In 1867, the United States bought Alaska from Russia for $7.2 million. At the time, the acquisition was popularly dismissed as "Seward's Folly" (Seward was Secretary of State at the time), as the frozen land was considered worthless. Since that time, the conventional wisdom has been that, given Alaska's natural resources, the Alaska Purchase was a great deal (example). Economist David Barker, however, argues that the US experienced a net loss as a result of the purchase and would be better off economically if Alaska had been absorbed into Canada:
Barker also ran similar calculations for the profitability of the US acquisition of Hawaii, the Virgin Islands, and the Gadsden Purchase.
Link via Marginal Revolution | Image: US Department of the Interior
Cash flow from Alaska to the federal government since 1867 has certainly exceeded the initial purchase price, but this fact is not sufficient to demonstrate that the purchase was a sound financial investment. Using a variety of assumptions and techniques for valuing the net cash flows from Alaska, it is clear that the financial returns have not been positive. The economic benefits that have been received from Alaska over the years could have been obtained without purchasing the territory. In financial terms, Alaska has clearly been a negative net present value project for the United States.
Barker also ran similar calculations for the profitability of the US acquisition of Hawaii, the Virgin Islands, and the Gadsden Purchase.
Link via Marginal Revolution | Image: US Department of the Interior
Never mind.
It would be intriguing to imagine what might have happened had it stayed in Russian hands - the impact on the American psyche of the 50s would have been immense - or so it seems from this side of the Atlantic from this many years after.
Have to agree that over the last year what we have gotten from Alaska has not been worth the cost.
I've often wondered the same thing about Hawaii. If it hadn't been a US territory and been attacked by the Japanese in 1941, would we have gotten involved in that war? If it hadn't been attacked, would it ever have achieved statehood?
Anwar?
The analysis is flawed from the start in that it assumes that the purpose of government is to invest with an eye to tangible return. That argument would cause things like the Post Office and the Army to look bad on paper.
What "isn't" for sale on Craigslist?
DEAL! 49 states here we come!
er...wait. no the US royally f'ed up. Alaska should secede from the nation.
actually the not so starving caribou's migratory routes and mating habits are affected by the massive pipelines. not such a big deal unless you're one of the thousands of Alaska natives who subsist on caribou for a living...
Get rid of American Samoa, Guam, Mariana Islands, Virgin Islands, Puerto Rico for starters.
Grant them full autonomy and have their own currency.
As for Alaska or Hawaii, I guess referendums should be conducted because of their full integration in the Union.