No benefit in selling the third runway on its economic benefit
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The third runway - with a cost of HK$136.2 billion, factoring in inflation - would be the city's most expensive single project but the Airport Authority said yesterday it would bring eight times as much in economic benefits over the next 50 years.
SCMP, June 3
Only eight times as much in economic benefits? I figure I can get us 12 times as much with my favourite infrastructure project and it would also be more environmentally friendly.
My favourite project is to build three separate tunnels from the southern tip of Lamma Island all the way to Antarctica (it doesn't matter if they ever get finished) and to do it all with hand tools. Just think of the number of jobs this would create.
To make it environmentally friendly, we shall also revive Hong Kong's shipbuilding industry to build (with hand tools) a number of vessels that will then carry the excavated rock from these tunnels to Antarctica and dump it there. That would constitute yet more job creation.
Oh yes, I forgot. We can't give these vessels fossil-fuel-burning engines. That would be environmentally unfriendly. We shall have to make them sailing ships. That should also please the local maritime lobby. There will be lots of employment for sailors in sailing ships. No, I'm not being silly. The only silly thing here is the economic benefit argument for building a new airport runway.
The idea behind economic benefit is that for every dollar you spend you get a ripple effect of many times that dollar throughout the economy. Thus if I spend HK$10 on an ice cream cone, the ice cream vendor will in turn split that money between paying his rent, ordering more ice cream from his supplier and buying some rice for his dinner.
And then the shop landlord will use the rent payment to help pay for his son's university tuition, the ice cream supplier will order bigger freezers and the rice merchant will buy some fish to go with his own dinner.
And so on. You can keep this chain of payment and expenditure going in circles forever if you want, but economists choose to cut it off after a certain point by saying 'enough is enough'. In the new runway's case our government economists have chosen to cut it off after eight times round the circle.
They then try to confuse you into thinking of this as profit. You invest HK$86.2 billion and you get HK$912 billion back in economic net present value, which is actually more than eight times HK$86.2 billion (oh, well) but is also an even fancier set of words than economic benefit. Wow, we gotta do this. It's a money maker.
But now let's do it with my three tunnels dug by hand from Lamma Island to Antarctica. Not only do we solve our unemployment problems immediately but, as this is labour intensive, we will find more of the money spent in Hong Kong on local shops, local goods and local services.
With the new runway, in contrast, we will spend much more of the money on fancy machinery that we have to buy abroad and on paying top salaries to foreign engineers who know how, when and where to use this fancy machinery.
So between getting full employment with my three tunnels to Antarctica and having more of the money we pay for these tunnels spent in Hong Kong, I reckon that if the new runway get us an eight times multiple in economic benefit then my three tunnels should get us at least 12 times. And if that all begins to sound a little silly, well, it is. Economic benefit is a lame government excuse for spending money when it may otherwise not be justified. Grab your wallet when you hear those words and keep it held tight.
It's all a little odd because there may be a good case for building a new runway. The price tag is much too high, but the project itself is very likely justifiable. Why undermine it, then, with an argument used for projects that cannot be justified on their own merits?
The point about economic benefit is that any time you spend money you create a ripple effect of expenditure throughout the economy, whether you spend it on bubble gum or a new airport runway. But the only way to determine whether we should go ahead with any given project is the straightforward way of asking ourselves whether we really need it and whether we are getting value for money. Economic benefit is just pointless talk to cloud the real issue.