Atlantic City should have prospered when it legalized gambling in 1976. Yet today many of its casinos have closed or are struggling. This wasn’t supposed to happen. Urbanism blog Granola Shotgun (great name!) ponders what went wrong and what their faulty assumptions were. Meanwhile, Vegas, where we live now, just keeps reinventing itself. It’s now the biggest convention city in the US, is family friendly, with world-class food and entertainment.
Using Atlantic City as an example, these four assumptions apply to many other cities too.
Number One on the list goes like this. “Bring in lots of good paying jobs and the neighborhood will blossom.” Not so much.
So if you were to visit Atlantic City today you’d see the triumph of nearly four decades of accumulated wealth and a thriving middle class, right? No. The place is still a slum. Mind you, it’s a slum with a lot of very flashy casinos and resorts hot glued to the beach like a complete set of Lee Press On Nails all polished in garish colors. But step outside the multi-story parking garages (something that is exceptionally hard to do, by the way) and you’ll see blight, abandonment, and despair in all directions. Why? Because the people who were best able to take advantage of those jobs immediately carried their pay checks out of town and bought homes in other places. Left behind are the hard cases that are apparently permanently unemployable.
This sounds a lot like Hartford CT, near where I grew up, a decaying city surrounded by mostly prosperous suburbs. Vegas has a geographical advantage over Atlantic City on this. There are no outlying suburbs to live in. Once you get past Vegas and adjoining Henderson, there’s nothing but desert that can’t be built up because it’s BLM land. Money stays in the Vegas area because it has to.
Number Two on the list. “Induce new commercial activity to bring in sales tax revenue.” This doesn’t work either.
Big surprise. Crumbling old schools were abandoned, replaced with ticky-tacky trailer schools, while too much tax revenue went to constantly maintaining beaches so casino visitors would not be inconvenienced by too little or too much sand. Naturally the casinos paid for none of this directly.
Number Three on the list goes something like this. “If we invest in infrastructure the town will thrive.” No. Not even close.
New roads were built to shuttle tourists to new casinos in the area when downtown existing casinos faltered in the 1990’s, a victim of Vegas reinventing itself and new casinos appearing on the east coast. The roads isolated the city even further, leading to more decay.
Number Four on the list might go like this. “Provide financial assistance to your home industries to help them set deep roots and ride out the rough spots.” Oh God, no.
Handing out subsidies, tax breaks, cheap loans, and zoning exceptions won’t help businesses that would have failed anyway and puts more burden on surviving companies. Yet large established nationwide chains like Wal-Mart, Starbucks, Costco  routinely ask for and get special deals.
Each and every one of these places routinely asks for, and receives, heavy subsidies by local governments as part of “business friendly” “economic development” policies which are designed to encourage employment, generate sales tax revenue, and cultivate economic growth. It’s exactly the same set of arrangements with precisely the same eventual results as Atlantic City. Some towns do it with more flash and fail more spectacularly. But it’s all the same.
What does actually work to build durable long term wealth in a community? That’s a topic of another blog post.
I’m looking forward to it.