The truism, of course, is that Las Vegas is the great exception — a bizarre, completely unrepresentative aberration thankfully isolated in the middle of the Mojave Desert.
And there is plenty of truth to the perception, crystallized in the fantastical, now mostly frozen construction site of the Strip skyline.
And yet, as my group at the Metropolitan Policy Program at the Brookings Institution launches an initiative to deepen our research in the Mountain West, I find myself thinking less about the ways Las Vegas is strange and more about how it is representative, even emblematic, of America’s current predicament.
After all, Las Vegas’ gargantuan problems and its necessary way forward mirror and take to an extreme those of our troubled nation as a whole.
Southern Nevada, for starters, may well stand at ground zero of a national economic crisis made massive by speculation, financial game-playing, and insufficient attention to the fundamentals. No large U.S. metro area has suffered house price declines greater than Las Vegas’ 24 percent slump in the past year. No large metro has a higher concentration of home foreclosures. Gross metropolitan product has declined by 3 percent since its last peak in early 2007. And unemployment now exceeds 13 percent.
In this respect, Vegas exemplifies and exaggerates America’s economic quandary.
Most notably, a growing consensus believes the nation needs to export more goods and professional services, and trade less on consumerism. As Larry Summers, the director of the National Economic Council, said recently, “The rebuilt American economy must be more export-oriented and less consumption-oriented.”
Yet this is potentially disastrous for Las Vegas — just as it is challenging for the nation — because it is massively over-dependent on consumption. Using one group of indicators, for example, we calculate that Las Vegas depends on consumption activities (real estate, construction, eating, drinking and hospitality) for an astonishing 53 percent of its private-sector metropolitan GDP.
Southern Nevada is not alone in its dependency: Orlando relies on consumption for 46 percent of its output, San Diego for 38 percent, Phoenix 34 percent, and so on, with the metropolitan average running to about 27 percent.
That hints how Las Vegas represents only a heightened case of the nation’s broader vulnerability to any long-term increase in the savings rate and consumption pull-back. It also points to the immense challenge the nation faces in returning to a semblance of balance and economic sanity, including through goods exports.
Or to put it another way, Las Vegas epitomizes many of the questions facing the whole nation. Where will the next period of growth come from? How can we build a more sustainable new economic order? How will we use the bad times to change and get better?
As to the answers to those questions, the potential outlines are slowly coming into view, but they will be hard to fill in, whether nationally or in Las Vegas.
Much is fluid, but it seems pretty clear now that the next economy must require reforms and new investments in infrastructure, innovation (especially in energy), education and sustainability. Nationally, a major new partnership between Washington and U.S. metros is necessary to make the most of America’s place in it.
And here again, Las Vegas offers a relevant instance. Too little work aimed at science, technology and energy innovation is going on. The region contends with seriously low education levels and major water sustainability and development challenges. And its potential as a convening hub for major conferences and professional services development is undermined by its woefully deficient highway, rail and transmission grids to move people in and out efficiently.
Yet for all that, the region is groping its way forward, motivated by a degree of fear.
Key leaders are pushing hard for a high-speed rail link to Los Angeles and talking up a true interstate link to Phoenix.
Talk continues about ways to move the region’s convention and visitors economy up the value chain to make the place a true center of higher-value convening and deal-making, with a focus on renewable energy development.
And beyond that, few metros have made more striking efforts to go green. Per-capita water consumption is plunging. The huge CityCenter project on the Strip will open soon as the world’s largest green development project. And no state has shifted faster and farther toward renewable energy than Nevada.
In short, bizarre, heedless and extreme Las Vegas is not solely deviant but also paradigmatic. Like the rest of America, it went too far, and broke down, and now faces the challenge of the “reset” with the beginnings of a new approach. But it had better use these bad times well.
Mark Muro is a fellow at the Brookings Institution and the policy director of the Metropolitan Policy Program there. He is also a research director of the new Brookings Mountain West initiative. The preceding commentary was originally written for Citiwire.net.
"But it had better use these bad times well."
Perhaps more of the same is not the answer?
Vegas is what it is and will never be anything else.
I wish the city luck, but it appears to me that Americas love affair with the place is over, for good.
Working baby boomers and their parents used the place as a short-term stress relief. Retired boomers and their parents will have more free time for cheaper and more satisfying vacations.
Why visit a fake New York, Paris or Venice when you can go see and experience the real thing? And the "real thing" does not have a rigged machine that steals your money.
Another article that states the obvious, wrapped in buzzwords.
Larry Summers, Alan Greenspan, and other neoliberal economists led us into this mess. In fact, it was Rubin, Summers, et al, who promoted a laissez faire market that eventually crashed and burned (See Frontline's "The Warning" about their marginalization of Brooksley Born and the CFTC). The same thinking created the overexpansion, sprawl, and miseducation of Clark County, Nevada. We are the suckers of American exceptionalism and Las Vegas exceptionalism--and planners still don't have a clue.
Alan Greenspan is a Republican, and the first thing he did to support Bush was to lower the Fed Funds Rate to 1 per cent to get us out of the 2000/2001 recession. That got things going as far as the economy but unfortunately it was done on easy credit which led to overvalued real estate and people spending on credit. Our consumer-driven economy was in overdrive and the low unemployment rate looked good but it was all fake. LV will have to deal with the new reality by downsizing to reflect the probable permanent decline in visitors. Nothing wrong with that. Won;t that resolve the illegal immigration problem? If there is no work, won't they go somewhere else in the country for work, maybe even go home? http://www.foxnews.com/story/0,2933,2969...
hmmm...
how many ad pages did the greenspuns sell in "vegas" magazine because of all that growth?
a lot.
did you guys sponsor any "science night at pure" events?
nope.
i find it funny when the very people that helped get us into this situation wax poetic on "we need to diversify".
vegas and pamela anderson seem to have an identical popularity / career arc.
fogcity: You have some excellent points, however, it is short-sighted and disingenuous to just point to Bush alone. This downturn has been cooking longer than that. Remember the repeal of Glass/Steagell (spelling?) by a repub congress and Clinton and what about the Financial Services Modernization Act (same players involved)? These also helped along with the CRA (Carter) and even Johnson's "War on Poverty". Both parties have messed us over and both parties share equal blame. To think otherwise is simply not true and just plain partisan.
Bullet Train ! Bullet Train ! Bullet Train ! Bullet Train! Listen all concerned folks out there about our future here in the valley! The bullet train is going to save us, just as the railroad created this place a hundred years ago! We must do everything with a large loud common united voice to tell the government and private sector that WE WANT THIS NOW!!!! To link Vegas with Los Angeles and Phoenix brings us into the 21st century with a ROAR!!
Yes, I agree that the problem has its roots long before Bush came into office, but I would point to other root causes. First and foremost is when we became a net import of oil. This has been a steady bleed on our wealth. Secondly, is the globalization of our economy. In the 60's Japan was noted for its cheap electronic radios. In the late 70's into the 80's it was Japan's automobiles. American manufacturing companies established maquiladores in Mexico to build appliances and auto parts, etc., etc., and all of these global changes made the American worker with pensions, unemployment insurance, and health care too expensive compared to other countries that do not provide any of these. India and China were pretty much backward until the last 10-15 years and with 3 billion people they can easily exceed us with an educated work force even if that educated work force is a fraction of their population. Its hard to compete with countries that do no provide the things we consider basic such as health care. How can we cut labor costs so we can compete? will the devaluation of the dollar to offset that disadvantage? Not likely. Also, you may havea point about the social agenda our country has implemented. Social Security and Medicare now comprises two thirds of the Federal budget so there is not alot of wiggle room to cut into the budget deficit unless we are willing to cut our senior citizens loose.
Man I am tired of the "Vegas is done" articles by the same people that said that Vegas was done when Atlantic City came along, when the Mirage opened when the midwest got riverboat casinos and when the Indians first got casinos. Vegas will do what it always does, reinvent itself and find an even better nitch.
The USA spends $600,000,000,000 per year importing foreign oil. If the USA went all out for Green Energy that dollar amount would be multiplied to $960,000,000,000. There are 307,000,000 citizens in the USA and their share of that would be $3,127 for every man, woman, and child in the USA. You do the remaining part and multiply that $3,127 times the population of NV. NV needs a diverse economy and "Go Green" should be a large part of that diversity.
This may be a little off topic but I wanted to mention an experience that I had this past weekend. I was in Kansas City for a football game and decided to take advantage of the comped rooms that I could get at Harrahs.
I was absolutely blown away at how crowded the property was for the entire weekend. Machines were hard to come by and the wait time for the buffet was about an hour. The hotel was booked as I overheard several conversations regarding no room availability. I also noticed the other 3 or 4 casinos in the area were equally as busy.
I have to believe that this an example of what is happening all over this country. People are staying local and until Vegas does something to reignite the interest to come back, Vegas may have a long road ahead.
I will also mention that the machines were much more loose than Vegas and unlike our last Vegas trip I wasn't in my back pocket all of the time.
I had a great time. I really hope Vegas wakes up before it is too late.
Fixing the economy is easy. Tax rich people the way they were taxed in the 50s and 60s when the middle class was actually growing.
Use the money, like in the 50s and 60s to build infrastructure-like the interstate highways of the 50s and 60s.
What we need now is a proper electrical grid. High speed rail. Solar and wind power, electric cars and solar power for homes.
And don't forget our roads, sewers and bridges are still disasters.
American needs a lot of work done. Just don't be stupid and higher illegal immigrants to make more profits on these jobs.
Do it right and hired UNIONIZED legal workers.
We need to drill our own oil,stop giving our money to The middle east.
Close our borders.
This is a start of a new begaining.
The problem is that questions like "Where will the next period of growth come from?" keep being asked. The last periods of explosive growth where fraudulent bubbles. You want more of that?
Let's be realistic and stop dreaming of bubbles. The consumer economy is declining because average Americans have no money to spend. On the other hand you have the rich filth that has been stealing money by the billions and who need to be "serviced" in every which way possible.
But our poiticians still love globalism and immigration so there's no light at the end of the tunnel. If you want a sustainable, long term strategy to improve the situation: focus on America's interest first and foremost. Forget about enriching China, accepting all the unprepared folk who can climb over a fence and instead invest in US industry. Put tarrifs of foreign junk so that American product can compete with products made elsewhere by slaves.
Sure, we can create the next bubble: cap-and-trade, or invent the next ulra-complex voodoo shadow financial instruments, but this country cannot take more of these inevitable busts.
once again, moronic liberals thumping that "tax the rich bible" again.
seriously...you spelled "niche" wrong.
maybe YOU are the dumb one.
I like the high-speed rail idea. With Harrahs driving away the customer base with things like 6:5 blackjack we can build the rail system and then let the gamblers with money take the train to california where they will pay better odds on the games. Everybody thinks it's for getting in but it will really be for getting out! If we can't do gaming right at least people will be able to get to the beach quickly.
The American economy is now analogous to living on a credit card.
If someone needs short term cash to tide them over a short period, you can get by with borrowing for a month or so... If you try to borrower for a longer period than that it soon catches up and you either run out of credit or it will end up taking up such a big portion of your income when you do get a job that you become financially strapped and live miserably till you do pay it off.
The American economy is at that point. Collectively, we are between jobs (we no longer make anything) and too many of us are living on government programs (be it unemployment, stimulus funds, bailout, whatever...) That is our collective credit card.
Until we start making something in this country and people start earning wages on products we produce, we are simply going deeper into National Debt.
Someone talked about high speed rail as being a solution. I don't see it. It would help if the people in Phoenix and LA had money to spend. That problem is not solved by high speed rail.
This country needs to put people back to work either through tariffs or business development incentives or something. In the late 1960's, ninety five percent of the clothes worn in the country were made in the USA. Today, five percent are made here. This is true in almost every sector of the economy when it comes to production of goods. Production and sales is the only way out.
Otherwise, we are not going to come out this. In fact, darker days lie ahead.
this is the calm before the storm; no one has faith in the politicians to do anything, so its everyman for himself.
WATER, WATER, WATER, ....
US Senator John McCain stated in Ottawa, Canada's capital city, on June 20, 2008, when asked about water exports from Canada
"water exports will be the defining issue of the 21st century"
The WATER shortages in the American South West and Mexico can only be addressed by massive WATER imports from CANADA -- a project that was canceled due to political corruption in CANADA and, especially BRITISH COLUMBIA, where recently disclosed internal government documents prove the government intentionally violated the FREE TRADE AGREEMENT / NAFTA and the GATT
These documents are now posted online for the first time at
http://www.waterwarcrimes.com
These documents also lend credence to and support the claim for arbitration against CANADA by SUN BELT WATER INC. under Chapter 11 of the NAFTA.
Visit http://www.sunbeltwater.com
The political corruption in Canada surrounding bulk water exports is now emerging in a lawsuit in Canada Federal Courts that the Canadian media refuses to write about.
Seven judges linked to this lawsuit and the water export political corruption suddenly dropped dead as their crimes were exposed and they became a liability to insiders. This is not a novel or fiction but a true story
Visit http://www.waterwarcrimes.com
So, good article. But does it tell us anything new? What is a Brookings Institutions fellow? How much does one get paid? To do what, tell us what we already know?
sorry, folks!
there won't be any fast rail from l.a. to l.v..
i have some cash...
anybody care to sell me their $250k home for
$50k?