Beacon Hill Institute Says Herald Is Attempting to Destroy Its Reputation
The following article is by the Beacon Hill Institute

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The Thomas Keane Affair: In Boston, It's Also the Polemics of Personal Destruction 

     On July 23, 2004, the BostonHerald published a wide-ranging attack on the Beacon Hill Institute ( "Beacon Hill Institute really is in the dark") under the authorship of columnist Thomas Keane, Jr.  The article containing this attack is aimed at research findings by BHI over the last ten years.  The article is an attempt to destroy the reputation of the Institute by presenting a laundry list of allegations impugning its competence and integrity. 
      The author made no effort to contact BHI prior to publication.  Worse, his column, presented in this newspaper as fact, was littered with factual errors.  It appears, as a result, that he made no effort to obtain information readily available through our website, our printed material, media archives, or other sources easily available to him. 

Background

     Why the attack?  This is anyone's guess.  By our count, the Herald has cited BHI in 22 editorials and published 16 BHI opinion editorials since 1991. Over the years, and until now, the Herald has provided what one would consider evenhanded news coverage of our work.
      The only clue about the motivation behind this work is the torrent of publicity BHI has received in recent weeks over its estimates of the economic effects of the national political conventions.  The Keane article evidences some resentment over this publicity and favorably quotes a representative of a city agency that has disputed our estimates regarding the economic impact of the Democratic National Convention. 
      Other than that, we have no idea where the Herald attack came from. This column is a sloppily researched, vindictive article coming, it would seem, out of nowhere.  Whatever its motivation, the Keane piece has inflicted damage to our reputation, and we must now set the record straight.
      His allegations contain just enough references to supposed facts as to make his opinions persuasive irrespective of whether he has the facts right or not. His is a style of journalism in which the goal is to make the whole matter of "facts" a boring, nitpicking distraction from the real agenda, which is to destroy his prey through a recitation of disjointed and unsubstantiated allegations.  His column is an exercise in the polemics of personal destruction. 
      We at the Beacon Hill Institute, however, remain committed to our mission of conducting rigorous research of the kind that has been praised or cited by the Romney Administration, Governor Craig Benson of New Hampshire, Governor Mark Sanford of South Carolina, Governor Bill Owens of Colorado, Governor Ruth Ann Minner of Delaware, as well as by the presumptive Democratic candidate himself, Senator John Kerry.  We remain passionate about informing the policy debate in Massachusetts and the nation by producing and disseminating readable analyses of current policy issues. 
      Indeed, Mr. Keane personifies our worst fear, that opinion leaders and decision makers will make sweeping pronouncements on the issues on the basis of nothing more than uninformed opinion.  His empty attack on our research inspires us both to defend our work and integrity and to redouble our efforts to make such ungrounded statements impossible to put forward.  And we do not wish to hand this author a cheap victory, obtained by his access to an unlimited supply of ink and to his newspaper's willingness to turn itself into a weapon in his personal, unprovoked war against our Institute.
      In the pages that follow, we summarize the most important arguments made by Keane and then follow with our rebuttals.  In some instances we have paraphrased his points for the purpose of brevity, keeping them as close to the original as possible. 

Answers to Keane’s Attack

Keane:  "Some of BHI's work is barely disguised ideology," as evidenced by a 1994 report describing a proposed graduated income tax as taking the "slippery road to serfdom."

BHI:  The phrase comes from Nobel laureate Friedrich Hayek's acclaimed book, The Road to Serfdom, in which Hayek writes about the threat to democracy posed by income-leveling government policies. The book was reproduced in Reader's Digest and is one of the most popular economic writings of all time. We used the title of the book in connection with research we performed on a ballot measure that would have imposed a graduated income tax on Massachusetts.  Apparently, the Herald, which cited our work in several editorials opposing a graduated income tax, and the voters, who turned down the ballot measure by an overwhelming majority, found our research informative.

Keane:  "[BHI] argued in 2002 that eliminating the state income tax would create 300,000 to 500,000 jobs."

BHI:  False.  We never argued anything of the kind.  Here's what happened:  The 2002 state ballot contained a measure that would have abolished the state income tax.  The sponsors of that measure, acting on their own, came up with the estimate in question they said based on our work.  However, we explicitly warned them against using our work to make any estimates about the economic effects of the measure.  We pointed out that anyone attempting to estimate the economic effects of so huge a tax change must proceed with caution and that the economic modeling capability that we had in place at the time was not suited to analyzing this tax change.  (This has since changed, but that is a matter for another day.)  We put all this on the record in the October 20, 2002 issue of The Worcester Telegram & Gazette. 

Keane:  In studying a proposed wind farm in Nantucket sound, BHI "conducted an extraordinarily questionable analysis."

