Behold, America’s playground.

UPDATE: This post has been recommended by Medium Staff, so it’s getting a lot of traffic. So, hello new readers! While you’re here, you should also check out the migration history Podcast I co-host, Migration Nation.

What Happened to Atlantic City?

America’s Original Playground is a Parable of Economic Development Gone Wrong

For my birthday this weekend, my wife arranged for us to go visit Atlantic City. Now, this was odd, because I’m a teetotaler, my wife and I don’t gamble, and a mixture of natural scenery and cute towns is really more our speed. But, of course, what happened is (1) we got a free nice hotel room and (2) my wife heard “Atlantic City” and her mind filled in pictures of, I dunno, Atlantis or something. In other words, she had no idea what Atlantic City was until she got on the incredibly depressing Lonely Planet page for the city a week or two ago.

But our weekend on the Jersey shore was fantastically fun. And, as it happens, illuminating of some key economic development concepts. It also resolved a years-long dispute between my wife and I.

Let me start with that dispute. And I promise, I’ll have some data about Atlantic City below. But let me walk you through why I think more people should study the Atlantic Cities of the world.


Shopping Malls and Palm Plantations

My wife, then girlfriend, was in Malaysia on a Fulbright grant, back in 2013. I went to visit her. We roadtripped around the country. In Kuala Lumpur, we got momentarily lost in one of those multi-block high-rise-embedded shopping malls you only find in Asian cities, where it’s like you can wander for days without seeing sunlight. I commented, “Wow, isn’t it wonderful that a place like this exists here?” with “Here” being “a world region with extraordinary poverty in many places and that until recently was an incredibly poor backwater” and “a place like this” being “an efficient distribution of resources clearly helping boost peoples’ incomes and provide a modern standard of living.”

My wife was aghast. She was living in a small, rural town, surrounded by palm plantations. She taught in a Chinese school, lived among Malay neighbors, and attended a Tamil-speaking Lutheran Church. And she loved it all. Everything about Malaysia’s unique multi-ethnic culture and its apparently traditional lifeways spoke to her. So when I came out on Team Shopping Mall, well, our relationship struggled for a moment.

We argued, but the details are unimportant next to the classic tension presented: new vs. existing development, cultural change vs. cultural entrenchment, globalization vs. localism… or as it became in our argument, Culture vs. Efficiency, my eventual wife on team Culture, me on team Efficiency (sidenote: as it happens I’m a huge sucker for “cultural” souvenirs while my wife is much more discriminating, and a hard bargainer; we’re both hypocrites).

These two poles of the argument come up a lot. Should we adopt economic efficiency, or should we protect local culture? Should we knock down a historic block for a skyscraper, or put up a walking tour route with special place markers? Should we protect neighborhoods from gentrification, or encourage that process?

This battle between Culture and Efficiency will come up in Atlantic City’s story. But now, let’s tell that story.


America’s Playground for $1.25

How Atlantic City Became Great

See the full visualization here.

The above chart shows the population of Atlantic City from its founding to the present day. The chart can be summarized pretty simply: extremely fast growth until 1930, decline until 1969, faster decline until 1990, a brief recovery in the 1990s, and decline again to 2010.

This is just using decennial Census data. While I’d love to use more annual data, the state of annual data for incorporated places is very poor, with often very wide errors between the official Census count and any reasonable extrapolation from the official Population Estimates. This is especially true in places with transient populations or unusual housing units-to-permanent-residents ratios, such as beach resort towns. As such, sticking with decennial Census data.

So what made Atlantic City grow so fast?

The answer is simple: railroads! A railroad from Camden, New Jersey opened in 1854. Within two decades half a million Americans were visiting Atlantic City each year. Why specifically Atlantic City? Again, railroads! Not every beach town had a railroad dumping you out on the beach. In a pre-automobile age, railroads were the only method of longer-distance transportation which could enable a week or two by the sea. Atlantic City was in easy range of Philadelphia and New York City, and fares were cheap: the museum I visited claimed $1.25 for a round trip (yes, we spent our time in Atlantic City visiting a museum).

