Alaskan Socialism is in trouble

January 3, 2013

So here’s the thing: Alaska is a socialist state. And it’s in trouble.

No–seriously. Alaska’s socialist. I realize this fact runs afoul of the classic sense of Alaska as the home of rugged individualism, but bear with me.

Why is Alaska socialist?

Well, for one thing most of the oil under its tundra is on state-owned land. So when oil companies come and drill and pump that oil, they have to pay the State of Alaska huge royalty fees. For what amounts to state-owned oil.

Hmm. State ownership of a natural resource. That sounds a whole lot more like socialism than capitalism to me.

But there’s more. For two, Alaska sends each of its citizens a check every year just for being Alaskan. The Alaska Permanent Fund sent every Alaskan a check for $1,174 in 2011, for example. The money came from the royalty fees paid to the State by the oil companies. It varies annually, but it comes just for being alive.

Hmm. State payments to people just for living. Sounds like a conservative caricature of Obamacare.

For three, Alaska receives vastly more in federal dollars every year than its citizens pay in taxes. Indeed, only the District of Columbia–home to the federal government, after all, and a place with a limited tax base–sees a greater ratio of federal dollars come in compared to federal taxes paid out. In Alaska’s case this high federal spending derives from its many military bases, but the point is clear: Alaskans get a lot more money from the federal government than their citizens pay to the federal government in taxes. Alaska is, in a sense, a dependency of the federal government.

(By the way, this pattern is fairly common in the US: states that see more federal dollars come in than their citizens pay in taxes are more often than not Republican-leaning in their politics, while net contributor states – like my Illinois – lean Democratic.)

For four, all these sources of “free” money make it possible for Alaskans to pay very low taxes. There is no state sales or income tax in Alaska. Instead, Alaskans pay for their public goods and services not with their own money, but with other peoples’. One would think tea partiers would demand Alaska be tossed from the Union with this level of welfare benefit, but they haven’t so far, at least not that I am aware.

But here’s the thing: the oil is drying up. Production has declined year over year for a decade now. 2011 saw Alaska’s production fall to its lowest levels in more than 35 years. There’s talk that the Alaskan pipeline may no longer be worth its cost of operation.

So what happens to Alaska when oil production runs so low its financial model falls? Especially when the fantasy of Alaska-as-home-of-rugged-individualism runs afoul of the financial fact that Alaska is organized along socialist financial principles and is even then financially-dependent on the federal government for its survival?

That’s right, dear readers: I’m telling you that the great symbol of American self-reliance, Sarah Palin, was the half term Governor of a declining socialist paradise.

Have fun with that thought for the rest of the day! I imagine you will …

10:48am | URL: https://tmblr.co/ZPUuPyaslBM1

(Notes: 138)