On Jan. 20 economists from the University of Alaska Anchorage's Institute of Social and Economic Research came before the Alaska Legislature to warn lawmakers that without corrective action on the state's fiscal crisis the state's economic recession will linger.
Specifically they warned that "cutting state jobs would be the Legislature's worst choice." The ISER economists projected that for every $100 million saved in the state budget by cuts, between 1,400 and 1,700 people would lose their jobs.
The high number is a result of having 450 to 730 direct jobs lost for every $100 million, and then adding in a multiplier for the loss of those people's spending in Alaska's stores and overall economy.
Yet, one week after hearing this dire economic report, state Senate President Pete Kelly, R-Fairbanks, still supported cutting $750 million to $1 billion in state expenditures over the next three years. He expressed that sentiment at a fiscal forum hosted by the nonpartisan Alaska Common Ground group.
When pressed about such a steep cut in these difficult economic times, Kelly stated, "wealth does not come from government, it comes from the private sector." This view comports with his sense, touted earlier, that the state is drifting toward socialism.
For anyone who understands what socialism really is, nothing could be further from the truth. The The Merriam-Webster dictionary defines socialism as 1) a system of society or group living in which there is no private property and 2) a system or condition of society in which the means of production are owned and controlled by the state.
The closest the state of Alaska comes to this definition is how we handle state lands and mineral rights. By in large, we lease them for production to the private sector. In essence, there has never been, nor will there ever be, any drifting toward socialism, because the private sector rules in Alaska.
Besides, socialism is not a function of the size of government.
Ever since President Ronald Reagan declared "government is not the solution to our problem; government is the problem," fiscal and social conservatives like Kelly have failed to see that wealth does not come from the private sector alone. It comes from a "mixed economy" where government plays a strong role.
Historical analysis shows that to get and keep prosperity, a strong, effective government is needed as well as competitive markets. In "American Amnesia: How the War on Government Led Us to Forget What Made America Prosper," Yale University political scientist Jacob Hacker notes:
"You need a mixed economy in which the strong thumb of government and the nimble fingers of the market each play a vital role. Notions of a small government, with unfettered markets leading to broadly shared prosperity, have turned out to be as a real as the Tooth Fairy. It was precisely because the United States created a mixed economy roughly a century ago that we escaped the widespread poverty, bad health, and limited education of our ancestors. After decades of making government the bad guy, our society is paying the price -– falling behind the pace of societal improvement not just of our own past, but also of other affluent democracies today."
Making government the bad guy has been going on in Alaska for the last decade and resulted in the fiscal 2017 budget being the lowest (after adjusting for population and inflation) state budget in 10 years.
Yet, when asked where $750 million in cuts will come from, Kelly had no answer. Instead he just reiterated, "wealth is generated by the private sector." If he only looked beyond his misinformed socialism trend, and indistinct sense of what makes our economy work, he would realize that cutting government to such an extreme will eliminate the "strong thumb" a responsive economy depends upon.
Fortunately, there are many businesses and organizations that get this connection amid our fiscal crisis. A coalition of 150 organizations and businesses have formed the aptly titled, "Alaska's Future," and according to the group's website its mission is "to support the development of a stable and sustainable fiscal plan that will allow the Alaskan economy to grow and thrive."
Although undefined, it calls for responsible budgets cuts and new revenues; not draconian reductions that will hinder Alaska's economy.
A few days ago, an Alaska Dispatch News headline read, "Anchorage faces more job losses this year as state budget problems linger." The headline and factual story under it bears truth to what ISER warned us about — cutting deeply, during an economic crisis, is the worst choice.
Yet, if the Legislature follows the lead of Kelly's myopic, ideological vision of "bad government" drifting toward socialism, lawmakers will be putting Alaska's economy in the hands of the Tooth Fairy.
Kate Troll, a longtime Alaskan, has 22 years of experience in coastal management, fisheries and energy issues. She is a former executive director of United Fishermen of Alaska and Alaska Conservation Voters, and has been elected to local office in Ketchikan and Juneau. She now lives in Douglas.