World Cup in the USA

The group seeking to get the U.S. selected as World Cup hosts in 2018 or 2022 is well-financed and well-connected. It has many official partners, some well-known like Fox Sports, some more obscure, like Latham and Watkins, a law firm. But like most boosters, it is effectively trying to get the nation to host a huge party that the government will wind up paying for.

Here is how the game is played, as summarized by a Freakonomics entry, which summarizes in turn the research of economist Dennis Coates:

As it seems the U.S. is going hellbent for leather trying to land an upcoming World Cup, he wants to get ahead of the cheerleading to make clear how the economics will actually play out. His new paper, “World Cup Economics: What Americans Need to Know about a US World Cup Bid,” is an attempt to challenge “the rosy assumptions being made by U.S. bid leaders, and I hope it will force proponents to be more forthcoming with answers about what we can really expect from a U.S. World Cup.”

Coates’s central claim:

Despite bid organizers’ claims, the World Cup won’t be a boon for the American economy; in fact, it will likely cost the United States billions of dollars in lost economic impact. For example, economic estimates in support of the 1994 U.S. World Cup were later shown by economists to have been off by up to $14 billion. Far from having a positive economic impact, the last World Cup we hosted, a so-called major success, had a negative impact on the average U.S. host city of $712 million. Yet no one is discussing these figures despite the current economic troubles we face. … Few analysts who aren’t in the employ of the event boosters have ever found such events to pay for themselves in a purely dollars and cents view.

The recently completed South Africa World Cup is hardly an exception, with the bulk of the trouble lying in the gap between optimistic projected costs and actual costs:

The proposed budget for the 2010 games was about $225 million for stadiums and $421 million overall. Expenses have far exceeded those numbers. Reported stadium expenses jumped from the planned level of $225 million to $2.13 billion, and overall expenses jumped similarly from $421 million to over $5 billion.

And don’t forget the “ruins of modern Greece” — i.e., the abandoned facilities from the 2004 Summer Olympics in Athens. You think Greece might be feeling a bit of buyer’s remorse about now?

Of course the sponsors benefit. But why does the U.S. allow them to shoulder the rest of us with the costs.

For TLC being 12% Correct is Good Enough

Seven weeks ago, the TLC announced that more than 35,000 taxi drivers had "scammed" passengers on 1.8 million trips for a total of $8.3 million.

Today, the TLC posted revised numbers: Now it's 21,819 taxicab drivers, 286,000 trips and a total of "almost $1.1 million." Industry observers--such as me--immediately noted that the TLC's original claims were impossible to believe. Sure enough, the TLC itself quickly admitted it was not sure what the numbers were. The buffoonish former TLC Chairman Matthew Daus indeed accused the press of jumping the gun, when all the reporters did was repeat the TLC's press release. It's reminds one of the athlete who claimed to be misquoted in his own autobiography.

Today, the new TLC Chairman David Yassky refused to apologize or even admit error for his massive slur on taxi drivers. It admitted today that, by its new accounting, 13,315 out of the 21,819 drivers, engaged in overcharging just one or two times.

The TLC indicates it will seek license revocation for the worst offenders. I suppose the charges, if proved, merit the sanction. Most likely, the TLC will browbeat many drivers into surrendering their licenses, threatening them with huge fines and criminal prosecutions. But the TLC has said it will seek the penalties in Office of Administrative Trials and Hearings, a citywide tribunal, rather than bringing the charges in its kangaroo TLC Court. Of course, the TLC has been very wrong before. The tribunal and the history should, one hopes, give drivers willing to make a defense a fighting chance.

Taxi Gougers

Today the NY Times is running a page one story called

"New York Cabs Gouged Riders Out of Millions"

I really doubt this gouging happened on anything like the scale the TLC suggests. If riders were overcharged on "more than 1.8 million trips," certainly there would have been, say, 1800 actual complaints (that is one out of one THOUSAND fares). But the TLC does not report even a single complaint. (Even in the notorious recent Cheema case, there was NO passenger complaint!) And under TLC rules, even a $10 overcharge merits license revocation. Yet there are few if any actual prosecutions.

Maybe the TLC doesn't know how to read the data. That seems more likely as the agency is staffed by mostly incompetents, including and especially outgoing commissioner Daus.

Also: The math doesn't work at all:

"The scam was primarily perpetrated by a small number of drivers, with 3,000 of them overcharging more than 100 times, the agency said."

3000 x 125 [more than 100] = 375,000

Yet in the very next sentence, the article claims: "1.8 million overcharged trips."

There is a 1.4 million trip disparity!


More troubling is the exchange between the Bhairavi Desai of the Taxi Worker's Alliance [full disclosure I have reperesented the TWA on other issues] and Daus:

The taxi industry vigorously challenged the city's findings, saying it was unimaginable that such a pervasive problem could be the result of deliberate fraud. The city said that 35,558 out of the city's roughly 48,000 drivers had applied the higher rate.

This is clearly a systematic failure on the part of the meters and the technology, said Bhairavi Desai, the executive director of the New York Taxi Workers Alliance, which represents cabbies.

For this to be so widespread --nearly every single driver -- makes no sense, she added.

The taxi commission refused to comment on the alliance's claim, citing its continuing investigation. "We have to sort through the numbers," Mr. Daus said.

If the TLC is still "sorting through" the numbers, why go public?

The TLC is just not a trustworthy source, and the story is basically a rewrite of a TLC release issued late on a Friday afternoon. The Times should really check this stuff out first.