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