Cheap transportation to the beach combined with an era when urban pollution was getting really bad makes for a good market. Atlantic City came to be called the “Lungs of Philadelphia” for its cleaner air. We laugh today at claims that going to the seaside could have “curative” effects, but it’s not far-fetched to think escaping the terrible air of industrialized cities from 1870–1930 may really have made people feel better.

And where the railroad stopped was a town that was dedicated to giving the visitors what they wanted: fun times, relaxation, good memories, and an escape from the dreary gray of the city. Atlantic City invented the souvenir postcard, popularized souvenir photographs, popularized the cut-out photographs where you stick your head into a painted scene, practically invented “city-label kitsch,” featured popular and rising musicians and performers, and carted in sand to ensure an attractive beachfront. Artists even developed new and improved craft products to sell: sand-sculptures plastered in cement were extremely popular. Eventually, a boardwalk was built, to help guests from the city avoid getting sand in their shoes, and, with the board-walk, the famous rolling-chairs and the waterfront businesses. Then came the piers full of entertainment. Eventually, the city would create unique foods too, with prized fresh seafood free of urban water pollution, the famed “Salt Water Taffy” invented by two local competing businessmen (who have now merged), and of course the city’s icon, Planter’s Peanut. The city’s popularity grew still more during Prohibition. Because Prohibition was only lightly enforced in Atlantic City, it became a key locale for those who wanted to flout the law and drink alcohol, and as such developed a substantial criminal underbelly, which sought extra profits through prostitution and gambling.

So the city became great. Atlantic City attracted millions of tourists. The combined force of improved transportation access and a local community ready to try anything that’ll work and innovate to meet consumer demands created a powerful nexus that turned a basically uninhabited island into one of America’s great entertainment Meccas.

But then, it began to die.

Technology is Shocking

How Atlantic City Nearly Died With Dignity

The Atlantic Coast is littered with seaside cities all featuring a boardwalk, some historic hotels, a handful of good restaurants, a few historic markers, and some locals eager to provide visitors with good hospitality. These towns are, in some regard, dying: they are shrinking and graying. On the other hand, they provide those remaining with a good living, and they continue to provide a tourist amenity that apparently many people still value. Atlantic City could have become a jumbo-version of this; full of historic curiosities, beautiful old hotels, interesting culinary treasures, and with a considerable first-mover advantage in beach attractions, it could have shrunk, but eventually joined the honorable ranks of very-nice-and-slowly-shrinking seaside towns.

But why is even that fate necessary? Why must Atlantic City have shrunk after 1930?

First came the Great Depression, which hammered Americans’ budget for luxury. Then came WWII, with rationing, and mass recruitment of key tourism drivers: young men. Then WWII exposed these men to new beach climates in the southeast and California; Atlantic City was rather less impressive than these beaches on many measures. And then came airplanes, air conditioning, and interstate highways, which made long-distance travel faster, cheaper, and more comfortable, especially travel southward. All of these forces drove one inexorable conclusion: more northerly beach towns faced serious headwinds going into the 1950s and 1960s. Atlantic City was, if anything, positioned to lose bigger than most, as it was relatively more dependent on big-city tourism than many other seaside towns, where fishing was more prominent, or where local tourism targeted niche clienteles like the wealthy for whom Atlantic City had become too gauche.

That explains the initial decline.

But Atlantic City today is not just a larger, more self-confident version of other Atlantic seaside towns. No, it’s Atlantic City, America’s playground.

You’ll notice I haven’t mentioned casinos. That’s because no legal casinos existed. The Mob ran illegal gambling in Atlantic City of course, but most tourists came for the beach and for general entertainment, not gambling. However, the Mob was a key element for the city, with a nation-wide organized crime conference held in the city in 1929. Yeah; apparently Mob bosses have continuing ed requirements too. Atlantic City’s choice to specialize in vice, to carve out for itself an environment uniquely tolerant of law-breaking, created a set of dangerous institutions.

Organized crime is actually not great business, as it turns out. By the 1970s many of Atlantic City’s resorts were nursing homes and cheap apartments, or else demolished. Crime was rampant, worse than many comparably sized cities, and its premier vacation status was gone for good. That’s before the casinos.

