"If you must play, decide upon three things at the start:
the rules of the game, the stakes, and the quitting time."
— Chinese Proverb
Since China took a chapter from America’s playbook on working hard and smashing through any obstacle to achieve success, it’s too bad we didn’t reciprocate by heeding those prophetic words from the Orient. If we had, China wouldn’t be the massive tiger whose influence becomes more global each day, and we wouldn’t be on the fast track to becoming a paper tiger.
Yet, too many refuse to acknowledge the fact that the United States is, and has been, in a dangerous financial decline for decades, fueled by the self-interest of both political parties, and a public unwilling to demand accountability and a change in direction. In not believing that the rules apply to us, we continue to raise the stakes in a game we cannot win.
There is an extremely naïve mindset that we’re too big to fail (or fall) and that protests, righteous indignation and more money will solve everything, even when the books show we’re broke.
It is always easier to comprehend large issues on a local level. The recent spate of casino bankruptcies and closings in Atlantic City, and the reasons for their shutdowns, provide a microcosm of America’s problems. And it’s a sure bet that if America doesn’t turn things around soon, it’s bluff will be called and it will fold its hand, just as is happening in Atlantic City. Consider:
1.) Former glory: The recent closing of the Atlantic Club Casino, along with the anticipated closings of the Showboat, Trump Plaza, and the new, $2.4 billion Revel would leave Atlantic City with just eight casinos, a whopping 33 percent decline since January. How could this happen?
Atlantic City was once a jet-set destination, the A-List place to see and be seen by the world’s rich and famous.
But that was then. As has been the case for decades, a huge percentage of residents live in extreme poverty, with an educational system so bad that even when the casinos were in full swing and had ample job opportunities, the city’s unemployment rate was double the national average.
Without education, and thus the prospect of gainful employment, crime and vice skyrocket, which we have seen not just in A.C. but nationwide, as America’s woefully inadequate (yet lavishly funded) public schools continue to fail our children. Despite all the promises of government leaders and industry officials to reinvigorate the city after building the casinos, the situation continues to deteriorate.
There are many who think that America’s glory days are behind her, as optimism in the future continues to wane, regardless of who occupies the White House. Jobs continue to be lost overseas, educational achievement levels are dropping, and the middle class is shrinking while an unaffordable and unsustainable entitlement class is growing. Despite blue ribbon commissions and campaign promises of a better tomorrow, things are going the wrong way with no solution in sight.
2.) Resting On Laurels: America is still unquestionably the world’s most powerful nation — for now, but it has gotten sluggish. Content in its position, it refuses to see who is breathing down its neck. As a result, the competition is gaining while the U.S. remains stagnant. Each week brings news of the dollar’s further decline as more countries move to other currencies for their international transactions.
As America loses its reserve currency status, while continuing to print money to spend trillions it doesn’t have, the value of our incomes decline. But since no one wants to admit the mathematical certainty that insolvency is nearly upon us at municipal, state and federal levels, especially given the trillions in unfunded pension liabilities, the problems aren’t being addressed.
Atlantic City, located within driving distance of well over 100 million people, also rested on its laurels, as it had the casino industry all to itself. Until it didn’t — but by then it was too late. In its complacency, it never strove to better itself, nor was it proactive in re-inventing who it was and what it offered. That blindness made it impotent to compete when neighboring states started permitting casinos.
And then there was Vegas (a desert, without the allure of being next to an ocean), whose leaders had the foresight to make that town not just a gambling mecca, but a family vacation destination, a remarkable feat since the vast majority of visitors must fly there. Las Vegas markets itself brilliantly, keeps the city relatively safe and continues to attract people from all over the world. The numbers tell the story: Atlantic City’s gaming revenue has declined 50 percent since 2006, yet for the most part, Vegas continues to post moderate gains, and, unlike Atlantic City, the city still prospers even when revenues are down because of its diversification. The spoils go to the victor and Las Vegas is winning every hand.
Likewise, nations and financial institutions are parking their investment money in places other than America. And not only aren’t they buying American debt at previous levels, viewing it as an increasingly risky bet, but many are dumping it altogether. It doesn’t take a genius to figure out that our house of cards strategy will, at some point, collapse.
3.) Denial. Two plus two always equals four. If America continues to spend uncontrollably without reforming entitlements and rebuilding its moribund manufacturing base, there will be unprecedented pain. And no amount of protests, lobbying or complaining will change this.
In Atlantic City, casino employees and union members continue to protest the closings, playing the blame game and hammering owners, despite the mammoth losses being incurred by the casinos, with one union official even labeling the closing of one casino a "criminal act."
Really? What planet are these people living on? If there’s no money, there’s no money. What part of that can people not comprehend?
If these casinos were profitable, they wouldn’t close. But they’re not. That’s why they are declaring bankruptcy and closing their doors. And the true blame must be shared by all: The city, which has for decades done nothing to improve itself; the industry, which sat on its derriere, arrogantly betting that people would always come; and the employees and unions who never prodded either to keep up with the times.
Now, with over 6,000 layoffs looming and certainly more to come, a city in despair, and the negative image associated with dying casinos, the few high-end stores that still remain in Atlantic City will eventually leave, furthering the death spiral.
Is there a solution? For Atlantic City, probably not. It would take a generation or more to turn that city around, yet there is not an iota of political or corporate will to do so. So the implosion will continue until that once great city won’t even be a shadow of itself, but just a sad ghost of the past.
Luck always runs out, so if America is to avoid A.C.’s fate, it needs to stop gambling with its future. Otherwise, it’ll be left holding a Dead Man’s Hand.
Chris Freind is an independent columnist and commentator. His print column appears every Wednesday. He can be reached at [email protected]