impotence. Our analysis informs academic researchers and policymakers to motivate future studies and promote sound policy decisions guided by relevant research findings.

Gee-whiz Wally, my local mayor assured me it all made sense. The simple explanation that so many public officials fall for this is a willful neglect of understanding the substitution effect and the lessons of public choice economics. Again from the paper:

Robust empirical findings documenting the impotence of professional sports in local economies likely reflect a simple theoretical explanation: consumer spending on sports represents a transfer from other local consumer spending, not net-new spending. Although sports games attract some nonlocals to spend money in the area, these visitors also crowd out other tourists attracted to other consumption amenities common to major US cities. Even with the presence outside visitors
attracted by sports events, most consumer spending in and around pro sports venues derives from local residents; therefore, the opportunity cost of local sports consumption falls primarily on other competing local businesses, such as movie theaters, restaurants, and retail shopping. Most spending on game tickets, concessions, and associated hospitality near a sports venue would have occurred in other parts of the host jurisdiction without the presence of a pro sports team. Sports-related spending largely reflects a redistribution of existing spending by residents rather than increased local spending.

Any added spending from visitors attending games tends to be concentrated in certain sectors in the local economy and in locations that may not bear the full tax burden generated by subsidies. In addition, the influx of consumers also generates local nuisance or congestion externalities in the form of traffic, crowds, noise, litter, and crime, which may mitigate any positive economic effects. Furthermore, there is no obvious reason to expect income or employment multipliers from
sports spending to be greater than those for other types of local consumption spending that are crowded out; thus, the consistent empirical findings of insubstantial tangible economic impacts from professional sports teams and venues conform to theoretical expectations.

(HT: Timothy Taylor, who disappoints me a bit in his attempt to rescue the idea by falling into the noneconomic-benefits trap, which is actually addressed in the paper and the larger literature.)

Third, SEC Commissioner Hester Peirce proves to be a light amongst the darkness in her statement on the SEC finally approving Bitcoin-based ETPs (original footnotes removed).

We squandered a decade of opportunities to do our job. If we had applied the standard we use for other commodity-based ETPs, we could have approved these products years ago, but we refused to do so until a court called our bluff.

…

Although this is a time for reflection, it is also a time for celebration. I am not celebrating bitcoin or bitcoin-related products; what one regulator thinks about bitcoin is irrelevant. I am celebrating the right of American investors to express their thoughts on bitcoin by buying and selling spot bitcoin ETPs. And I am celebrating the perseverance of market participants in trying to bring to market a product they think investors want. I commend applicants’ decade-long persistence in the face of the Commission’s obstruction.

How about this! Common sense and advocacy for basic liberty, a measured and reasonable regulatory approach, and generally just treating adults like adults. All of that from a government regulator! Perhaps there is hope after all?

I include this hopeful piece in a post labeled “infuriation” simply because Commissioner Peirce is the exception that proves the rule.

(HT: Alex Tabarrok)

Fourth, Nicholas Anthony joins Caleb Brown on the Cato Daily Podcast to share a particularly punitive crypto rule attacking financial privacy. A new rule as part of our old friend the Infrastructure Investment and Jobs Act requires that “anyone who makes a transaction in the process of business or trade in the amount of $10,000 or more in cryptocurrency to now report that to the IRS” within 15 days. Failure to do so including getting all the details right can result in stiff fines and years in prison.

We have a long way to go dragging our heels on the road to serfdom. Keep fighting the good fight!