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Editor's Note

Matt Hickman

Maybe the most baffling thing about Gov. Mike Dunleavy’s $444 million budget vetoes that are certain to wreck Alaska as we know it — but not before it first wrecks his administration and future political career — is the ‘why’ of it all.

Why would any governor of any political party or ideological persuasion want to depopulate his state? Why would any governor purposely drive his state back into recession after it was just coming out of one? Why would any governor try to sell their plan with such fatalistic desperation and negativity, when any salesperson who’s ever made a single sale will tell you they did it on selling the attractiveness of their product — not its warts.

If the tack taken by the Dunleavy administration were the Reagan campaign of 1980, its slogan wouldn’t have been ‘Morning in America’, it would have been ‘Hospice in America: Just get the fuck out and leave us to die.’

Other baffled souls have tried to understand the ‘why’ by blaming it on the pernicious, Svengali influence of the Koch Brothers and their Americans for Prosperity PAC. There is a precedent for this theory, most infamously the experiment earlier this decade in Kansas, where Koch influences got all up the nose of ultra-conservative governor Sam Brownback, a disaster that completely ruined Brownback and set the Kansas economy behind for decades.

There’s a just couple things wrong with this comparison. The first of these being that in the case of Kansas there were already state taxes in place that Koch adherents (bless their moron hearts) believe that if you eliminate, untold cities of gold will follow. No such taxes currently exist in Alaska, so with no tax fat to trim, Dunleavy’s cuts directly hit tissue, muscle and organs vital to survival, which is why more than 10,000 went out of their way to sign Dunleavy recall petitions on day one.

Also, there was no intent on Brownback’s part to depopulate Kansas. On the contrary, Koch adherents (bless their moron hearts) believed cutting government would lead to untold growth in jobs, hence growth in people. Dunleavy’s plan runs people out of his state — permanently, for all intents and purposes, and that’s just for those who have the means and opportunity to leave. The rest are just fucking stuck here, trying to survive one Big Mike winter after another.

Then, last Sunday, I got my first taste of, if not sympathizing, then at least understanding the true spirit behind the intentions of the Dunleavy camp and how their vision for Alaska stands apart from the cliché anti-government screeds going all the way back, in one incarnation or another, to Grover Norquist.

I found this sympathy for the devil whilst dip netting on the Kenai. Not fancy/lazy riverboat dip netting — I mean shoreside dip netting, bumping waders with salt-of-the-earth Alaskans.

There isn’t much science or equipment to dip netting, as I’m sure everyone reading this knows. Nor is there much in the way of conviviality along the dip net shores — it’s mostly business, little pleasure for these folks.

Dip netting during salmon runs in Alaska is so easy, once you get the basics down there’s no reason you couldn’t fill your freezer with enough salmon to feed your family for a year with just an afternoon or two of leisurely labor. I stopped at five fish, mostly because the water that seeped into in the footies of my waders was starting to slog and five whole salmon was more than enough to sustain my urbane bachelor ass for a good, long while.

It occurred to me that if I also killed a moose this summer, I would have more than enough protein to sustain a large family for a very long time, and it was in this moment I got my first sense of understanding what Dunleavy’s aim really is — it’s not ideological, at least in a political sense, and it sure as Hell ain’t economical.

As I was trying with great difficulty to cave in a salmon’s skull with beach rocks, because I didn’t have the wherewithal to bring the little wooden bat with me to the water, it occurred to me the exact ‘why’ behind Dunleavy’s mission — that Alaska is a theocracy and the God of that theocracy is subsistence.

In Alaska, if you kill and catch enough food and reproduce enough PFD-qualified kiddos to do the same, the October dividend is all you need to make ends meet. All Alaskans need to do to maintain this lifestyle is to keep their mouths shut while a skeleton crew of a state government takes it up the ass from big oil to keep feeding the dividend that feeds this commune that used to be called Alaska.

Ripping out the beached and netted salmon’s gills — an act of raw violence that was not nearly so objectionable as I had imagined — it occurred to me that Dunleavy is not a Republican at all, not a friend of business in the least, he’s a communist, in the truest, most literal sense of the word.

His theology can only be understood by a certain streak of Alaskans — Native, Asian, White American and Russian alike — who don’t want the rest of us who came for ‘jobs’ or ‘homes’ or ‘culture’ or ‘economic development’ here.

The next morning, after a long day of driving, dip netting, drinking and more driving, I made it on time, more or less, for a meeting with Anchorage Economic Development Corporation President Bill Popp for an interview at his office on the eve of his group’s release of its midsummer economic report. The doomsday prophecies of the AEDC’s report, pretty much dovetailed mine in this column so far, which shouldn’t come as much of a surprise to anyone who spends time paying attention to anything besides subsistence.

I asked Popp about how uncomfortable it was of the AEDC and its board having to step outside the comforts of economic data to step into the fray of the political circus, and what hope, if any he has for Anchorage in Dunleavy’s Alaska….

Where is the Anchorage economy going to see the most damage from the governor’s vetoes?

The most significant is in the areas of education. The university cuts will probably manifest themselves over the next two years; then it’s the cuts to the social services network and the health care sector… That’s why our board came out with a letter urging the legislature to override those vetoes. Both the board and I signed those letters.

What are Anchorage business owners most concerned about?

Certainty is one of the things they’re most concerned about; certainty in the level of government services that will be available. They want to see a plan that makes logical sense that isn’t an instant shock to the system. The other thing is the difficulty in finding a qualified workforce to fill the positions that are being created… When you don’t have the workers, you don’t make the investment. Do we import workers? That’s always a risk. The odds of them sticking it out for the long-term aren’t great. You always have the challenge of the workers themselves (wanting to leave) if it wasn’t what they thought it would be — or it could be a spouse — that’s a challenging piece.

