[Tinordi]

Here you go Resolute, because I know that your priors are likely too hardened to be challenged by you going out and doing the research yourself:

Companies facing regulatory hearings like Kinder Morgan, groups promoting events like the Vancouver Olympics, or politicians justifying public expenditures like the new hockey arena in Edmonton generally talk about the benefits of their projects using a tool called economic impact analysis. This technique takes spending, runs it through a statistical model, and predicts impacts of that spending on both GDP and employment.

There are, basically, two issues with this method, and both are wonderfully illustrated by the oil spill example. First, the method is agnostic as to what the money is spent on, so money spent cleaning up an oil spill looks remarkably similar to money spent building a new hospital or school in terms of economic impact. Second, the technique generally does not account for where the money comes from, or how it would otherwise have been spent. Money spent on a hockey arena in Edmonton might otherwise have been spent on light rail or tax reductions, both of which would also have economic impacts. In the case of an oil spill cleanup, the costs are likely to be directly incurred by an insurance company, but the premiums paid for that insurance come at the expense of the value of the oil transportation service—the higher the expected clean-up costs from oil spills, the higher insurance premiums will be, and this will mean higher pipeline tolls, which in turn implies lower profits, taxes, and royalties on the products shipped. Simply-put, there’s no free lunch.

Economic impact analysis leads to what economists have known for decades as the broken windows fallacy—the idea that rebuilding existing things creates economic growth by requiring people to spend money. The oil spill is a perfect example of this fallacy, but of course it’s one in which we all know intuitively that oil spills are bad, so it seems ridiculous to talk about the benefits of cleaning them up. The fact that the technique we use to evaluate the benefits of spending in general only makes sense when we know the spending is beneficial should raise more than a few flags.Economic impact analysis is a wonderful tool for confirming your pre-existing biases and for justifying anything. For this reason, it’s a terrible tool for analyzing economic benefits because it never yields negative numbers—all spending is good spending as far as an economic impact analysis is concerned. All spending creates jobs. The trick, it seems, is to only listen to the results when it’s a project you like.

http://www.macleans.ca/economy/econo...-sounds-leach/