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Alaska is still an economic colony. The Legislature’s action on Permanent Fund earnings proves it.

  • Author: Steve Haycox
    | Opinion
  • Updated: May 24
  • Published May 24

Trans-Alaska pipeline in June 2017. (iStock / Getty Images)

Though often imagined as a land of self-reliant individualists, Alaska's destiny has long been heavily dependent, in truth, at the mercy of forces beyond the state's control, and of decisions made by powerful people elsewhere. Distance from markets, and economies of scale defeat profitable manufacturing or commercial agriculture here; locally produced goods cannot compete successfully or for long with products made closer to buyers. So, the only components from which a regional economy can be constructed are the natural resources: historically, furs, fish, gold, copper and other minerals, including oil.

There isn't enough capital in the state to develop those resources profitably, so we're dependent on financing by absentee corporate investors: In the case of oil, the companies that operate North Slope production and that own the Trans-Alaska Pipeline System, as well as the oil tankers that transport it. Since throughput began, taxation on the production and transport of oil has generated most of the money the state spends on services to its residents. That's been a powerful goad to the Legislature to provide incentives for such investment.

Most of the benefit realized from development of Alaska's resources has not accrued to the people who live here. Rather, it has gone to enrich investors. As the exploiters are corporate entities, it's their shareholders who reap most of the benefit; many are large corporate or financial entities themselves.

At the same time, an extraordinary amount of money comes into the state directly from the federal government. It comes in services to Native people, in management of the federal conservation units, in military spending, and some basic infrastructure (new highway construction, for example). We rely on the annual federal budget for such funding, and on the success of our congressional delegation in attracting it. But the vicissitudes of the federal budget are often unpredictable, and are in the hands of the congressional delegations from 49 other states.

Those are the forces we cannot control, on which we depend. While there may be many self-reliant and individually independent folks in our midst, most of us in Alaska rely on a job the money for which comes from absentee corporate investment or the federal government. The much smaller elements of our economic base also are mostly dependent: Investment in the successful mining ventures comes from Outside, and also in the forest products industry, and even in tourism, whose major players include Carnival (Princess and Holland America) and Alaska Airlines. Those Alaskans working in commercial fishing are more dependent on the major seafood companies and on government regulatory bodies than they would like to be.

In the face of such systemic dependency, it's hard to make a case for self-reliance. It's not inappropriate to call Alaska an economic colony, a colony being an entity subject to policies that control its destiny not made by the residents.

Statehood was intended to free Alaska from its colonial dependency, and it accomplished much in that regard. Myriad decisions affecting the lives of Alaskans once made in bureaucratic offices in Washington, D.C., are now made here. But the systemic economic dependencies that have determined Alaska's circumstances from the beginning of modern development remain today.

The designers of the Alaska Permanent Fund hoped to wrest more of the benefit from the exploitation of Alaska's resources for the people of Alaska, and at the same time somewhat mitigate the effects of our economic dependency. As the fund was made part of the state Constitution, its corpus cannot be appropriated by the Legislature. But the dividend program, drawn annually from the earnings of the fund, is how all Alaskans receive some personal benefit from development of their natural resources.

Would it please the designers of the fund that the state Legislature has now diverted into state coffers for general appropriation a large portion of what used to be the people's direct benefit? No! Former Gov. Jay Hammond said clearly that the fund's earnings should go into the people's hands, not the Legislature's.

There are important constitutional questions about the current incentives the Legislature seeks to pay for through bonding, questions the lawyers and the courts will have to sort out. Meanwhile, the sense of betrayal around the state over the earnings diversion is palpable, quite rightly.

The views expressed here are the writer's and are not necessarily endorsed by the Anchorage Daily News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary@adn.com. Send submissions shorter than 200 words to letters@adn.com or click here to submit via any web browser.

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