But in 1976, gambling was legalized within the city, and only in Atlantic City. Many people see this as a resurgence. Renovations cleaned up the boardwalk, the worst-condition old hotels were demolished, and a new crop of tourists began to arrive in the city by the 1980s. But Atlantic City’s population wouldn’t really start to rise until the 1990s, suggesting this tourist revival’s benefits were more limited than the shiny new paint jobs would seem to suggest.

Then, in the 2000s, new casinos in the Philadelphia area, New York, and Connecticut have created competition for Atlantic City, as have proposals to allow gaming elsewhere in New Jersey. Today, the casinos are struggling, the city is floundering, and indeed it is practically a byword for a certain kind of gaudy experience.

But it didn’t have to be this way.

Atlantic City could have kept its place as a beloved beach city.

Let the City Die

It Could Have Been a Phoenix

Let’s do a counterfactual. What if Atlantic City hadn’t been taken over by the Mob, hadn’t become a hotbed of illegal gaming and prostitution, and hadn’t permitted casinos?

It seems likely the population would have declined further. Maybe to 30,000, or even 25,000. Even at 25,000, of course, it would still be one of the largest cities on the Jersey Shore. That would be true even at 20,000.

And of course, those low population numbers do seem likely. Without casinos, it seems highly plausible Atlantic City would have a dramatically smaller population today. But would that be a bad thing?

Normally, when I talk about a city dying, people accuse me of ignoring the free market; if that city is so inefficient, they say, then surely it would die naturally. The neat thing about Atlantic City is that the market forces are on my side, militating for decline.

Back when Atlantic City was competing on an even footing with other cities, before casino gambling, it was losing people. Its market-competitive industries could not justify or support 65,000 residents. It shrank to 40,000. Allowing casino gambling stopped the bleeding for a while. But now casino gambling is becoming more widely legalized, so Atlantic City is once again having to compete on an even footing, and is once again losing. Only a special carve-out delayed the city’s market-driven death.

Whether a special tax incentive or a special legal permission, narrow policies intended to favor one specific place, person, or industry are almost always bad policy.

Because, you see, Atlantic City had assets. When the doctor started testing out the experimental drugs on her, she actually wasn’t even terminal. She just needed to change some lifestyle factors and get back in shape. Instead, she was prescribed dangerous medicine.

What were Atlantic City’s assets? Let’s list them:

  1. A long, beautiful, historic boardwalk — Tourists like these areas of dense amenities. The boardwalk really is great. With a better bike rental system it could be even better.
  2. Novelty transportation — You think I’m joking? While kinda overpriced, the hand-pushed rolling chairs are unique and fun, and they’re the kind of “local flavor” that makes tourists of the “I-want-to-remember-my-vacation” variety think a place is worth recommending.
  3. Novelty food — Atlantic City still has access to good seafood; we had some great food at a few places. Beyond that, they actually invented Salt Water Taffy. But is there a historic marker? A bill-board? Any kind of broadcast that, hey, we invented the snack your kids want to buy at every tourist destination? Nope. You just have to ask when you step into the store. Oh and also, there’s a total of 4 taffy stores total, all owned by the same company, selling the same taffies. The two guys who invented the taffy, separately, eventually had a merger. Let me repeat: in the city that invented one of America’s favorite candies, that candy is sold less aggressively than almost any other tourist site I’ve ever visited. Oh and did I mention peanuts? Apparently Planter’s Peanuts became famous partly by advertising on the boardwalk with a guy in a peanut suit. That’s fun. You know how much marketing of peanut-products or peanut-related-marketing or peanut-branding there is on the boardwalk? None. Actually, one shop has a faded sign saying “Peanut World.” It does not appear to sell peanuts.
  4. Beautiful Architecture — The old hotels are beautiful, no joke. That is, the 3 or 4 that still stand. They’re the type of places that if you ran across one of them in some tropical country, you’d stop, pose for a picture, and instagram about how you found such a gem.
  5. The Beach — Granted, not the world’s greatest beach; never was. But still, it’s a beach, and often remains empty or lightly visited.
  6. Unique Local arts and Crafts — The sand art sounds cool. They would sculpt all sorts of things, portraits of tourists, buildings, historical figures, and then coat it in cement as a permanent edifice. Unfortunately, in 1944, a hurricane destroyed the accumulated decades of sand-art.

