Focus on Economic Fundamentals, Not Gimmicks

I’m a relative new-comer to Arizona, having lived here only five years. But I’ve traveled the length and breadth of the state, visiting more places than most native Arizonans have ever visited, if my personal sampling is any indication. Considering that, the degree to which Arizonans believe tourism is an economic powerhouse and worthy of government support is striking.

Take a look at the table below, which compares shares of GDP in the U.S., Arizona, and Texas. The two sectors most directly impacted by tourism are “Arts, entertainment, and recreation” and “Accommodation and food services.” Together, they contribute about one-half of 1 percent more to the Arizona economy than to the U.S. economy and over 1 percent more than to the Texas economy.

The tourism industry is not that much more of an economic contributor in Arizona than it is in the U.S. as a whole. And it’s a relatively small part of Arizona’s overall economy; certainly not an industry to plan economic recovery by.

So, what’s the point? The point is that state and local governments do a lot for tourism in this state, with all the government financed golf courses, stadiums, hotels and convention centers. Yet, it seems someone is constantly promoting yet another tourism scheme taxpayers need to fund. And even though we’ve spent a lot of money on the industry, it isn’t paying off with loads of new jobs.

But this is Arizona’s unfortunate pattern. Pick an industry, shower it with taxpayer money and hope jobs come. Instead of pinning our hopes on a hand-picked industry, Arizona needs to have the most efficient governments and produce the most efficient infrastructure, with the least intrusive taxes in the country. Do that and we might just see an economic revival that doesn’t depend on tourists.

Read more:

Goldwater Institute: Lessons from Texas on Building an Economically Healthier Arizona

Goldwater Institute: How Arizona Can Become the Oakland A’s of the States

Goldwater Institute: When Government Picks Winners, It Creates Losers