Tesla, Amazon & gold are way up. The ‘battle born’ response: So what?

musk tesla sandoval heller
Elon Musk and elected officials in Carson City in September 2014 after the state awarded Tesla $1.3 billion in tax breaks and subsidies.(Photo by Max Whittaker/Getty Images)

On March 18, the day Nevada’s casinos had to close, Tesla stock was trading at $361.

It closed Tuesday at $1,516.80.

On March 16, the day before Gov. Steve Sisolak announced casinos would have to close, Amazon was trading at $1,689.

It closed Tuesday at $3,084.

About the same time the Nevada Legislature began its special session to cut $1.2 billion from the state budget last week, the spot price of gold topped $1,800 an ounce, a price it hadn’t achieved for nine years, and before that, never.

Gold closed Tuesday at $1,809, and analysts overwhelmingly agree the price will keep rising well into the foreseeable future. So far this year Barrick Gold Corp. stock has gone up 46 percent. Shares in Newmont, Nevada’s other gold mining corporate giant, have gone up 44 percent since the year began.

The countercyclical price of gold — the worse the economy, the higher the price — is a long-standing phenomenon. It’s happened time and again, not least during the Great Recession. Even as gold’s price fell once the economy began to recover, gold had established a new $1,100 (or thereabouts) floor, substantially higher than a pre-Recession floor of about $300.

The splashy market values currently enjoyed by Tesla and Amazon, as well as Apple, Alphabet-owned Google, and the data center operator Switch, similarly reflect stock prices that are not only substantially higher than springtime coronavirus depths, but higher or equal to all-time highs. 

The techy-techy companies stand out, but the whole stock market has been doing surprisingly well. Since troughing out in March, the Dow Jones has gone up 43 percent, making up most of the ground abruptly lost when the corona freaked everybody out.

At least there’s sort of an excuse for gold spiking while the rest of humanity plunges into misery and despair. It’s the safe haven investment.

The stock market’s rise is more, well, creepy. It reflects an increasingly financialized economy’s diminished capacity to do what “the free market” is supposed to do: broadly expand prosperity. Whatever else today’s stock market is, it is also yet another example of how the covid has exposed pernicious structural social and economic failures.

So… what’s this got to do with Nevada, the state by most accounts where working people have been hit the hardest by the pandemic’s economic consequences, and where the recovery will be uniquely nasty, brutish and slow?

Not much. Sadly.

‘The Battle Born way’

Gold’s sweetheart deal in Nevada is so well known even legislators talked about it, in public, last week. (Though, as this is written, mining’s tax deductions are like the weather; everybody talks about it, but…)

As for the other aforementioned companies, each and every one of them, and dozens more, are currently benefiting from generous tax breaks and other “incentives” bestowed by Nevada as part of a national zero-sum game where U.S. states and cities rush to see who can sell out their citizenry fastest and hardest to attract and retain businesses, despite any convincing evidence that such “incentives” even matter to the companies’ location decisions.

Nevada thus far has had a budget response to the crisis, the orgy of cuts to health care, education and other services currently taking place in Carson City.

But other than distributing money from federal relief legislation, Nevada hasn’t had, and doesn’t have, an economic response — unless you count the economic development crowd’s promise to dole out more tax breaks.

Well, maybe that’s unfair. Legislators meeting in the special session have been very clear about their plan for Nevada’s economic recovery: Cross fingers and hope Mitch McConnell and Donald Trump send more money.

The scale of the crisis demands more money from the feds. Most urgently, at the end of this month, the $600 a week in federal unemployment benefits will end, even though for hundreds of thousands of Nevadans, unemployment won’t.

Whatever Democrats in Congress can get McConnell (and Trump, though he’s been little more than a spitball-throwing bystander during the pandemic) and the Republicans to pass, it will be too little. 

If Biden wins in November and Democrats retain the House and regain the Senate, whatever relief a new government provides next year, when many Nevadans will still be un- or underemployed yet still have to pay for food, will also be too small.

And on the outside chance Nevada’s governor and legislators manage to offset budget cuts with additional revenue this week, it will be Lilliputian, not a serious policy response but an attempt to save face.

Waiting for Washington to come to the rescue isn’t going to cut it. Nevada needs to help itself.

When it comes to government assistance for its people, Nevada is a notoriously cheap, mean state.

But there are several actions, some immediate, others longer term, the state could take to help Nevadans when they need help most. When not only Nevada people but Nevada business and industry are struggling, industries that are thriving should have to step up.

Thus far during the aforementioned special session to cut budgets, there has been scant indication those industries will be asked to do so. 

The special session that started last week is — or would have been — an opportunity for the governor and lawmakers to find ways for Nevada to help Nevadans.

Instead, they’re giving the state a knee-jerk, business-as-usual reaction that grasps the urgency of the crisis in one and only one area, the state budget. The harm inflicted on Nevada’s economy and people by this special session will be far more consequential, and longer lasting, than any benefit derived from meeting the state constitution’s balanced budget mandate.

Democrats love — no, really, really love — to excuse their inaction by pointing at the two-thirds requirement in both houses necessary to raise taxes.

Here’s a thing: Republicans in the Nevada Legislature have shown support for higher mining taxes before. There are also Nevada Republicans who have railed against giveaways to business. They might be particularly receptive to the idea of reversing giveaways and/or raising commerce tax rates for the likes of Jeff Bezos and Elon Musk.

Perhaps Democrats should have asked.

“Nevadans have faced difficult challenges before, and we have always persevered in the face of obstacles,” reads the document from Sisolak’s office that outlined the budget cuts. “It’s the Battle Born way.”

Nevadans have suffered mightily in “difficult challenges” before, and been pummeled even during the recovery by smaller wages, unstable and worsened working conditions, and a state government that is as callous as it is callow. If past performance is an indication of future results, when the current crisis is over, things will be even worse for working Nevadans than they were before the crisis started.

That’s “the Battle Born way.” And it’s a crock.

Hugh Jackson
Editor | Hugh Jackson has been writing about Nevada policy and politics for more than 20 years. He was editor of the Las Vegas Business Press, senior editor at the Las Vegas CityLife weekly newspaper, daily political commentator on the Las Vegas NBC affiliate, and wrote the then-groundbreaking Las Vegas Gleaner, which among other things was the only independent political blog from Nevada that was credentialed at the 2008 Democratic National Convention. He spent a few years as a senior energy and environmental policy analyst for Public Citizen, and has occasionally worked as a consultant on mining, taxation, education and other issues for Nevada labor and public interest organizations. His freelance work has been published in outlets ranging from the Guardian to Desert Companion to In These Times to the Oil & Gas Journal. For several years he also taught U.S. History courses at UNLV. Prior to moving to Las Vegas, he was a reporter and then assistant managing editor at the Casper Star-Tribune, Wyoming’s largest newspaper.