Nevada’s Economy: Don’t Diversify; Solidify

(Chuck Muth) – I fully recognize the phrase “government should operate like a business” is not only a cliché, but a bad one because government produces nothing that taxpayers fund voluntarily; its “services” are provided with revenue extracted under threat of fine or imprisonment.

Businesses, on the other hand, have to earn their revenue and patronage from customers via dog-eat-dog free market competition. That’s why you can buy a shirt at WalMart, K-Mart, Target, JC Penny, Sears, Dillard’s, Saks or Macy’s…not counting smaller retailers.

That said, there are some concepts in business which government would do well to emulate. One of those would be the admonition to “stick to the knitting,” as author Tom Peters put it in his 1982 book “In Search of Excellence.”

In short, the phrase means “stay with the business that you know.”

That’s why you don’t see McDonalds performing 10-minute oil changes or Best Buy selling frozen steaks and seafood. Which brings me to incessant calls to “diversify” Nevada’s economy. “Why can’t we be like Silicon Valley?” many muse.

Simple. Because we’re NOT Silicon Valley. High tech isn’t what we do. It’s not our business. It’s not our schtick. We do entertainment. That’s what we do. That’s what we do best. That’s what we do better than anyone else. That’s the business we know.

So we should stick to the knitting.

Silicon Valley has Stanford; Las Vegas has UNLV. And I don’t care how much money taxpayers dump into UNLV, UNLV ain’t ever gonna be Stanford. Nor should it be. UNLV has the best hotel administration program in the universe. It’s what UNLV does better than anyone else. It’s the business UNLV knows.

UNLV should stick to the knitting. To expect UNLV to crank out high-tech engineers and world-class brain surgeons is like expecting the Clark County school district to crank out graduates who can read their own diplomas.

OK, OK. That was a bit of an exaggeration for effect. But you get the point.

Back to this notion of “diversifying” Nevada’s economy. Instead of trying to be something we’re not and hoping it will “broaden” and “stabilize” our tax base, we ought to focus on taking that which we already do best and solidify our position. Here’s one example.

Let’s say a Hollywood producer wants to shoot a motion picture. Being the greedy bastard he is – not that there’s anything wrong with that – he can pretty much fit almost any location into almost any script plot. So where’s he going to go for on-location shooting: the state where he gets a significant break on his taxes…or a state that charges him out the wazoo?

You betcha.

But while Nevada may be the entertainment capital of the world – and has the climate, workforce and location (not to mention the Strip) – that is perfectly conducive to Hollywood movies, television shows and music videos, we also offer no real film incentives to shoot here whatsoever.

According to J.R. Reid of NevadaFilmIncentive.com, back in 2005 only four states offered film industry tax incentives. Today only six states do NOT offer such incentives – including Nevada. “The end result,” explains Reid, “is that in the eyes of film producers Nevada is seen as the least-attractive state in the region in which to film.”

And some wonder why thousands of jobs and millions of dollars from the film industry are going to states such as Michigan, Pennsylvania and New Mexico instead?

“Additionally,” Reid further explains, “exposing Nevada on film has proven results for drawing more visitors, gaming revenue, and state revenue.” In other words, incentivizing the film industry would not only dramatically increase jobs and tax revenue coming in from the film industry, but it also promotes and benefits that which Nevada already does and does best.

Yes, Nevada needs to expand and diversify its economy, but it should do so in a way that sticks to the knitting. As such, the Nevada Legislature should pass a film incentive program as one of its first orders of business when it convenes in February.

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Chuck Muth is president of Citizen Outreach, a non-profit public policy grassroots advocacy organization. He may be reached at chuck@citizenoutreach.com.