Government Business Boondoggles, Alaska Style

This article from Alaska contains some nice illustrations of just how truly, truly awful-terrible government can be at business. Oh my, how easy it is to pony up huge sums when it's not your own money. We're not talking a mere few millions of dollars here and there, folks. No, in Alaska they do things big:

Point MacKenzie Dairy Project — early 1980s

Tipsy on a strange brew of Alaskan pioneering spirit, burgeoning oil revenues and Soviet-style top-down ambitions, the state set aside 15,000 acres of mostly well-drained forest and spent millions installing a grid of new roads and power. More than 2,000 people bid on 31 tracts, including 19 slated to be working dairies with 100 to 150 cows each.

The goals? At least 30 to 40 families would ultimately make a living milking cows and growing feed — reviving the flagging local dairy industry while providing a sure market for barley grown at the 10,000-acre sister project near Delta Junction and a quality product for a struggling local dairy. It didn’t happen.

“Most went under in just a few years, victims of crushing debt brought on by diving milk prices and the high cost of reshaping wilderness into viable dairies,” wrote Alaska journalist S. J. Komarnitsky here.

By one estimate, the state sunk at least $9.6 million directly into Point MacKenzie farms. The New York Times later reported that the state lost up to $120 million for its agricultural hubris, ultimately foreclosing on $40 million in loans by the early 1990s.

"You want to know how to lose money in a hurry?" said Harvey Baskin, the last of the original farmers and a stubborn, hard-working man who held on until his death in 2002, in this story. "Become a farmer with the State of Alaska as your partner. This is what you call negative farming."

The article has six fine examples, so here's one more taste:

Anchorage seafood plant

The stench of dead fish is part of life in a state that's home to some of the nation's richest fisheries, but this deal stunk to high heaven.

What started out as a grand idea to diversity the state's oil-trapped economy quickly began to rot and finally ended when Alaska Seafood International's huge seafood plant went belly up in 2003.

The Alaska Industrial Development and Export Authority gambled and lost on this mega-monster. Working with ASI founder Howard Benedict and Taiwanese investors, the state development agency blew $50 million to build the plant and millions more in failed attempts to save it.

The 202,000-square-foot Anchorage processing plant was supposed to employ hundreds of workers churning out frozen seafood meals, largely salmon and halibut. But for many reasons -- including distance from the fishing grounds and trouble lining up buyers -- production stank. The state never got paid rent.

But, hey, look what it spawned: A nondenominational Christian group, Grace Alaska, bought it with food distributor Sysco for $25 million after borrowing millions from AIDEA. Now it's ChangePoint church, a cold-storage distribution center and indoor soccer fields.

Well, the government is pretty good at building soccer fields, anyway.

July 5, 2012