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The Real Economy

Nevada’s boom and bust economy

Sarah Gardner Jan 31, 2012

Kai Ryssdal: It didn’t take long for counting to be done in Florida tonight. All the major networks called the GOP primary for Mitt Romney just minutes after the polls closed.

Here’s what we know about how he won: Exit polls show two out of every three voters said the debates were important in helping them make up their minds. Electability was a big one. Forty-five percent said the most important thing was who could beat President Obama in the fall.

Not surprisingly, we like this next number best: 62 percent said the key issue was the economy. How they’re living, what their prospects are, how they’re going to get by.

It’s what we’ve started calling The Real Economy, away from the hype and the politics. So as the campaigns regroup and re-strategize, we’re going to start our election coverage by taking you to two states where the real economies are quite different, differences that point out how big the challenge of getting the whole country healthy really is.

We’ve picked Nebraska and Nevada. Nebraska because — as you’ll hear in a bit — the recession passed almost unnoticed. And Nevada because dating back to the silver mines of the 1800s, it’s no stranger to the cycle of booms and — most recently — busts.

Marketplace’s Sarah Gardner starts us off in Las Vegas.

“Bonanza” TV clip: Hey Roy! Mr. Cartwright. Mr. Cartwright! Doggone it, you won’t have to worry about them critters of yours no more. The Thunderhead hit it big!

“Bonanza,” now that was television. Ben Cartwright and his three rugged sons running the Ponderosa ranch, just a horse ride away from the rich Nevada silver mines, like the Thunderhead. Fictional Ben didn’t always trust the local mining barons. But in real life, those guys founded Nevada. Guys who gambled big on finding a bonanza of silver or gold.

Historian Bill Rowley says those men left a legacy of risk-taking here. It sounds bold and sexy, but it comes from desperation.

Bill Rowley: Because if you have a basically resourceless state, and you’re desperate, you’re going to probably take more risks than you would otherwise do.

Mix in a feisty libertarian streak and you’ve got a state full of people who like to gamble, and not just at the blackjack tables.

Las Vegas entrepreneur Andrew Donner is betting on a revival of the city’s old and, forgive me, sketchy downtown.

Andrew Donner: I’m really bullish on downtown.

Donner’s company just bought the old City Hall building here for $18 million. He’s going to rent the space to Zappos, the online shoe outfit. The idea? Get a hip company to move in — and bam!

Donner: I really do believe that it’s almost impossible to move thousands of people downtown of the creative class and not have other things happen.

Nevada encourages this kind of chance-taking. No corporate income tax, no personal income tax. It’s easy to get politicians and other powerbrokers on the phone. Nevada business consultant Jeremy Aguero.

Jeremy Aguero: There’s also a regulatory environment that essentially allows a business owner the freedom to be a business owner with minimal interference from government.

Nevadans throw the word freedom around a lot, especially in Vegas where they happily sell the idea of “adult freedom” to tourists. And whether freedom leads you to lose a couple thousand bucks at the casino or buy a big house you really can’t afford, it’s all sort of tolerated. Some here even call it an addiction to risk.

Historian Michael Green.

Michael Green: You are taking the risk that you are going to find the gold. You are taking the risk that you are going to roll seven. And this reflects the economy today and what has gone right and now terribly wrong. The people who rolled the bones, so to speak, on a housing boom — and it went bust.

That bust has left Nevada with the highest jobless and foreclosure rates in the country. And even though the tourists are back, they’re spending less. People got too greedy, folks here will tell you. They took on too much risk. But knowing how much is too much isn’t always clear, says entrepreneur Andrew Donner. Donner’s invested in casinos over the years, but doesn’t gamble. He saves that for business.

Donner: Well, you know casinos, you somewhat know the odds, and I think there’s something beautiful about being somewhat ignorant of your odds out in the business marketplace. You keep working and hopefully you win more than you lose.

In Las Vegas, Nev., I’m Sarah Gardner for Marketplace.

“Bonanza” TV clip: Thunderhead’s up $80 a share! Yeah! Hey, $80 a share, pop! $80 a share. Now I’ve got some money of my own. Pa, I think he might be right.

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