At a press conference on Wednesday, October 5, Alaska state senator Mike Dunleavy (Republican) announced plans to introduce legislation to restore the 2016 Permanent Fund Dividend (PFD) amount to $2052, the full amount calculated by the Alaska Permanent Fund Corporation. Earlier in the year, Governor Bill Walker vetoed over half of the state legislature’s appropriation of funds to the PFD, resulting in an amount of $1022 per Alaska resident.
Alaskan residents have joined in protest of the cuts in the PFD. More than 15,000 individuals have joined the Facebook group “Alaskans Against Gov. Walker’s PFD Theft”, which organized a protest at an Anchorage budget forum held on Saturday, October 1.
As a universal and unconditional cash transfer, paid annually to all residents of Alaska, the PFD is frequently cited as an example of a “real world” universal basic income. It continues to be presented as a model for UBI policies by groups ranging from the Movement for Black Lives in the United States to the Goenchi Mati Movement in the Indian state of Goa.
Note: Alaska already has the Permanent Fund Dividend (PFD), a similar UBI-like program funded from revenue derived from invested state petroleum revenues, so Oregon would be the second, not the first U.S. state with such a program if the Oregon Rebate passes in the November 2024 election. The Alaska PFD was started in 1982 to make sure Alaskans directly benefit from its resources in the wake of its oil boom in the 1970s. It has usually been on the order of $1000 – $2000 for each Alaska resident including children.
“A proposed measure to create a universal basic income program which would put $750 in the pocket of every Oregon resident, including children, has officially qualified to be put on the ballot in November.
The initiative, Oregon Rebate, proposes to increase the minimum corporate tax rate for Oregon-based companies making more than $25 million per year in sales to 3 percent tax, whereas the current minimum sits under 1 percent.
The amount raised would then be given to the Oregon’s State Department of Revenue for rebate distribution, which means that every Oregonian—regardless of their age or income—would receive a guaranteed income. Any money left from the rebate would be used to fund services in favor of senior citizens, health care and public education.”
To read the full article in Newsweek by Giulia Carbonaro, click here.
The Alaska Permanent Fund was started in 1982 to make sure Alaskans directly benefit from its resources in the wake of its oil boom in the 1970s. Part of the proceeds from investments of the principle, which is held in trust for the state and invested by an independent board, is shared yearly with all Alaskan citizens as the Permanent Fund Dividend (PFD). This is as close to a basic income by BIEN’s definition as has been achieved world-wide. It is paid equally to each individual regardless of age or financial status, without means tests or other conditions and regularly every year, although the amount differs depending on how the APF’s investments do over a five year period. It has inspired campaigns in many other countries, including Mongolia, South Africa and Goa, to share the profits from resource use as a basic income or dividend to all citizens. The PDF is under particular threat at the moment as a result of recent deficits in the State’s budget, which some legislators want to plug by taking the dividend payments away entirely.
BIEN News interviewed a board member from the Permanent Fund Defenders about the situation. Joe Geldhoff, a lawyer in Juneau, the capital of Alaska, said that “while it is in our constitution that Alaskan citizens should benefit from the state’s resources, the dividend itself is only in legislation.” The PFD allocation for Alaskan citizens needs to be approved by the state legislature every year. For the first thirty years it was paid equally from a fixed 25% share of the fund’s average profits over five years. In the past six years state politicians have whittled down the amount of dividend paid, “despite big promises at election time, which are often unrealistic.” There are worries that there might be no dividend paid out this year, despite the Fund making a profit of some $18.6 million, and large Federal subsidies to the state, especially since the Covid crisis. The PFD competes with state services and projects for priority, since the state government levies neither income nor sales taxes to cover its own spending, which also comes from Permanent Fund proceeds. “This should be a lesson for people advocating basic income schemes all over the world,” Mr Geldhoff said.
The Defenders want the eariler formula from Permanent Fund investments restored to the dividend, and enshrined in the State constitution to protect it from other budget demands and political maneuvering. Mr Geldhoff said that the current special session will be deciding this year’s dividend allocation, and may not pay it at all. The legislature may also consider a constitutional amendment to protect it and restore the original formula which, if approved, would then go out to be voted on by all state citizens. He expressed the worry, however, that there “aren’t enough adults” amongst state politicians, and that they could be too divided to see the latter option through.