BHI:  False.  In fact, our work was performed with meticulous attention to scientific rigor.  See http://www.beaconhill.org/BHIStudies/Windmills2004/WindFarmArmyCorps.pdf, which is our report to the Army Corps of Engineers on the economic effects of the wind farm. In that report we detail the findings of a survey we conducted of Cape Cod tourists and homeowners, and we provide a cost-benefit analysis of the wind farm project.  Keane tries to smear us by tying the foundation that supported our project to the Bush campaign.  In fact, the wind farm issue cuts across party lines.  Among opponents of the project are Democrats Edward M. Kennedy and William Delahunt. 

Keane:   A questionnaire BHI used to survey Cape opinion on the proposed wind farm was "obviously designed to provoke a negative response."

BHI:  False.  Our questionnaire was designed and administered to the specifications of an independent survey research firm and crafted to be as neutral as possible in soliciting responses from tourists and homeowners.  Details are provided in report to the Army Corps of Engineers, for which we provide a link above.

Keane:  The intended negative response is apparent, in part, because BHI's survey compared "the wind turbines to the size of the Statue of Liberty."   

BHI:  Indeed we did make this comparison.  And that's because it's entirely valid.  The wind turbines would be 417 feet tall.  The Statue of Liberty is 305 feet tall.  Unsurprisingly, the same comparison appears frequently in discussions of the proposed wind farm.  It was, in fact, used by the Herald in a March 10, 2004 article, "Wind farm fans, foes air views," which discussed "concerns with the size and scope of the project, which will feature windmills taller than the Statue of Liberty." At any rate, we solicited responses from interview subjects by showing them scientifically designed renderings of the turbines as they would be seen standing miles away on the beach.  In these renderings, the turbines appear as tiny specks against the horizon.

Keane:  The margin of error in BHI's survey "could effectively undermine" the finding that the wind farm would reduce tourism and that homeowners expected a decline in property values.

BHI:  False.  There is nothing in the survey's margin of error that could undermine this finding.  It is, indeed, Keane who is in error.  Apparently, in misunderstanding the binomial distribution, he thinks that the maximum margin of error in the survey, which is +/-4.38, applies to all responses to the survey.  But that margin of error is applicable only when the proportions are near 50% (as in, "Of the two leading presidential candidates, which do you prefer?").  With respect to the survey issues he addresses – lost tourism and reduced property values resulting from the wind farm –different margins of error apply.  For example, our survey found that 3.2% of tourists would spend less time on Cape Cod if the windmill project were undertaken. This is not a small number; it represents over 60,000 visitors per year.  The reduction in spending associated with this volume of reduced visits would be large. And the applicable margin of error is +/-1.50%:  We can be 95% confident that the true proportion of tourists who would reduce their length of stay on Cape Cod is in the interval 1.7% to 4.7%.  We clarified all this months ago at http://www.solaraccess.com/news/ssm.jsp?storyid=5417&msgid=2216.

Keane:  BHI's survey findings about tourism and land values "became the basis for [its] conclusion that the costs of the wind farm were greater than its benefits."

BHI:  False.  Our report to the Corps of Engineers contains two sections.  The first is our cost-benefit analysis, which had to do with broad societal costs and benefits of the proposed wind farm, and the second is our report on the survey of tourists and homeowners, which had to do with the more immediate issue of the Cape Cod economy.  The cost-benefit analysis in the first section used none of our survey findings about tourism or land values in the second.  (The reason is that, while effects on tourism and land values are important to Cape Cod, they do not enter into the calculation of costs and benefits for the nation as a whole. Again go the link to our report to the Corps of Engineers for further detail.)  However counterintuitive this may seem, we make the distinction clear in our report, as Keane or anyone could see by simply reading the report. 

Keane:  BHI "gave too little credence to benefits such as jobs and a cleaner environment. Most importantly, speculation notwithstanding, land values in fact have not declined when other wind farms have been built elsewhere."  

BHI:  False. The assertion about "too little credence" is his unsupported opinion.  But let's consider his opinions, one at a time:

Jobs: Our report recognizes that jobs would be created, as well as lost, as a result of the project.  (But note that Keane is mistaken in his apparent belief that the jobs issue figures into our cost-benefit analysis.)

Cleaner environment:  We determined that the project would confer $744 million in benefits, of which $108 million would be due to cleaner air, basing our estimate on published research by the Harvard School of Public Health. 

