by Karl Widerquist | Sep 27, 2019 | News
An early version of a book, Alaska’s Permanent Fund Dividend: Examining its Suitability as a Model, is now available for free download on my personal website. A summary, from the first chapter of the book (2012), is reprinted below. If you want to cite or quote it, please see the published version:
Alaska’s Permanent Fund Dividend: Examining its Suitability as a Model, edited by Karl Widerquist and Michael W. Howard. New York: Palgrave Macmillan, 2012
Every year, every Alaskan gets paid. Every man, woman, and child receives a dividend as a joint owner of Alaska’s oil reserves. Alaskans are free to use this money as they wish with some potentially putting it towards a home improvement project. After all, if your looking for metal buildings Alaska is your place to find them. In 1956, Alaska ratified a constitution recognizing joint ownership of unoccupied land and natural resources. In 1967, North America’s largest oil reserve was discovered in publicly owned areas on Alaska’s North Slope. In 1976, the state government voted to dedicate a part of its yearly oil revenues to a state investment fund, called the Alaska Permanent Fund (APF). In 1982, the state government voted to distribute part of the returns from that fund as a yearly dividend, called the Permanent Fund Dividend (PFD), sometimes called “the Alaska Dividend.” In 2008, the dividend reached a high of $3269,[1] which comes to $16,345 for a family of five. More often in recent years, the PFD has been between $1000 and $1500 per person, which comes to between $5000 and $7500 for a family of five.
Karl Widerquist (left) Michael W. Howard (right)
The Alaska Dividend 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. And, seemingly unnoticed, it has provided unconditional cash assistance to needy Alaskans at a time when most states have scaled back aid and increased conditionality.
The Alaska fund and accompanying dividend seems to be a model worthy of imitation and adaptation. This book examines whether and how the Alaska Dividend is a model that can and should be imitated and adapted for circumstances elsewhere. It is an “edited volume” with authors who differ in their level of enthusiasm for (or skepticism of) the Alaska model. But we believe that the evidence provided by this book shows that the combination of policies we call the Alaska model is worthy of examination by other states, nations, and regions.
What is the Alaska model?
The “Alaska model,” as we use the term here, does not refer to the whole of Alaskan state government policy, nor to even to the whole of its oil revenue policy. It refers only to elements in the combination of APF and PFD. Although the APF is the source of revenue for the PFD, the two are different programs created at different times by different kinds of legislation. The APF is a Sovereign Wealth Fund (SWF)-a pool of assets collectively owned by the members of a political community usually invested into interest-generating assets. It was established by a constitutional amendment that did not specify what was to be done with the returns to the fund. The PFD is the policy of devoting the APF’s returns to a dividend for all Alaskan citizen residents. It was created by a simple act of the state legislature. Many nations and regions have SWFs, but only Alaska’s SWF pays a regular dividend to citizens. Many nations and regions provide some form of cash benefits, but so far, only Alaska pays a regular cash dividend to all of its residents.[2] The APF and the accompanying PFD link a resource-revenue-management policy with a progressive social policy. As an SWF, the APF helps to ensure that the state will continue to benefit from its oil after its reserves are depleted. As a dividend, the PFD helps every single Alaskan make ends meet each year without a bureaucracy to judge them.
We call this unique combination the Alaska model. It consists of three elements: (1) resource-based revenue (2) put into an SWF or some other permanent endowment, (3) the returns of which are distributed as a cash payment to all citizens or all residents. The extent to which a policy has to contain all three of these elements to qualify as following the Alaska model is not so important. But we will discuss the importance of each of these elements separately.
(1) Resource revenue.
The argument for the Alaska Dividend is simple and powerful: the oil, by right, belongs to all Alaskans. The PFD is an efficient and effective way to ensure that every single Alaskan benefits from it. If that argument works for Alaska’s oil, why not Maine’s fisheries, South Africa’s diamonds, Hong Kong’s real estate, Oregon’s forests, America’s broadcast spectrum, or the world’s atmosphere? Governments have allowed private, for-profit exploitation of these and many more resources, claiming that we will all benefit from the jobs and economic activity they create. But do we? Does a homeless person in Denver benefit from the gold being mined in Colorado? Does a shanty dweller in Johannesburg benefit from the diamonds being mined in South Africa?
The PFD has made sure that every single Alaskan has benefited from the state’s oil industry. Whatever benefit they might or might not get from more jobs or increased economic activity, every Alaskan can point to the dividends they’ve received since 1982 and say, I got this benefit from the state’s decision to exploit its oil reserves. Not many other programs do that, but many more could.
The case for taxing natural resources is at least as good, and probably far better than the case for taxing any other source of wealth. Resource taxes have the benefit of discouraging overuse of scarce resources. If properly employed, they can be an important part of a green environmental management strategy, giving people the incentive to reduce their consumption of scarce resources to sustainable levels. Yet, few if any countries in the world employ resource taxes in this way. Resources are often given away by governments to individuals and corporations who sell them back to the public with value added, but the sellers capture not only the value they add but also the natural resource value along with it.
A resource tax is literally a user fee. Anyone who takes possession of a resource makes it unavailable for others. The tax represents a payment for the burden imposed on others. This justification for resource taxation is more closely associated with “left-libertarianism,” discussed in chapters of this volume by Ian Carter, Alanna Hartzok, and Gary Flomenhoff. But as we will argue in a later chapter resource taxes are also consistent with liberal-egalitarian, utilitarian, and other theories of justice.
Of course, not every country has as much oil as Alaska, but one of the key lessons of this book is that a country does not have to be “resource rich” to have a resource dividend based on the Alaska model. We make this argument fully in the final chapter of this book. Here we preview only a small part of that argument.
One reason we know that a country does not have to be resource rich to have a resource dividend is that every country and every region has valuable resources. Later chapters of this book will show that 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. Gary Flomenhoft (this volume) shows that even “resource poor” states, such as Vermont, can create a substantial resource dividend.
Another reason we know that a country does not have to be resource rich to have a resource dividend can be seen from what a small part of Alaska’s resource wealth actually goes to supporting the fund. Alaska has many valuable natural resources, but the APF is supported almost entirely by taxes on oil. These taxes are extremely low by international standards, and only about one-eighth of the state’s total oil revenue goes to supporting the APF. Thus only a tiny fraction of Alaska’s resource wealth is used to support the PFD.
