IS SPENDING LESS ON GAMBLING PERMANENT?
Nevada, is essentially a desert with some interesting metals in the ground (hence its name, the “Silver State”). So mining, as in California during the Gold Rush, provided the initial draw for people to come. But then what?
What, in other words, is Nevada’s “comparative advantage”? What was to be the good or service that it could provide more efficiently than any other place?
The answer was legislative: Nevada created its own comparative advantage; it embraced sin. Nevada’s economy today is based on sin. For example, about half of the state’s revenue comes, directly or indirectly, from gambling in the form of casino taxes or the sales taxes of tourists.
Hence the existential crisis: It goes beyond the immediate economic pain (Nevada has the country’s highest unemployment, foreclosure and bankruptcy rates). Nevada “needs easy money and easy virtue. It was not built on frugality but on excess. Nevada’s whole model is now being questioned.
That’s because the rest of the country is in the mood for personal and household austerity, paying down debt, saving, finding simpler pleasures. Slot machines are becoming uncool. Sin, at least in the economically viable way, is out claims the Economist.
Interesting Article.