5/24/99

KUFM / KGPR

T. M. Power

To most of us, the economic energy that makes the wheels of the local economy turn is the income injected into locally-oriented businesses by those specialized local industries that serve the rest of the nation. Such "basic" economic activity is assumed to be the engine that drives the overall economy. Because our traditional export-oriented natural resource sectors like mining, forest products, and agriculture have been in relative, if not absolute, decline for over a decade, a lot of people have been left scratching their head about just what has been fueling the economic expansion that has been taking place in almost every single county in the inland west, both large metropolitan, urban, and rural counties. The assumption that some expanding basic industry has to be injecting increasing amounts of money into the local economy for it to be able to expand, has led many to the conclusion that it must be expanding tourism that explains the growth in most of Montana and most of the West. This is explanation by default: All other basic industries are in decline; only one, tourism, is expanding; economic expansion cannot take place without basic industry expansion; therefore it must be tourism that is driving the expansion. The dramatic expansion of destination resorts and the towns associated with them has provided the visual evidence for this default explanation. Thus Whitefish and Big Sky in Montana, Sun Valley and Coeur d’Alene in Idaho, Jackson in Wyoming, Aspen, Vail, Telluride, and Steamboat in Colorado, Taos in New Mexico, Lake Tahoe in Nevada and California, etc. etc. have become symbols of the New West economy: Upscale outside visitors creating lifestyle colonies who employ us as their servants, at, of course, servants’ pay. It is this default explanation that has led some to cynically re-label the service economy of the West the "servant" economy.

There is no empirical economic evidence to support this focus on tourism and resorts as the dominant economic engine that explains why the inland west has been the fastest growing region of the country for a decade or more. First of all, there are not destination resorts in every single county in the inland west. Yet almost every single county is expanding. Where, for instance, is the destination resort in Missoula or the Bitterroot?

Alternatively, one can focus on the actual growth in the destination ski resort counties in the inland west. Counties with such resorts have gained about 110,000 new people over the last 30 years. But the inland west has gained 8 million people. Clearly the resort counties are a trivial part of the expansion. Even if we focus only on nonmetropolitan counties in the inland west, they gained 1.7 million new people. The resort counties provided only about 7 percent of that growth. What explains the other 93 percent? Die-hard economic base enthusiasts will say a multiplier of 15! A convenient fantasy, but preposterous from an empirical economic point of view.

Even those resort towns that are used as symbols of how tourists have transformed communities are proving that it is no longer temporary visitors but new permanent residents that are the driving force in their economic expansion. That was brought home dramatically in Montana in the early 90s when Whitefish sought to document its status as a resort town so that it could be get permission to levy the resort bed tax. The economic study it commissioned concluded that its economy was not being driven by skiing visitors but by new permanent residents. Sun Valley, Jackson, and Aspen, to name a few, now understand that that has been true of their communities too. In fact, this realization has lead some of these towns, like Jackson, Wyoming, to reject any further public subsidization of tourist promotion on the grounds that higher volumes of temporary visitors undermines quality of life which is the community’s real economic base.

I just returned from a conference in Steamboat Springs, Colorado, sponsored by the Steamboat Chamber of Commerce. It too is beginning to realize that Steamboat Springs is not primarily a resort that happens to have a town adjacent to it but is, rather, a vibrant community with a life of its own, one of who’s local amenities happens to be a good ski mountain. The increased role of permanent residents is apparent in ticket sales. Daily and multi-day ticket sales have been steadily declining while season pass skier days have been steadily climbing. The Steamboat community, like most other supposed "resort towns" is actively working to protect both open space, working ranches, affordable housing, and the town’s historical character. These "resort towns" are determined not to be resort towns. That too is evidence that the default tourist explanation for the inland west’s economic vitality is far off the mark.

This economic error is the result of the search for new "basic" industry. What is actually going on, for better or worse, is something that the basic industry approach did not envision, namely residential location decisions bringing people to an area and then economic activity following. That is not a new phenomenon; it has been going on for at least a half-century, if not for most of the history of European settlement of this continent. It is time to give up the last desperate attempt to hang on to the basic industry view of the economy by exaggerating the importance of tourism and accept the powerful economic forces associated with people’s active pursuit of what they perceive to be higher quality living environments. Only then will we be in a position to face economic reality head on and cope effectively with it.