From Permanent Austerity to Post-Industry: Thoughts on Nevada's future.

Nevada was barely a state under Fordism, the population of the whole state in 1970 was 496,960, yet the state and in particular Las Vegas became the promised land of Neoliberalism. In Las Vegas work was plentiful and housing was cheap, booms in profits were matched with booms in standards of living, and all this happened with a tiny state presence. Sure Las Vegas was dominated by three industries – gambling, construction, and realty – but no one saw any reason to worry. By 2008 the state population had reached 2,738,733 with 72% of those people living in Las Vegas.

The house of cards collapsed with the rest of the global economy. Tourism declined, heavily leveraged construction projects ground to a halt, housing prices plummeted, workers were laid off, people defaulted on their mortgages, and 15,000 people left the city. I’ll try and make a more detailed analysis how this crisis unfolded in a later post but suffice to say, it’s bad.

Now three years into the crisis folks are beginning to ask what’s next for Nevada. A recent Economist article (“Rolling the Dice” January 7th, 2012, pg. 28) profiled some recent steps taken by the new governor of the state, Brian Sandoval. His main drive is to diversify the Nevada economy, to bring in tech business, medical services, warehouses among other things. In a nutshell he wants to bring the post-insdustrial dream to Nevada. But is this possible? Can growth be restarted in Nevada with call centers?

Let’s focus on the capital already there. Nevada has two main industries, gambling (with which we might include a cluster of vice industries) and mining. For much of the 20th century Nevada was the only possible home for both of these. Mining still can’t leave since Nevada is home to the US’s largest gold reserves, but things are changing for gambling. In the last three years several states have become more open to gambling, many including Ohio and Maryland legalizing Las Vegas-style resort casinos. These new casinos will have a slightly different clientele make-up but the effect will be a striking shake-up in the geography of the industry. A casino is rural Ohio won't draw the high rollers, but it will more efficiently reap the diminishing “disposable” incomes of America’s working class. The high rollers will still go to Las Vegas to some extent but many, especially those outside of the US and Europe, will go to the new gambling centers of Macau and Singapore. Frankly, if I were a high roller I’d pick these new spots since they're new and not designed to appeal to the riff-raff like Las Vegas casinos are.

What’s more there’s little market pressure to preserve the current geographic configuration. Outside of Indian Reservation gaming, the industry is pretty well consolidated into five companies, most of which have their fingers in Vegas, East Asia, and the emerging smaller US markets. All of this is adding up to a doomsday proposition for Las Vegas on the scale of Detroit in the 1970s.

So we’re looking ahead to potential massive capital flight from one of Nevada’s main industries. Let’s talk about prospects for attracting industries and other forms of capital. The Economist article notes a major obstacle to this when it states that Nevada “produces too few knowledge workers to attract gee whizz industries. It also does too little research on its campuses to seed start-up companies.” One could add to this infrastructure – the American Society of Civil Engineers gave Nevada a C in 2007 – and resources, seeing as it’s basically a giant desert and relies on Lake Mead, which it shares with Los Angeles and whose water levels dropped 115ft between 2000 and 2010. The reason for many of these issues is simple: Nevada has been a libertarian paradise since its creation.

Nevada has no corporate or personal income tax. In 2004 Nevada ranked 48th in per capita state government expenditure with $3,723.13, whereas California (ranked 10) was at $5,686.48. Nevada already has low public spending on most of the core social services that are being attacked in other states. In fact Nevada has capped the percentage of taxes on net proceeds in the mining industry. That cap is now 5 percent, meaning that the state has created tax incentives to stay in Nevada for the one industry that cannot actually leave the state. Nevada and the city of Las Vegas should be rich public entities, given that for most of its boom the major industries were geographically handcuffed. But they’re not because the wild-west libertarian spirit has meant a voluntary and permanent austerity that has only been mitigated by heavy unionization to push wages up.

This means that the Nevada economy is remarkably inflexible. There is little expertise outside of gaming/hospitality, mining, and military developments, and underfunded educational institutions block any change in this. Add the weak infrastructure inhibiting aggregation effects, i.e. efficiencies in things being closer, so much of Las Vegas is tailor-made for the casinos and little else, and Nevada doesn’t look like a very good place to pump capital into.