(2) A permanent endowment
Alaska introduced the APF largely because Alaskans knew that oil drilling would provide a very large but temporary windfall. They wanted to extend the period in which that windfall would benefit Alaskans by putting some of it away into a permanent fund. The APF was one of the first SWFs. Today many resource-exporting nations have them. Some nations have funds more than 10 times the size of the APF.
We see the essence of the Alaska model as a strategy to make sure that the system functions as a permanent endowment, but an SWF is not the only mechanism that can do so. To some extent treating resource taxes as user frees does so on its own. Some resources are capable of producing a permanent stream of revenue from user fees. These include land, the broadcast spectrum, and renewable resources. Such resources do not need to put revenue into a fund to function as a permanent endowment, and the Alaska model can be employed with only the first and second elements. Other resources produce only temporary resource streams. No nation can produce oil forever. Pollution taxes will hopefully discourage pollution. For revenue from sources like these to produce a permanent endowment, a mechanism such as an SWF is necessary.
(3) A cash payment to all citizens
To some extent the dividend was a way to sell ordinary Alaskans on the idea of a permanent fund. But to some extent the motivation for the fund was to support the dividend. Some of the lawmakers who created these programs, particularly 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 1970s. Hammond had unsuccessfully proposed a similar policy on a local level when he was a mayor of Bristol Bay Borough, and he very much saw the APF as an opportunity to create a basic income.
Basic income is a widely discussed topic in the academic literature in social science and philosophy. Researchers have examined the political and economic feasibility of the idea, its likely effects, and the ethical arguments for and against it. The United States and Canadian governments have conducted five social science experiments to see how a very similar policy would work. The Indian government will soon begin its own experiment. Basic income comes and goes in political popularity. It has recently appeared on the political agenda in Germany. It has considerable grassroots support in southern Africa today, and the Brazilian government is officially committed to phasing it in, although no timetable for moving beyond the first stage of the phase-in has been set. It is currently popular with Green and left-leaning parties in Europe, but its support (much like the support of the Alaska Dividend) often cuts across party and left-right divides.
As we will see in later chapters, not everyone agrees about the extent to which the Alaska Dividend fits the definition of a basic income. Usually, a full basic income is defined as an unconditional income, large and regular enough to meet a person’s basic needs. The Alaska Dividend is neither regular in size nor large enough to meet a person’s basic needs. But it is regular in timing and unconditional. So, it constitutes only a partial, irregular basic income. But it is the only version of basic income currently in practice in the Western industrialized world.
We (the editors of this book and the authors of this chapter) became interested in the Alaska model because of our interest in basic income. We’re excited to see an idea-so controversial in theory-has proven to be effective and extremely popular in the one place it has been tried. The Alaska model shows not only how basic income works, but also how the unique attributes of the Alaska model can be designed to work well elsewhere. The Alaska model is not perfect, but it is a successful strategy on which to build something better.
Employing the Alaska Model
By endorsing the Alaska model, we do not mean that governments should replace everything they do with the combination of a resource taxes, fund and dividend. We mean only that they should examine it as a possible addition to their toolkit. It’s only being used by one government, but it has proven to be more popular and more effective than many things that governments all around the world are doing. Certainly, it’s a policy that other governments should take a look at.
A preview of the book
The three parts of this book evaluate the Alaska model and discuss whether and how it can be adapted for other areas.
Chapters in Part One provide the background necessary to evaluate the Alaska model. Cliff Groh and Greg Erickson examine the unlikely history of the APF and the PFD and explain how the two programs work in practice. Scott Goldsmith discusses the impact of the dividend on Alaska’s society and economy.
Chapters in Part Two examine the ethical and political case for using the Alaska model as a tool for social justice. Jim Bryan and Sarah Lamarche discuss the political consequences of linking natural resource wealth and basic income, and how this policy combination can serve justice for future generations. Ian Carter presents the resource dividend as a left-libertarian economic policy. Christopher Griffin discusses the PFD as a practical application of the theoretical idea of Stakeholding. Stakeholding is a variation of the universal, unconditional grant idea. It differs from basic income in being delivered as a large lump sum grant rather than as a steady flow of smaller payments. Almaz Zelleke criticizes the extent to which the Alaska model, structured as a resource dividend, can be thought of as the practical implementation of basic income or even a step toward it. Jurgen de Wispelaere and David Casassas argue that the Alaska model, as it stands, is of limited value in promoting Civic Republican objectives. Steve Winter criticizes the Alaska Dividend for making recipients complicit with the oil industry. In the final chapter of Part One, we (Widerquist and Howard) respond with a chapter addressing the concerns of the authors in this section, and a discussion of why the link between resource taxation and basic income is important for different theories of social justice.
Chapters in Part Three discuss empirical questions about how the Alaska model can be adapted to be used most effectively in other states, nations, and regions. Gary Flomenhoff provides a detailed empirical investigation of the resource tax revenue available in the state of Vermont. He finds that even the resource-poor state of Vermont can raise $2000 (and possibly much more) for each resident each year. Michael Howard looks at the cap-and-dividend approach to global warming as a version of the Alaska model applied to pollution control. Karl Widerquist proposes personalizing the Alaska model into what he calls “Citizens’ Capital Accounts.” Alanna Hartzok argues that any dividend program based on an SWF has a strong responsibility for socially responsible investing, and presents evidence the APF currently fails to live up to that goal. Michael A. Lewis addresses the issues of fund and risk management, which will be important if the Alaska model is to further economic security of recipients. Angela Cummine discusses whether other existing Sovereign Wealth Funds (particularly in the Middle East) should move toward an Alaska-style dividend. Greg Erickson and Cliff Groh discuss the challenges to the APF and PFD in Alaska today and the extent to which the model can be expanded and improved within Alaska.
In the concluding chapter, Howard and Widerquist respond to the concerns of authors in Part Three and discuss six lessons they take away from the Alaska experience.
[1] Including a one-time supplement of $1200 from that year’s state government budget surplus.
[2] Iran is currently in the process of phasing in a regular dividend.
