Privatize the CBC? They can’t even do a proper cost-benefit analysis

The Globe and Mail commented today that the CBC published a consultant’s report showing that the broadcaster “has a $3.7 billion economic impact every year, while a privatized version without the parliamentary grant would produce only $1.1 billion in economic activity.”

Can’t these guys even do a proper cost/benefit analysis?

The CBC subsidies, if applied elsewhere or even given back to taxpayers, might well generate economic activity far in excess of the $2.6 billion that the CBC would apparently cease to generate. Until we know how large that alternative benefit might be, it’s not possible to say that subsidizing the CBC is a good use of taxpayers’ money.

The subsidies, incidentally, are $1.1 billion. Here’s the consultant’s report.

Economist Fréderic Bastiat wrote about the “broken window” fallacy in his essay “What Is Seen and What Is Not Seen” 160 years ago. The CBC and its consultants apparently still haven’t heard of it.

6 Responses to “Privatize the CBC? They can’t even do a proper cost-benefit analysis”

  1. CBC Sucks says:

    Why don't we invest a kabillion jillion dollars into the CBC, then get 3 kabillion jillion back?

  2. A Hermit says:

    The idea that we shouldn't be worried about losing a known benefit because there is a possibility of some unknown, unforseeable alternative benfit that might, in some hypothetical scenario take it's place is simply absurd.

    This is another good example of the Libertopian/Austrian school tendency to value ideological thinking over real world data

    • The idea that we shouldn't be worried about losing a known benefit

      Who decides if the CBC is Beneficial? certainly not consumers – or citizens or even taxpayers? You may like the CBC, but what if 95% of Canadian taxpayers don't? Based on "Real world data" methods of mainstream economists, such as the Keynesians and others who are slowly destroying our economies in the west, I would highly doubt that the $3.7 Billion has any meaning at all!

      By your reasoning, every single person in Canada could be employed by the CBC, but you would oppose any cuts because you think that the "unknown, unforseeable alternative benfit(sp)" is not worth pursuing.

      Before China decided to reduce government control of the national economy, certainly there were hardline communists and socialists said exactly the same thing.

      Luckily for the average Chinese person, the dicatorship decided to allow people to pursue "unknown, unforseeable alternative benfit(sp)" and improve their lives.

      Yes, I agree, lets look at the real world data please, and stop professing the ideological belief that more government spending and control is always better.

      Canadian Wheat Board, are you listening?

    • What I also find entertaining Hermit, is that you are defending a report which is simply based on a hypothetical scenario by arguing that Karen is creating a hypothetical scenario. DeLoitte(and the government) has created a fantasy world where they know what the money that would have beeen spent by individuals who were not taxed coercively and they claim that the money being spent by said individuals would not have provided an equal or greater benefit. I would love to have that crystal ball.

      All of government action is based on ideology and Political Decisions…

      Here is an excerpt from the report

      CBC/Radio-Canada 's NV A
      We estimate a NVA of $1.3 billion, after adjusting the GVA for the impact of the counterfactual and
      other wider impacts within the creative sector and a redistribution of CBC/Radio-Canada's
      government funding. This means that the direct government funding of $1.1 billion in 2010 not only
      contributed to the GVA for CBC/Radio-Canada of $3.7 billion, but also created additional value of
      $1.3 billion to the Canadian economy compared to the alternative use of the funding.
      Table 2 below shows the breakdown of CBC/Radio-Canada's GVA and NVA. The estimated NVA
      consists primarily of a "narrow" NVA of $2.5 billion due to the reduction in the scale of spending in
      CBC/Radio-Canada. This is increased by the impact of crowding out of private broadcasters and
      other media that would occur in the counterfactual.llt is substantially reduced by the GVA that
      would arise in the counterfactual from the alternative use of the government funding of CBC/RadioCanada.
      The commercially focused activities of a counterfactual CBC/Radio-Canada would lead to
      crowding out of other private broadcasters and other media.

  3. A Hermit says:

    The idea that we shouldn't be worried about losing a known benefit because there is a possibility of some unknown, unforseeable alternative benfit that might, in some hypothetical scenario take it's place is simply absurd.

    This is another good example of the Libertopian/Austrian school tendency to value ideological thinking over real world data

  4. Dashing Leech says:

    I hope you are joking on this. You seem to have missed something fundamental here about cost/benefit. Let me illustrate with options:

    Option 1: Fund $1.1B to CBC. Generate $3.7B. Net gain = $2.6B.
    Option 2. De-fund CBC and invest the $1.1B into Project X that produces $3.7B + $Y. Net gain = $2.6B + $Y
    Option 3. Fund $1.1B to CBC. Generate $3.7B. Take $1.1B of the $2.6B gain and invest in Project X. Net gain = $2.6B – $1.1B + $2.6B + $Y = $4.1B +$Y.

    From a cost/benefit POV it doesn't matter if there is another option to invest the $1.1B. If it is a net economic generator then it more than pays for itself, and anywhere else you'd put that $1.1B can be done from the net gain and still have more than by not funding the CBC.

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