That’s all enough local flavor to be able to support a good-sized beach town. That’s more than Myrtle Beach has, and, sure, it has a longer season too, so there’s a trade-off, but it seems like Atlantic City could at least nab some visitors by marketing their culture.

So why not do that? Why not market the culture?

Special Incentives Destroy Markets

Policy, Unlike Economics, is Zero-Sum

Let’s walk through the state of those theoretical assets today.

Beautiful boardwalk and novelty transportation — check! Except for all the stores on it. They lack variety, competitive pricing, or uniqueness. They manage to be expensive and poor quality at the same time. Much of the food is better than the retail options, but still leaves much to be desired. Plus, the boardwalk is too long: many empty spaces and shuttered storefronts. Consolidate! Moreover, getting down the boardwalk involves either walking (long), hiring a rolling car (expensive, and in our case lied about their pricing), or renting a bike. That last would be a great option, except we saw only one bike rental place, and it was literally a paper sign with markers offering mis-matched bikes for excessive prices. Get a real bike rental service that’s easy to find and operate. Sidenote, we did see a tyrannosaurus rex on a unicycle charging for posed pictures. That was pretty unique.

Food — Why isn’t there more novelty food? Oh, I know: because casinos don’t show up and look around for local food specialties. They work with other national brands to produce familiar experiences for visitors. Why hasn’t Atlantic City figured out a way to turn the bare-bones of its food novelties into a meaningful set of local food specialties? Maybe because all the food money ends up at Johnny Rockets, Rainforest Cafe, etc. And to be clear, I’m not saying chains are bad: many customers want chains. Heck, I’m a cultural Philistine who’s loves to eat at Ruby Tuesday’s and Applebee’s. But Atlantic City’s casinos are failing. Don’t tell me I don’t understand their business model: I do, and it’s bad. They are now in a more competitive world, so you gotta be more competitive. Maybe try promoting a wider community that attracts diverse tourists, say, by asking why the city that made Planter’s Peanuts famous doesn’t have a peanut shop left on the boardwalk (note: I looked for the Boardwalk Peanut Shoppe; Google puts it a solid 7 miles inland from the Boardwalk). Maybe ask yourself if offering the same set of brands as will be present in every other casino is actually optimal. That uniform branding makes sense if you’re in a casino town not known for anything else, but Atlantic City actually has other assets.

Architecture — Many of the old hotels have been demolished, as is necessary sometimes. Sadly, the remaining historic hotels have suffered a fate worse than death, however. Here’s a picture of one:

The smaller building on the right is the original hotel. Up close, some of the white paint is chipping, exposing blue and gray beneath, in the kind of beautiful way that old townhouse paint chips, exposing red brick. Unfortunately, the hotel’s base level is obscured by a huge car port modeled after the new building on the left. And of course the formerly subtle classical capstone of the original hotel has been repainted in colors intended to highlight the columns and connect it to the new building.

The result is that the beautiful old hotel is hidden beneath a facade of opulent garishness. Opulence can be its own kind of beauty if it really is opulent, like the Palace of Versailles, for example. But Atlantic City will never be Versailles. Class has been sacrificed for shiny-ness.

You may think I’m just being cranky. But, hold on. If you’re a person coming for the big gambling casino experience: does that old hotel appeal to your vision of your casino vacation? Probably not, but it also doesn’t drive you away. So you just choose to stay in the new hotel; the old hotel does no harm. But if you’re a person coming to explore Atlantic City’s culture and history, does that gaudy new hotel appeal to you? No, in fact, it makes you less likely to visit. In other words, the new casino construction has made it harder for Atlantic City to market its history, because the new development so actively works to mask, conceal, or overpower the older development.

Unique Local Arts and Crafts — This comes out elsewhere too. I mentioned that in 1944, a hurricane destroyed the sand sculptures. That was a huge loss for Atlantic City; imagine what hundred-year-old sand-sculptures of American tourists in a more optimistic age would be worth today. But here’s the weirder thing: they were never replaced.

Why weren’t they replaced?

Because after the hurricane, the city banned new sand sculptures. It is actually against the law to build sand castles in Atlantic City. Why did they ban it? Because sand-artists are riff-raff, good-for-nothings, glorified panhandlers, and besides, they encourage people to gawk on the boardwalk instead of buying souvenirs, and they don’t even pay property taxes! In other words, sand artists were too creative and innovative for an increasingly stagnant Atlantic City elite.

It’s also forbidden to feed seagulls or throw balls on the beach or bring pets on the board walk. The beach also has some scary-looking pipes running out into the water from some of the casinos that honestly may be nothing at all, but totally made us keep our distance from the water. In other words, the city is working overtime to make it hard to do anything other than drink, gamble, and maybe lay in the sun.

The first tentative steps towards encouraging sand art again began a few years ago, when temporary sand castles were permitted for a competition. But it’s far from clear whether the old art form can be resurrected at this point.

Beyond that, Atlantic City was once famous for its kitschy souvenirs, like the I-Heart-NYC shirts of a bygone age. Today? Finding non-suggestive Atlantic City postcards is work. We had to buy some at the taffy store. Most boardwalk shops don’t sell Atlantic City kitsch; they sell the cheapest beachwear options and slogan-shirts. What made Atlantic City great was a class of tourism entrepreneurs constantly innovating to create new kinds of products, like the sand-art. As best I can tell, that’s not happening now. Just the low-growth environment of perfectly competitive retail. It’s so cutthroat that we found one stores whose claim to fame and marketing gimmick was that they’re the only American-owned store on the block. Oddly enough, marketing your ethnic background is not a form of capitalist innovation.

And in fairness, probably the most innovative retail we did see was a Funnel cake stand selling Halal funnel cakes in tons of different flavors: flavored funnel cakes? Who knew such a thing existed? Pakistani immigrants, that’s who!

But why is this what happens? Simple: because heavy reliance on a specific type of tourist retards alternative innovation. Atlantic City was an entertainment innovator because they tried to appeal to all of America. America’s Playground. That attempt has ended: they are appealing to casino-gamblers and conventioneers. And they couldn’t even change now if they tried, because bad policy decisions and the scarring caused by casino investment has destroyed many local assets.

Quantity and Price

Why is Competition Working Out This Way?

Oddly enough, though, for all Atlantic City’s economic malaise, prices are still high. We paid prices for food we’re used to paying in DC, even when we bought things outside of the boardwalk area. You’d think with economic losses, somebody would cut prices.

But then again, casinos are mazes, hard to escape, so there’s less competition than there seems at face value. The boardwalk is long with fairly poor transportation options. Hotels offer discounts at affiliated amenities and restaurants to capture pieces of the tourist market. Vacations are sold as “packages.” Plus, the stores aren’t selling to all tourists: they’re selling to those with winnings, who are less likely to be price-sensitive. Most of us are more willing to overspend when we’ve just had a windfall and when we feel like winners.

So within Atlantic City, the incentive to compete on price for any establishment connected to the casino industry, be it restaurants or shopping, is low. They’re really competing against other vacation destinations.

And on that front, price reductions have to be fairly significant to really induce consumers to take the trip to Atlantic City (especially given the obscene number of tolls and the bad traffic on I-95). But if you just hack prices and advertise by saying, “Atlantic City, now cheaper than ever!” it feeds into the narrative of “Atlantic City, now more desperate and dirty than ever!” which also doesn’t help.

Traditionally, the way vacation destinations transition to a lower price tier is by going family friendly. When a restaurant or amenity is marked as “family-friendly,” it partly means “not too expensive for a group” which means “relatively cheap.” Unfortunately for Atlantic City, that’s not all it means to be family-friendly. And having nude bar ads on every taxi and rolling chair and fairly explicit t-shirts for sale along the boardwalk pretty solidly locks AC out of the family-friendly market. In some sense, the existence of the casino and night-club tourist culture prevents Atlantic City from marketing to a lower-priced clientele that has been a boon for other tourist destinations and that might be interested in non-casino attractions.

Don’t believe me? Let me show you.

Comparing Beach Cities

Ocean City and Atlantic City

If only we had another city founded around the same time as Atlantic City, with similar core assets, in a similar geography, that made different cultural or policy choices.

Oh, hello there Ocean City, New Jersey.

