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By J. P. Tangen
Special to Mining News 

Alaskans ask: Where did I come from?

The federal government seems determined to regulate resource development out of existence at a time when we cannot pay our bills

 

Last updated 7/19/2015 at Noon



A brief survey of the history of mankind suggests that most communities were organized around the successful exploitation of nearby natural resources.

More "civilized" city-states were able to collectively develop the available resources with efficiencies that generated surpluses.

Such efficiencies required a class of leaders, which, in many instances, favored the ambitious.

Ambitious leaders, when they gained control of metals, were able to expand their aegis by conquest.

As wealth accumulated, exchange media, frequently metallic, were needed.

In a simpler world, it was easy to see that wealth was directly tied to the amount of sheep you could raise, rice you could harvest or gold you could mine.

Somehow, in our modern era, we have lost sight of the direct relationship between wealth and resource development.

It appears that there are an awful lot of folks out there who assume, for lack of a clearer understanding, that electricity, for instance, comes from a hole in the wall.

Over time innumerable political theories have been tried, ranging from total anarchy to brutal dictatorships; somewhere toward the middle of the scale are the various social democracies that most First World nations today subscribe to.

They are typically overlain by a reasonably well-regulated form of capitalism that tends to favor rewarding entrepreneurial success on the one hand and compassionate benevolence on the other.

Social democracy, by its very nature is not static, but drifts off the bubble with regularity.

It may not be an overstatement, for instance, to note that when a government is directly influenced by the bulk of the population of the nation, many of the electorate will choose to disburse the nation's wealth to themselves. In moderate measure, doing so strengthens the nation; however, as a policy choice, siphoning off the nation's wealth for social programs cannot be allowed to drain the engines of productivity for very long, for when the national wealth is depleted, not only do the social programs terminate; but the rebuilding of the national productivity will, predictably, be slow.

Witness Greece, where, apparently, its social welfare programs have become so entrenched as to ensure that the people of Greece will have to make do without many of the past benefits of living there and simultaneously commit themselves to converting its lavish resources into globally competitive products.

Perhaps, to the other extreme, the United States has, until recent years fostered the development and marketing of its resources. America was quick to realize its strengths in terms of agriculture, animal husbandry, fisheries - including whaling, timber, mining, wildlife - from passenger pigeons to buffalo - and hydrocarbons. In absence of governmental regulation, over-exploitation has taken its toll. Well-regulated resource development industries, on the other hand, have flourished.

The current dilemma that confronts us as a nation and as a state at the moment, however, is that the regulators have lost sight of the nexus between resource development and wealth. It is axiomatic that bankers and bureaucrats, engineers and educators, architects and authors don't create wealth. Their contributions are manifest, but they do not increase the size of the economic pie. Only the farmers, the fishermen, the ranchers, the miners and the loggers can do that. If you are not in the business of harvesting something from the land or the sea, you are riding for free.

If the regulators are being driven to circumscribe the means and methods of resource recovery, they put the expansion of the economic balloon at risk. If the electorate demands ever increasing social services, a static or dwindling national bank account draws us toward the Greek abyss. In this context, Alaska's prognosis at the moment looks grim.

Our state's social programs, including education, health and social services are drawing down our fiscal resources at a rate that diminishes our ability to respond. In due course, it is foreseeable that our reserves and even our permanent fund may be zeroed out. In the meantime, the throughput of oil in the Trans-Alaska Pipeline is well below capacity and continues to fall. Parenthetically, the dream of a major gas pipeline is an elf at the end of a rainbow. In addition, the regulatory burden on resource development is becoming weightier every day.

When we, as children, ask where babies come from, stereotypically, the answer is "from Mommy's belly." Too many of us are satisfied with that answer, and too few of us ask the natural follow-up question, "how on earth did it get there?"

When it comes to resource development, we all need to be asking the question of where our common wealth comes from and not be satisfied with the simple but incomplete answer. Our wealth comes from the development of our resources; and we, Alaskans, who live in a resource rich state, need to be demanding the right to develop those resources, in a well-regulated way, as aggressively as we possibly can. If our right to develop our resources continues to be increasingly circumscribed, while our health, education and social services costs are increasingly enhanced, we shall surely enjoy the benefits of neither.

 

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