Legislators delve into alternative economic options

New Zealand cabinet minister recommends state leaders get creative to deal with budget

Posted: Friday, January 20, 2006

With a revenue surplus of $1.2 billion and everyone sticking their hands out, Alaska legislators are turning to experimental economics for answers.

"I know my brain has to do some stretching," said Rep. Sharon Cissna, D-Anchorage.

Several lawmakers on Thursday were treated to "Capital Campus," a program put on by George Mason University's Mercatus Center, which teaches state legislators, congressmen and their staffs how to think creatively using economics.

Legislators heard how to relate theories to areas of education reform, health care and spending a budget surplus.

"Mercatus is obviously interested in policy calls that affect economics. And I've actually kind of pushed them to come and talk to us about how they see things from a think-tank perspective," said House Majority Rep. John Coghill, R-North Pole.

At lunch, Maurice McTigue, former New Zealand cabinet minister and visiting scholar at the center, advised legislators to be creative with their spending this session. "In my view this is going to be a period of opportunity. But it's only going to be a period of opportunity if you really do focus looking forward on things that make a difference," McTigue said.

By spending more money investigating the root of problems, the state would come out better in the long run, he said. For example, New Zealand was able to drastically reduce its number of welfare recipients by spending 45 minutes with each beneficiary, instead of seven minutes, to learn about why they needed government assistance.

"Control input, instead of poor outcomes," McTigue repeated several times during his speech.

He said leaders often cannot be trusted when handling savings accounts, and pointed to companies that have squandered their employees' pensions. Savings should either go toward debt or investing in something that would generate more money for the state, he said.

A video game in which legislators participated simulated market movements and showed that a cutthroat, take-all attitude doesn't always win.

"People tend to think economics is about people acting in their own self-interests," said George Mason University economics professor Bart Wilson. The exercise showed that personal relationships and trust play a key role in decisions, he said.

An education expert said reorganizing a school faculty's time, space and traditional job descriptions can bring about results that states want.

Studies of inner-city schools with problem students showed improvement when teamwork was applied, and even a janitor pitched in to tutor kids, said William Parrett, director of the Center for School Improvement and Policy Studies at Boise State University.

Funding should be directed to specific needs, such as an extra class for those students having trouble reading, he said.

• Andrew Petty can be reached at andrew.petty@juneauempire.com.

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