Thursday, November 17, 2011

Let's Fold Vegas

If US cities were poker hands, America's invisible hand would have folded Las Vegas long ago for there is nothing capitalist about gambling.  Aside from being an anti-capitalist theme park (about which, more later), Vegas, as it is affectionately known, competes with Southern California, wherein a large portion of US fruits and vegetables are grown, for Lake Mead's water.  Me, I'd take food over black jack any day.

If I were a talk radio host I might authoritatively assert, "we should just shut Vegas down, move the people elsewhere in the country and be done with it- simple, really."  Fortunately (for both you and me) I'm not a talk radio host and thus, on occasion, take a moment to reflect on the practical difficulties of policy proposals. 

Can you imagine the hue and cry from the media (jealous, no doubt, at the attention I'd be receiving), the various governments (rightly fearing a loss of tax revenue), the banks (who'd have to increase the pace of debt write-offs with no hope of return) and, last but not least, the people forced to relocate.  Yep, it's an absurd idea.

Except it isn't. 

Vegas was a bad bet.  Yet not only have we (i.e. us Americans, to greater or lesser degrees) continued to play it, we've bet heavily on what is a sure loser.  Consider.  It is a city which produces nothing economic, yet requires not only a large volume of water (precious stuff in the desert), but electricity as well.  Imagine the boon to other users of Colorado River hydro-power and water if Vegas was allowed to return to the desert it was.  Imagine the economic benefits accruing from reallocation of Vegas labor into more economic pursuits than income redistribution.

What's that, you say, gambling isn't economic?  Nope.  Gambling is as un-economic as theft.  Income changes hands but nothing comes from the exchange.  In a sense, Vegas is like Wall St.- a place where economics eats its own arm.

Nonsense, you say, Wall St. is about investing, not gambling.

Not so much these days, I counter.

Consider a few definitions before hyper-ventilating.

Gambling: a zero-sum game in which money changes hands leaving the world in exactly the same state

Investment: a non-zero-sum game in which money is exchanged for capital which is put to use in the pursuit of profit, thereby changing the world (admittedly sometimes not for the better) in the process

How much of Wall St. engages in the former instead of the latter?

But I digress.

As a practical matter folding Vegas would be difficult for us.  The US has proven its skills breaking virgin territory, and its impotence in reforming already existing territories (see also nation building).  China, by contrast, would have little difficulty evacuating Vegas, just ask the millions of former residents of the Three Gorges Dam area. 

On the topic of evacuations, Michael Bloomberg is probably scratching his head wondering why it was so easy to evacuate much of lower Manhattan in August and now so difficult to evacuate Zuccotti Park but a few months hence.  Note to Mike, it wasn't the police, but the shared sense of dire consequence if they didn't evacuate in August, and, I suspect, if they do evacuate now- the fear of being swamped by Irene or Wall St. respectively.

In a sense, Occupy Wall St. wants to fold Vegas too- the Vegas that is Wall St.

I can't say I blame 'em.  Let's fold Vegas, stop gambling and start investing (which, as an added benefit, might give some of the protesters something better, i.e. working, to do- just saying).  Why are we taking lessons (or, as seems more the case, not taking the lessons) on Capitalism from China?

ps As a closing note, I sometimes chuckle to recall the vigor with which men like Morgan and Rockefeller fought to avoid exchanging their businesses for money- they much preferred the latter than the former.  These days many can hardly wait to sell out.  There might be a lesson in that.

pps As I recently received notice of a (now-deleted) comment on this post which assumed my view was more literal than metaphoric let me set the record straight. I'd much rather get Vegas out of Wall St. than Nevada (although the latter has its merits).


Ronnel Sahagun said...

Las vegas is one of the most popular
gambling country in the world !

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