As Jane Jacobs once noted in The Economy of Cities, regional economies tend to weaken when they become overly reliant on a single industry. For instance, the Appalachian Mountains, North Carolina, and Michigan all suffered when coal, textiles, and automobiles respectively entered periods of cyclical decline.
In these three cases, though, the industries slowly developed into positions of regional economic dominance over extended periods of time. And even though governmental policies undoubtedly supported their development, the industries primarily benefitted from a wide array of natural, environmental, and human resources that existed in the regions.
There are times, though, when local government officials strive to create dominant industries from “scratch” when such supporting resources don’t exist at all. One such situation is Atlantic City, New Jersey, a fading summer beach resort that rushed headlong into the casino gambling industry on a massive scale during the 1970s. At the time, New Jersey officials hoped that Atlantic City would grow to become “the Playground of the World and the major hospitality center of the Eastern United States.”
Even as recently as last year, New Jersey Governor Chris Christie pledged $261 million of taxpayer funds to support Revel, a $2.4 billion resort project. So what return did New Jersey earn on its taxpayer investments?
In a word (or three), not very much! In fact, just last week, Revel declared bankruptcy for the second time. It followed Caesar’s Entertainment, which had announced a few days earlier that it would shut down the Showboat Casino. These followed the closure of the Atlantic Club, which shut down five months ago.
Interestingly, just two hours north of Atlantic City, another fading beach resort that had considered a massive casino development strategy appears to be making more significant economic progress. Two weeks ago, the Coney Island neighborhood of Brooklyn, New York celebrated the launch of the Thunderbolt roller coaster.
Decades ago, the Coney Island amusement parks were anchored by two classic wooden roller coasters, known as the Cyclone and the Thunderbolt, and a giant Ferris wheel called the Wonder Wheel. Although the original Cyclone and Wonder Wheel remain in operation, the original Thunderbolt ceased operations in 1982 and was demolished in 2000.
Consistent with an economic development strategy that focuses on small scale amusements, the new Thunderbolt joins such entertainment options as Minor League Baseball games and Major League Eating competitions. Has this strategy been successful? Very much so; for instance, the global cable sports network ESPN has committed resources to the region, agreeing to broadcast the July 4th Nathan’s Hot Dog Eating Contest through 2017.
It’s possible, to be sure, that Coney Island’s economic development strategy will ultimately fail to the same extent as Atlantic City’s strategy. After all, as Jane Jacobs noted, a unilateral focus on any single economic engine — whether it is trained on relatively inexpensive entertainment options or on very costly casino projects — carries a significant degree of risk.
At the moment, though, it appears that the low cost / low risk entertainment projects of New York are producing far better results than the high cost / high risk casinos of New Jersey. If you doubt it, you might wish to tune into the Nathan’s contest this Friday and see for yourself!