At some level, Alaska exceptionalism is a part of Alaskans' psyche. We all feel that Alaska is different from other states, and that feeling takes many forms of expression, such as the saying, "We don't give a damn how they do it Outside."
Alaska is different from other states of the Union in many ways, from our off-the-scale size to our Permanent Fund dividend.
Yet we Alaskans hesitate to comprehend, accept, and act on Alaska exceptionalism in one important aspect -- our relationship as citizens to our mineral wealth. We often invoke the phrase coined by the late Gov. Wally Hickel that Alaska is an "Owner State." We know that the federal government transferred a vast amount of mineral wealth to Alaska at statehood. And we are vaguely aware that Congress, at the urging of the framers of the Alaska Constitution, restricted the state government's authority to transfer title to the minerals to the private sector. But we do not yet accept that state and federal laws provide a new type of "ownership" of the mineral wealth lying under and within state lands.
The late Gov. Jay Hammond understood that the phrase "Owner State" does not fully capture the unique relationship of individual Alaskans to the state's mineral wealth. Hammond believed that our mineral wealth (at least a portion) belonged directly to the people -- all of the people. Thus, he proposed to allocate dividend-paying shares in the Permanent Fund Corp. to each adult Alaskan, a proposal that ultimately resulted in the Alaska Permanent Fund Dividend Program that has been in place since 1982.
By almost any measure, the Permanent Fund -- professionally managed and off-limits to the state Legislature -- has provided greater benefits to the state and its citizens than if that wealth had been available for appropriation by the state Legislature. And the dividend has, to most Alaskans, been a wiser and fairer allocation of a small portion of our nonrenewable resource wealth than leaving that wealth all under control of state government. For example, economist Scott Goldsmith has credited the Permanent Fund dividend as an important factor in cutting the poverty rate and narrowing the income gap in Alaska, something that can be said of virtually no other state-funded program.
With the Permanent Fund Corp. and associated dividend having been so successful, why not extend the program to all of Alaska's mineral wealth? Why not treat the minerals on state lands as if every Alaska citizen of today, tomorrow and every day thereafter has an ownership stake in those minerals?
Consider: How well has our state government managed our mineral wealth to date? Has the greatest possible public good been realized? In an admittedly extreme case, the state's hard rock mineral mining overall generates little public revenue. The only public good has been jobs for a tiny fraction of the state's population. The state government's management of oil resources seems, at first blush, to have been better, considering the billions of state revenues from oil production on state lands. But how many of those billions have benefited Alaska and Alaskans in lasting ways versus how much wasted, such as on failed experiments in public-sector economic development projects?
Consider the cumulative value of the oil produced from state lands -- $500 billion as of 2009. What fraction of that $500 billion has gone to the state's coffers or into the pockets of Alaska workers and companies (as opposed to outsiders) versus the share taken by multinational corporate executives and shareholders who either have never been to Alaska or who rotate in and out? Compare the public benefit realized from those hundreds of billions of dollars to the public benefit generated from just the one-tenth of the state's revenues from oil production transferred to the Permanent Fund Corp. As Goldsmith noted in a 2010 analysis, "most of the cash from dividends will ultimately find its way into the Alaska economy to increase employment, population, and income. A rough estimate of the total (direct and indirect) macroeconomic effects of this increase in purchasing power is 10 thousand additional jobs, 15 to 20 thousand additional residents (drawn to the state because of the jobs), and $1.5 billion in additional personal income."
Our collective mineral wealth is not "owned" by our state government. We own that wealth -- we the people who are citizens of this state and, more importantly, they the people who will be citizens of this state in the future. Let's take the management of those resources away from politicians and bureaucrats and entrust them to professionals charged with a fiduciary duty to manage those assets for the highest public good. Let's create an Alaska Public Minerals Corp. Let's include annual distributions to every individual Alaskan of a portion of the earnings of the corporation to give every Alaskan a direct stake in how well they are managed. Let's do this before there is nothing left for future generations of Alaskans.
And what of financing our state government? It should be done the old-fashioned way -- through taxes on income. Depending on the proceeds of depletable assets is not sustainable, and is one aspect of Alaska exceptionalism that has not served us well. Worse, such a model handcuffs private sector economic growth. Government nurtures and encourages that which sustains government. If what sustains government are taxes on the extraction of oil, government policies and actions will lead to extracting more oil. But if what sustains government are taxes on the incomes of individuals and companies working in Alaska, government's policies and actions will lead to increases in those incomes. Economies of countries where the government is financed from income taxes -- think the United States, Germany, and Japan -- are stronger, more diverse, more vibrant and more productive than economies of countries where government is financed largely or exclusively from the extraction of oil and gas -- think Russia, Iran, Saudi Arabia and Venezuela. Alaska's anemic economic performance for the first 50-plus years of statehood is further proof of this.
Despite our sense of exceptionalism, Alaska and Alaskans suffer in comparison with other states. It is not too late to change. A start would be to convey Alaska's mineral resources to a professionally managed corporation with the requirement that the earnings be distributed to every current and future Alaskan.
Walter Featherly is a lawyer and the executive partner of the Anchorage office of Holland & Knight LLP. He is a long-time Alaska resident who spent a part of his childhood in Yupik villages in southwest Alaska.
The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary@alaskadispatch.com