The economics of Alaskan secession

The state has oil, natural gas and lots of armed libertarians. Independence is a no-brainer!

Published September 4, 2008 6:58PM (EDT)

Among some of the more excitable communities of what President Bush recently dubbed the "angry left," it has become fashionable to refer to the Republican vice-presidential nominee as "that secessionist Sarah Palin." The evidence for this being her husband's seven-year membership in the Alaska Independence Party (AIP) and her own predilection for, at the very least, showing up at AIP conventions and flashing her pit bull-with-lipstick smile.

I'm not going to take a stand on whether, in her heart of hearts, Palin truly wants to cut ties with the United States. Presumably, even if she did once harbor such a desire, she's now tabled the agenda, seeing as how secession at this juncture would make her ineligible to run for national office. But spending as much time as I do reading blogs written by economists, I find myself unable to resist considering the question of whether secession, for Alaska, makes any practical economic sense.

As usual, Tyler Cowen, the libertarian economics professor who co-authors the Marginal Revolution blog, is ready to help, providing links this morning to two academic papers exploring the economics of secession. I just finished reading the more recent offering, "The Political Economy of Secession" by Paul Collier and Anke Hoeffler. The argument: Significant secessionist movements (by which we can distinguish the real thing from the rampant "romantic localism" that blossoms nearly everywhere) are linked to economic self-interest.

That is, secessionist political communities invent themselves when part of the population perceives secession to be economically advantageous.

Generally, what this translates to in practice is access to exploitable natural resources or other primary commodities. As a provocative example, the authors cite the miraculous transformation of the Scottish National Party from a nonentity into a significant political force -- just about the time oil was discovered in the North Sea.

Oil was discovered in the North Sea in 1966, and most of it was off the coast of Scotland. When the price of oil quadrupled in 1973, the British government imposed taxes on the oil companies so that approximately 90 percent of their additional oil revenues accrued to the government. The Scottish Nationalist Party ran a campaign with the slogan "It's Scotland's Oil" and argued that, if Scotland were independent, the tax revenues would accrue to the five million people of Scotland rather than to the 50 million people of Britain. Per capita oil revenues for inhabitants of Scotland would rise ten-fold if the other 45 million people were excluded. The fragile and recent cause of romantic nationalism could thus be allied to the robust and ancient cause of economic self-interest.

In 1970 the Scottish National Party had only one Member of Parliament and 11 percent of the Scottish vote. In 1974, 11 MPs and 30 percent of the vote.

Collier and Hoeffler offer other extenuating factors (it helps if the population is relatively uneducated, they argue) and survey various secessionist movements, successful and failed, around the world. They do not, however, mention Alaska. Perhaps, like much of the English-speaking world, they were unaware that there even was a significant secessionist movement in the state, until Sarah Palin arrived on the international scene.

Of course, Alaska does have access to natural resources, in great abundance -- notably, oodles of crude oil and natural gas. So Alaska at least partially fits the paradigm of a place where romantic localism intersects with huge economic self-interest. As a commenter on my post "Sarah Palin's Stiletto" wrote last night, "we love high oil prices in Alaska!" The rest of the U.S. winces when the price of a barrel of crude spikes up, but in Alaska, they break out the champagne. Or whiskey. Or whatever. As the New York Times pointed out on Thursday:

Thirty-one other states are projecting shortfalls in their state budgets. Alaska is expecting $5 billion more than it can spend in a state with only 680,000 people.

Interestingly, the Times also chimes in with an observation that fits neatly into Collier and Hoeffler's secession hypothesis.

...Alaska is harder to govern than a smaller, more settled realm in the Lower 48. With vast distances, large numbers of indigenous peoples and a narrowly based extraction economy -- with a handful of giant multinational oil corporations dominating the game -- some economists say a country like Nigeria might be an apter comparison.

The Biafran War just happens to be one of the case studies explored in "The Political Economy of Secession." The authors contend that the civil war had far more to do with economic self-interest than tribal identity politics -- the traditional explanation for internal African strife.

In the realpolitik world, secession for Alaska would probably be a disaster. I am certain Vladimir Putin is chafing at the bit to rectify the awful mistake his predecessors made in 1867, when they sold the territory to the U.S. for a piddling $7.2 million.

Suddenly, the theory that Alaska's proximity to Russia makes Palin an expert in international relations would be no joke.

Finally, as a reward to the Economist's FreeExchange for encouraging How the World Works to think about Alaskan secession, I will leave you with its anonymous blogger's summation of Wednesday night at the Republican National Convention.

So let's see, what's in the news? Well, last night Republicans trotted out a Massachusetts venture capitalist and governor, the former mayor of New York City, former executives of eBay and HP, and an Alaskan neophyte pol who as mayor of a small town delivered $4,000 in federal pork for every man, woman, and child, in railing against coastal elites and Washington politics, while supporting a candidate who's been in the Senate for 26 years.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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2008 Elections Globalization How The World Works Sarah Palin