Land values:  In January of this year, a judge in the United Kingdom awarded a family £15,000 ($27,355) [1] in damages, on the grounds that the value of their house would have been 20 percent higher had a wind farm not been located nearby.  The principal difficulty with Keane's argument rests, however, on the fact that there are no offshore wind farms in the United States that could serve as a comparison to the Nantucket Sound project. There are land-based wind farms in the United States, but they are often sited in rural areas that are not remotely comparable to Cape Cod.  Furthermore, these projects pay property taxes and royalties.  In fact, farmers who agree to allow turbines on their property are generally paid $3000-$5000 per turbine each year and continue to use the land around the turbines.   Martinsburg, New York, a town of 1,200, which currently collects only $400,000 per year in property taxes, stands to collect an additional $1.23 million per year in payments in lieu of taxes from a wind farm.  Land owners in the area will collect $1.25 million in lease payments.  It's therefore no surprise that land values don't fall in these instances.  The situation is entirely different on Cape Cod:  Because the Nantucket Sound wind farm would neither pay property taxes to the town nor royalties to homeowners, there is every reason to believe that property values would fall, just as Cape homeowners predict.  

Keane:  BHI's "conclusions about educational reform are belied by consistent improvements in MCAS scores."

BHI:  False. We have always acknowledged that MCAS scores have improved.  But that doesn't affect our finding that such improvement as has occurred is unrelated to increases in state spending. Most research and the state's own arguments in the recent Hancock case support this finding.  Our data show that the principal reason why MCAS scores have improved is the fact that high school seniors must now pass the test in order to graduate.

Keane:  "On March 30, [BHI] released a study claiming the net benefits from the [Democratic] convention would be $121.6 million.  A week later, it released another study saying the net loss would be $12.8 million. BHI had forgotten to include costs – such as disruptions to traffic – in its analysis.  Yet the revised version was equally flawed, with 'costs' (such as the cancellation of a planned Tall Ships visit) wildly inflated."
BHI:  False. We didn't "forget" to include anything.  As part of our ongoing analysis of the economic impacts of both the Democratic and Republican National Conventions, we have chosen to update our analysis as new information about the conventions is revealed, but only when the new information is rock solid in reliability.  The Boston area road closings were announced after our March 30 th analysis was released.  We therefore released an updated analysis on April 13 th, which included the new information indicating a net loss of $12.8 million. We released further updates in May and in June following announcements of additional closings and new security spending.  According to its organizers, the Tall Ships visit would have brought hundreds of thousands of visitors to Boston, as compared to the 35,000 the convention has attracted.

Keane: BHI based its conclusion that the convention would help only 11 percent of Boston businesses on "a survey of 100 businesses near the FleetCenter." This is a mistake because, "The impact of the convention extends throughout the entire metro area."  

BHI:  False. As detailed in our press release, "Our survey included businesses in the North End, the Haymarket and Faneuil Hall district, South Station, Back Bay, Beacon Hill and the South End."  By concentrating our efforts in many Boston neighborhoods, including, but not limited to neighborhoods "near" the FleetCenter, we were able to survey businesses most likely to be affected by the convention. 

Keane:  BHI said that if the voters cut the income tax to 5.0% in 2000, there would be no program cuts even if a recession ensued.
BHI:  In 2000 we didn't know that the state would have to weather a national recession, impelled by a dot-com bust and a terror attack. And our prediction about avoiding program cuts was for a hypothetical recession occurring in 2003, not two years earlier in 2001.  At any rate, with the economic recovery now under way, the state is in a position to reduce the tax to 5% without further service cuts.
Keane:  "Last year BHI claimed people choose to live in communities that tax their residents the least."
BHI:  False.  The whole purpose of our 2003 report was to show how some people choose in live in communities that offer more services while imposing higher taxes, even as others choose to live in communities that impose lower taxes while offering fewer services.  Citing a famous article by economist Charles Tiebout, we said that if people find themselves living in a community where services are poor, "they can move to another community that offers better services and higher taxes."  The premise of the study is that voters choose the communities that best suit their individual preferences, not that they generally prefer either lower or higher taxes. The details are available at http://www.beaconhill.org/NewsLink/NLV74/v7n4PolGeoTaxPreference.html.

Conclusion

     Columnist Thomas Keane has penned a distorted and inaccurate account of BHI research. His article proves that if a newspaper sets the bar low enough, anyone with access to its opinion page can, on a whim, dash off a sloppily-researched attack on anyone he chooses.  The only recourse to a person or research institute thus selected for attack is to set the record straight and put out the facts for all to see. 
      We hope that, through this rebuttal, our readers will have learned something about the Beacon Hill Institute and something about Mr. Keane as well.  And we hope that, in learning the difference, they will see which to believe and which not. 

 

To share your comments please contact David Tuerck at dtuerck@beaconhill.org, Thomas Keane at TomKeane@TomKeane.com, and the Boston Herald editorial page at letterstoeditor@bostonherald.com.