Questionable economic benefits of Chattanooga’s gig

[Commentary] On June 14 Chattanooga Mayor Andy Berke touted the economic impact of the municipal broadband system in his city. Chattanooga’s fiber system required a $330 million investment, with $105 million coming from federal taxpayers. A sizeable share has also been shouldered by the city’s captive electricity ratepayers. Demonstrating the economic benefits of such massive investments — about $4,400 per customer — is a necessary political task, albeit a tricky one, especially since most Chattanoogans purchase service from private providers in that city.

Upon inspection, the mayor’s claims just don’t add up. Mayor Berke’s lead claim is that the “city’s unemployment rate has dropped to 4.1 percent from 7.8 percent,” over the past three years. Yet, over the same period, the nationwide unemployment rate fell from 7.5 percent to 4.7 percent. In terms of unemployment, Chattanooga isn’t much different than the nation as a whole. Unless the Chattanooga system is having nationwide economic impacts, it’s pretty clear that attributing the unemployment decline to a city broadband network is bogus.

[Dr. George S. Ford is the Chief Economist of the Phoenix Center for Advanced Legal & Economic Public Policy Studies]