You don’t have to be a devout Keynesian to see that there’s a lot of stuff that would require investment before there could be a meaningful basis for growth: schools, better public transit, better cargo transport, better water usage and supply, etc. But the casino or mining companies have no interest in directly funding or planning this kind of thing and the industries Nevada is trying to court have no incentive to do it. Under a regime of permanent austerity the only source of capital left, the state, just doesn’t have the funds to do it. It means weird things happen like conservative lobbyists asking for tax increases.

So Nevada faces a timely issue. The existing regime of accumulation has failed and capital has begun to leave it behind. At the same time there is no viable source besides the state to provide the necessary alterations to the objective conditions for accumulation, and the political climate makes it almost impossible to imagine big publicly funded projects. Sounds familiar, right? Economic deadlock, matched with equal political deadlock. How to square that circle? I never thought I’d say it, but I think Nevada is pretty important right now.

So will Nevada be able to diversify its economy? Will Tony Hsheih save Las Vegas? It’s still unclear but we can now refine the question. What kinds of alterations of the objective conditions for accumulation would actually work? Are server farms and call centers enough to make Las Vegas become Minneapolis instead of Detroit? And will the political climate be enough to allow these things to happen?

There are really only two questions here, what would actually help Las Vegas and Nevada, and how could we make that happen. My impulse for the first question means figuring how this dream of a “post-industrial” economy would work and asking ourselves whether there’s a difference between server farms, call centers, and green energy or even small-scale, high-efficiency manufacturing, and what meaningful steps could be taken to make it possible (if it is). The second question is a different matter, we have to track not only the electoral situation, but the arrangement of forces and gathering storms within the rest of Nevadan society. The economic packages of the casino union contracts are coming due this spring, the immigration movement is heating up nationwide, and Occupy Las Vegas isn’t dead yet. Answering these questions is vital though if we want to do theory that actually matters to our work on the ground and the possibilities of rebuilding a left and actually improving lives.

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Post Script

To end this post I should say something about the strategy implied by the previous paragraph. There’s been a lot of debate on this blog about whether we should be talking about “reviving accumulation” as opposed to overcoming the very notion of accumulation. I hope this closer analysis of Nevada and Las Vegas helps clarify what I, Walker, and others, I think, have been getting at. In Las Vegas there’s a few strong unions, the casino workers in particular, some strong immigrant rights organizing (link: Las Vegas May Day 2006) and that’s about it. Occupy Las Vegas is small and ineffective (if energetic). The vestiges of the direct action peace movements that organized against nuclear weapons testing are largely defunct and disconnected from other organizing. There are no neighborhood organizations, and there is no organized left presence (besides some anarcho-primitivists and a few confused socialists).

In Las Vegas, a place that is an important example for other US cities for the reasons I went through above, an explicit and meaningful movement to overcome capitalism cannot happen any time soon. This is not because the citizens of Las Vegas are too reified in their consciousness to be able to think about socialism – I have more faith in people than that – but because both the movement and the material conditions aren’t there. The union rank and file will not become revolutionary, and collectivizing casinos doesn’t do anyone any good (mines are a different story, but I don't see that happening anytime soon). So what should we do? Let it become Detroit? Swept away into the Mojave sands? I don’t think that's fair or progressive.

Instead I think we need to get serious about asking how we can make Las Vegas and Nevada a better place and plant the seeds of revolutionary struggles to come. This doesn’t mean jumping into the Republican v. Democrat debate of taxes and spending. This doesn’t mean bringing Paul Krugman on a speaking tour of Nevada. It means asking concretely and in detail what can be realistically accomplished and what it would mean. We have to figure out how affordable housing, better public transit, better water efficiency, public investment in light manufacturing, or green energy would connect to improve the lives of Las Vegans in the short term and how we could realistically win them.

This is still the realm of the NYTimes editorial page. The next step is when we also ask how the struggles over these concrete proposals can develop the expertise, political consciousness, and relationships that would form the basis for future revolutionary organizations. That means things like organizing study groups among radicals in different parts of The Movement, that means pushing organizations to be militant and uncompromising, and it means building institutional infrastructure for the rank and file to push the leadership of the various organizations forward. This means using concrete, winnable struggles that would have real lasting impacts to lay the groundwork for revolutionary movements and to learn what an adequate revolutionary politics might look like. In essence the “line” that I and others on this blog have been developing is less about hopelessness or an endless deferral of freedom and more about getting concrete about what it means to participate in a revolutionary struggle, given the historical conditions. I'm fighting for human emancipation, and I want to be serious about winning.