Fueling Your Economic Development: The Power of New Money and Trade March 6 th, 2014 Marcus Hartley and Jonathan King Presentation to SWAMC Annual Meeting.

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Presentation transcript:

Fueling Your Economic Development: The Power of New Money and Trade March 6 th, 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 related Why 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 Money New 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 weve had: New Money! Source: ISER, – 1960: Military Boom Population Triples , , – 1977: Pipeline Construction Boom Population up 25% , , – 1985: State Oil Revenue Boom Population up 30% , ,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

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

Isnt government spending a drag on our economy?

Why is Government Money New Money Isnt government spending a drag on our economy? Shouldnt 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 Govt 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 Govt 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 Govt 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 govt and education funding comes from the State

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

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 6 th, 2014 Marcus Hartley and Jonathan King Presentation to SWAMC Annual Meeting 2014