Alaska’s Permanent Fund Dividend: Examining its Suitability as a Model, edited by Karl Widerquist and Michael W. Howard. New York: Palgrave Macmillan, 2012
by Karl Widerquist | Aug 14, 2019 | Opinion, The Indepentarian
This article is an early version of a paper that was published as:
Karl Widerquist, “The people’s endowment.” In Axel Gosseries and Inigo Gonzalez (eds.) Institutions for Future Generations, Oxford University Press, pp. 312-330
The proposal
Governments should start to build up a permanent endowment of publicly held assets, both financial and physical, lease at least some of them out to private industry, and use the revenue for two purposes: half for government spending and the other half for a dividend in the form of an unconditional basic income for all people-in recognition of their shared ownership of their common resources and the sacrifice they make living in a world where others own the environment they live in.[1] The goal should be to keep the total value of the portfolio growing (taking into account the overall value of its income-generating and non-income-generating assets), so that each generation leaves the next with a more valuable endowment.
Many private institutions, such as universities and museums, have large and growing endowments. Why doesn’t the government have one? Simply, we have failed to take advantage of enormous opportunities to create one.
There are essentially three things we can do with shared resources. 1. We can hold them as a commons, such as parks, rivers, and nature reserves, keeping them basically in their natural setting for the use of all but the property of none. 2. We can use them for jointly for public enterprises such as a national health service or a transportation system. 3. We can privatize them.
The endowment model is not about what mix of these three uses we should choose. It is model of how and under what conditions we should privatize resources. The private sector could be large or small, but we should privatize resources only if it is better for current and future generations to do so, and when we do privatize resources, we do so for profit to be returned to the people. The upfront sale price has to justify privatization. The government can hold and manage resources when there is a particular reason to do so, such as an environmental need, an obvious common use, or a market failure. Otherwise, it should lease resources at market prices, leaving private agents free to decide how to use them. It doesn’t necessarily need to oversee business; it merely needs to manage the terms on which it leases resources to private entities.
This model is very different from contemporary capitalist or socialist models of property ownership. Under contemporary capitalism most resources are assumed to be privately owned, but few governments have any consistent model of how resources are privatized. Permanent titles are often granted on an ad hoc basis, sometimes to cronies, often at little or no charge. Our governments give resources to corporations free or far below market rates, and our corporations sell them back to us at full market rates, capturing not only the value they add in production but also the scarcity value of the resources they received as a gift with resource rents going almost entirely to wealthy private individuals and corporations.[2] Ad hoc privatization continually shrinks the pool of shared resources, ignores environmental concerns, and creates institutions that cause inequality to persist across generations.
Under the socialist model, many resources are held and managed by the state, but there is no obvious socialist theory of privatization. Mixed socialist states and welfare capitalist sates are usually as ad hoc in their privatization as more capitalistic states.
The endowment will increase both the revenue governments earn from private use of common assets and our ability to protect both privatized and non-privatized assets for future generations. The dividend is important not simply to relieve the effects of poverty, inequality, and economic uncertainty, but also to ensure that every single person in whose name the endowment is held actually benefits from it. The permanent nature of the fund is necessary to ensure that all people with a claim to the environment, including our descendants benefit from the decisions we make now.
Thinking like a family farmer
Although the endowment model is far from the way most governments manage the people’s resources, it is typical of the way most or all private owners manage their resources. Two comparisons illustrate the difference.
1 A family farm
Imagine a successful farmer who wants her farm to benefit her children and their descendants. She has many options, including selling the farm to put the money into a trust that will pay dividends to them, renting it out and splitting the rent among them, holding it as a joint venue that would provide produce for her descendants, creating a land conservancy to preserve it as a family park. Any mix of these strategies treats the farm as her family’s endowment.
Now consider an option the farmer would never take seriously: a corporation asks her to give the land to it for free with no strings attached. The corporation claims that this will benefit the farmer’s children because it will “create jobs.” If her children are good workers, they can get those jobs and take out loans to buy houses the corporation will build on the land. Of course, it will charge market rates for those houses and the land they’re on. Certainly the farmer would recognize that although this proposal might get her children wages for their labor, it gets them nothing for the legacy she would relinquish.
No family farmer-no private owner-would do such a thing. Yet, this is exactly what governments do with the most of the assets they control in their peoples’ names. They give them away at vastly below market costs with few if any conditions attached in the hopes that the people designated as owners will create jobs. By giving away resources, governments not only create inequality of wealth and income; they also cede unequal control of those resources. They thereby create entrenched interests that become powerful in the public decision-making process for generations.
2. University endowments
Many non-government institutions-such as museums, universities, NGOs, and wealthy families-have endowments made up both of financial assets they use to generate income and of physical assets used to further the institution’s mission directly (such as items on display at a museum, the buildings on a university campus, or a family home).[3] In many cases, universities’ financial portfolios grow as their campuses get larger and more elaborate. Harvard’s financial endowment is over $32 billion, having risen from $17 billion in 2001.[4] Its managers claim to have delivered an average annual return of more than 12% per year over the last 20 years.[5] Its real estate holdings have increased to include thousands of acres of land and hundreds buildings, some used directly by the university others leased out for income.[6]
Thomas Piketty presents a great deal of historical evidence that the returns to capital have tended to exceed the economic growth rate for most of the last two centuries.[7] If his findings are correct, any capital-holding institution (whether a family, a business, or a non-profit enterprise) can grow its endowment over time as long as it spends less than its returns each year.
In light of these examples, it seems strange that governments don’t already have large and growing endowments as their legacy from centuries of the privatization they have authorized. In the name of the people, they control more assets than any private institution, yet the commons tends to shrink in size and value every year to privatization and pollution, and governments seldom build up financial (or any other) assets in return for all it relinquished.[8] For the most part, governments have acted neither as good custodians of the environment nor as profit maximizing sellers of resources.
SWFs: a positive step but a limited example
There is one example of national and regional governments taking small, limited steps toward the endowment model by establishing financial endowments, called “sovereign wealth funds” (SWFs). An SWF is a pool of financial assets held by the government in the name of the people. Usually, SWFs are set up by resource-exporting polities in hopes of turning a temporary resource windfall into a permanent income. One SWF, the Alaska Permanent Fund (APF) pays a regular dividend, called the Permanent Fund Dividend (PFD), to citizen-residents of Alaska. While the fund makes part of the temporary windfall permanent, the dividend ensures that every Alaskan, now and in the future, benefits from the state’s windfall.
