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Alaska’s faux libertarian economics

At last, we have a legitimate criticism of Sarah Palin and her fellow Republicans in Alaska. But it's worth noting that Alaska is just an extreme case of the US economy's dependence on state support.

In Thursday’s New York Times, Michael Powell wrote about how Republican politicians in Alaska have a contradictory relationship with the federal government. Headlined “Alaska’s scorn of Washington exempts cash,” Powell writes:

No place benefits more than this state, where the Republican governor decries “intrusive” federal policies, officials sue to overturn the health care legislation and Senator Lisa Murkowski, a Republican, voted against the stimulus bill.

Alaska has received $3,145 per capita in federal stimulus money, which is the highest in the country and almost double the next highest, South Dakota with $1,781. The fact that a third of Alaska’s jobs are supported by federal government dollars is a major reason why the state’s unemployment rate, at 7.9 percent, is less than the national average.

As Powell notes, “Alaska’s appetite for federal dollars has been voracious and is not confined to the stimulus”. From 1996 to today, Alaska’s share of the federal spending increased from 38 percent to 71 percent above the national average. This was largely thanks to the Republican Senator Ted Stevens, who recently died in a plane crash. Stevens was exceptionally skillful in obtaining federal dollars, especially for the military. Powell writes that the “cognitive dissonance” in Alaska is that Republicans in Alaska increasingly “identify the federal government and pork-barrel spending as the enemy, although Alaska was built by both”.

The subtext to Powell’s article is an attack on Sarah Palin. Powell does note that Palin is one of the Republicans who have been happy to take federal money while decrying government’s influence (and calling Obama a socialist). As mayor of Wasilla, Palin hired a lobbying firm that garnered $25 million in federal earmarks for a city of fewer 7,000 residents. Powell could have also highlighted that as Governor of Alaska, Palin increased a separate tax on oil companies (which Powell does note leads to a dividend check to Alaskans annually, for $1,300 each this year).

This criticism – the hypocrisy of espousing a libertarian ethos while relying heavily on federal government funds - is a very legitimate and damning one that can be made against Palin and other Republicans in Alaska. It is certainly a better argument against Palin than all the personal stuff that is said about her (and which only serves to help her gain support).

It’s true that Alaska is effectively a petrostate propped up by federal money. But, in Alaska, we see an extreme case of the US economy generally. Free-market rhetoric notwithstanding, the reality has been a strong dependence on the state, both before and (especially) after the recent economic crisis. Conservatives say that the stimulus money has “failed”, but the stimulus has been the main source of the meager economic growth the economy has recorded recently.

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