Less than an hour down the coast, Ocean City, NJ (not to be confused with Ocean City, MD) was founded in the 1870s by some Methodist preachers who wanted to start a religious camp revival site in the area. Atlantic City was already popular, but not yet in its true hey-day, so Ocean City could benefit from good rail access. Crucially, the town as it was founded banned alcohol sales, which continues to this day.

Ocean City has a long boardwalk, similar beach amenities, similar cultural and ethnic mix on the “front-end” so to speak… it’s a great comparison for Atlantic City. It has, however, received much lower immigration in recent years. Atlantic City today is 31% foreign-born, while Ocean City is just 8%; AC meanwhile is just 18% interstate migrants, while Ocean City is 58% interstate migrants. Of course, Ocean City is also smaller, with peak population under 16,000, and it’s close enough that the success of Atlantic City will create spillover benefits, and its failure, spillover costs.

We can also look at Cape May, even further down the coast. Cape May doesn’t have the same uber-family-friendliness of Ocean City, but instead has appealed to a wealthier clientele seeking an escape from the noise and chaos of urban life. Cape May was a premier seaside resort town already by the mid-1800s. And, as of 2014, it has an even lower foreign-born share: 3%, and is 68% interstate migrants.

Finally, we can also look at one of the later-rising beach towns: Myrtle Beach. For simplicity, I’ll combine Myrtle Beach and North Myrtle Beach. Myrtle Beach is about 14% foreign-born, 57% interstate migrants.

So four cities: Atlantic City, Ocean City, Cape May, and Myrtle Beach. Here’s their populations from 1860-present:

Full visualization.

The times, they are a changin’.

But really, what do you see? Because what I see is a huge boom in Atlantic City vs. the previous pre-eminent Jersey beach resort, Cape May. From 1870, Atlantic City grows explosively thanks to railroad links, yes, but also thanks to innovative marketing to middle America in all its diversity. It helps that Atlantic City’s lands were empty beforehand, and owned outright by pro-tourism developers, so “Greenfield development.” Cape May and Ocean City clearly grow as well, but they are totally overshadowed. Meanwhile, Myrtle Beach isn’t even in existence yet in those early years.

When Atlantic City starts to decline in the 1930s, so does Ocean City, and so does Cape May. When economic times are bad, all of the vacation towns suffer. The key to Atlantic City’s struggles is that it suffered when economic times were not bad, however.

As Atlantic City came to be more recognized for its gaudiness, showiness, illicit gambling, and the celebratory burst of nightlife after the end of Prohibition, it… began to die. Oddly enough, middle America just wasn’t that gaudy. Or maybe more correctly, it just wasn’t that gaudy at that price. There were cheaper, better options. Like Myrtle Beach, for example, which grew dramatically as Atlantic City shrank. Or alternatively, like Ocean City, where travelers could find a taste of the “old” Atlantic City before nightclubs and mobsters began to tarnish its all-American charm.

To be clear, I’m not saying nightclubs or casinos are bad for tourism: Las Vegas would beg to differ. I’m saying they’re can be for alternative industries or alternative forms of tourism. In places where there are few other alternative industries or reasons for tourism, like Las Vegas, these industries make perfect sense. Even in places like Atlantic City, if gambling had become legal throughout New Jersey and surrounding states all at once, or even throughout New Jersey, probably AC wouldn’t have been so inundated with casinos, and other forms of tourism could have competed and preserved their unique assets. I’m saying that distortionary policies intended to save a city by cultivating unique industries with favorable tax or legal treatment have destructive side effects in many cases, and, ultimately, are competed away when other states offer similar incentives.

Myrtle Beach drew the mobile tourist population of middle America. Ocean City drew those hoping to stay a bit closer to home, but wary of seedy Atlantic City.

In recent years, all of the Jersey shore towns have started to decline. They were hit hard by the housing bubble, and the worsening situation in Atlantic City, alongside its worsening reputation, has not helped. The fact that there are high tolls along every major thoroughfare to and from Atlantic City is a further hindrance compared to relatively toll-free destinations like most southern beach cities. Of course, these toll-free southern roads are themselves a form of unsustainable tax-handout that will eventually come home to roost. Someday, more interstate roads will be tolled, especially roads locals associate with outsiders and tourists.

