Conventional Thinking: Stop Pinning all Your City’s Hopes on Big Projects and Events

I moved away from my adopted hometown of Milwaukee, Wisconsin two years ago, and for most of the time since I left, there’s been one big story brewing across the city: the Democratic National Convention is coming to Milwaukee!

The “Fiserv Forum” is (was?) going to serve as home base for August’s Democratic National Convention. Image source.

It was heralded as an exciting step for a city that definitely falls in the “up-and-coming” category. New hotels were built to accommodate the anticipated influx of 50,000 visitors. Restaurants and bars geared up for a big week of business. And the brand new “Fiserv Forum” basketball arena seemed like an even more justified expenditure, as it would serve as the home base for the convention. The city has been gearing up for this massive event for months, laying out security plans (with a request for $50 million in federal funding to pay for them), and preparing for transportation challenges (how will we ever handle this much traffic?!?).

The number $200 million has been repeatedly floated as the anticipated economic gain from this convention for the city of Milwaukee. (Interestingly I have yet to find a clear accounting of how someone came up with that number…)

Big Risks Have Big Downsides

But then the coronavirus happened and everything changed. The most recent announcement from the DNC postpones the event by a month, from July to August. But the reality is that no one quite knows what will happen yet, and there is plenty of speculation that the event might move online completely. Whatever the ultimate decision, we can be sure that the convention will not be the 50,000-person hoopla that was initially planned for.

I don’t blame the city of Milwaukee for getting excited about this opportunity and devoting so many resources to it. This response to opportunity is to be expected in most communities: A chance comes along to put together something big—with a big promised payout for the town—and community leaders jump on it. Yes, there will be costs and sacrifices, but in the end, that huge predicted economic gain will make it all worth it, they say.

But the result of putting all your eggs in one basket is also, unfortunately, to be expected: things often don’t go as planned. Of course, none of us could have fully predicted a disruption of this scale and I would not advocate that we build a world around preparing for absolute worst-case scenarios. But the lesson still stands: If you make big investments and big promises based on an imaginary “economic growth” number, you’re probably going to be disappointed.

And not only that, but you have leveraged a good deal of your community’s time and money for a shot in the dark. The convention is slated to last a mere four days, and for that the city has constructed new buildings, halted other projects, and devoted countless police hours—not to mention the private donors who have chipped in tens of millions to support the event.

The Fallacy of Economic Projections

Wisconsin-based research nonprofit, the Badger Institute, did some investigating into previous predictions about the economic impact of DNC conventions:

When the 2016 convention was pitched to Philadelphians, organizers predicted it would have a $350 million economic impact on the region. After they secured the convention, they dropped the estimate to $270 million. The final tally was even lower—$230.9 million, the Philadelphia Convention and Visitors Bureau reported.

In 2012, organizers of the Democratic convention in Charlotte, North Carolina, predicted an economic impact of up to $200 million. The actual benefit was $163 million, according to a city-funded study after the event.

Again and again, towns and cities are fed imaginary numbers about the economic benefits of shiny, new project.  And again and again, those numbers are proven false.

Even with the uncertainty in the world right now, earlier this month the mayor of Milwaukee was still doubling down on pipe-dreams about the economic impact of the convention. Local news outlet Urban Milwaukee quotes Mayor Tom Barrett as saying, “I hope this will serve as a very, very important shot in the arm for our businesses.”  Along those same lines, a few weeks ago, in an interview with the Milwaukee Business Journal, Milwaukee consultant Buddy Julius said, “The convention is exactly what will keep businesses living. It will re-install a market economy.”

“Again and again, towns and cities are fed imaginary numbers about the economic benefits of shiny, new project.  And again and again, those numbers are proven false.”

This is not the first time Wisconsin has gone all-in on a huge project with big risk and low returns: See Foxconn and the aforementioned Fiserv Forum. How I wish they had learned from these mistakes.

Choosing Small Bets

As someone who cares about Milwaukee, I am angry. Not just that city government went all-in on this convention, but that they led local businesses down this risky path with them. Restaurants, breweries, event venues, local transportation companies…that $200 million economic impact was supposed to be spread out to business owners and organizations across the city, and they were gearing up for it.  Now it might not happen at all.

No one could have fully prepared for the large-scale impacts of this pandemic. But we can prepare our towns to be antifragile for the future. We do this by making small bets and incremental investments—not reorienting an entire city around a four-day event.

When we can start reopening local businesses and gathering with our neighbors again, it is going to be our small-scale efforts that will create the building blocks for economic prosperity—not waiting for the next huge event to come through and save us.

Top image via Flickr.

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