Archive for July 17th, 2010
WC got an email from the Ethan Berkowitz for Governor Campaign yesterday. Understand, WC has supported Berkowitz, even to the point of campaign contributions. The email proudly announced “Ethan’s Royalty Plan.” It might as well have announced Ethan’s Pandering Plan. The following quotes are lifted directly from that email.
1. With Ethan’s plan, the royalties go to Alaskans. With Sean Parnell’s ACES tax, the money goes to the government. Ethan thinks Alaskans surviving these hard economic times need the money more than our government, which is already running billions of dollars in surpluses. The Royalty system ensures that the Legislature doesn’t run off and spend your children’s college fund on pet projects. ACES gives YOUR money to the Legislature. Ethan’s Royalty plan sends YOUR money to YOU.
Berkowitz has a degree in government and economics from Harvard. Presumably, he understands multipliers and the importance of government-funded infrastructure to long-term economic health. WC regards the Alaska Permanent Fund dividend program – not the Permanent Fund but the citizen dividends – as the late Jay Hammond‘s biggest mistake. It demolished the connection between citizens and the services citizens receive from government. Alaskans are conditioned, by decades of permanent fund dividends, to expect something for nothing. Government services and government checks.
It would be called Socialism is any other political environment. But Alaskans, of course, are conservative, capitalist and big fans of Adam Smith. And resolve the contradiction between reality and belief by denial. “It’s not Socialism because it’s me receiving the money.” Sorry. It’s still Socialism. And hypocrisy.
Putting more money in the permanent fund pot feeds the lie. That can’t be good.
2. With Ethan’s Royalty plan, the government works harder and, as a result, your PFD gets bigger. With Parnell’s ACES system, the government doesn’t try and you just get by. Ethan knows YOU are working hard for your paycheck, and he thinks it’s time the government did too. Sean Parnell telling you “it’s too hard to negotiate field by field” is just another way of saying “I don’t want to try, so let’s keep the mediocre system we have”. Ethan thinks that is insulting. Under the Royalty system, sure, the government, including Ethan, works harder, but it’s you who takes home the bigger check year after year!
Berkowitz has a couple of different ideas mixed up in this paragraph. First, he correctly notes that the real solution to an appropriate oil field taxation system is a case-by-case approach. The oil industry hates that. The industry wants low, predictable taxes. But then he claims that all of the revenue from such an approach would go to the Permanent Fund. If so, exactly what is the motivation of the Alaska state government to maximize oil revenue? A selfless desire to increase the Permanent Fund Dividend? Heh.
Why not put the same effort into the General Fund. Why not address deferred maintenance, or better funding for schools, or funding the expanded health care services that Sean Parnell vetoed? As oil and gas revenues contract, the squeeze is going to hit critical government services hard. How does Berkowitz propose to pay for those critical services if the remaining oil field revenues are going to the Permanent Fund? Because voters have come to expect services without taxes. It’s going to be a crisis. Under Berkowitz’s scheme, the crisis will be unnecessarily magnified.
3. With Ethan’s Royalty system, the Permanent Fund grows and grows. It’s PFD insurance! When the oil is long gone, Ethan’s Royalty system will leave a bigger Permanent Fund for our families and all Alaskans. With ACES, your family will have to scrape by for generations to come. Ethan isn’t going to let that happen. That’s not what leaders do.
Their are a lot of problems with those five sentences. The governor of Alaska must run a state government, not the state Permanent Fund. Making the Permanent Fund bigger at the expense of funding critical government services isn’t good policy or even sensible. The civically dubious goal of bigger Permanent Fund Dividends shouldn’t trump delivery of governmental functions.
And the lines, “your family will have to scrape by for generations to come,” seems to imply Berkowitz’s goal is the make the PFDs so fat that Alaskans don’t have to work at all. Anyone with a calculator can prove that’s not possible, assuming it is even desirable. Apart from attracting to Alaska every deadbeat with air fare.
Now Ethan Berkowitz is a smart guy. He knows and understands everything WC has said in this blog entry. Why is he talking about routing all oil and gas tax revenues to the voters’ PFDs?
It’s political pandering. WC defines pandering as promising something to the voters that is either unobtainable, or saying something that you don’t believe, just to get elected. John McCain and Hillary Clinton’s advocacy of a gas-tax holiday back in 2008 certainly fit the definition. It was a suggestion that had little prospect of becoming law, made no sense either environmentally or economically, but might have won over a few voters. Ethan’s Royalty Plan is 2010′s gas-tax holiday.
WC reminds candidate Berkowitz of the etymology of “pandering.” In Geoffrey Chaucer’s poem Troilus and Criseyde (1370), Pandarus was a debauched letch who furthered illicit love affairs, and his name entered out language as a synonym for pimp.
WC thinks Ethan’s Royalty Plan is pimping for votes. It’s pure pandering. Sad, but true. At least, WC hopes it is pandering. The alternatives are all worse.