Category Archives: Business

The NY Times recently ran an article about Alaska, which attracted my attention since I was planning a vacation to that giant state (in fact, I am drafting this entry on my flight to Anchorage). But this article wasn’t about fishing, or the awesome glaciers, or how to avoid being eaten by bears. No, this article was about the irony of Alaska being the home of such anti-government fervor (Sarah Palin’s small government views are pretty representative of her home state) while at the same time being the largest recipient of federal stimulus money.

For example, Alaska state representative Carl Gatto called to roll back the federal government’s “entire socialistic experiment in federal hegemony.” Yet he also celebrated that “for every $1 we give them in taxes for highways, they give us back $5.76.”  Jay Ramras, another state rep, embodied the dichotomy in a single quote: “If you want to feed us federal money like it’s a narcotic and make the state into a junkie of the U.S. Treasury, O.K.,” he allows. “But we would like to be an Emersonian Alaska and just get control of our resources.”

Of course, Alaska is not alone in this irony. There is a strong correlation between conservative states talking a big game about “government out of our business” while sucking aggressively at the federal teat. This map shows how red states take more than they give, and this chart shows traditionally republican states leading the way in receiving more federal dollars than they pay in taxes. And here is a brand new map from the NY Times based on census data.

So how do we explain this paradox? I suppose it could simply be the essential greed of humanity, people feeling that they are justified in taking as much as they can while giving as little as possible. Or it could be a canny political move, trying to drain the coffers of the government in order to force it to shrink, sort of a “starve the beast” movement at the grass roots level. But I don’t think either of those explanations fly. I think, instead, that the average voter doesn’t even make the connection between small government and services provided, between taxes paid and resources received. When voters say “don’t tax me” while taking a bridge paid by other citizen’s taxes, they don’t see the irony because they don’t even realize that taxes are what pay for bridges. See this piece by James Kwak on how the whole tax & service thing works, and this piece by David Sirota on how American voters seem to lack the ability to remember what policies worked or didn’t work in the past.

The politicians, on the other hand, who vote for these policies, like Carl Gatto and Jay Ramras from the NY Times article, or Ted Stevens, a major obtainer of federal dollars for the state, should actually understand how taxes and services are related. I mean, they are professional legislators, and this is a basic part of government budgeting. They are not ignorant, like the voters; they’re just hypocritical, saying and doing whatever they must to get reelected. They recognize the irony in calling for lower taxes while trumpeting the bacon they bring home from Washington…they just don’t care. They use that irony to cynically take advantage of the electorate’s lack of understanding, and it gets them elected year after year.

I just returned from a week in Alaska, where I saw this phenomenon in action multiple times. There will be follow-on posts on this topic.