Backgrounder: The Obama Presidential Center
by T. Norman Van Cott, Ph.D.
As controversy swirls about the forthcoming Obama Presidential Center in Chicago, its builders cite jobs associated with the center as benefits. According to the Obama Foundation, there will be 5,000 jobs during the Center’s construction and 2,500 after it opens. Whatever the job figures turn out to be, they represent costs, not benefits.
Obamaesque puffery about the dispossessed of Chicago filling these jobs aside, those involved in building and maintaining the Center will surely have alternative earning capabilities. This means construction and operation of the Center will entail bidding people away from other jobs. Thus, other things will go unproduced as a consequence of the Center. Foregoing other things is hardly a benefit.
Actually, the fewer jobs associated with the Center’s construction and operation, the more likely the Center is economic. Fewer jobs mean it costs less to construct and operate. It means overall living standards will be higher.
Indeed, in the best of all worlds the Center would magically appear, requiring only kiosks to operate, the kiosks also magically appearing. That way, Americans could enjoy the Center and have the maximum amount other things. What’s wrong with such a scenario? Nothing, except free lunches like this are not part of this world.
The source of the confusion is that those employed in constructing-operating the Center clearly benefit. Lurking behind the scenes, however, are those things that go unproduced as a consequence of the Center. It’s impossible to see things that are not produced. Not so for those working at the Center. So it relatively easy for hucksters for government and other non-profit projects to cast associated jobs as benefits, when in fact jobs represents costs.
It’s true that private, for-profit entrepreneurs also cast new jobs associated with an expansion of their operations as a benefit to the communities where the expansion occurs. I submit that the entrepreneurs are playing upon public ignorance about job counting. You can rest assured that entrepreneurs will opt for lower cost means of expansion — fewer jobs. Their bottom lines depend on it.
It is instructive to point out that Barack Obama was involved in another high-profile example of job counting silliness. Such was the case with the Keystone Pipeline that was to transport oil across a section of South Dakota. Obama refused to permit the project to continue, citing, among other things, that the project did not create many jobs. Of course, this is the very thing that would increase the possibility that the pipeline would be a worthwhile endeavor.
Obama’s GOP opponents insisted that there were lots of jobs associated with the pipeline. For them, this was a reason to permit the pipeline. But lots of jobs mean the project is less likely to be economically productive.
Amusingly, if not so frustrating for economists, Obama’s reason for not approving the pipeline was actually a reason for approving it. And his GOP opponents’ reason for permitting the pipeline was a reason for not permitting it.
Job-counting, regardless of whether it’s a presidential center in Chicago, an oil pipeline in South Dakota or a multitude of other examples is dangerous to our economic health.
T. Norman Van Cott, B.A. MA. and Ph.D. in economics, came to Ball State University in 1977. During the ensuing 38 years he taught a wide variety of courses and published articles in a number of professional journals and public policy outlets. He was also department chair for 15 of those years. His undergraduate degree was earned at Long Beach State College, while his graduate degrees were earned at the University of Washington in Seattle.