SWFs provide an example of how governments can use endowments to benefit people, but they represent only a limited application of the wider endowment strategy, and their example might give people the impression that the possibilities of a resource endowment are more limited then they really are. [9] Right now, few resource-based industries pay the market value of the resources they appropriate; governments devote little of their resource revenue to SWFs; and only one of those SWF pays a dividend.
Alaska created the APF in 1974 and began paying out the PFD in 1982. Over the last 10 years (2004-2013), the dividend has averaged about $1,213 per year for every individual or about $4,853 for a family of four. Despite all those payouts, the APF is now worth more than $50 billion.[10] So far, the APF and PFD have been instrumental in helping Alaska avoid the resource curse, in which the people of many resource-exporting nations fail to benefit from their resource exports or in which those benefits prove temporary. If nothing else, all Alaskans have benefited in one direct way from Alaska’s oil. Very few resource-exporting regions can make that claim. For example, it is hard to say how or whether the poorest Mexicans and Nigerians have benefited from all the oil their nations have exported.[11]
The APF and PFD are financially sound. Alaska might choose to get rid of them someday, but as long as they are allowed to exist, they will provide benefits for all future Alaskans. Modern Pennsylvanians probably can’t say how or whether they’ve benefited from the Pennsylvania oil rush of the 1860s,[12] but future Alaskans will have one small tangible benefit.
Other SWFs are much larger than the APF. The United Arab Emirates and Saudi Arabia each have SWFs worth over $500 billion.[13] Norway’s SWF has $818 billion or about $161,000 for each person. It is primarily used to support the country’s pension system. [14] Norwegian pensions will be financed by the assets their government owns around the world for generations after their oil-exports have run out. The fund is now larger than the country’s national debt ($759 billion), so that by some counts, Norway has no net national debt.[15]
Not all SWFs are people’s endowments because they are held by authoritarian governments.[16] I use them only to demonstrate the possibility that public agents can build up endowments. I’m arguing that under a democratic government, the endowment is preferable. I have no statement whether authoritarianism with an endowment is better than authoritarianism without one.
The success of these SWFs ought to inspire imitation. If it is a good idea for Alaskans and Norwegians to be paid for their share of their country’s oil, it must also be a good thing for Namibians to be paid for their share in the country’s diamonds, for Jamaicans to be paid for their country’s beach resorts, for South Africans to be paid for the country’s gold, for the Swiss to be paid for their banking system, and so on around the world. However, because the SWF is a relatively new idea that has been tried only in limited circumstances, I’m worried that they will give people the impression that the endowment model is more limited than it is.
Four features of the endowment model
The endowment model has four features, or one could say, there are four tests to see whether a policy is following the endowment model. Governments fully employing the endowment model do the following things:
- They charge market rates (profit-maximizing prices) for the resources they privatize.
- They apply the model to all resources they privatize.
- If they privatize nonrenewable resources they save and invest a sufficient amount of the revenue so that the future generations receive a fair share of the benefit.
- They take sufficient account of the environmental, social, and political impact of privatization to ensure that whether they decide to privatize a resource, use it for a public enterprise, or leave it as part of the natural environment, the decision will fairly benefit all people of current and future generations.
The first goal applies to the price not the conditions of leases. An oil lease with environmental restrictions probably sells for less than one without. Maximizing revenue from a signal sale without regard to its impact on the environment would be a shortsighted effort to maximize the value of the endowment. The first goal simply means no gifts to businesses: once the authority sets the conditions of a lease, it charges what the market will bear for that lease.
The next two sections look at two examples of privatizations to see how resource-based SFWs get closer to the endowment model than most privatization efforts, but still fall far short of it.
1. U.S. broadcast spectrum policy
The broadcast spectrum is used by radio, television, cell phones, wireless internet, and so on-apparently with few direct environmental side effects. When you pay to access the broadcast spectrum, you pay partly for the company’s provision of service, but you also pay for the slice of the broadcast spectrum they control. Their slice has value because with currently available technology the spectrum is a scarce resource. The company didn’t create the broadcast spectrum. It didn’t invent it. It didn’t discover it. It controls the broadcast spectrum because the government gave it a lease. Although most governments nominally assert ownership of the broadcast spectrum,[17] in most cases, they charge little or nothing for leases to it.[18] The U.S. government, for example, gave away television-broadcasting rights largely in exchange for broadcasters’ promise to run occasional public service announcements.[19]
Of course, companies with broadcast spectrum leases spend money. It costs money running a business provide the cell phone networks, television, radio, wifi, or similar things, that is why business Accountants Brisbane, and ones similar, need to be incorporated in helping look over and manage financials. Businesses, big or small, encounter a number of costs they probably didn’t expect to be included in their budget. For example, as stated previously, networks and technology cost money. This could also be due to the hiring of Managed IT Melbourne services, or IT services wherever a company might be based, to give them assistance with running the technology side of things. They are equivalent to a young entrepreneur running a coffee house in a nice location where her wealthy grandmother pays the rent. Some of the money she makes is the return on her entrepreneurship, but all the value the flows form her location is a gift from grandma. The difference is huge. A 2003 study evaluated U.S. broadcast spectrum at $301 billion per year (more than one-eighth of government expenditure that year).[20] This does not include the value of that broadcasters add from their efforts and expenses. It’s the pure rental value of the spectrum-the gift from grandma government. The revenue forgone would be enough to provide a dividend of $1000 for every man, woman, and child in the United States every year from now on. Instead, from now on, this revenue will provide returns for the heirs of those who received the government’s gift of the broadcast spectrum.
Many other common assets are treated like the broadcast spectrum. The government created the internet; the community makes it valuable; but private companies capture most of the revenue it generates. The government lends money to banks at low interest rates, and they lend it out to the rest of us at higher rates. The U.S. government spends enormous sums to bail out banks and other institutions during financial crises, but does not usually leverage those moves into permanent ownership of banks or anything else.[21]
2. Alaskan Oil policy
Clearly, Alaska’s oil policy is closer to the endowment model than U.S. broadcast spectrum policy. Alaska have made money from resource privatization and taken steps to share part of that revenue with all current and future residents. But Alaska has fallen short of the endowment model in many ways. As mentioned above, the PFD is a small legacy, and barring a significant change, it is not likely to rise significantly.
