Okay, I admit I got caught by Marta Mossburg's satirical riff on Baltimore's economic development policies published in the Baltimore Sun on March 15th. I should have looked at the headline, which referenced the view from 2021, and the substance of the article.
But, alas, the truth is that Mossburg was keying into real-world sentiment and public policy. Many public officials actually do believe that simply spending more money on nifty projects will bring their cities back. They won't, and the academic research is pretty clear on that.
And Baltimore is a case in point. Despite projects such as the Inner Harbor and Camden Yards, both of which were well designed and implemented, Baltimore has continued to bleed population and jobs. By one estimate, 30,000 people have left since 2000 as the city's population has dipped to 620,000.
Mossburg, a fellow at the Maryland Public Policy Institute, opens up her fictional article by reporting that the U.S. Bureau of the Census released its population figures for Baltimore, and local leaders are baffled. The city lost 50,000 people and 10,000 jobs over the last decade, she writes:
"[Baltimore] Mayor Christian Johansson said he was "stung" by the figures. "We've invested $3 billion in the new convention center and arena and State Center complex. We lured the Indy 500 to Baltimore. We built a $1 billion incubator for high-tech jobs. I don't get it."
Unfortunately, the academic research is pretty clear that these kinds of programs don't (and won't) turn a city's economy around. They can't. Job creation in a market-based economy is bottom up and driven by entrepreneurship, not government programs and spending on white elephants. In fact, in some cases, investment in sports stadia have had negative impacts on the local economy as money has been shifted from other nonsubsidized uses to subsidized ones.
One recent article (spring 2004) in the Journal of the American Planning Association noted that these projects create "opportunities" for revitalization (what project doesn't?), but their success is not guaranteed. Camden Yards, in fact, is used as an example of a project that didn't. But even in the "successful" projects (e.g., Cleveland and San Diego), the effects were highly localized; they didn't catalyze citywide or regional development.
I've looked at these issues for more than 25 years, and the mistake elected officials make over and over again is they believe their own press releases. Ribbon cutting doesn't created jobs. Similarly, sports stadia, sporting events, and convention centers don't create an economy; a vibrant economy creates the environment that make these businesses flourish. Pushing money into programs that "create jobs" like state building projects don't improve the productivity or competitiveness of the city's economy, they reshuffle jobs.
Back in 1995, I wrote an article (with David Swindell) for The Buckeye Institute that concluded:
"Public investment in sports is not a good economic development policy for Ohio cities. While sports may have important psychological and political value, public officials should not sell the idea on economic grounds. If city officials, business leadersa nd local citizens believe ia sports stadium is needed and financially sound, private capital should be raised to finacne the project."
The same conclusion holds true for conventional centers and entertainment complexes in 2011 as well as other forms of public "pump priming." Hopefully, Baltimore officials will take note.