“Young people have become very cynical about the political process,” Mr Geldhoff said, so the Defenders are working to educate all Alaskans about the role the dividend has played in “lifting people out of poverty, supporting private enterprise and combatting income inequality” and how they can get involved with saving it. He said that while those with higher salaries in the state’s large public sector have tended to save their dividend to send their children to university, the dividend has enabled people in rural areas with little cash to maintain and buy equipment for subsistence farming, hunting and fishing. Women in particular have used their dividend to get away from relationships which have gone bad, and to train for better jobs. “It’s really about whether you trust citizens to spend the money well or the politicians who tend to give contracts to their cronies,” he said. “This is our common wealth from which we all should have a direct share.”
A recording of our interview with Joe Geldhoff will be available soon. In the meantime people can support the all-volunteer Permanent Fund Defenders in getting their message out to Alaskans on their GoFundMe page. More information about their campaign and the history of the PFD can be found on their website, and the latest news can be followed on their Facebook page.
UBI Europe is to hold webinars. They say this about them:
Europe and the world under the siege of a virus: Difficult days to cope with for the most of us. At the same time, we begin to realise – the world might never be again like before the epidemic. Will Basic Income become part of the post-Corona world order?
To explore this and related questions, but also to give you proper facts and analysis rather than second hand headlines, UBIE is starting a new experiment: From this week on, we are going to invite you every Sunday at 5pm CEST for a “Basic Income Tea” – a one-hour online talk with various guests from all over Europe on subjects related to the Corona crisis and UBI.
In the first edition, on Sunday, 26 April we are going to ask: “Has the EU shown solidarity in the Corona crisis?” With Stanislas Jourdan (Executive director, Positive Money Europe) and Francois Denuit (Policy Advisor, European Parliament) , moderated by Alessandra Bianchi (Vice-Chair, UBIE), we will take a thorough look at the EU institutions’ reactions and policy packages adopted or discussed. We will also be discussing alternatives on the table like eurobonds, helicopter money, and basic income.
Want to meet other basic income advocates, share your thoughts via live chat, and be able to put your questions to our guests? Then please register here until Saturday, 25 April, 6pm, so we can send you the connection details for the video conferencing tool (most likely Zoom)!
However, if you just want to listen and enjoy, you can also watch the live stream on the UBIE website and on our social media channels (Facebook, Twitter, Instagram, YouTube) starting Sunday, 26 April, 5 pm CEST.
An early version of the book, Exporting the Alaska Model, is available for download for the first time. This is possible because most academic publishers allow authors and editors to post early versions of their works on their person websites. A preview, written in 2012, is below. If you’d like to cite or quote it, please refer to the published version:
In recognition of every Alaskan’s share of the ownership of the state’s oil reserves, every year, every Alaskan gets a dividend from the returns of the Alaska Permanent Fund (a sovereign wealth fund comprised of a pool of assets collectively owned by the residents of the state). It was created from royalties the state receives from the oil industry. Each year it pays a dividend to every Alaska resident. In 2008, the dividend reached a high of more than $3200 (including a supplement added from that year’s state budget surplus). That dividend amounted to more than $16,000 for a family of five.
Many other resource-exporting regions around the world have sovereign wealth funds, but only the APF pays a regular dividend to citizens. The APF and the accompanying Permanent Fund Dividend (PFD) are actually a combination of resource-management policy and a progressive social policy. As a sovereign wealth fund, it helps to ensure that the state will continue to benefit from its oil long after its reserves are depleted. As a dividend, it helps every single Alaskan make ends meet each year without a bureaucracy to judge them.
The PFD is one of the most popular government programs in the United States. It has helped Alaska attain the highest economic equality of any state in the United States. It has coexisted with, and possibly contributed to, the state’s growing and prosperous economy. Most importantly it has given unconditional cash assistance to needy Alaskans at a time when most states have scaled back aid and increased conditionality.
Cliff Groh
This book argues that the model provided by the combination of the APF and the PFD is worthy of imitation by other states, nations, or regions. Of course, not every country has as much oil as Alaska, but every country has resources. The total value of natural resources (including not only mining, fishing, and forestry but also land value, the broadcast spectrum, the atmosphere, etc.) is surprisingly high even in areas not thought of as being resource rich. The case for taxing natural resources is at least as good, and probably far better than taxing other sources of wealth.
One reason Alaska introduced the APF was that lawmakers realized that oil drilling would give the state a large and temporary revenue windfall. They wanted to extend the period in which that windfall would benefit Alaskans by putting some if it away into a permanent fund. To some extent the PFD was a way to sell ordinary Alaskans on the idea of the APF.
