By WIN GRUENING
“Nothing is so permanent as a temporary government program.” Milton Friedman
It seems like ages, not just a few months, since COVID-19, coronavirus, and social distancing became part of our everyday vocabulary. The coronavirus is challenging our state, our country and the rest of the world unlike anything we’ve experienced in our lifetimes.
There is much unknown about the virus from a medical and health perspective. Medical researchers and epidemiologists will soon figure this out and provide the tools needed to beat this scourge back.
When that happens, it will be a monumental achievement that saves many lives. Those responsible deserve all the accolades that come their way.
But, that accomplishment, when it happens, may not be what many people will remember. Instead, it may be the cultural and economic impacts that come to mind – and how government and our citizenry responded to them.
We know this event is already changing our lives in many ways.
We’re already more conscious of our health and hygiene habits – especially relating to the people we come in contact with – including healthcare providers on the frontlines of medicine.
We are discovering that our physical presence in an office, classroom, or meeting isn’t as important as we imagined. One wonders how this will affect HR policies, demand for office space, and the need for grand university campuses in the future.
Likewise, regular trips to brick-and-mortar buildings, whether a grocery, department store, bank, or medical clinic suddenly don’t seem so necessary. Even the less computer-savvy among us are learning to order groceries, make a bank deposit, and confer with our doctor online.
Could this mean we eventually will spend more time exercising, pursuing other interests, and interacting with our families and friends?
This new paradigm portends beneficial changes in our culture – as long as organizations, companies, and workers are willing to adapt to consumers’ changing consumption habits. Those that do will be the winners in the new recovered economy.
The direct economic consequences of this crisis aren’t well defined. In the short term, we know it will be devastating.
In Alaska, private employers are especially vulnerable because of our over-concentration in the oil and visitor industries.
The growing world-wide oil glut and current price war will depress oil prices indefinitely, negatively impacting both production and exploration.
Alaska’s visitor industry is fueled almost exclusively by discretionary purchases – the first to be reduced in a recessionary economy. Negative stories surrounding the ease of viral transmission in airports, aircraft, and cruise ships will linger in the public’s mind. Unfortunately, this means our visitor industry won’t likely recover for several years.
Many other businesses – from restaurants to retail stores, hair salons, dog groomers, and dry cleaners – are all taking a hit. Few areas of our economy will escape unscathed – except, it seems, maybe the government workforce.
This unprecedented economic disruption has triggered a massive government response at every level. Congress passed a $2 trillion relief package and Gov. Dunleavy has proposed millions in state economic assistance. Local municipalities are formulating their own aid plans.
Short term, this is necessary and helpful. But it won’t be enough over the long run. Ultimately, history will judge us on how we individually and collectively rebuilt our economy. Holding government itself harmless from economic impacts doesn’t help accomplish this.
This begs the question: Why did our state legislature just pass a budget that contemplates providing state services as usual – presumably continuing to fund salary step increases and job security for all state workers – when, by some estimates, 39,000 Alaskans will have gotten layoff notices in our private sector?
Alaskans like to think of themselves as a hardy, self-reliant breed. But, without much regard to whether we can afford it, we’ve come to expect “free” PFD’s, unending government assistance and grants galore funding expansive amenities – arts, parks, pools, museums and special programs. We’ve poured billions into education and Medicaid without improving student achievement or health outcomes.
A real long-term danger we face is that this crisis will make us more dependent on government when we need to be willing to restructure our priorities to fit a new reality: Expect less from government and do more for ourselves.
Win Gruening retired as the senior vice president in charge of business banking for Key Bank in 2012. He was born and raised in Juneau and graduated from the U.S. Air Force Academy in 1970. He is active in community affairs as a 30-plus year member of Juneau Downtown Rotary Club and has been involved in various local and statewide organizations.
I used to work for several states in my career. There were a number of times, when sources of income were uncertain, that we had hiring freezes, step increase freezes, restrictions on overtime & cost of living freezes. Sometimes there were increases in the portion employees paid toward retirement or health insurance costs. It’s not pleasant, but it can be necessary. Often these things were enough to get the state by until the problems were over. Its the very least government employees can do when private sector workers are having to do the same, or worse. And yes, government workers are not immune from lay offs if that is necessary just as in the private sector. Unless you want to perpetuate the idea government employees are somehow above it all or better/more necessary than private sector workers. But that’s not a good idea at all!
I haven’t heard of any revenue projections on State/Local level for reduced tax receipts and moorage fees/head tax from a cruise season that starts in July. And I have yet to see a drop in gasoline or bunkers relative to the price of crude.
Mr. Gruening is right on target. Dependency is a disease that will grow if allowed to take root. The Left, in classic Rahm Emmanuel style, sees the current crisis as an opportunity to advance many elements of their agenda. Look at Speaker Pelosi’s efforts to attach all sorts of nonsense to the CARES Act. Permanently supporting large numbers of people is extremely expensive; it probably can only be accomplished by continuous devaluation of the currency. Economic collapse is not far behind.
Good writing!: Thanks, Win. How does Suzanne keep coming up with the best writers in Alaska? So much better writing skills than professional writers at ADN, DNM, and others around the state. The Cole twins only wish they had MRAK invitation.
Never had so few owed so much to so many! A rewrite of a quote by Winston Churchill.
The majority of the working class, the ones who democrats supposedly care about, are not working, losing businesses, heading toward poverty. The whole economic burden of the pandemic has been born by the private sector. Across the country, the govt. sector is still working, or if not, still being paid. When this is over, if it ever is, the private sector will be left with crumbs and likely, increased taxes. The govt sector will be at the local car dealer buying a new vehicle!
Mr. Gruening is correct. Since the majority of our legislators don’t seem to understand the predicament our economy is in, I can only hope that the governor will veto large items in the recently passed FY21 budget, including the power equalization program. I realize that the PEP is popular and helpful in many Alaskan communities. However, in a free society folks have the right to move to another community if the cost of living is too high for their personal finances to meet in the community that they currently reside in.
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