Another letter to the editor

Last time I wrote a letter to the Wichita Eagle for publication, I said that I learned my lesson, which was that I needed to be brief. I didn’t learn this lesson well.

This Sunday The Eagle printed a letter I submitted, and a large section in the middle was omitted. This omitted material was the entire basis of my argument. As before, here is what I submitted, and what The Eagle printed.

What I submitted What was printed
When supporting the subsidy to AirTran, Fair Fares supporters grossly — I would say even speciously — overstate the importance of the airport to our local economy. When supporting the subsidy to AirTran, Fair Fares supporters grossly — I would say even speciously — overstate the importance of Wichita Mid-Continent Airport to our local economy.
As an example, Mr. Troy Carlson, then Chairman of Fair Fares, wrote a letter that was published on September 16, 2004 in the Wichita Eagle. In that letter he claimed $2.4 billion economic benefit from the Fair Fares program ($4.8 billion for the entire state). I was curious about how these figures were derived. I learned that the basis for them is a study by the Center for Economic Development and Business Research at Wichita State University that estimates the economic impact of the airport at $1.6 billion annually. In this study, the salaries of 12,134 employees of Cessna and Bombardier, because these companies use the airport’s facilities, are counted as economic impact dollars that the airport is responsible for generating. Fair Fares supporters perform extrapolations starting with that figure to arrive at the $2.4 and $4.8 billion figures. As an example, Troy Carlson, then chairman of Fair Fares, wrote a letter that was published in The Eagle last September. In that letter, he claimed $2.4 billion in economic benefit from the Fair Fares program ($4.8 billion for the entire state). I was curious about how these figures were derived. I learned that the basis for them is a study by the Center for Economic Development and Business Research at Wichita State University that estimates the economic impact of the airport at $1.6 billion annually. In this study, the salaries of 12,134 employees of Cessna Aircraft Co. and Bombardier Aerospace, because these companies use the airport’s facilities, are counted as economic impact dollars that the airport is responsible for generating. Fair Fares supporters perform extrapolations starting with that figure to arrive at the $2.4 billion and $4.8 billion figures.
To me, this accounting doesn’t make sense on several levels. For one thing, if we count the economic impact of the income of these employees as belonging to the airport, what then do we say about the economic impact of Cessna and Bombardier? We would have to count it as very little, because the impact of their employees’ earnings has been assigned to the airport.

Or suppose that Cessna tires of being on the west side of town, so it moves east and starts using Jabara Airport. Would Cessna’s economic impact on Sedgwick County be any different? I think it wouldn’t. But its impact on the Wichita airport would now be zero. Similar reasoning would apply if Cessna built its own runway.

Or it may be that someday Cessna or Bombardier will ask a local government for some type of economic subsidy, and they will use these same economic impact dollars in their justification. But these dollars will have already been attributed to the airport.

It is a convenient circumstance that these two manufacturers happen to be located near the airport. To credit the airport with the economic impact of these companies — as though the airport was involved in the actual manufacture of airplanes instead of providing an incidental (but important) service — is to grossly overstate the airport’s role and its economic importance. To credit the airport with the economic impact of these companies is to grossly overstate the airport’s role and its economic importance.
The best reason for opposing the AirTran subsidy is that it distorts the market process through which individuals and businesses decide how to most productively allocate resources and capital. The second best reason to oppose it is the implausibility of the economic impact figures.

An article I wrote titled Stretching Figures Strains Credibility provides more information, including a link to the Center for Economic Development and Business Research study.

The best reason for opposing the AirTran subsidy is that it distorts the market process. The second-best reason to oppose it is the implausibility of the economic impact figures.
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