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June 11, 2001 The Anchorage Daily News proposes a 'Plan B' for long-term economic prosperity:

Posted: Tuesday, June 19, 2001

How can Alaska get back on track to prosperity and growth? Reports that Alaska had the second-slowest growth of all 50 states during the boom years of the 1990s should trigger both concern and activity.

Dreaming and scheming to tap an oil gusher in the Arctic National Wildlife Refuge is not a reliable answer. We can and should continue the fight to explore in ANWR, but as much as we might wish it were otherwise, that issue has been gridlocked for 20 years and could stay that way for another 20 -- or more. We have to have a Plan B.

The gas pipeline is one possible part of the answer, but it is no holy grail. If launched, it would bring a couple thousand high-paying, multiyear construction jobs; a couple hundred permanent jobs; and a couple hundred million dollars a year for the state treasury and would secure long-term, in-state energy supplies.

What that adds up to is an extremely hopeful enterprise -- but hardly another Prudhoe Bay-sized boom. And a gas line is hardly a done deal. The complexities of markets, prices, producers' interests, competitive environment, route choices, potential state investment and so on still mean, after 30 years, that the project remains up in the air. Meanwhile, what else can Alaska do?

The first step is to stabilize state government's long-term finances. Right now, without any general taxes, every additional job, every additional resident, is a net drain on the state treasury. Economic growth means more people and families use state services funded by the state's shrinking oil wealth while claiming part of the Permanent Fund's yearly payouts. Anchorage businessman Ernie Hall is starkly correct when he says we have to figure out how to make Alaska citizens a financial asset rather than a liability.

The continued failure to come to grips with the fiscal gap remains one of the biggest drags on potential growth. What business would feel confident investing in a place that is rich with oil dollars but unwilling to fix its fiscal problem, leaving future generations and industries to hold the bag?

Businesses legitimately wonder whether they will be the target when the state's short-term savings accounts are spent and the cost of needed state services far outpaces the state's available cash.

There's also the question of public services. Companies that know Alaska's public services are inadequate -- or will be because we've failed to balance the books -- will be unlikely to move or invest here.

The fiscal gap has given shortsighted legislators an excuse to stint on K-12 education, the university, stewardship of state-owned natural resources and protection of public safety and the environment. Alaska's quality of life, one of the state's premier economic assets, is at risk.

Alaska should make strong investments in public education, including the university. It's also important to remember that education alone is not sufficient. Even if all Alaska graduates qualified as Rhodes scholars, we'd still have to find a way to keep them from heading south to greener pastures.

Alaska's quality of life is a great tool for fighting that kind of brain drain. As Jamie Kenworthy of the Alaska Science and Technology Foundation says: ''It takes a very few people who are tired of the I-5 traffic in Seattle and L.A. to choose to live in this beautiful place to make a big impact on our economy.''

Alaska is a national leader in home computer ownership and Internet access. One thing that would help, Mr. Kenworthy says, is finding ways to expand the pool of private financing for innovative but high-risk ventures in Alaska.

Alaska's convenient global location is another crucial asset. Anchorage in particular is a logical place for global logistics and light manufacturing operations that need speedy access to world markets. We need to find out why those businesses aren't coming and what the state and city can do (within reason) to get them here.

There is the age-old theme of ''adding value'' to resources or activities already produced or occurring in Alaska. We should sell seafood meals instead of fish, lumber instead of trees. Unfortunately, it's possible to spend a lot of money with not a lot of results. Just look at the struggling seafood plant near Anchorage's airport. The one way to ensure failure, though, is to stop trying because we cannot ensure 100 percent success.

And that leads to the question of competitiveness in harsh and unforgiving world markets. With every product and every process, Alaskans must focus on competitive success, on beating the competition in cost or quality or both. As Mr. Kenworthy points out, for instance, that means leaving behind the ''cost-plus'' mentality of the pipeline years, or defeating the problems of distance from markets or high labor costs so that we compete effectively in a global economy. In the 21st century, a combination of technology, brain power and capital will be the key to success. We need to attract and keep all three.

Rejuvenating Alaska's economic growth will take hard work, most of it far from the political limelight. Nothing within the state's reach will single-handedly deliver prosperity the way Prudhoe Bay did. But creative, farsighted and patient leadership working on many smaller fronts can help Alaska escape the stagnation of the past decade.



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