What are you seeing for a population decline in Anchorage?

We’ve been seeing population numbers that are more and more disturbing over the last 12-18 and most especially (in most recent months). We’re down about 6,500 in the broader labor pool and there’s multiple components to that. Some are the traditional suspects — we’d lost about 5,000 net moving to the (Mat-Su) Valley.

There had been more people moving to Anchorage from the Valley, but that balance is starting to shift. We’ve seen like clockwork the last five years, every year 16,000 moving to Anchorage from the Lower 48, but every year, like clockwork for the last 5 years, we’re seeing people moving to the Lower 48 with a net loss of 20,000. Some of that is off-set by increased births, but the challenge with that is that those aren’t working-age adults… Now I know why I’m hearing the difficulty for businesses in hiring in Anchorage. It’s very challenging to find quality workers and it’s been getting progressively worse the last couple of years.

But isn’t it always hard to find workers in Alaska? After all, this isn’t a place people typically come to for a 9 to 5 job, much less a desk job.

There is the professional adventurer who comes here to say I lived and worked in Alaska a couple years, which is not insignificant… but the size and scope of this loss is without precedent in recent decades. It’s a clear symptom of recession, especially looking at how the Lower 48 economy has been on fire the last five years. The Alaska economy was first in an oil recession, then it turned into a policy recession and the inability for the state to come up with a plan to balance the books leads to long-term instability and dysfunction.

How much of this coming re-recession can be blamed directly on Gov. Dunleavy’s vetoes?

We believe the current fiscal impasse is definitely the main contributor. We were heading in the right direction; we were showing positive numbers of where things were standing with the oil and gas sector and the positive factors about to manifest that would really start to bloom in 2 to 3 years. That was a really bright spot, and then you see other things like construction, professional services and construction was even going to be up, even without the earthquake in Q4 last year. We were starting to see signs of life; local businesses were willing to take chances and invest, with the POMV in place, and now that’s all kind of gone out the window for at least the next 2 to 3 years.

You and the AEDC board sent out a public letter in support of overriding the governor’s vetoes. It must have been kind of uncomfortable for a group like yours, which bases itself entirely on nonpartisan numbers to have to take such a political stand.

We are always purveyors of facts; the facts are what they are. But you look at the casualties and the view of the board was that (the governor’s vetoes) were (cuts) too much, too quickly. The board believes there is still room for cuts in state government. The issue was that to make it happen in such a compressed period of time right at the beginning of a recovery was not the right policy position. We need to look at a compromise model to bring the budget down over time and balance it with new revenue sources and inclusion of the Permanent Fund.

The business community have said uniformly that these cuts are a bad idea for business. Do you have any idea why an administration that disguises itself as being pro-business would so ignore the interests business like this?

I wouldn’t begin to speculate or speak for them.

It is a bit of a surprise. There was a lot of business support for this legislature and governor last year. But business entities are starting to make it clear that we need to rethink what we’re doing now. It’s interesting to see. Our organization believes we need a more moderated, carefully thought out plan or we’re just going to end up with more years of recession.

Is there any business sector that could benefit from the governor’s vetoes?

I don’t have any that come immediately to mind.

About a year ago we were all in this room full of business dignitaries from China talking about seafood and LNG and other investments. All that seems to have stopped. Why is that?

I think that the international political environment between the U.S. and China is starting to chill those opportunities. China is still our No. 1 trading partner, and that’s just a statement of fact. I’m not sure about this year’s seafood season, but our biggest component of trade still seems to be interest in tourism from their middle class. Alaska is on the bucket list of top 3 destinations they want to visit as emerging middle class tourists.

What will these cuts do to home values?

That has been relatively stable due to the fact that there hasn’t been a lot of home construction… There hasn’t been a lot of overbuilding of single family homes from a rental or purchase perspective and that mitigates the impacts on the housing market. (Values) are not going to be going up, but I don’t see it going down. An area that might be affected would be the Valley. They’ve had quite a significant run of big years of housing construction. Last year it was down it appears in unit numbers about 20 percent, from 1,000 units built to just over 800.

The data tends to lag a bit on home values, but my suspicion is that if there’s anywhere in the greater Anchorage area that would feel the heat of a housing decline it would be the Valley.

What advice do you give to business owners who might be interested in investing in Anchorage after these cuts?

It would depend on the business; what niche are they trying to fill? What opportunity are they trying to take advantage of? Clearly they have to do their homework and have a rock-solid understanding of what’s going on around them. I’m not going to make a blanket statement that now isnt’ the time to invest. The problem is, I’m in this no-man’s-land because we still have a lack of policy direction coming from the legislature and administration combined. The impacts generate a couple thousand jobs lost and it’s taking three-and-a-half years of recession at dragging it out 6-7 years — that’s not a good message.

When you get to the bottom of a recession, that’s the buying opportunity.. But now, where is the bottom? Right now, we forecast a couple thousand more jobs lost before we see the bottom. Is that 2021? 2022? That’s opportunity delayed.

Is there any way a loss of population could be good economically for those who remain, a la the Black Plague?

No, losing population is not going to be good for our economy. We have a population of 737,000 spread across the geography of the Lower 48, we have to continue to see growing population. That brings in new energy, new investments to the economy. That brings us closer to that point, many, many years in the future where we might become a self-sustaining economy. Right now we are dependent on the global economy to pretty much everything that makes Alaska work. Whether that’s resource extraction industries or our ability to grow food, or it’s our very nascent, small but feisty manufacturing sector.

But right now, our warehousing district is Tacoma. We’re at the end of a 1,400-mile production chain. We’re a long way from being independent and still very much subject to the global winds of change.

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