FROZEN BANANA REPUBLIC. The Economist has a piece today tying the recent string of corruption scandals in Alaska to the ready availability of money from oil extraction and the federal government. This is a problem that's well documented in the development literature (including in a new book which I reviewed for the website on Tuesday). Basically, the availability of a lot of easy money means that it's easy for leaders to justify avoiding spending money well. Why bother, comes the answer, when we've go so much? Also, since the money doesn't come from taxpayers, there's much less scrutiny of how it's spent. All of this encourages corruption and simple bad governance. We tend to forget that this is not just a problem for developing countries either. Other developed country regions that depend on subsidies, like southern Spain, are also famous for corruption and bad governance. Alaska, we're discovering, is probably the best U.S. example.
--Sam Boyd
