Anytime money is spent in the economy, it generates a positive economic impact. This impact varies from industry to industry. For example, the impact multiplier for earnings in the film industry is 1.93. However, for the automobile manufacturing industry it is 2.25; for a new supermarket it is 1.7; for the commercial construction industry it is 1.73; for a nuclear power plant it is 2.51; and for a new hotel it is 1.91. Thus an economic impact analysis will always show that public subsidies result in a positive economic impact for the state.Ignore Bastiat. Assume this is correct. It should still be noted that "generating a positive impact" is not the same as being the optimal path to pursue. And in a complex world where knowledge is dispersed (and, in some cases, tacit), only a discovery process like that of the market economy can reveal the latter. Comments open.
Tuesday, July 29, 2008
From the cover letter to some film tax studies I am reading: