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By J. Patrick Coolican (contact) 
Friday, Jan. 1, 2010 | 2 a.m.
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Sun Coverage
Sun Archives
- 2010 – The Decade Ahead (12-28-2009)
- Nevada's Top 10 political stories of the decade (12-20-2009)
For Las Vegas, the end of the 2000s has been the equivalent of the housekeeper walking into a Strip hotel suite midmorning, cranking some Christian rock, and then Tasing the bedridden guest who is nursing a bad hangover.
A painful awakening.
The decade began like any boozy party, with backslapping and uproarious laughter following lots of new jobs, climbing wages and rapid building all over the Las Vegas Valley. But it has ended with heartache and headache: historic unemployment, property values sunk back to 2000 levels and skyrocketing bankruptcies.
The Sun asked a few local elites what lessons should be learned.
Insanity: Doing the same thing over again and expecting a different result
This may seem circular, but what is the first lesson to learn? Learn your lesson, and move on.
“Lesson One is we can’t go forward the way we lived in the past, which was catch-as-catch-can and everything will work out,” says Billy Vassiliadis, CEO of R&R Partners, the advertising and public affairs firm.
Jim Russell, a geographer and Colorado redevelopment consultant who writes about the struggles of Rust Belt cities on his blog Burgh Diaspora, says the lesson Las Vegas can learn from faded industrial cities is: “There isn’t any quick fix. There isn’t any way to recapture the glory. The sooner you put the past behind you, the better.”
Vassiliadis adds: “The economic fantasy of the past 20 years is over. Smart, gutsy, dedicated people need to get together and make decisions.”
What he means is that there was a way of doing things in Nevada for a long time: Lean on gaming and growth and development; spend what’s available to prop up ailing schools, hospitals and social services; tell people to mostly fend for themselves; let the chips fall where they may.
So if that’s not the plan anymore, now what?
Payday loan centers and tattoo parlors don’t count as economic diversity
“We have to stop talking about diversifying our economy and actually accomplish it,” Assembly Speaker Barbara Buckley says. “There’s been lots of discussion but never has the point been made clearer these past few years that gaming is not recession-proof.”
Here’s an economy that never diversified, despite endless warnings: Detroit.
Mark Muro of the Brookings Institution echoes the late UNLV economist Keith Schwer when he says we’re too dependent on consumption. More than half of our metro gross domestic product comes from consumption — gambling, strip clubs, food and beverage, hotel rooms. The only other metro area in the country that comes close is Orlando, Fla.
“The consumption formula, based on historically low savings rates, is a dangerous source of economic energy going forward,” Muro says.
We need to leverage our expertise and resources in travel, tourism and convening, while also expanding our presence in clean energy, so that we’re exporting both energy and expertise and less reliant on plain old consumption, Muro says.
So, how do we do this?
Education, education
It’s no mystery. As Republican state Sen. Randolph Townsend says, “Without an intensely educated workforce in the areas we can be best in, we will never be the state we’re capable of being.”
This doesn’t mean trying to turn UNLV into Harvard, or even Berkeley, he says. Just focusing on our potential — like we already have with hotel management — and could do with health care and water and energy research.
Better schools will have another salutary effect, says former state Sen. Warren Hardy, now a Republican lobbyist. Improved schools will bring companies that need an educated workforce, leading to still more educated people moving here. “Taxes are low on the list of what good companies look for when they decide to relocate. They want quality education, health care, culture. And we’re behind the curve,” he says.
The debate about how to improve schools is complicated, but one thing is clear, according to Republicans such as Hardy and Townsend, and Democrats such as Vassiliadis and Buckley: We need a more stable tax structure that provides more revenue, and improved accountability measures.
Spin the wheel and around she goes — hope for the best, kids
The state’s tax structure depends heavily on gaming and tourism as well as the now-dormant growth and development industries.
“We built tax policy around the boom. That’s not very smart,” Hardy says.
Townsend concurs: “It’s obvious to everyone no matter where you are on the political spectrum that the tax structure we currently have is no longer a functioning mechanism to fund the tremendous demands of schools, social services and corrections.”
Unfortunately, Nevada is in a bit of a vicious circle. We can’t diversify the economy without better schools. We can’t improve the schools without some new money from a diversified tax base. But there won’t be new money until we diversify the economy.
The end and the beginning of libertarianism
Libertarianism was an important catalyst of Nevada’s development. Quickie divorces and gambling helped Nevada through the Depression, and low taxes and a light regulatory touch have attracted businesses and residents ever since.
Over time, that libertarianism has become more like a child’s security blanket — part of our identity, addictive, but in the face of some pretty big market and regulatory failures during the past three years, useless.
“If you have reasonable regulations in key industries, it prevents chaos,” Buckley says. She cites a legislative audit that found lax regulation of the mortgage lending industry, which could have contributed to the housing meltdown.
Others have suggested, however, that a new libertarianism could help Nevada through its current troubles. California and Colorado, for instance, are quickly becoming known for their de facto decriminalization of marijuana possession. Doing so here could attract pot-loving tourists.
Quality over quantity
“Over time we’ve pursued a policy of ‘Let’s chase growth at all costs.’ All growth was good, and in retrospect, we should have been more selective about how we grew and who we attracted here,” says Thom Reilly, former Clark County manager and now a vice president at Harrah’s.
For Reilly, this means attracting companies that pay good wages and benefits and are solid corporate citizens.
He says we attracted low-skill, low-wage American and foreign-born workers, many of them disconnected from network of family and social support. So, once the recession hit, they leaned hard on nonprofit groups and government, which were threadbare to begin with.
This glut of unskilled workers also made us more vulnerable to the recession. The unemployment rate is 10 percentage points lower for Americans with college degrees. Las Vegas has one of the lowest percentages of college-educated citizenries in the country.
“You want a balance,” Reilly says.
Russell, the geographer and Burgh Diaspora blogger, says rapid growth masks hidden problems.
“An influx of migrants makes policymakers lazy. If you screw up, the growing numbers of people will hide your mistake,” he says.
The kids like the trains
Reilly says not developing light rail during the past decade, unlike, say, Phoenix and Seattle, will have long-term negative consequences. That failure prohibits us from developing a more diverse settlement pattern of transit-oriented retail and residential development.
The educated segments of Generations X and Y grew up in the suburbs, and many of them now hate the ’burbs and want to live in urban environments, at least until they have kids. (Which is later in life than any generation in history.)
The evidence? Urban property values are rising relative to suburban property values.
As University of Michigan urban planning scholar Christopher Leinberger noted in The Atlantic last year: “Urban residential neighborhood space goes for 40 percent to 200 percent more than traditional suburban space in areas as diverse as New York City; Portland, Ore.; Seattle; and Washington, D.C.”
Without light rail or some kind of viable transit, we’re an auto city. Which really means we’re a giant suburb, with some casinos. That will make attracting certain kinds of residents more difficult.
Reilly contrasted our failure in this area with Arizona, which built a downtown campus for Arizona State University in urban Phoenix and connected it to the Tempe campus with light rail.
Muro of Brookings raises another transportation issue: The failure to better connect Las Vegas to both Phoenix and Los Angeles, and for that matter, Salt Lake City and Denver, has been a colossal failure. An interstate to Phoenix and high-speed rail to Southern California would help move tourists here and back. But it would also build commercial links to those cities, enticing companies to set up shop here.
Pull a Reagan and crush the local government unions
Local government employees, especially the unionized ones, have won impressive wages and benefits because of favorable collective bargaining rules, a state Legislature uninterested in messing with those rules and local elected officials who make a career of kowtowing to those unions.
Reilly, who dealt with the local unions for years at Clark County and watched helplessly as their salaries increased in the good times, says it’s time to roll back these costs to preserve needed services.
According to data compiled and analyzed by the Sun last year, the average firefighter in Nevada makes nearly $95,000, or 48 percent more than the national average. The average salary of a Clark County firefighter is $128,026, according to recent figures. Local police officers make nearly $79,000, or 30 percent more than the national average.
The salary levels create a tremendous burden on local government, especially during a downturn with no end in sight. The upshot is that layoffs of police, firefighters and other local government employees are inevitable.
“This means less services for people who need them,” Reilly says.
Save, save, save
“Debt is bad,” says Bill Robinson, a UNLV economist.
Our biggest gaming companies, including MGM Mirage and Station Casinos, took on massive debt, which nearly prevented MGM from opening CityCenter and pushed Station into bankruptcy. The result has been layoffs and real suffering for untold thousands.
Our own residents, meanwhile, were also in over their heads. This debt binge was a nationwide epidemic, but it seemed to find a special home here.
We all need to live like our grandparents taught us.
Bigger is not better
Robinson thinks we would be better off with many more small tourism companies as opposed to the rapid consolidation that consumed the industry in the past. Steve Wynn has voiced agreement.
Smaller companies, Robinson says, are more nimble, entrepreneurial and innovative, and often less weighed down with debt. (Although small companies borrowed too much, as well in recent years.)
Again, think of Detroit: One dominant industry, dominated by three massive companies.
Perhaps before Nevada regulators meet to rubber-stamp another merger, they might take a trip to Detroit.
•••
Can we do it? Can we learn from our errors?
Robinson is skeptical, even fatalistic.
“Have we ultimately learned the lessons? Only the next decade will tell. And my judgment is, of course we haven’t learned them.”
"...cranking some Christian rock..."??
Black Sabbath's "Paranoid" would be far more appropriate.
Hindsight, of course is 20/20. If we don't correct these mistakes, we won't deserve to go forward.
Libertarianism exists in third world hell holes like Hatti, precision pristine places to live, like Switzerland, have laws, codes and guidelines. Deport the Vins to Hatti for "Education."
HATE Talk radio with its lies and hypocrisy should be reduced and regulated. Dittoheads should be shunned.
Police and government agencies should be consolidated.
Poluting Patrol cars should be replaced with foot patrols.
Growth should be controled.
Throw out the Liberals in our government! Democrat policies led to economical messes.
Thank you President Hoover.
Las Vegas is based on spending money.
A local hate-talk station runs a syndicated "financial" show out of TN. The hayseed host is against gambling and spending money. He says all people should stay home and eat beans and rice until their debts are paid and their houses are paid-off.
Why would any local business, restaurant, casino, store, want to try and promote their business on a station that tells people not to spend money?
The same can be said about U S Chamber of Commerce running these dome and gloom anti-Obama heathcare reform ads. If things are so bad, then don't expect people to buy things that your members market and produce.
While people should save and invest more, media outlets that tell people the sky is falling because of Obama should be shunned.
8 of last 9 recessions started with Republican presidents in the White House.
80% of the national debt is from Reagan, HW Bush, and W Bush. The debt DOUBLED while W was in office. 12 of 20 years with those three, Republicans controlled Congress as well.
How are the Democrats the bad guys?
#1 They're politicians
#2 Look at the Health Care Reform bill written by them behind closed doors.
Wow - one minute they write they have to 'correct their errors', and then they suggest attracting 'pot-smoking tourists'........
Sounds like we'll just go around in circles again - trying to cater to the 'wild and wooly crowd' (residents and tourists) with that kind of thinking.
I smell a rise in taxes and even a potential state income tax on the horizon because 'the devil made us do it'.
When in trouble, tax the people - in this case, tighten up the gambling machines, and rob from anyone who is greedy enough to keep pumping coins into the spinning toilet-reels.
It's the entire mind-set of Las Vegas to start with; it's what once worked when organized crime was what put this spot in the desert to start with.
It will be hard for most of these politicians and 'big-business' people to recognize what it takes to build a diverse base for sound revenue when they've had little experience in actually producing product and services, and not simply expanded on the wanton activities and vices of millions who treat this state, like a place to party heartily, and vomit on the sidewalks with no regard or responsibility for their actions.
Las Vegas offered itself as a whore and prostitute to the world, and so she will die a hard death.........
mred makes a funny point about Dave Ramsey, a conservative evangelical radio guy who teaches getting rid of all debt, except for, maybe, a small mortgage, through "Financial Peace". He's made a small fortune doing this, and is actually interesting to listen to. He appeals to the folks with a 50G dually parked outside their mobile home, who thought it was OK to have a $750 a month rent and a $600 a month truck payment. He is popular with people in states like Tennessee or Texas, the slave states.
But I guess we'd better start listening. We fell into the "easy money" trap, too, and look at us today. Don't like the religious crap attached to it, however. Remember, the pastor wants to get to your heart so he can get to your wallet...
Nevada lacks the leadership and the maturity to become anything more than a third rate country. Certainly not smart enough to be retained as a state of the Union. It's been stupid long enough to think it knows what's smart and to condemn the rest of the world as "dumb." I'm leaving Nevada. And I probably won't even bother to follow Nevada's rocky plunge into historical insignificance.