Conclusion

I have said before that all cities are mining boom towns on one time frame or another. Atlantic City is a living testament to the universal-boom-town model, but its booms were first technological, then policy-driven. Unfortunately, while its technological boom left it with substantial cultural, infrastructural, and social assets, its policy-driven boom has destroyed those assets, and ultimately stems from the political dominance of organized crime. The capture of political institutions in Atlantic City by illegal gambling, rum-runners, and Mob-bosses placed New Jersey’s laws in hoc to crime, such that when New Jersey’s voters rejected statewide casino gambling in a referendum in 1974, the leaders of Atlantic City got a second referendum passed legalizing it in just their turf in 1976. The pleasant cultural amenities and diversions of America’s Playground are now gone, replaced by failing casinos, empty lots, and ultimately little or no recovery of the city’s formerly universal appeal.


When coal is mined, there are options on how to do it. One option is mountain-top removal, which is pretty much what it sounds like. Taking this option can yield major employment and productivity gains while the mine operates, but land remediation afterwards takes much longer than when less invasive methods are used, and the reclaimed land will never be a mountain again. Certain future forms of economic activity have been rendered impossible. Sometimes these kinds of future-narrowing decisions, call them economic development commitment devices, are necessary, or even beneficial. Sometimes, as in the case of transforming a family-friendly massively-popular beach town into a Mob-lead gambling and prostitution hotspot, such future-narrowing decisions come back to bit you in the bum. The mountaintops of Atlantic City are gone, and they will never return. It remains to be seen if new value can be made of the land once it is reclaimed; such a recovery is possible, even if hard to see from here.


But other cities should take warning: attempts to save your city may have dire consequences. The “one weird trick” to draw in a new industry may destroy decades of nationally renowned culture. The appeal to a certain class of migrant may destroy good things already going on. If your city is shrinking, don’t try to “save it” by getting new industries to prop up a population number, or recruiting a favored kind of person. Try to innovate to create more value for the people who remain. This advice is especially true if you already have valuable cultural or economic assets. Maybe your city’s existing assets couldn’t really serve as economic engines for the whole city, even if they scaled up quite a bit: well then, encourage your city to shrink faster. Reach the appropriate economic scale as fast as possible, shedding as many liabilities as you can along the way and investing available resources in the assets that give your community something to sell for the long-haul.


Atlantic City had culture that it could have used in an economically efficient way. Instead, a corrupt institutional structure gave the city a poisonous solution aimed at propping up the city’s size rather than its standard of living. And that’s why my wife and I were able to come to an agreement: even if sometimes I may be more enthusiastic for market-driven expansion that crowds out local culture than she is we both abhor the wanton destruction of valuable cultural and economic assets by a mixture of bad policy and crime bosses. The two poles of well-intentioned economic development ought to be able to agree that we probably should let naturally shrinking cities shrink to an appropriate size, so they can find a new footing, lower prices, and look for a new path forward.


As a sidenote, here’s the average incomes in Atlantic County vs. New Jersey, Cape May County vs. New Jersey (where Cape May and Ocean City both are located), and Horry County (where Myrtle Beach is located) vs. South Carolina. I do city vs local state to control for fairly enormous cost-of-living differences that may change over time, and for wider-area economic trends.

Full visualization.

Lookee there. Atlantic City is falling further and further behind. Granted Myrtle Beach has had a rough time of it since the 1990s too, especially as a still different set of beach towns becomes popular, but that may also be more retirees moving in. Cape May, meanwhile, seems to have found a pretty workable strategy.

Check out my Podcast about the history of American migration.

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I’m a graduate of the George Washington University’s Elliott School with an MA in International Trade and Investment Policy, and an economist at USDA’s Foreign Agricultural Service. I like to learn about migration, the cotton industry, airplanes, trade policy, space, Africa, and faith. I’m married to a kickass Kentucky woman named Ruth.

My posts are not endorsed by and do not in any way represent the opinions of the United States government or any branch, department, agency, or division of it. My writing represents exclusively my own opinions. I did not receive any financial support or remuneration from any party for this research. More’s the pity.

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