fueling your economic development: the power of new money and trade march 6 th, 2014 marcus hartley...

Fueling Your Economic Development: The Power of New Money and Trade

March 6th, 2014

Marcus Hartley and Jonathan King

Presentation to

SWAMC Annual Meeting 2014

Introduction

Our goal is for you to understand:The power of “new money”How new money and trade are relatedWhy new money and trade are so important in

Alaska and to economic development in general

Slide Title (Keep It Simple!)

hoopla

Things More things Sub things

What Do They All Have in Common?

“New” Money versus “Old” MoneyNew Money

(Fills up the Tank) Brings new wealth to the

community Only comes from outside the

community It can be saved, invested, and

grown. Or, it can be spent. When you

start spending the money in your economy it gets “burned” in the local economy.

Old Money(Gets Burned in the Engine) Recycles through the economy Transfers from person to

person Eventually leaks out of the

economy Unless the economy is fully

self-contained Alaskan economies are not

fully contained

How Does Money Move in the Economy

New Money: It Powers Alaska…

Source: ISER, 2008

Without Oil We Are Half the Size

Source: ISER, 2008

Every boom we’ve had: New Money!

Source: ISER, 2006

1940 – 1960: Military BoomPopulation Triples

1940 72,000

1960 222,000

1973 – 1977: Pipeline Construction Boom

Population up 25%

1973 336,000

1977 418,000

1980 – 1985: State Oil Revenue Boom

Population up 30%

1980 420,000

1985 540,000

Where does Fairbanks Get Its New Money?

Source: Northern Economics, 2010

Where does Fairbanks Get Its New Money?

Source: Northern Economics, 2010

Fairbanks’ New Money Creates Jobs

Source: Northern Economics, 2010

Fairbanks’ New Money Creates Jobs

Source: Northern Economics, 2010

New Money in Rural Alaska

Source: ISER, 2005

New Money in Rural Alaska

Source: ISER, 2005

Why is New Money So Important in Alaska?

Because our economies are terrible at holding

in money!

The Big Boys get it….

Source: ANCSA Annual Report, 2010

CDQ Groups: They Understand It Also

CDQ groups use new money revenues to: Own a larger share of the

fisheries Create economic

development and employment opportunities in their communities in and outside of fishing

Even at a loss….

Source: CVRF, 2010

The Economy of Southwest Alaska

The Economy of Southwest Alaska

The Economy of Southwest Alaska

The Economy of Southwest Alaska

Where does your new money come from?

The Economy of Southwest Alaska

Where does your new money come from? Fish Harvesting

The Economy of Southwest Alaska

Where does your new money come from? Fish Harvesting Fish Processing

The Economy of Southwest Alaska

Where does your new money come from? Fish Harvesting Fish Processing Waterborne Transport

The Economy of Southwest Alaska

Where does your new money come from? Fish Harvesting Fish Processing Waterborne Transport State Government

The Economy of Southwest Alaska

Where does your new money come from? Fish Harvesting Fish Processing Waterborne Transport State Government Federal Government

The Economy of Southwest Alaska

Where does your new money come from? Fish Harvesting Fish Processing Waterborne Transport State Government Federal Government Tourism

The Economy of Southwest Alaska

Where does your new money come from? Fish Harvesting Fish Processing Waterborne Transport State Government Federal Government Tourism Air Transport and Aviation

Why is Government Money New Money

Why is Government Money New Money

Isn’t government spending a drag on our economy?

Why is Government Money New Money

Isn’t government spending a drag on our economy?

Shouldn’t we be trying to cut government spending?

Why is Government Money New Money

We pay our taxes

Why is Government Money New Money

We pay our taxes Federal Income Taxes

Why is Government Money New Money

We pay our taxes Federal Income Taxes Fish Taxes

Why is Government Money New Money

We pay our taxes Federal Income Taxes Fish Taxes Local Property Taxes

Why is Government Money New Money

We pay our taxes Federal Income Taxes Fish Taxes Local Property Taxes Local Sales Taxes

Why is Government Money New Money

We pay our taxes Federal Income Taxes Fish Taxes Local Property Taxes Local Sales Taxes

The Federal Gov’t spends much more in AK than we pay in income taxes

Why is Government Money New Money

We pay our taxes Federal Income Taxes Fish Taxes Local Property Taxes Local Sales Taxes

The Federal Gov’t spends much more in AK than we pay in income taxes

Over 90% of State Government Funding comes from oil taxes & royalties

Why is Government Money New Money

We pay our taxes Federal Income Taxes Fish Taxes Local Property Taxes Local Sales Taxes

The Federal Gov’t spends much more in AK than we pay in income taxes

Over 90% of State Government Funding comes from oil taxes & royalties

Most of local gov’t and education funding comes from the State

So, What Should We Do?

So, What Should We Do?

Bring New Money In?

So, What Should We Do?

Bring New Money In? Stick our finger in the Dam and plug the leaks?

So, What Should We Do?

Bring New Money In? Develop Infrastructure

Stick our finger in the Dam and plug the leaks?

So, What Should We Do?

Bring New Money In? Develop Infrastructure Increase our exports

Stick our finger in the Dam and plug the leaks?

So, What Should We Do?

Bring New Money In? Develop Infrastructure Increase our exports Increase our ownership

Stick our finger in the Dam and plug the leaks?

So, What Should We Do?

Bring New Money In? Develop Infrastructure Increase our exports Increase our ownership Increase our employment

in export industries

Stick our finger in the Dam and plug the leaks?

So, What Should We Do?

Bring New Money In? Develop Infrastructure Increase our exports Increase our ownership Increase our employment

in export industries Lobby for more

government funds

Stick our finger in the Dam and plug the leaks?

So, What Should We Do?

Bring New Money In? Develop Infrastructure Increase our exports Increase our ownership Increase our employment

in export industries Lobby for more

government funds

Stick our finger in the Dam and plug the leaks? Develop and support local

businesses

So, What Should We Do?

Bring New Money In? Develop Infrastructure Increase our exports Increase our ownership Increase our employment

in export industries Lobby for more

government funds

Stick our finger in the Dam and plug the leaks? Develop and support local

businesses Buy local whenever reasonable

The Bottom Line

The Bottom Line

We need to understand that growth requires new money

The Bottom Line

We need to understand that growth requires new money

Unless the economy is fully self contained, the money will all leak out

The Bottom Line

We need to understand that growth requires new money

Unless the economy is fully self contained, the money will all leak out

There is no panacea for economic development in isolated communities

The Bottom Line

We need to understand that growth requires new money

Unless the economy is fully self contained, the money will all leak out

There is no panacea for economic development in isolated communities

If it there were easy solutions, we would already be there

Fueling Your Economic Development: The Power of New Money and Trade

March 6th, 2014

Marcus Hartley and Jonathan King

Presentation to

SWAMC Annual Meeting 2014