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Alaskans’ pessimism is justified. We’re suffering from the resource curse.

  • Author: Charles Wohlforth
    | Opinion
  • Updated: May 29
  • Published May 29

Even at a sunny Alaska Memorial Day picnic, possibly the most hopeful place on Earth, the talk got stuck on crime, homelessness and bankrupt businesses.

Unemployment is high, emergency rooms are overwhelmed by mental patients, and able-bodied men are camped out in greenbelt parks living on petty theft.

What else is going wrong? The newspaper reported Alaska was topping the nation in sexually transmitted diseases. At least we're good at something.

I've never seen the mood as dark or Alaskans as pessimistic. Even old-timers whose explosive optimism built the state advise young people to pursue their careers elsewhere.

To say Alaska is in a ditch would be too positive. That implies that with a tow rope and an F-150 pickup we would soon be back on the road. In fact, the road is missing.

An uptick in oil prices and a series of announcements of new oil finds on the North Slope got some people thinking Alaska could soon return to the good old days. The Alaska Legislature, for example, passed a budget with a substantial deficit in hopes things will get better on their own.

But, as predicted, higher oil prices quickly drove U.S. shale oil production to a new high. A glut is accumulating and prices are falling.

There's plenty of shale oil in Texas to keep prices down for as long as cars use gasoline. And most of Alaska's big new oil discoveries would require sustained high prices to be economical to develop.

Besides, why would oil be the solution? What has it solved so far?

It has been 40 years since Alaska briefly became one of the richest places in human history. We've had 40 years to solve the social problems that now seem so evident.

The Alaska pipeline was completed in 1977 and soon ramped to maximum capacity, 2 million barrels a day. While it was being planned and built, the Arab oil embargo and Iranian revolution caused a 1,000 percent increase in the price of oil. That was all profit.

At the time, Alaska had serious problems with education, substance abuse, public safety, suicide, sexual assault, health care, mental health care and homelessness.

After a 40-year run with the oil money, we have serious problems today—among the worst in the nation—with education, substance abuse, public safety, suicide, sexual assault, health care, mental health care and homelessness.

In some ways, the problems are worse.

In the 1970s, Alaska attracted some of the nation's best young people to be teachers. Pay was high and benefits generous.

The challenges of teaching in a vast, relatively new state were daunting, but research tells us that quality teachers are the most important ingredient to school success. The best way to get them is through competitive compensation and public support.

Today, Alaska teacher salaries are no longer competitive with other states. In addition, new Alaska teachers don't receive pensions, just a portable 401(k)-style account, and they are ineligible for Social Security.

In the latest national tests, Alaska students were close to the bottom and falling. We also have the lowest percentage of our graduates going to college and some of the highest levels of chronic school absenteeism.

Some kids get a great education in Alaska — mine did. But teachers can't make kids attend school or go to college.

The problem goes deeper. Something sapped too many Alaska kids of the ambition — or hope — that creates a drive to succeed in school.

Causes of big social problems are complex. Each of Alaska's 740,000 people has an individual story. But when you pull back, you can make some generalizations, just as you don't need to describe every tree to say how a forest grows.

In Alaska's story, money from oil and the federal government made us unique. No other state has an economy like ours, in which the main sources of wealth come not from making or doing things but from simply being here.

It hasn't worked. Alaska failed to develop the human capital — the strength in our people — to be ready for the next stage in our development.

Alaska won a natural resource lottery. Everyone dreams of winning the lottery, but stories are many about how those winnings ended up ruining the winners' lives.

The problem is called the resource curse.

The curse happened in other places in the world. Venezuela and Nigeria were destroyed by their oil money. Some countries in the Middle East also have lots of oil money but miserable, dangerous living conditions.

The resource curse happens when a flood of income displaces normal economic activity, motivates corruption, distorts life decisions, and induces growth of a population that cannot be sustained when the non-renewable resource is gone.

We can see evidence of it in Alaska's failure to keep up with changes happening in other states.

The health care costs that are devouring Alaska competitiveness are one example. Other states adopted innovations to contain costs two decades ago. Alaska ignored those changes. We could afford to pay more. Now we've got the highest-cost health care in the world.

Worldwide, higher education turns out to be the economic engine of the 21st century. Innovators, engineers and idea generators are creating spectacular wealth around universities and intellectual communities.

In Alaska, young people often went into resource jobs that paid more than they could make in professions that required college degrees. Our university has areas of strength but is far from being a transformational force. Meanwhile, its low subsidized tuition prevented private colleges from succeeding.

Oil money has left us with an underqualified work force and a population that is too large to support.

I know this column will make people mad. I'm from here. I get it. I've always been proud of Alaska and of being an Alaskan.

But I think we need to get beyond denial and start thinking about a different future.

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(at)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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