In this memo,
Hopewell's mayor recommends that in order to stimulate the town's economy and
boost tax revenues Hopewell should build a new golf course and resort hotel,
just as the town of Ocean view did two years ago. To support this
recommendation the mayor points out that in Ocean View during the last two
years tourism has increased, new businesses have opened, and tax revenues have
increased by 30%. I find the mayor's argument unconvincing in several important
respects.
First of all,
it is possible that mayor have confused cause with effect respecting the recent
developments in Ocean View. Perhaps Ocean View's construction of a new golf
course and hotel was a response to previous increases in tourism and business
development--increases that have simply continued during the most recent two
years. Since the mayor has failed to account for this possibility, the claim
that Hopewell would boost its economy by also constructing a golf course and
hotel is completely unwarranted.
Secondly, the
mayor fails to account for other possible causes of the trends in Ocean View
during the last two years. The increase in tourism might have been due to improving
economic conditions nationwide, or to unusually pleasant weather in the region.
The new businesses that have opened in Ocean View might have opened there irrespective
of the new golf course and hotel. And, the 30% increase in tax revenues might
have been the result of an increase in tax rates, or the addition of a new type
of municipal tax. Without ruling out theses and other alternative explanations
for the three recent trends in Ocean view, the mayor cannot reasonably infer
based on those trends that Hopewell's economy would benefit by following Ocean
view's example.
Thirdly, even
if the recent trends in Ocean View are attributable to the construction of the
new golf course and hotel there, the mayor assumes too hastily that the golf
course and hotel will continue to benefit that town's overall economy. The
mayor has not accounted for the possibility that increased tourism will begin
to drive residents away during tourist season, or that new business development
will result in the town's losing its appeal as a place to visit or to live. Unless
the mayor can convince me that these scenarios are unlikely I cannot accept the
mayor's recommendation that Hopewell follow Ocean View's example.
Finally, the
mayor's argument rests on the unsubstantiated assumption that Hopewell and
Ocean View are sufficiently alike in ways that might affect the economic impact
of a new golf course and hotel. Hopewell might lack the sort of natural
environment that would attract more tourists and new business of the
town--regardless of its new golf course and hotel. For that matter, perhaps
Hopewell already contains several resort hotels and golf courses that are not
utilized to their capacity. If so, building yet another golf course and hotel
might amount to a misallocation of the town's resources--and actually harm the
town's overall economy.
In sum, the mayor's
recommendation is not well supported. To bolster it the mayor must provide
better evidence that Ocean View's new golf course and hotel--and not some other
phenomenon--has been responsible for boosting Ocean View's economy during the
last two years. To better assess the recommendation I would need to know why
Ocean View decided to construct its new golf course and hotel in the first
place--specifically, what events prior to construction might have prompted that
decision. I would also need to thoroughly compare Hopewell with Ocean
View--especially in terms of their appeal to tourists and businesses-- to
determine whether the same course of action that appears to have boosted Ocean
View's economy would also boost Hopewell's economy.