The APF and PFD are small partly because Alaska receives a relatively small portion of the revenue from its oil exports. The state has received about one-third of the revenue generated by its oil exports. The other two-thirds have gone to private for-profit oil companies. Norway receives 78% of oil revenue, and still finds plenty of oil companies willing to drill.[22] Conditions are different in Norway than in Alaska, and it is not fair to could have done that well, but it is fair to say that Alaska could have raised a lot more money if it charged the market rate.
The other reason that the dividend will have a relatively small impact on future generations is that Alaska devotes only a small portion of its oil revenue to the fund. As of 2010, only 18.3% of the state’s oil revenue had been devoted to the APF.[23] One plan that was discussed in Alaska at the outset of the oil boom was to put all of the state’s oil revenue into an SWF and spend only the interest, gradually reducing other taxes as revenue from the fund made them unnecessary.[24] Had Alaska done so and had it received two-thirds instead of one-third of oil revenues, all else equal the fund would now be 10 times their current levels. The APF would be more than $500 billion.[25] If the state devoted half of the returns to the dividend and half to government spending, the dividend would be about $6,000 ($24,000 for a family of four) and the state would have $20 billion to spend each year-far exceeding the state’s budget of $12 billion in 2013.[26] Of course, all else would not have remained equal, and so it is not fair to say that this strategy would definitely have produced a fund this large, but it is fair to say that Alaska’s fund and dividend could be several times larger than they are now.
Instead, the state gave itself an enormous tax cut at the expense of future generations by eliminating the income tax in 1980. Lower taxes, of course, are a benefit to for many of the people, but as then governor, Jay Hammond argues, the benefit of eliminating the income tax was felt mostly by the wealthiest Alaskans.[27] Additionally, it might not have been best for Alaska to devote all of its oil revenue to the APF. The state badly needed improvements to its educational system and its infrastructure at the time. These are also part of the endowment we leave for future generations, and they can be a more important than any financial legacy.[28]
In effect, by eliminating the income tax, the current generation of Alaskans is spending a temporary revenue stream on themselves, depleting a resource forever but leaving a fiscal cliff for future generations when the oil runs low. Similarly, living in the Persian Gulf, I get the impression that most hydrocarbon exporting nations will leave neither sufficient physical infrastructure nor sufficient financial savings to sustain their current level of development after the boom. These decisions represent a serious failure of today’s leadership to be a good custodian of the people’s common inheritance.
Alaska has also failed to apply to the model to most of the rest of its environment. There are a few other resource taxes, but the model could be applied many more of the Alaskan economy, such as land value. Valuation of land is a critical element of real estate and many hire a land valuer to maximize property revenue. Probably the most significant way that Alaska differs from the endowment model is not in its failure to maximize revenue from the privatization of resources, but in its failure to take ownership of the environment as a system, and to protect it sufficiently. I’ll talk about environmental issues later in this chapter.
Applying the model more widely
The rest of this chapter will dispel the following potential misconceptions as it explain the benefits of wider applications of the model.
- People might think that the financial fund is the endowment.
- Actually, our common resources are the endowment. The establishment of a financial fund is only one of many things we can do with it.
- People might think that resource endowments are inherently small or only for nations experiencing a resource boom.
- Actually, the all nations have many extremely valuable common resources, most of them renewable.
- People might think that getting revenue from resources naturally accompanies the irresponsible depletion of resources or degradation of the environment.
- Actually, a resource endowment provides a coherent mechanism for more responsibly managing resources for the benefit of future generations.
1. It’s not the fund: it’s the resources
SWFs are financial endowments, but our nonfinancial endowments-physical resources-are far more important. The act of creating an SWF is not the establishment of an endowment; it is the transformation of a physical endowment into a financial endowment. Physical assets don’t always have to be transformed into other forms to give people their highest value. As mentioned above, our parks, rivers, beaches, and public enterprises are parts of our endowment and they might already be in their highest value use.
The most important thing to learn from the resource-exporting polities is not that they have set up SWFs, but that they have stopped giving away resources for free and started demanding payment for at least some of the resources they privatize. Even the largest SWFs in the world represent a small and narrow model of the potential for a people’s endowment, because they are made up entirely of financial assets, and they are usually based entirely on revenue from one or two resources, which are generally not treated as part of a national endowment. The potential for all governments to build up SWFs is enormous and the potential for them to build up a common asset endowment beyond the financial SWF is even greater.
On average, from 1977 to 2010, 87% of the State of Alaska’s government revenue has come from oil taxes, fees, and royalties.[29] Several resource-exporting polities (such as Norway, Qatar, the UAE, Kuwait, and Saudi Arabia) are also financing all or most their government spending from resource-revenue.[30] Citizens pay almost no taxes, and so are less defined by their role as taxpayers and more as owners of shared resources.
The most important thing we, the people, do by establishing the endowment is to assert ownership over our environment as a system. Currently, no one truly owns the environment. Individuals own parts of it, but no one manages or takes responsibility for the system as a whole. The obvious candidate is the government as representative of the people, but governments have not really asserted ownership. They regulate some uses of the environment here and there but not as part of a systemic plan to restore and maintain a healthy environment and the total value of the people’s portfolio.
To see the natural resource base as the people’s endowment is to see the natural resource base as our treasure. It has to be managed for the long-term benefit of the people-in every sense in which it benefits the people-and we have to consider future generations as owners of the environment as much as we are. We will bring them into existence, and so, any transformation of resources we do should be a net benefit to all of them as well as all those alive now.
2. All nations are resource rich: the Vermont example
This section argues we can apply this model to nations not usually recognized as resource-rich.
This chapter does not discuss international justice. It assumes we’re stuck with the nation state system and discusses what states can do. Perhaps someday international institutions will have the authority to employ some or all elements of the endowment model. If so, most of what I say here still applies, and our ability to address the ecosystem as a whole improves. I do not discuss the issue that some nations have more valuable resources than others, because it is not as pressing as how we use those resources. Difference in the size of the resource base explains why Yemen is less wealthy than Qatar but not why it is less wealthy than Singapore. The most important issues involving our resources are in how we use them, who we allow to own them, and how we allow them to cross borders. Better management of resources would not make all nations equally wealthy, but it would make the poorest and most unequal countries much better off.