But to some extent the motivation for the APF was to support the PFD. Some of the lawmakers who created the APF, most especially Governor Jay Hammond, were influenced by the movement for what is now known as a “basic income”—a small unconditional income for every citizen to help them meet their basic needs. At the time, the policy was best known as the “guaranteed income” or the “negative income tax.” It was widely discussed by policymakers in the United States in the 1960s and 70s. Hammond had created a similar policy on a local level when he was a mayor of Bristol Bay, and he very much saw the APF as an opportunity to create a guaranteed income. The argument was simple: the oil, by right, belonged to all Alaskans. The PFD was an efficient way to ensure that every Alaskan would benefit from it.
A similar argument can be made for almost any natural resource.
This book takes an interdisciplinary approach to assessing whether the APF is a model to be copied with chapters in the disciplines of economics, philosophy, sociology, history, and social policy studies. It also has chapters written by political activists and practitioners.
Several chapters discuss the history of the APF and similar policies around the world (both resource taxation policies and income support policies). Others chapters discuss the ethics of unconditional cash grants and resource taxes, and how the Alaska mode fits in with recent theoretical models. As mentioned, the PDF is essentially a small basic income—a political proposal that has been widely discussed in political theory literature. Stakeholder grants would replace the yearly basic income with a large, one-time payment when individuals come of age. Resource egalitarianism is the belief that all people should benefit equally from the natural resources of the Earth. Policies like the APF, which link resource taxes to direct redistribution, advance resource egalitarian goals. We discuss what should count as a “resource” for purposes of the standard of “equality of resources,” and how this might be focused on resources that can become the basis of a sovereign wealth fund. A clean atmosphere, for example, is a shared resource that is being depleted by billions of individual polluters.
Several chapters debate whether it is a good idea to link a progressive social policy, such as a cash grant, to an environmental policy, such as a resource tax. One reason to make this link is that resource taxes redistributed as dividends reflect shared ownership claims to the environment. Other reason to do so is that the redistribution of resource tax revenue can compensate people for the cost of moving to less resource-intensive activities. One danger is if the redistribution of resource taxes is seen as a good thing, people might be more willing to accept increased exploitation of natural resources.
The book also discusses possible ways that the model might be altered and improved, including a proposal for Citizens Capital Accounts, which personalize the fund, giving each individual owner, among other things, the power to decide whether to take out regular dividends or let her earnings accrue as a protected investment. Instead of passively receiving a check each year, each citizen have some control over a small portion of the principle and the choice of when and whether to withdraw her available returns.
The book also has country- and region-specific proposals with estimates of what size dividend might be achievable in various places. As criteria for success we consider effects on poverty, effects on inequality, effectiveness in discouraging greenhouse gasses and other forms of pollution (for carbon-based taxes), efficiency, satisfaction of voters, and other factors.
Summary
This book is divided into three parts. Part I discusses employing the Alaska model in circumstances similar to those of Alaska: in wealthy, resource-exporting nations and regions. Part II discusses applications of the model further afield. And Part III discusses a hybrid proposal for an individualized version of Alaska’s fund and dividend.
Michael W. Howard (right) and Karl Widerquist (left) in the rain at the 2017 NABIG Congress in New York
Hamid Tabatabai (chapter 2) begins Part I with a discussion of the second place in the world to introduce a resource dividend: of all places, Iran. Like Alaska, Iran stumbled upon the dividend following a peculiar set of circumstances. For most of its period as a resource-exporting nation, Iran has used its resource wealth to support an inefficient system of commodity subsidies (mostly on gas and oil consumption). Iranian politicians knew that these subsidies had to go, but the policies benefited so many people in such a significant way that the politicians knew they could not eliminate them without a similarly broad-based policy (discussed as the fifth lesson in section 2 above). After lengthy discussions, the policy that emerged was a basic income in the form of a regular resource dividend. The policy is not funded by a permanent resource endowment, but it does employ the other two elements of the Alaska model.
Angela Cummine (chapter 3) looks at the very opposite issue. There are many SWFs in the world today. Some of them are many times larger than the APF. Yet, only the APF pays a dividend. Given the enormous popularity of the PFD, why have no other resource-exporting nations imitated it? Employing information gained from interviews and other sources, Cummine assesses the reasons SWF managers around the world are skeptical about dividends.
