Keeping Alaska competitive.

• Position: Special Report

The Crossroads

Recent economic developments at home and abroad have Americans in a quandary. As far as their standard of living, and the nation's economic well-being are concerned, they perceive America to be at a crossroads.

That the perception is widespread manifested itself solidly in the last Congressional election. The people sense that much of long-standing government policy - indeed, much of government itself - doesn't work.

It remains to be seen whether resolution of the ongoing struggle between young conservative "revolutionaries" and the entrenched old guard will reflect the will of the voters. One thing is certain: Those whose interests lie in a large and powerful government - and in what they have come to consider their own impregnable government positions - will not give in to reform without a fight.

Reform? Not hardly! For five out of the past seven years, state government has grown and continued to spend, almost recklessly, in spite of what has been reported.

The crossroads metaphor - its sense of urgency, even emergency - has long been a part of Alaskans' consciousness. Doing business, working, even living in a relatively small town in the sub-Arctic, 2,000 miles away from the nearest major metropolitan center, is no easy task. In fact, every Alaska schoolchild knows that in the early days of the territory, life - no less so than making a profit - was often a marginal proposition. Waste and mismanagement were beyond the purchasing power of territory people.

More Growth?

But with the advent of statehood and oil industry development of Alaska's oil resources, the awareness that one ought to keep a hand on one's poke diminished.

With the subsequent fattening of the state treasury, it was natural that government, along with the services it provided, would grow as it did. A sense of wealth prevailed, and the general feeling took hold that government could continue to spend and expand, unconstrained by such pioneer traits as prudence and frugality.

The roots of the national crisis are said to grow out of pressures from a global economy - trade deficits, changes in tariff agreements, intensified competition for markets - and out of a government that, through growth and regulation, has come to view commerce and industry as targets for taxation.

Government is the same everywhere, and government in Alaska is just as prone to tax as its federal counterpart in Washington, D.C. Taxes and regulations which were tolerable when Alaska was booming are now intolerable, thanks to changes in the local economy, and international markets.

The figures are stark: Oil production at Prudhoe Bay has declined 40 percent since it peaked in 1987. During the same period, employment statewide in the oil and gas industry has been slashed by 30 percent. The cuts in Anchorage have been even deeper. Predictably, the down-tuning of Alaska's principal economic engine has hit the state's businesses hard. And many employees have lost their jobs.

Hearing this, Alaska's voters have quite rightly called for changes in government, and especially for changes in policies that continue to dictate an unrelenting growth in taxation.

As for Alaska's own policy makers and bureaucrats, they do listen - but often they don't hear. And they continue to look at commerce and industry as sources of funding for departments and programs that are inflated relics from a more prosperous time.

In this special report, we advance the thought that Alaska and its...