29 August 2006

America's Welfare State?

One of the things about living in Nome is that it can take mail a little while to get here. That means I just got my issue of the Economist and turned quickly to the article that trashes Alaska - America's Welfare State.

So let's take this article piece by piece.


Alaskan licence-plates may growl that this is the “The Last Frontier”, but urban areas—where four-fifths of Alaskans live—are amply stocked with espresso bars, broadband connections and all the comforts of modernity. Alaskans are, on average, slightly richer than Americans who live in the “lower 48” states.
I'm not sure where the 4/5s statistic comes from but it's clearly an elastic definition of urban. The trickier part about this is the second sentence. Sure, Alaskans may be "on average" slightly richer than people in the lower 48 but this only reveals yet again how misleading averages can be. There may be several people in Anchorage, Fairbanks, the Mat-Su who are quite well off. But what about the thousands of people who live in rural Alaska, in conditions that Alaska's own junior senator, Lisa Murkowski, has frequently compared to "third world." If Bill Gates and I are in a room together, our average net worth is slightly more than Tom Cruise's but that doesn't mean I'm richer than ol' Tom.

Citizens Against Government Waste, a watchdog, calculates that Alaska guzzles more pork per head than any other state.
Yes, this is probably true. Alaska knows how to ride the Stevens-Young-Murkowski gravy train pretty well, as Lexington notes later on. However, this is as much a criticism of Congress as it is of Alaska. Congressional funding is largely dependent, as we see over and over again, on a seniority system, where lawmakers who have been around for a long time can send more money home than those who haven't been. Fortunately for Alaska (but unfortunately for its reputation), Ted Stevens and Don Young (and even Frank Murkowski) have been around for a long time and know how to pull the right levers. Let's re-evaluate this claim when both are gone.

It is not as if they have no other source of cash. Alaska's oil wells allow the state to function without levying an income tax. And the interest from a $34 billion “Permanent Fund”, in which past oil receipts are stashed, gives every Alaskan man, woman and child an annual handout, expected to be about $1,000 this year.
And, as a matter of fact, hasn't Ted Stevens been making this exact point this year? In several speeches, Stevens has noted that it's hard to get funding for the Denali Commission, for instance, when the PFD is so large and there isn't an income tax. Lisa Murkowski, in my recent trip with her, made a similar point in Stebbins.

[Murkowski] shed the “longevity bonus”, a handout to persuade old people to stay in Alaska.
Another way to look at it is to see it as a means of off-setting the high cost of living in the bush so that Alaska native elders can continue the only lifestyle they've ever known.

The victor in the Republican primary, with 51%, was Sarah Palin, an articulate former small-town mayor.
By Alaska standards, I do not consider Wasilla a small town. It's part of the fastest-growing region of the state!

Sixth and finally,
Both candidates agree that Alaska needs to diversify, so that its economy depends less on a commodity whose price goes up and down like a drunken mountaineer.
Yes, of course, the economy needs to diversify (and there's a third candidate who has been talking about the boom and bust economy for some time). Ted Stevens has been arguing for some time that all the federal money is needed precisely so that Alaska can build an economy that is not so dependent on the price of natural resources. Isn't that the argument behind the Gravina Island "bridge to nowhere"? That the money be spent now to open that area to economic development? And the same argument underlies the painting of an Alaska Airlines 737 like a fish. That the industry be promoted so that there is less of a need for federal spending. This argument only holds so much water (after all, there is the question of proportion and the Gravina Island bridge carries a price tag out of proportion to its expected benefits) but it is a discussion that has been going on for some time.

Further, Stevens has called Alaska a "frontier state." The infrastructure in this state is under-developed, which is precisely why the state needs federal money. When you've got scores of villages without running water or flush toilets, it makes sense to ask for some money to provide basic services. Of course (and see point three), the state can kick in some of its own but there are needs in Alaska that do not exist in the lower 48.


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Lori said...

Hi Jesse --

Thanks for the insightful blogging about this recent example of AK trash talk. It galls me to hear the national coverage of Alaska sometimes -- people really don't do their research.

BTW, you might want to start turning on word verification on your blog...looks like the automatic comment trolls have found you :)

Take care!