Consumer and tourist spending
April 15, 2009 – 10:06 pm by JohnOne of the many fallacies I hear people on TV and radio repeat is that anything that increases consumer spending should be lauded because it’s good for the economy. Tourism spending, sports-event-related spending, and the like are presented as being healthy and a great boon to the host city or state’s economy. Well, true, it results in dollars being reallocated from one group of people to another group who live in a different locale. But ever since I was a child, I was skeptical of the virtues of simple tourism- or event-related spending. I remember hearing sports commentators or maybe team executives extol the virtues of a playoff series being hosted in a certain city because it will drive spending in that city during the series because both residents and visitors will come in, buy tickets, buy paraphernalia, stay in hotels, dine out, and “boost the economy” of that city. And I also seem to recall the criminally incompetent commissioner of the NHL, Gary Bettman, bemoaning the NHL lockout because, among other reasons, the absence of consumer spending surrounding hockey games was hurting (or, failing to help) the economies of many NHL cities.
But now that I’ve learned more about economics and understand a little bit about the structure of wealth-creating production in an economy, I realize my skepticism of such consumerism was well founded. I knew that just spending money wouldn’t produce anything new or good or increase the total value in the system. It would just redistribute wealth (or, at least, dollars) from one place to another! I’m proud my childhood instincts were so good, on this matter.