Alanna Hartzok (chapter 4) looks back at the Alaska model itself in advance of export. She argues that the APF and PFD embody the idea of socializing the rent of assets that rightfully belong to the people as a whole, but to do this, managers at the Alaska Permanent Fund Corporation (APFC) should take on a strong responsibility toward social investing, and they are not yet living up to that responsibility. Any nation or region wishing to socialize rent on a large or small scale should, therefore, take a look at what the APFC has done right and what it has done wrong.
Rather than looking at employing the Alaska model in other places, Cliff Groh (chapter 5) looks at the future of the Alaska model in Alaska. Although the PFD has a sound permanent endowment in the APF, it is the only part of the Alaska government that has such safe financial footing. Most of Alaska’s state budget is based on current oil export revenues. The volume of Alaskan oil exports has been declining for more than 20 years. So far, increases in the price of oil have more than made up for the decline in the volume of oil exports, but they will not always do so. When oil revenue begins to dry up, there will be enormous pressure on the state government budget, which will also put pressure on the APF and PFD. Groh discusses when this might happen, what it will mean, and what can be done about it.
Gary Flomenhoft begins Part II with a chapter (chapter 6) estimating the potential for a common-asset-based dividend in the “resource-poor” state of Vermont. He shows that even Vermont has many resources that are being given away for free by government to corporations who sell those resources back to the people at higher prices. Flomenhoft estimates how much revenue the state could generate by treating those assets the way Alaska treats its oil. In his low estimate, he finds that Vermont could support a dividend at least as large as Alaska’s; and in his high estimate, he finds that Vermont could support a dividend many times larger—perhaps more than $10,000 a year for every Vermonter. If a resource-poor state such as Vermont can do it, any state or nation can too.
Paul Segal (chapter 7) discusses employing the Alaska model in the poorer nations of the world and discusses the impact on poverty of doing so. He finds that a resource dividend could cut world poverty by more than half, as measured by the World Bank’s poverty rate of US$1.25 per day at purchasing-power-parity.
Jason Hickel (chapter 8) examines the potential impact of the Alaska model on a less developed nation—the newly independent state of South Sudan. Although South Sudan has large oil reserves to draw on, the potential impact of the Alaska model on it is hard to estimate because the state is so new and few good data are available. However, he finds that oil exports have the potential to finance both a substantial dividend and significant infrastructure improvements.
Governor Jay Hammond, “Father of Alaska’s Permanent Fund Dividend”
Jay Hammond’s contribution (chapter 9) applies the Alaska model to Iraq. Hammond was the fourth governor of the state of Alaska and is justly described as the father of the PFD. He campaigned for the idea long after he left office. His posthumous contribution to this book is a piece he wrote near the end of his life suggesting that a permanent fund and dividend would help ensure that Iraq’s oil revenues were shared by members of all of its diverse communities. This chapter includes a brief introduction by Larry Smith.
Michael W. Howard’s chapter (chapter 10) discusses the cap-and-dividend approach to global warming as a politically viable way of applying the Alaska model at the federal level in the United States. The idea of cap-and-dividend is simple. The government limits the amount of carbon emissions allowed (the cap). It sells the rights to make those emissions to the highest bidder and redistributes the proceeds as a dividend for all citizens.
Widerquist closes Part II with two chapters (chapters 11 and 12). The first examines the possibility for, and potential size of, a permanent common-asset-based endowment for the United States. The second examines the prospects of exporting the Alaska model back home to Alaska to widen and deepen the use of the strategy we call the Alaska model in Alaska itself. Widerquist argues that a fuller use of the Alaska model will strengthen Alaska against the likely eventual decline in resource revenues.
Part III of the book is entirely devoted to the discussion of a proposal by Karl Widerquist to create an individualized version of the permanent fund and dividend approach. Widerquist’s proposal, called Citizens’ Capital Accounts (CCAs) (chapter 13), assigns a portion of the principal of the fund to each individual at birth. They can decide when and whether to draw dividends, but the principal must remain in the fund for future generations. Widerquist argues that CCAs provide more economic security for the money than basic income or other similar proposals, because they allow individuals to keep the returns in their safe investment account until they are needed. Subsequent chapters by Michael W. Howard, Jason Berntsen, Ayelet Banai, and Christopher L. Griffin, Jr. (chapters 14–17) evaluate, criticize, and consider variations of the CCA proposal. In the final chapter of part III (chapter 18), Widerquist responds to criticism.
