Today's NY Times includes "The LeBron Stimulus ... King James may resurrect a basketball team, but can he save a city too?" To be sure, any shock ("stimulus") redirects expenditures and thereby reallocates resources. But there is less than meets the eye because this does not necessarily amount to new wealth.
Fans and others who choose to redirect their personal spending are by definition better off. But new sports facilities built via edict (city hall crony-boosterism) also redirects spending but increased welfare is by no means assured. Similar misunderstandings surround practically all discussions of government stimulus. Redirection is among sectors as well as places.
The biggest error is the one that sees war (even WW II) as a great economic booster. Does anyone need to be reminded that wars are great destroyers? War efforts can prompt new technological achievements which can add to wealth. But one has to ask: at what cost? It's the old Econ 101 question that must be attached to all "good ideas" and associated policies
This brings us back to Cleveland and LeBron James. Can anyone point to new productivity? Do basketball-energized Clevelanders work smarter and harder? Does capital and labor that may stream towards northeast Ohio work better and smarter in its new setting? The Times piece evokes Keynes' "animal spirits" and suggests that "mood matters." But we do not know. Microsoft in Seattle was a source of great innovation. Would Microsoft in Portland instead have been any less innovative? New ideas are embedded in new capital but to what extent does this apply to re-directed labor and capital? Unless we have strong reason to suppose otherwise, re-direction is zero-sum; politicized re-direction is probably negative-sum.