In only two hundred twenty five years, about three lifetimes by today’s standards, the United States has progressed from a group of colonies to the single leading economy in the world. Our capitalist economy has two main factors that other economic systems (i.e., communism, socialism and fascism) lack: private land ownership and the individual profit motive. 

But there are some ways that Alaska’s economy differs from the rest of the United States: remote villages with little or no business activity, air travel that must be subsidized, limited road systems, no power grids, remote resource-based economy, and public land ownership.   Chief among these factors is land ownership.

Bob Thomas’s piece in the Fairbanks Daily News Miner, Owning a Piece of the Resource Pie, presents the land ownership issue most clearly.  Thomas refers to it as “Alaska’s unique flaw among state governments:”

Gov. Hickel calls it the “Owner State.” I call it an “upside-down economy,” but it’s the same thing. It is upside-down because when resources are developed, the income is paid directly to the state. Elsewhere, most income from natural resources goes to the private sector first and state government tries to collect enough taxes to pay for oversight and a share of the cost of governing and providing public services. In other states, land is mostly privately owned. The land owner negotiates a selling price, and the legislature establishes taxes to pay for government.

This is not to say that Alaska has no opportunities for ambitious business people.  But the bulk of our economy is government workers and businesses that depend on grants and government money.  Government activity, taxes and spending do not create wealth–they merely redistribute it.

In Alaska, even the resource-based industries that do create wealth do not own the resources.  Instead they pay the state for mineral rights, timber rights, fisheries permits, and permits to take tourists onto public lands to snap pictures. The state allows the profit motive, but limits the amount of land available for private ownership.

Thus, we’ll never have “rich oilmen” in the way that Texas has rich oilmen.  Nor will we see “timber barons” in the respect that the Pacific Northwest had timber barons, nor railroad owners who own their railroads, nor miners who own their mines. 

The closest Alaskans will get to large scale land ownership and industrial development are the regional native corporations, which act more like co-ops than private businesses and distribute profits equally among shareholders.

Because Alaskan businesses must often depend on public lands they are more vulnerable to public process as they obtain necessary permits and work through regulations.  Environmentalists and other activists have more clout on public property than on private, and it appears that many of these groups are resolved to stop ALL development in Alaska.

Even on a local level questions often arise, for example:

• borough or city land ownership vs. selling land into the private sector,
• government provided services vs. contracting with a private company,
• environmentalist demands vs private development.

An economist would say the best plan for the future is to lean toward supporting private business growth and development.  We can support responsible growth and good stewardship through existing regulations; we must not make it more difficult than necessary to do business in Alaska.