The difference between what we usually think of as a resource-rich nation and what we think of as a resource-poor nation is that resource-rich nations are rich in the kinds of resources governments usually sell and resource-poor nations are rich in the kinds of resources governments usually give away. All nations have enormously valuable resources, most of which are being privatized without any compensation to the people for removing them from the commons. For example, bottled water is just as much a resource as oil, but many companies take it out of the ground (or out of the tap) at no charge, many paying no more taxes than non-resource-extracting companies located on similarly valuable real estate,[31] like another gift from grandma.
Another example is perhaps even more telling. The beach resort industry is-financially speaking-just as much a resource export as the oil industry. The beaches of many developing countries are dotted with-and sometimes dominated by-resorts. Yet, to the best of my knowledge, there are no beach-resort-real-estate dividends. Not only are taxes on resorts often low; sometimes governments offer corporate subsidies for their development. Taxes for them can be handled by small business accounting firms. Resorts in the developing world are often owned and patronized by people from developed countries, offering little more than a few jobs to the locals. This is exactly what the farmer in the original example would never do: closing off land that were once freely available; getting no revenue in exchange; sometimes paying people to take it away; sometimes for little more than the hope of employment.
How big is the potential for revenue from common assets? Gary Flomenhoft estimates the value of common assets in the “resource-poor” state of Vermont, including the following assets: air, wildlife and fish, public forests, groundwater, surface water, minerals, land value, wind, the broadcast spectrum, the internet, the financial system, and the monetary system. He finds the total rental value of these assets to be somewhere between 8.86 and 28.31% of Vermont’s GDP. The wide range exists because of the difficulty of estimating the outcome of auction markets that don’t yet exist.[32]
If Flomenhoft’s low estimate is representative of the United States as a whole, common assets produced $1.28 trillion of revenue per year. If the higher figure is representative, the amount of rent available is $4.10 trillion-28.31% of the $14.5-trillion GDP of the United States. If half of that ($2.05 trillion) were used for government spending, it could fund 82% of the US government budget. The other half could fund a dividend of $13,300 per person per year, or $54,200 for a family of four.[33]
According to Mark Blyth and Eric Lonergan, the Bank of England, the European Central Bank, and the Federal Reserve already own assets in excess of 20% of their countries’ GDPs.[34] That alone would make a good start: something in the neighborhood of $300 billion in that United States.
In one sense, it doesn’t matter how much money there is in treating assets as the people’s endowment. Whether it raises a little or a lot, we owe it to ourselves and our descendants to start thinking about our resources as our endowment, rather than squandering it for the benefit of the politically connected. We need to stop thinking that businesses need or deserve the gift free resources just to induce them to provide services using those resources. If they can make money with otherwise common resources, they should pay the full market value for those resources.
3. Our responsibility to future generations
People are likely to ask two nearly opposite question about the idea of financial compensating future generations for what we do now. They could point to technology improvements and ask why we should we financially compensate future generations for anything when they will probably have far higher living standards than we do. They could point to environmental degradation and ask whether any amount of financial wealth can compensate future generations for the incredible damage we’re doing now.
A. Finance and future generations
The question of whether we should financially compensate future generations is closely tied to a question of whether it is even possible for one generation to financially compensation another. One might argue that we can’t financially compensate future generations, because they will have to produce all the goods they consume from the stock of natural resources, developed capital, and labor available at the time. Financial instruments are not resources; they are only claims on resources by one party against other parties living at the same time. Given this obvious fact, what does it mean to say that a financial endowment provides anything for future generations?
The key to the answer is that any generalization we make about future generations applies only to the average, not to everyone. The unequal world we live in is-financially speaking-nearly opposite of Lake Woebegone: most of our children are below average. We need to compensate all financially below-average citizens for granting claims resources that create financially above-average citizens.
We need to take responsibility not only for the physical environment but also for the institutional setting that we leave our descendants. The ad hoc privatization system our ancestors left us creates an institutional setting that guarantees inequality. If we don’t change, the wealthiest 1% of future generations will control most of the world’s resources, because ad hoc privatization assigns permanent ownership of resources to some and not others. The beneficiaries of privatization will pass on the benefits of those resources to future generations, giving them greater claim to the natural resources, capital, and labor available than other members of their generation.
Future generations could rectify economic inequality using the government’s power to tax and redistribute property that exists in their generation, but it is wrong of us to put them in the position where they have to do so and to create an institution setting making it so difficult for them to do so. Once a group obtains strong legal rights over specific resources, they gain both the motivation and the political power to protect that privilege. The income tax, the inheritance tax, and the capital gains tax all have powerful political enemies. The APF has no enemies. It’s just a pool of publicly owned funds with a long established history as public funds. Even though it is an equalizing mechanism just as much a redistributive income tax, no one feels inhibited by its existence. If it did not exist, some wealthy people would own those assets instead. Established history would tell them it was theirs. They would feel the pinch of any tax meant to have the same equalizing effect as the APF, and they have political to resist those taxes.
Thus, the goal of a shared financial endowment is to bolster the income and wealth of those who would otherwise be born with fewer claims on resources in compensation for the privatization that would otherwise result in default inequality. The financial endowment will give all the members of future generations some claim on the wealth accumulation our economy will do between now. The endowment gives future generation greater political and economic leverage to distribute their production in ways that recognize everyone as free and equal citizens. Although we cannot compensate a future generation as a whole, we can compensate the average person for the privileges we bestow on the people we name as owners of property. And for this, the financial portion of the endowment works very well.
B. How can we compensate for environmental degradation?
If we leave future generations an unhealthy environment, there is nothing we can do economically or technologically to compensate for it. The environment we leave our descendants is as much a part of our legacy as the capital and knowledge base we leave them. It is as much theirs as it is ours.
We have to pass on a healthy environment, but it’s unreasonable to think that no natural resources should ever be converted into consumption or investment goods. The environmental problem is not that we have made environmental tradeoffs. It is that we have avoided facing them for what they are. Even today environmental regulations tend not to be based on a careful examination of the costs involved. Some actions (such as chlorofluorocarbon emissions) are limited or prohibited; other actions (such as most green house gas emissions) are allowed freely,[35] as if anything not prohibited imposes no costs on others. Any use of natural resources involves environmental tradeoffs that affect all current and future people. Environmental accounting-the effort to make these tradeoffs explicit-is still in its infancy, and little, if any, public policy around the world incorporates realistic appraisal of environmental tradeoffs.[36] Within a strategy to protect a healthy environment, it is these tradeoffs we compensate for. Estimating future environmental costs of present use is extremely difficult, and until we have better understanding, we need to err on the side of caution.
