UNLV economics professor Mary Riddel remembers growing up in Detroit in the 1960s when it was a bustling and booming city, king of the automobile manufacturing industry.
She went shopping with her family at upscale department stores and everyone seemed to have plenty of money. Household income in Motown easily exceeded the national average.
"We'd laugh at the Japanese cars," Riddel said Wednesday at the annual Southern Nevada Economic Outlook presented by the Center for Business and Economic Research, where she's been named interim director. "Look how small they are. Who would drive them? They're low quality. They're for poor people."
Then the oil crisis struck America in the 1970s, prices skyrocketed and cars lined up at gasoline stations overnight for limited supplies. Suddenly, Japanese cars didn't look so bad, at least not to people outside of Detroit or Flint, Riddel said.
"Detroit didn't put it together. This will pass. Americans love their big cars," she said.
Instead of investing in automotive technology, Detroit invested in Washington, D.C., lobbying for huge tariffs on Japanese imports.
Detroit is now one of the cities with the worst urban blight in the United States, Riddel said in her tale of three cities. Detroit, Pittsburgh and Las Vegas all have one thing in common: one-horse economies. And the horse is sick, just about dead in Detroit.
Pittsburgh, once the steel capital of the world, had similar beginnings to Detroit.
It was located along a major transport route with the confluence of the Allegheny, Monongahela and Ohio rivers. The area enjoyed abundant natural resources, including large coal deposits, which were used for heating homes and coke in steel plants.
Pittsburgh's economy thrived from the 1920s through World War II when demand for manufactured steel and iron surged.
However, increased competition from steel plants in Japan and China during the 1950s began to erode demand at Pittsburgh's more costly foundries. The economy continued to founder into the 1970s and '80s and unemployment grew.
Unlike Detroit, city leaders in Pittsburgh coordinated economic development plans, investing in the renovation of downtown's "golden triangle." They rebranded the city as an export center for new ideas and technology in steel production. Pittsburgh attracted and retained corporate headquarters for national and global firms such as Alcoa, US Steel, Rockwell International, Westinghouse Electric, PPG Industries and HJ Heinz.
Las Vegas could learn some lessons from those towns, Riddel said. Founded as a railroad stop in the early 20th century, Las Vegas has depended on leisure and hospitality industries since gaming was legalized in 1931. In the 1990s, Las Vegas shifted into a luxury resort destination, an economy that can be fickle to the whims of consumer spending and leisure travelers.
"Let's be careful comparing Las Vegas to Pittsburgh and Detroit because our story hasn't played out yet," she said. "But it's in decline. We have increased competition. We had massive home price increases. There were people smart enough to say, 'I can't afford to buy a home.' I don't know how many people.
"We're at a crossroad. We don't need any more houses. The gaming industry doesn't need any more expansion. What about new industries? What can we take from Detroit? What can we do better and cheaper than other places? What are our resources?"
Investment in physical capital is important, but human capital investment cannot be ignored, she said. Companies prefer to locate in cities with an educated and skilled work force.
"Like physical capital, it is tempting to cut back on universities and public education when the states suffer budget shortfalls," Riddel said. "However, this is exceedingly short-sighted. Long-run returns result from long-run investments, and being penny-wise can be pound-foolish."
Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.
RSS