Letter: The Bad Doctor

Akin to a student who has just taken their first economics class, Councilmember Robbins completely misses the mark in his latest op-ed published in the Tahoe Daily Tribune entitled “Change is needed in Tahoe.” He laments the changes in local demographics, business diversity, and housing affordability in the last 25 years, diagnoses these changes as a "Problem That Must Be Solved," and then goes on to call out the shadowy forces that seek to thwart his heroism.

If the City of South Lake Tahoe were an isolated island with no economic links to the outside world, many of his arguments would hold water. However, his oversimplifications and misplaced nostalgia lead to prescriptions that will only hurt the patient, and should rightfully be opposed.

The major flaw in Mr. Robbins' argument is that he completely ignores economic specialization. There’s a reason why your iPhone is “Designed in California, Assembled in China” over the last few decades - the acceleration of globalization, lowered costs of transportation, and the Internet have drastically changed how and where goods and services are produced. Communities that have found their niche (like Silicon Valley and Shenzen) have prospered and grown, whereas those that cannot compete on cost or efficiency (like the Rust Belt) have faltered. Not everyone wins equally, but the overall standard of living has risen dramatically. Put simply, things get better, slowly. South Lake Tahoe’s economic specialties are tourism, government subsidies, and remote work (which brought both Mr. Robbins and my family to this town).

Every change has benefits and drawbacks; there is no free lunch. Tourism brings billions of dollars from outside the area and creates businesses and jobs that would otherwise never come here, at the expense of traffic and pollution. Government subsidies bring protected wildlands and a world-class hospital at the expense of economic growth. Remote work brings wages and families that create demand for higher-value goods and services at the expense of gentrification and rising housing costs. Overall, South Lake Tahoe is amongst the most subsidized places on the planet - we take more money from people who don’t stay here (whether they be tourists, taxpayers, or second homeowners) and largely export our problems.

In 2000, Amazon largely sold books and music, Kmart and Sears were leading retailers, gambling was only legal in Nevada and Atlantic City, and 737s brought thousands of tourists to South Lake Tahoe Airport. In 2010, California unemployment was 12.4 percent; it should be no surprise that housing was more affordable then. Wistful and selective nostalgia for either of these times is misplaced - they are both economic worlds that don’t exist today and (with luck for the 2nd example) will never exist again.

He also fails to recognize the other fundamental force in economics - demographics. The age of populations is not uniform; there are population booms and busts that dictate markets. The largest population cohort today is those 30-34 years of age, followed closely by 20-24, then 25-29. In 2010, the leading cohorts were 45-49 and 50-54; the baby boomers. When further turbocharged by the pandemic, remote work, and TRPA’s unscientific growth restrictions, these demographics alone would dictate a tight housing market and lower school enrollment.

However, this isn’t a market failure; the unstoppable force of time will slowly age out of homeownership to those who are now in their 70s. We’re starting to see the first signs of this; the rental market is softer than the few years prior, and months of supply of homes for sale will likely exceed pre-pandemic levels later this year.

Confident with his misdiagnosis, Mr. Robbins then proceeds to prescribe the cure - growing the size of local government through taxation. Tax the tourists, tax small businesses, tax Heavenly, tax the first homeowners, tax the builders; given enough time, maybe he’ll figure out a way to tax the government. Needless to say, I disagree with this approach.

Imagine the local economy as a sailboat on Lake Tahoe. Winds rise, fall, and change direction; Mr. Robbins’ solution is to put a gas-powered fan on the back and blow into the sails. Of course, no sailor does this; they tack into the wind, letting it do the work, even if it doesn’t result in the boat going in a straight line.

Local government is phenomenally ineffective and inefficient at playing the role of a housing developer, landlord, hotelier, or entrepreneur (the fan powered by your tax dollars). Instead, it should focus on what it does best; public goods like roads, police, fire, parks, and the like. These needs are largely fully funded with our existing levels of taxation; the City recently put out a survey on how an excess $2 million should be spent; that’s over and above the multi-million dollar rainy day fund.

Solving market failures, whether real or perceived, is best left to those with the resources to provide actual impact - the State and Federal governments who have billions, not millions, to spend and in the latter case can create money from thin air. Even in a world where every one of Mr. Robbins' proposed taxes were enacted, South Lake Tahoe will never be economically competitive with Nevada. Your metaphorical iPhone will never be manufactured in Lake Tahoe. The local government cannot hope to ever raise or create enough money to accomplish more than blowing a fan at a sail.

I agree with Mr. Robbins; Tahoe does need change. Much like an incompetent doctor who loses their license to practice medicine, Mr. Robbins should be soundly defeated the next time he’s on the ballot. We can do better.

- Seth Dallob