Investing PFD in gas line will not cost jobs, professor says

Lisa Demer

Gov. Sean Parnell on Tuesday blasted Democratic challenger Ethan Berkowitz's proposal to allow Alaskans to invest their Permanent Fund dividends in a natural gas pipeline project, asserting that the approach could ultimately cost Alaska 2,000 jobs.

But the governor's assertions soon were challenged by the very economist whose work the Parnell campaign used in its analysis.

Parnell based his conclusion on a July paper by an economics professor with the UAA Institute of Social and Economic Research that included the rough estimate that PFD spending supports about 10,000 jobs. Since Berkowitz estimates that 20 percent of Alaskans might invest their PFD in a pipeline project instead of pumping it immediately into the economy, that means as many as 2,000 jobs could be lost, the Parnell campaign says.

Scott Goldsmith, the economics professor who authored the PFD paper for a conference in Brazil, said in an interview that the Parnell campaign analysis is faulty.

"When you reduce the PFD and put the money into something else, you have to look at what the something else is," Goldsmith said. "It's not like the money is just flushed down the toilet. So as it stands now, it's a comparison of apples and oranges. In that sense, it's an incomplete analysis."

While some jobs might be lost in the short term, it likely would be fewer jobs, he said. And any analysis must consider whether the investment in a pipeline would in fact ultimately create well-paying jobs.

"Let's say you lose 1,000 jobs at Walmart but you gain 1,000 jobs on the North Slope in five years. What's better for the state?" Goldsmith said. "This notion that we just need to maximize the jobs today by pumping money into the economy and not thinking about using our resources to invest for the future is incredibly shortsighted."


A big natural gas pipeline project from Alaska's North Slope has been talked about for decades, but the cost estimates are huge, starting at more than $20 billion for a pipeline that ends in Valdez, to as much as $40 billion for one that ends in Alberta. Backers say it would bring North Slope gas to market, provide a source of energy for Alaskans and create a new flow of revenue into the state treasury.

Goldsmith hasn't examined the Berkowitz proposal and said he wasn't familiar with its specifics. But it's likely that some number of people who would invest in a pipeline project would be those with higher incomes who would be investing their PFD money anyway, not rushing out to buy a big-screen TV or paying the winter's heating bills in advance or going out to dinner more than usual. So that money wouldn't provide an immediate economic boost anyway, he said.

At any rate, it's unlikely that 20 percent of Alaskans would want to invest their PFD in a pipeline, based on the much lower percentages who have donated part of their PFD to charity or invested it directly in a University of Alaska college savings plan, Goldsmith said. Berkowitz's pipeline proposal assumes that 20 percent of the people would participate but notes that it could be less.

Goldsmith said someone called him Tuesday to ask if the dividend were cut by 20 percent, would the number of jobs also be reduced by 20 percent? Yes, Goldsmith said he told the caller, who didn't mention being with any campaign.

"There was absolutely no reference to the Berkowitz proposal," Goldsmith said. "If I had been asked about that, I would not have said what I had said."

Brandon Maitlen, spokesman for the Parnell campaign, said he made the call to check the 20 percent figure and see whether anything else needed to be factored in.

Parnell's campaign then sent out a press release attacking the Berkowitz proposal.

"Ethan's ideas might make for great campaign fodder," Parnell said in a written statement. "But Alaskans deserve the facts about how our economy will be impacted by a candidate's policy proposals. The real fact is that Alaskans are not willing to trade their permanent fund dividend checks and 2,000 Alaskan jobs for the potential return on a pipeline project without a buyer, seller, shipper, or concrete plan."


Maitlen acknowledged that the campaign's analysis was "back of the envelope," a quick look at the Berkowitz proposal.

Regardless, the campaign is standing by its assertion. Some number of jobs would be lost in the short term because money that normally flows into the economy through PFDs would be set aside, the Parnell campaign maintains.

Meanwhile, the Berkowitz campaign says the Parnell team is playing political games.

"People spend their PFD on all sorts of things every year, and we don't control that now," said Jon Blair, Berkowitz campaign manager. "Some people buy shirts that were made in China. Some people have sausage imported from New Orleans. ... We don't control what people are doing now. We wouldn't control what people are doing under the plan."

Blair said the proposal would create pipeline jobs.

"The idea that giving people an additional option to take ownership in their own state is somehow going to destroy jobs is ridiculous," he said.

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