From: How to fix Nevada, by David Curtis
1. Immediate mixed-use zone established for all of Central Valley, allowing joint commercial/residential use throughout. (What I am talking about would be work/live in all of the existing buildings. 20% of which are currently vacant.)
2. Serious consideration given to Dave Hickey's 3-shift Company School idea to educate the heavily damaged middle class. Private schools doubling as daycare for the workers children.
3. Abandonment of standardized testing for entrance into professions. Replaced by rotating peer review panels that sit with professional candidates to evaluate their work samples and grant provisional licenses.
4. The Federal money that is already allocated to Nevada for "weatherization" to be immediately used for low interest loans to micro-businesses and sole proprietors. The candidates reviewed by peer panels.
5. Legalize Cannabis and tax it.
I hope the tabloids continue to report on events. They broke news related to Ensign and Woods, and Sanford.
I think there is more to the Limpbaugh story. Is this Munchhausen Syndrome by Proxy? Even his "golfing buddies" dumped him like yesterday's garbage when the NFL deal started to fall through. Enquiring minds want to know.
Maybe he was afraid to take his pills? Remember how he was stopped with the "blue pills" on his Dominican Republic junket? So in Hawaii and running low on pills? Withdrawal time? I hope he's screened coming back to the mainland.
Here's an idea..what if we pulled a "Reagan" and let all these "service people" go - government employees as well, like he did with the air traffic controllers and then re-interviewed and hired in at lower costs like the rest of the country? May the best person - QUALIFIED for the job win. Sorry unions, you loose..I'll bet there's plenty of qualified people out of work who would move here or even already live here. Hell we could pay them to move here and still save money from the $128k these people are making now. A $128k firefighter makes more than some CEO's in parts of the world or even the US..Something is wrong with that.
As for the train, it could work if we could have companies move here where people could commute even from LA and again bring tourism - whoops there we go again, a one horse town... People are tired of sitting in their car for an hour an a half to travel to their job in what should be 20 minutes in LA. If companies were here, people that are out of work in LA sure would come here to look for a job - commute or not..get them here and then they could move here, as long as we had steady employment from companies OUTSIDE the tourism industry.
And since we have all these hotels and restaurants here, what if we started a REAL school to educate people on how to run a hotel or restaurant. Great training and all then we would be known for something else besides, hookers, booze and parties. There's a school in Midland, MI - in the middle of no where - Northwood University, a business school that teaches a broad range of business subjects like hotel, restaurant, fashion, etc. They are supported by the biggest companies in America like DOW Chemical, All the auto manufacturers, etc, and yet the biggest hotel in town for example is a holiday inn express. Their other courses from fashion, etc are well respected, and again, they are in the middle of no where. You mean to tell me we couldnt do something like this? Come on Las Vegas !!! Look at any ads for employment by our hotel business..they all want 3 yrs background in a hotel industry..why can't WE train these people. An my appologies to anyone with NO education or can't speak english - you'll need to go back to school and learn something besides turning tricks or having the oath of citizenship translated for you.
reallyoldvegas obviously flunked his civics class.
the executive branch CANNOT spend a dime, it is the legislative branch that controls the purse strings.
milfy2001,
Passed with flying colors.
1. Executive submits budget. Add up 8 budgets submitted by Reagan and what Congress actually spent. Guess what? Congress appropriated LESS!
2. 12 of 20 years (Ron, HW, W) REPUBLICANS controlled the legislative and executive branches!
3. Ever heard of a VETO?
I am quite aware that I haven't lived in Nevada very long, just a frequent visitor for the past 40 years. The first problem I did identify upon moving here was transportation. It is so bad it is laughable. Now I understand that education here is lacking and that is understandable as 30% of the population here doesn't even speak the national language. You don't have to even live in Nevada to be aware that your politicians are sub-standard. After reading the Sun for awhile and the bloggers I sense that the Republicans here are dumber than elsewhere. Now I understand why you elect strange fellows like H.R. I realize I am not being very polite tonight but I'm so fed up with the stupid remarks from the right wingers on this blog that have nothing to contribute but how bad the health care bill is, hell, absolutely none of them have read it because it hasn't even been vetted yet. The problems here are huge and the solution will be difficult at best but we have only one way to go and that is. So rather than bad mouthing the past, let us start discussing what we can do to make the future brighter!
Ah, the comment section. Why don't they turn ot off?
Burrittobandit2 It is a slang term you d-head and I wouldn't waste my time explaining it to you and I don't recall mentioning the term, Republican.