My Turn: 'Trust me' is no plan for Alaska's future

Posted: Sunday, October 27, 2002

The Anchorage Daily News recently invited gubernatorial candidates to discuss major issues. Republican candidate Frank Murkowski's response was an extended demonization of Fran Ulmer. His premise: "Alaska's economy is not what it was or what it should be... [We have allowed] Outside forces and burdensome government regulations to slowly strangle the resource-based industries that are the foundation of our wealth."

History says otherwise. In 1947 the Cold War fostered a two-decade-long construction boom that transformed the economy and created the state of Alaska. In 1969 an international consortium of petroleum corporations launched the oil boom with a pipeline from the giant state-owned Prudhoe Bay oil field to Valdez. When OPEC increased world crude prices ten-fold, Alaska became "wealthy beyond the dreams of avarice."

The end of the Cold War down-sized the defense sector of our economy. By the late 1990s Prudhoe production had begun its predicted downward trend, while the earnings of the Alaska Permanent Fund became the state's leading source of income.

Natural resources production is tied to exports, which are determined by national and global markets. Because of our strategic location and energy resources our economy is sensitive to global forces such as the Cold War and the petroleum wars of the Middle East.

Instead of confronting these economic fundamentals, Murkowski invents bogeymen. He blames the Knowles-Ulmer administration and environmentalists for the decline of the Southeast timber industry. This is nonsense. The shutdown was inherent in the industry's creation. Pulp mills arrived in Southeast because of the Cold War and the 1947 U.S. policy of rebuilding Japanese industry. The federal government heavily subsidized these mills. When the subsidies ceased, the mills closed.

Murkowski laughably attempts to link the Knowles-Ulmer administration with efforts to block ANWR exploration. The truth is that Fran Ulmer has strongly advocated exploration of the Arctic National Wildlife Refuge as well as the building of a natural gas pipeline.

Murkowski also charges that the Knowles-Ulmer administration helped fund "predatory environmental organizations working to shut down Alaska's fisheries." Fran's record gives the lie to Murkowski's slander. She has always recognized commercial fishing as one of Alaska's most important industries. As governor she will bring outstanding expertise and experience to fisheries issues. As U.S. commissioner to the North Pacific Anadromous Fish Commission she earned a reputation for tough negotiation and fostering cooperation. During her tenure high seas driftnet pirates were brought under control, benefiting Alaska salmon runs and fishermen. She has ambitious plans for restoring the prosperity of our fishing industry and communities.

Murkowski's grasp of fiscal matters is even less secure than his shaky understanding of Alaska's economic history. He rejects the idea that citizens should pay taxes. Unfortunately, the era of easy oil money is past. Most future oil development will not be on state land and we will have to start paying our own way just like other states.

Instead of creating a welcoming investment climate by balancing Alaska's books, as Fran Ulmer would do, Murkowski proposes to simply "grow Alaska's wealth." He says he will "increase oil production by bringing in more companies to Alaska to invest in exploration; demanding development of commercial oil reserves." I worked in the economics department of Standard Oil Company for five years before World War II, and I can testify that nobody "brings in" an oil company. They come when the opportunity cost calculations tell them the decision is right. Nobody "demands" that they develop their known commercial reserves. That happens when the optimum time arrives.

In his columns, Murkowski proposes to "help fund education with revenue from a new Southeast state forest." Unfortunately, SE Alaska timber is primarily low grade - a fact that did in the now defunct timber industry despite heavy government subsidies.

Finally, Murkowski says he "will work to grow the Permanent Fund." Thanks for the specifics, Frank. No further comment on this "proposal" is deserved.

Murkowski says he's a man with a plan, but his pitch to Alaskans boils down to "trust me." My response, based on his demonstrated ignorance of economics and history, is simply, "Why should we?" The side-by-side comparison makes clear that Fran Ulmer is the better choice to lead Alaska.

George Rogers of Juneau established and directed the Institute of Business and Economic Research at the University of Alaska and served as a consultant to the Constitutional Convention. He was instrumental in establishing the Alaska Permanent Fund.

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