Saturday, August 5, 2017

Must Read Alaska has this one wrong ...

Thursday, Must Read Alaska posted a commentary headlined "In Alaska, it’s unions vs. workers in the private economy,"

The gist of the commentary was that, by supporting Governor Walker and various other candidates, the unions have helped to create an "anti-development" state government which is undermining supposedly "shovel ready" construction projects which otherwise would employ Alaska workers.

Must Read Alaska is reading the situation wrong.

We believe the struggle really is between those in the Top 20% who want to maintain continued state spending on things that benefit them (like construction projects) while paying no taxes on the one hand, and the remaining 80% of Alaskans who would end up bearing the burden of such projects through the continuation of deep PFD cuts to fund them.

What Must Read Alaska attempts to paint another way, is actually the remaining 80% fighting back and saying, "no more capital spending" until the state figures out some way to do it other than by shoving the financial responsibility onto their backs.

If the Top 20% were prepared to pay a proportionate share of their income even remotely equal to what they propose the other 80% give up through PFD cuts, then there might be enough funding available to pursue the projects.

Without that, however, all that Must Read ultimately is advocating is that 
a large majority of Alaska families continue to suffer significant reductions in their income in order largely to benefit a handful of Top 20% construction contractors and subcontractors.

Whether or not they realize it, Must Read also is advocating a position which would significantly worsen the overall Alaska economy. According to the March 2016 ISER study, there is a huge difference in the effect on the overall Alaska economy between money spent on construction budgets and, alternately, to fund the PFD.

Because a large part of 
a state dollar spent through the capital budget leaves the state immediately for steel and other speciality goods, spending a state dollar on capital projects only returns $0.65 in overall Alaska income. According to ISER, a dollar distributed through the PFD, on the other hand, ultimately returns $1.40 in overall Alaska income, more than two times that spent on a state capital item.

Continuing to suck dollars out of the private sector through PFD cuts in order to recycle them through government capital spending certainly would benefit a few -- particularly state construction contractors and subcontractors -- but at the expense of the large majority of Alaska families and the overall economy.

Frankly, it's thinking like this -- "let's build big projects" -- that led to the surge in state overspending during the 2010-14 Parnell-era timeframe and sowed the seeds of the state's current fiscal difficulties. While some in the Top 20% want to continue to "let the good times roll" through continued government capital spending directed to projects that will benefit some of them, that will only send the overall Alaska economy even further into a tailspin.

From the perspective of the overall Alaska economy and the large majority of Alaska families, the state is much better off restoring the PFD and letting individual Alaskans and Alaska families decide where to spend the money, instead of redirecting the money through government in order to benefit a select few construction contractors and subcontractors.

Bottom Line:  At least in this case the conflict isn't between unions and the private sector workers, it's between what some in the Top 20% want for themselves and their friends on the one hand, and the health of the overall Alaska economy and Alaska families on the other.