Kickstarter For Kiwis

Crowdfunding website Kickstarter is opening up for Kiwis according to the NBR.

I would point you to Lance Wiggs’ recent posts:

In the aftermath of misrepresentation of both Fama and Shiller from journalists and bloggers trying to sell something, here’s something to chew on.

There is no alpha. There is beta we understand, and beta we don’t understand.

I think Kickstarter is good for things like shifting the cost of an America’s Cup campaign from taxpayers and ratepayers to people who watch that stuff. I’m not convinced crowdfunding will be the panacea the economist in me wishes it could be.

If We Host The America’s Cup, Kickstarter Financing Is The Only Responsible Choice

Paul Walker points out that we need to consider the net position – “the net thrills” after potentially hosting the next America’s Cup.

He is writing in response to James over at TVHE who thinks we should focus on the possibility of Kiwis getting a lot of enjoyment from hosting the American’s Cup, which makes it OK.

There may be benefits to hosting such events but those benefits go to a very small group who pay very, very, little of the costs of hosting. The people who make the decisions about hosting don’t pay the bill. That they may well make an inefficient decision is hardly surprising given this.

This is why reporting the views of economists on this stuff is important. It might be mean and party-pooperish, but the reality principle is in play here.

Money is the only thing that matters! The transfer of resources away from Auckland sewer and public transport projects to redeveloping the waterfront to host several cup bases and all of the assorted media facilities is a transfer from the many to the few.

It is money that is going from every single ratepayer and probably every single taxpayer, so that a proportion of people with the free time and energy to toddle down to the waterfront and watch some boats race can do so.

Whilst I get some utility from watching American’s Cup races, that utility does not extend to the point where I’d be happy for my taxes or rates to support another America’s Cup campaign.

If someone tries to tell me a story about how these events are “good for business”, well, I don’t buy it at all. The businesses with the most to gain from hosting clients at such an event are already likely to be highly productive firms capable of supporting an overseas sales team anyway. They’re getting a free lunch on top of their tax deductible ones during the event.

If we host the next America’s Cup, Kickstarter or some other sort of crowd-funding is the only responsible choice. We should be forcing these special interest groups to put their money where their mouth is. I’m sure that a non-trivial proportion of Kiwis would donate to such a campaign. The deal with council and government could be that if you reach $XX million in voluntary contributions, we’ll streamline the resource consents necessary.

That way, a lot of the nonsense around big sporting events turning into expensive boondoggles could be avoided. But remember folks, this is New Zealand, and people capable of thinking clearly about the costs and benefits of how taxpayer money is used are thin on the ground.