What Happened to the Last Frontier? Reflections on Alaska, Part 2

When the Good Friday earthquake struck Alaska in 1964, few realized that the surprising progress and prosperity to follow would last for several decades and then slowly erode as Alaska entered the 21st century.

The quake occurred as the energy of achieving statehood in 1959 was waning. Alaska needed a wake-up call. It had lots of space but few people. There was one Alaskan for every two square miles of Alaska, which spanned five time zones. Paltry transportation and communications infrastructure put almost all Alaskans in a state of ignorance about who was Alaskan.

Alaska suffered from an identity problem of great magnitude. Its “Native” people were Aleut, Yupik, Inuit, Athapascan, Tlingit, Haida or a dozen more tribes with little knowledge of each other. Only when tribal leaders met together in the late 1960s to discuss a common land claims settlement did they decide on the anodyne word ‘Native’ to describe themselves as a group. Prior to that time, they had little contact.

Likewise, Alaska’s “pioneer” migrants were also culturally diverse. They came from many of the lower 48 states but in a matter of hours after arriving, called themselves “Alaskans”. It stuck. The self-identity of Alaskans is fierce and proud. I became one of them in 1964, teaching English to Yupik students in Bethel, and after 50 years of development work in 17 countries, still identify with Alaska.

Most Alaskans identified with the town where they lived but had little idea about Alaskans living in the other distant places, especially the “bush” -- which like Australia’s “outback” contained dozens of cultures of ancient indigenous peoples living in rarified subsistence struggles unknown anywhere else in the states.

The Problem

The energy of achieving statehood for Alaska was waning when the great quake struck. The leaders who won the statehood fight, all Democrats – Governor Egan, Senators Bartlett and Gruening, and Representative Rivers – were tired, old and fading. They had little idea about how to solve Alaska’s fundamental problems:

The State of Alaska could not select the lands granted by statehood, and thus could not develop economically.

The Natives were in court with land claims for all of Alaska dating back to the 1800s, but the courts were unable to resolve the complex cases comprehensively.

And meanwhile, Alaskans were arguing and voting twice in the 1960s on moving the capitol from Juneau, which distracted them from working together to develop the state. Remarkably, all this changed for the good, and fast.

The Solution

Two years after the earthquake struck, oil was discovered on the North Slope. The hope of oil development unified Alaska, and hope brought change. From 1968 to 1970 the old guard faded away and in their place were four new leaders: US Senators Gravel (D) and Stevens (R), US Representative Pollock (R), and Governor Hickel (R), who became President Nixon’s Secretary of Interior in 1969. While these leaders – one Democrat and three Republicans -- rarely agreed on anything, Alaskan solidarity prevailed in a remarkable series of unifying, innovative strategies favored by large majorities of the Alaskan voters. By 1976 Alaskans had produced an unprecedented, successful and largely forgotten list of 15 strategic achievements:

The public and private sector worked cooperatively to produce a good result.

The oil companies lobbied for the Native land claims bill.

The Natives lobbied for the passage of the pipeline permit.

The US Senate overruled the Supreme Court and granted the pipeline permit.

The oil companies agreed to union demands for construction of the pipeline.

Oil companies and environmental groups compromised on pipeline regulations. Land claims legislation capitalized Native for-profit corporations.

Natives received equal shares in both village and regional corporations.

Native shares were made inalienable so they couldn’t be bought or sold.

Natives became entrepreneurs successfully running billion-dollar companies.

Native corporations shared their profits with all Natives in the state.

US government contracting advantages were created for Native companies.

Native corporations led the development of rural and eventually urban Alaska.

The Permanent Fund’s annual dividend averaged over $1,000 per capita.

And, the State spent billions on education while Native companies spent millions for scholarships.

Economically, these accomplishments resulted in unprecedented family wealth increases while cutting poverty and inequality to historic levels. It was a big win-win experience for all Alaskans. Socially, the accomplishments enabled improvements in knowledge of and harmony among Alaskans. It was not utopia by any means but Alaska made great progress in the latter half of the 20th century at unifying and improving the lives of virtually all Alaskans.

The Doldrums

But by 2000, the bubble of unity, cooperation and optimism of Alaska’s public and private sectors had begun to slowly lose steam. Oil production was in decline; the natural gas line was never built; Alaska had not diversified its economy in preparation for the end of oil; and trust in government was declining. The elimination of the state income tax by initiative in the halcyon days of early oil production, began to take a toll on the state’s

GDP fell from $61 billion in 2007 to $56 billion in 2019, however, Alaska’s GDP per capita at $74,000 that year was still among the highest in the USA and $9,000 above the national average.

What has returned to Alaska is an increase in distrust, conflicts, polarization, radicalization, fragmentation, demoralization, and resentments. Alaskans had lost the elusive cohesion that had worked miracles for them in the 20th century. How can that be recaptured?

Back to the Future

Alaskans have significant strengths now that didn’t exist in the 1960s. They are richer, healthier and much better educated. They have a story of achievement and unity that put them in first place among the states for building wealth, and for reducing poverty and inequality. Those are historic shoulders to stand on.

Alaska also developed mature, trusted institutions: state and local governments; the Permanent Fund; strong enterprises including the Native corporations; solid knowledge institutions in its universities and schools; and civic organizations that make constructive contributions to public policy.

On the downside, Alaska’s economy is in a slow decline, its politics is polarized and some say dysfunctional; its social cohesion has been fragmented by conflicts and distrust; and its mood is no longer can-do and optimistic but disgruntled and pessimistic. Alaska may feel stuck in a rut where it is not happy about its past or confident about its future.

Alaska cannot do oil development over again in the 21st century. That’s just a fact, based on the decline of the big oilfields, the improbability of finding more oil, and the world’s shift away from fossil fuels. It’s time to think again. It’s time to think about a future that can come from an unexpected, innovative and disruptive corner of human thought: digital technology.

Michael Rowan is the co-founder of Climate Prosperity Enterprise Solutions, an international development consultancy, with the architect and former US Ambassador and US Representative, Richard N. Swett; Tim Bradner, editor of the Alaska Economic Report, contributed to this article.