QuoteResearcher's Analysis Shows Buying Alaska No Sweet Deal for American Taxpayers
Released: 11/6/2009 3:00 PM EST
Source: University of Iowa
Newswise — Sarah Palin has a new book out, and the former Alaska governor's rise to fame has brought more notoriety to her native state than it's had since the United States dropped $7.2 million in gold to buy it from Russia in 1867.
But a new analysis by a University of Iowa economist suggests the investment hasn't been worth it for U.S taxpayers.
"Cash flow from Alaska to the federal government since 1867 has certainly exceeded the initial purchase price, but this fact is not sufficient to demonstrate the purchase was a sound financial investment," said David Barker, an economist and adjunct professor of finance in the Tippie College of Business. "The economic benefits that have been received from Alaska over the years could have been obtained without purchasing the territory. In financial terms, Alaska has clearly been a negative net present value project for the United States."
Barker acknowledges that Alaska provides many benefits to the country. It's a rich source of natural resources, especially oil; its vistas, open spaces and wildlife provide unmatched natural beauty; and, for many Republicans like Barker, there's Palin herself.
But Barker argues that the federal government spent so much money to acquire Alaska (the $7.2 million in gold had the value of about $10 million in greenback currency at the time), then govern the area and build the infrastructure needed to access its resources that whatever financial benefits the state has provided have been far offset by the costs.
By Barker's calculation, the state has cost the federal government $13.4 million in 1867 dollars, which translates to a $16.5 billion loss in today's dollars, adjusting for the size of the economy.
"A good example is the Alaska Railroad, built by the federal government at a cost of over $53 million from 1915 to 1924, and operated at a loss until 1938," Barker said. "The railroad showed some profit from 1938 through the end of World War II, but then required another $100 million in rehabilitation. The 1964 Anchorage earthquake caused $30 million in damage to the railroad. In 1983 the railroad was valued at $22 million before it was sold to the State of Alaska. It now shows a small annual profit, but mostly as a result of large subsidies from the federal government."
He said the purpose of the railroad was not military, but to improve the Alaskan economy and, in turn, federal tax revenues. "The federal government clearly would not have made these expenditures if Alaska had not been purchased."
As for revenues, Barker said the federal government has collected many forms of them from Alaskans over the years, including income and excise taxes, a seal fur tax early in the territory's history, land leasing and sales, and, most significantly, taxes on oil. But he said that revenue can best be described as "occasional spikes followed by long periods of net federal subsidy" and have never offset the costs to the American taxpayer of purchasing, financing and paying to develop Alaska. Even today, no state collects more federal aid than Alaska, Barker said.
Barker also acknowledges that Alaska has been helpful strategically to the United States. For instance, its North Slope reserves provide an important domestic source of oil for the country.
But Barker points out the belief among many historians that if the United States had not purchased Alaska, Great Britain would have acquired it and made it a part of Canada. Given the historically close and friendly relationship between the United States and Canada, Barker said Americans still would have had access to Alaska's resources, just as Americans today have largely open access to Canada's resources, including its oil.
But that access would have come at a much lower cost to Americans, Barker notes, because the costs of developing the region's economy with roads, rail, port facilities and other infrastructure would have been paid by Canadian taxpayers, not American.
The US government does plenty of things it loses money on but are a net benefit to the country as a whole.
Didn't you know that the value of a thing is always measured by its impact on the government treasury? Duh. Government = Society.
Quote from: MadImmortalMan on November 10, 2009, 07:52:50 PM
Didn't you know that the value of a thing is always measured by its impact on the government treasury? Duh. Government = Society.
You're such a homophobe. :rolleyes:
Anything that kept more of those fucking snaggle toothed brits out of more of North America was a good thing. Limey cocksuckers.
Did he do one for every state? I would love to see how much California costs us.
Quote from: sbr on November 10, 2009, 07:56:26 PM
Did he do one for every state? I would love to see how much California costs us.
California is a net federal tax contributor, getting back only $0.78 in federal dollars for each dollar paid in federal taxes.
http://www.taxfoundation.org/taxdata/show/266.html
Besides, we bought Alaska; we just took California.
Quote from: ulmont on November 10, 2009, 08:04:50 PM
California is a net federal tax contributor, getting back only $0.78 in federal dollars for each dollar paid in federal taxes.
http://www.taxfoundation.org/taxdata/show/266.html
Damn. DC is awful.
Quote from: Peter Wiggin on November 10, 2009, 08:06:38 PM
Besides, we bought Alaska; we just took California.
I thought we payed them a little bit for all the territory we got.
Interesting that the state of Goldwater and McCain takes in more federal cash then it gives out. Rugged Individualism FTW!
meh, looked at it from certain angles most of the country could be painted as a net drain.
Funny how the red states a bunched at the top, and the blue states are bunched at the bottom.
Quote from: Judas Iscariot on November 10, 2009, 08:11:33 PM
Quote from: ulmont on November 10, 2009, 08:04:50 PM
California is a net federal tax contributor, getting back only $0.78 in federal dollars for each dollar paid in federal taxes.
http://www.taxfoundation.org/taxdata/show/266.html
Damn. DC is awful.
Yeah, but if it were a real state, it would have the suburbs where the people working in DC live to offset.
Quote from: DGuller on November 10, 2009, 08:18:08 PM
Funny how the red states a bunched at the top, and the blue states are bunched at the bottom.
Effective representation...that has to be bribed to do anything useful.
Well, that and the fact that they generally are at the bottom of any metric you care to name, so not surprising they get redistributed to.
DC also has a shitload of government buildings, and also requires a ton of government spending on security and stuff like that.