The endowment is a powerful tool to help because charging for something discourages its use. A simple application of Adam Smith’s invisible hand theory[37] implies that users of resources will overexploit them unless they pay the environmental costs of their use. This is one reason for the rule that the purchase price of any resource has to justify its use. Once we tie government revenue to the value of the resource endowment, we give government an incentive to put a high value on the resource base.
One might think that if we start charging businesses for resources, we will start privatizing even more of our environment to make more money. I want to argue that the opposite is true. Throughout history, resources have typically been up for grabs or given away by governments to crony capitalists. In either case, people have incentive to exploit resources to extinction.[38] There was no dodo dividend. The assertion of ownership over common resources provides the following three mechanisms to reduce the overexploitation of resources.[39]
- The endowment encourages the community think like an owner. A demand for payment asserts ownership, and ownership confers rights to control and manage.[40] When private companies own the environment, any government action to protect it is “interference” with the powers that naturally flow from ownership. Once we establish the people as owners of the environment, government as custodian, and private companies as the hired help, environmental protections naturally follow from the people’s ownership. If companies want to lease the people’s resources, they have to follow the people’s terms.
Ownership (whether public or private) is the solution to the tragedy of the commons. The term “tragedy of the commons” comes from theorized pastoralists who have an incentive to over-graze a common field that none of them owns.[41] One solution is to divide the field into private property, but another solution is to formalize collective ownership, establishing an authority to set rules of access.[42] Agribusiness firms do not have incentive overgraze their own fields or butcher their own herds to extinction; they do have incentive to overwhelm the common watershed with excessive cattle excrement, hormones, fertilizer, and other pollutants.[43] Establishing the people’s endowment creates an authority to say this is people’s watershed; these are the terms of access.
- The endowment encourages the community to think like a monopolist, and to realize its price-setting power. This statement is less true of a resource like oil, which is sold a world market. But even the poorest countries have monopoly power over many valuable assets, including local real estate, the monetary system, and the broadcast spectrum. Monopolists don’t sell all they can at the lowest prices. They restrict supply to obtain higher prices. Once we realize the enormous monopoly power the community has over access to the environment, it doesn’t make sense for the people to unload their precious resources at bargain prices; it makes sense to hold them back to see how much money they can get.
- The endowment encourages people to think not just like any monopolist, but like Johnny Carson. Who? In the late 1970s and ’80s, he was the highest-paid television entertainer in the world.[44] His command over a huge audience gave him monopoly power, which he used not just to demand more money but also to demand less work. His time was valuable. The wealthier he became from selling his time, the more time off he could afford. He restricted the supply of his time beyond the profit-maximizing point and enjoyed the non-market value of his resource.
Currently the community’s share of the revenue from privatization is so small that we don’t feel like we can afford to hold any more back. Once start making companies bid pay for what they take out of the commons, we can realize the power over our environment Johnny Carson asserted over his time.
Compare two strategies for a country managing its beaches. Under the current strategy, politically connected corporations obtain the beaches at far less than their market value. Most the beaches become private resorts inaccessible to many citizens. Under the John Carson strategy, the people raise the price above the revenue-maximizing level, holding back a large amount of beachfront property to retain for public use, but making a very high rate on beaches they do privatize. A few private resorts dot the beaches, but large areas remain for public or for wildlife.
Our environment-left alone and unexploited-is the most important part of our endowment. We can have fewer smoke stacks, fewer drain pipes, bigger parks, cleaner air, a healthier environment, and make a higher rate of return on the resources we do exploit. We will leave our descendants in a better position both financially and environmentally. We aren’t doing this now, partly because we don’t have enough democracy, but also because we’re not looking where the money is and not taking power over it.
Conclusion
This chapter has introduced the idea of a people’s endowment, in which we establish the precedent that the people as a whole own the environment and the resources within it. It has argued that this strategy will help create an institutional structure that more fairly shares the benefits of our economy with-and better protects the environment-for all people, living today and in the future.
The people’s endowment is better than the tax-as-you-go method of financing government expenditure because it alters the institutional structure toward greater equality and responsibility. Default ownership in the current system is highly unequal creating leverage for the wealthy to resist tax-as-you-go efforts to combat inequality. Once the endowment is established, a high level of equality becomes the default. Businesses have to add value and pay for the resources they hold to make money.
The chapter has argued that the endowment will better maintain the environment for future generations because it focuses our attention on the environmental tradeoffs we make daily and because it gives the community greater power to set environmental rules.
The chapter has not argued for any specific level of public and private sectors. It has simply argued for how we should go about privatization of resources. This strategy does not necessarily imply a larger government sector. We should choose the mix of public and private uses of resources based on what is better overall for present and future people. We should privatize resources only if our environmental endowment is made more valuable by doing so, and only if private actors are paying enough to make privatization profitable for the community.
Of course, we need to make sure that the terms of use are loose enough to give people flexibility in the projects they will pursue as individuals with the resources they obtain. Access to resources needs to be open to all people on the same basis without discrimination. And everyone has to have access to enough resources to afford the basics of life. But anyone who holds resources must pay back to the community, and that payback must be enough to make their ownership a benefit for everyone else-now and in the future.
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[1] Similar proposals include (Barnes 2014); (Blyth and Lonergan 2014); (Flomenhoft 2012); (Widerquist 2012b); (Widerquist 2012a) This proposal obviously takes inspiration from left-libertarian proposals such as (Vallentyne and Steiner 2000); (Vallentyne and Steiner 2000b) The main difference between this proposal and more standard left-libertarianism is the emphasis on the community’s monopoly power over its resources (explained below).
[2] (Mansfield 2008)
[3] These institutional endowments are not people’s endowments, because they are not set up to serve the interest of the people as a whole. Whose interest these endowments serve is an interesting issue, but off the topic of this chapter. I use them only as examples of how endowments can work.
[4] (Institute 2003); (Institute 2014)
[5] (Harvar-Management-Company 2014)
[6] (Arsenault 2009)
[7] (Piketty 2014)
[8] (Flomenhoft 2012); (Widerquist 2012b)
[9] (Widerquist and Howard 2012b); (Widerquist and Howard 2012c)
[10] (Alaska-Permanent-Fund-Corporation 2014); (Permanent-Fund-Dividend-Division 2014), averages are the author’s calculations from the table.
