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Sen. Obama Wrong About Economics of Sports Stadiums

2 min readBy: Gerald Prante

Last night in the Democratic debate sponsored by the AFL-CIO and held at Soldier Field in Chicago, candidate Barack Obama was asked about his support of taxpayer money being used to build the stadium that houses the NFL’s Chicago Bears. Here is Obama’s response:

Absolutely, it was the right call because it put a whole bunch of Illinois folks to work, strong labor jobs were created in this stadium, and at the same time, we created an enormous opportunity for economic growth throughout the city of Chicago. And that’s good for the state of Illinois.

Sen. Obama is suffering from the famous broken window fallacy. Sports stadiums are rarely, if ever, the economic engines the politicians claim. While some people did work to build the stadium as Obama said, he fails to mention that had the taxpayer money been spent on another use, other jobs would have been created from that money, likely leading to even bigger economic growth in the state.

This is the classic case of what French economist Fredric Bastiat referred to as “what is seen and what is not seen.” For example, suppose that money had been spent on education. The state could have built new schools, which also require construction jobs. Or hired new teachers. Or what if the money had never been taken from the taxpayers in the first place, allowing them to spend it as they wished (even on football tickets) rather than have government take it to build a stadium in which millionaires play football twelve days out of the year.

There is wide opposition from the general public towards this type of corporate welfare, as well as among policy advocates on both the right and left. For example:

Reason Magazine: Demolishing Sports Welfare
Ralph Nader: Stadium Subsidies Scalp the Public
John Stossel: Robbing the poor to build a rich man’s stadium — it’s just plain wrong
Tax Foundation: Taxpayers Should Cry Foul Over Stadium Subsidies