It's also a craphole of a city.
Quote from: ulmont on November 10, 2009, 08:24:21 PM
Effective representation...that has to be bribed to do anything useful.
The biggest potential *discretionary* impact I could see is in the location of military bases (don't know if that's picked up in your table or not). But I think the current sites predate the de-Dixification of the south.
Quote from: Ed Anger on November 10, 2009, 07:54:41 PM
Anything that kept more of those fucking snaggle toothed brits out of more of North America was a good thing. Limey cocksuckers.
Interesting fact: Canadians have better teeth than Americans, and are much less fat.
Quote from: Razgovory on November 10, 2009, 08:13:26 PM
Quote from: Peter Wiggin on November 10, 2009, 08:06:38 PM
Besides, we bought Alaska; we just took California.
I thought we payed them a little bit for all the territory we got.
You're correct. I think it was fifteen million or somesuch. Look up the Treaty of Guadaloupe Hidalgo if you're curious.
Quote from: MadImmortalMan on November 10, 2009, 09:33:35 PM
You're correct. I think it was fifteen million or somesuch. Look up the Treaty of Guadaloupe Hidalgo if you're curious.
QuoteUnder the terms of the treaty, Mexico ceded to the United States approximately 525,000 square miles (55% of its prewar territory) in exchange for a $15 million lump sum payment, and the assumption by the U.S. Government of up to $3.25 million worth of debts owed by Mexico to U.S. citizens.
Quote from: HisMajestyBOB on November 10, 2009, 09:13:47 PM
DC also has a shitload of government buildings, and also requires a ton of government spending on security and stuff like that.
It's also a craphole of a city.
Well the government there is directly administer by congress, the city is very small and has tons of different police organizations. I'm surprised there is any taxes that come from there.
Quote from: sbr on November 10, 2009, 07:56:26 PM
Did he do one for every state? I would love to see how much California costs us.
:mellow:
Quote from: DisturbedPervert on November 10, 2009, 10:17:25 PM
Quote from: sbr on November 10, 2009, 07:56:26 PM
Did he do one for every state? I would love to see how much California costs us.
:mellow:
Yeah I'm not really sure what sbr was smoking. Perhaps standard irrationality about California.
Quote from: Neil on November 10, 2009, 09:21:27 PM
Interesting fact: Canadians have better teeth than Americans, and are much less fat.
Sad fact: They unfortunately have to live in Canada.
Quote from: Neil on November 10, 2009, 09:21:27 PM
Quote from: Ed Anger on November 10, 2009, 07:54:41 PM
Anything that kept more of those fucking snaggle toothed brits out of more of North America was a good thing. Limey cocksuckers.
Interesting fact: Canadians have better teeth than Americans, and are much less fat.
I used to go to Quebec a lot. I disagree with the first part and agree with the second. And at least our woman don't have hairy armpits and legs. :P
Quote from: Strix on November 11, 2009, 09:08:42 PM
Quote from: Neil on November 10, 2009, 09:21:27 PM
Quote from: Ed Anger on November 10, 2009, 07:54:41 PM
Anything that kept more of those fucking snaggle toothed brits out of more of North America was a good thing. Limey cocksuckers.
Interesting fact: Canadians have better teeth than Americans, and are much less fat.
I used to go to Quebec a lot. I disagree with the first part and agree with the second. And at least our woman don't have hairy armpits and legs. :P
wrong
That's PQ only - Like French Unilingualism
The rest of Canada only smokes one pack a day and the gals shave, except in my neighborhood :contract:
Wait are these gals or "gals" Buddha?
:P
I think some people are taking this bit of whimsical analysis more seriously than the author intended.
if its any consolation to perturbed yanquis there used to be plenty of people in Canada who thought our North was a waste of time and money as well. now that its being marketed as a source of wealth and power, people are much more interested.
Quote from: katmai on November 11, 2009, 09:45:37 PM
Wait are these gals or "gals" Buddha?
:P
I bet the author is just a racist, and anti-Inuit! ;)
Without Alaska, Sarah Palin would not have developed any foriegn affairs experience. You can't see Russia from anywhere else in the US of A you know.
Quote from: KRonn on November 12, 2009, 02:21:00 PM
I bet the author is just a racist, and anti-Inuit! ;)
Well, anyone who has tried to use their software is gonna be anti-Inuit.
Should we Auction off Alaska to try and recover some investment money?
Quote from: grumbler on November 12, 2009, 02:52:32 PM
Quote from: KRonn on November 12, 2009, 02:21:00 PM
I bet the author is just a racist, and anti-Inuit! ;)
Well, anyone who has tried to use their software is gonna be anti-Inuit.
Ba-ding! :lol:
:huh: I thought the Treaty of Tortillas between Jaron and katmai gave Alaska to katmai.
Quote from: grumbler on November 12, 2009, 02:52:32 PM
Quote from: KRonn on November 12, 2009, 02:21:00 PM
I bet the author is just a racist, and anti-Inuit! ;)
Well, anyone who has tried to use their software is gonna be anti-Inuit.
:frusty:
I've been dealing with a Lithuanian girl recently who was educated in the Soviet Union. She was shocked to discover that Alaska wasn't leased for 99 years like Hong Kong. Of course, she just chalked it up to yet another Russian lie.
Quote from: Neil on November 13, 2009, 07:44:46 PM
I've been dealing with a Lithuanian girl recently who was educated in the Soviet Union. She was shocked to discover that Alaska wasn't leased for 99 years like Hong Kong. Of course, she just chalked it up to yet another Russian lie.
I've never heard that one myself, but apparently a lot of Soviet immigrants in my junior high school social studies class did think that.