[11] For further arguments along these lines, see (Widerquist and Howard 2012b); (Widerquist and Howard 2012c)
[12] (Black 2000)
[13] (Sovereign-Wealth-Fund-Institute 2014)
[14] (Norges-Bank 2014)
[15] (International-Monetary-Fund 2013)
[16] (Tétreault, Okruhlik, and Kapiszewski 2011)
[17] In the United States for example, public ownership is asserted in (73d-Congress-of-the-United-States 1934), 301.
[18] (Flomenhoft 2012), 100.
[19] (Snider 2003), 12.
[20] (Snider 2003), 12.
[21] (Sherman 2009)
[22] (Flomenhoft 2012)
[23] (Erickson and Groh 2012)
[24] (Moss 2012), 76, 86 n18.
[25] Author’s calculations assuming a population of 700,000 and a real return rate of 4 percent.
[26] (Roberts and Solow 2003)
[27] (Hammond 1996)
[28] (Rose 2008)
[29] (Erickson and Groh 2012), Table 3.1, 43
[30] Qatar for example receives more than 70 percept of government revenue from hydrocarbons and another 10 percent from business taxes, much of which is directly or indirectly related to hydrocarbons. (International-Monetary-Fund 2010), table 13, p. 10.
[31] (Flomenhoft 2012), 96-98.
[32] (Flomenhoft 2012).
[33] (Widerquist 2012b)
[34] (Blyth and Lonergan 2014)
[35] (Hoffman and Wells 1989)
[36] (Odum 1996); (Mathews 1997); (Owen 2008)
[37] (Smith 1976)
[38] (Martin 2005); (Martin and Klein 1984) (Roberts and Solow 2003)
[39] Adapted from (Widerquist and Howard 2012a)
[40] The now-standard account of that we mean when we use the word “ownership” defines it as a bundle of 11 rights and duties (Honoré 1987), 161-192.
[41] (Hardin 1968)
[42] (Feeny et al. 1990)
[43] (Williams and Hann 1978)
[44] (McWhirter 1982)
by Kate McFarland | Aug 9, 2018 | News
Photo: “Fight for $15” Minimum Wage Protest, CC BY-SA 2.0 The All-Nite Images
A recently released survey shows support for an income-tax-funded basic income from people of color and the working class, but opposition from college-educated white Americans.
The left-wing think tank Data for Progress included a question about universal basic income (UBI) in Polling the Left Agenda, an opinion survey recently conducted to gain insight into the political viability of potential “big-ticket” progressive proposals.
The think tank hopes to remedy a lack of data concerning voter support for such policies, policies that politicians might be inclined to dismiss as too radical to gain sufficient support from the electorate:
“Because the policies that are exciting progressive voters have not yet caught the attention of most pollsters, debates over how ready the broader electorate is for a more progressive Democratic platform have been reduced to mere speculation. We set out to change that … We chose policies that haven’t been polled often, but could be central to the 2020 Presidential election.”
Policies considered in the poll included not only UBI but also a federal job guarantee, a stakeholder grant or “baby bond”, reparations for black Americans, and a 90 percent marginal income tax on millionaires, among other proposals.
In collaboration with YouGov Blue (a division of market research organization YouGov that serves clients from the political left), Data for Progress interviewed 1515 eligible US voters between July 13 and 16, 2018. Respondents were randomly selected and represented the full US political spectrum, not only progressives (e.g. about 44 percent of respondents who voted in the 2016 Presidential election backed Republican nominee Donald Trump).
Querying Support for UBI
Although the survey did not explicitly use the term, UBI was the intended target of one of the survey’s ten policy questions:
Would you support or oppose giving every American a monthly check from the government of $1,000, which would be paid for by raising taxes on individuals earning more than $150,000 a year?
Overall, 37 percent of respondents supported the policy (23 percent strongly and 14 percent “somewhat”), while 43 percent opposed it (31 percent strongly), and the rest remained neutral or undecided. However, as discussed below, net support for the policy was observed within some demographic groups, such as Blacks, Hispanics, women, eligible voters under 45 years of age, and those without any college education.
It bears note that the questionnaire did not query respondents about UBI per se but about a specific type of UBI: one of a certain specified amount (US$1000 per month) and funding mechanism (a higher personal income tax for individuals making more than US$150,000 per year).
Because of this, we must be cautious in making comparisons between the Data for Progress poll and other recent surveys of Americans’ opinions on UBI, such as those conducted in 2017 by Ipsos, Morning Consult, or Gallup, or the poll commissioned by the Economic Security Project in 2016. None of the latter polls included reference to a specific amount or funding mechanism in initial questions about UBI (although some proposed specific sources of funds in follow-up questions). At the same time, included other extraneous qualifications (e.g. Gallup’s poll asked specifically about a UBI introduced “as a way to help Americans who lose their jobs because of advances in artificial intelligence”). Thus, although ostensibly all surveys about Americans’ attitudes UBI, these studies cannot be said all to have measured the exact same thing.
Of particular significance is the fact that the Data for Progress questionnaire asked specifically about a UBI funded by a personal income tax. Data from earlier surveys already indicate that support for UBI decreases when respondents are told that the program would be accompanied by higher taxes.
A 2017 survey of British adults, for example, found that 49 percent of respondents would support “a regular income paid in cash to every individual adult in the UK, regardless of their working status and income from other sources”, but support dropped to 30 percent if the policy would entail an increase in taxes. Similarly, as Jurgen De Wispelaere has pointed out, a government-sponsored working group in Finland “found that Finnish support for basic income decreased quite radically once questions about the amount of basic income are paired with corresponding questions about the taxes needed to fund it”. And a 2016 Canadian poll found 67 percent of respondents in favor of a guaranteed income of C$30,000 per year, but only 34 percent said they themselves would be willing to pay more in taxes to support a government-sponsored guaranteed income.
Past American surveys have shown similar results. In the aforementioned Gallup poll, 48 percent of individuals surveyed supported “a universal basic income program as a way to help Americans who lose their jobs because of advances in artificial intelligence”. However, out of those who expressed support for the program, only a minority (46 percent) replied affirmatively to a follow-up question asking whether they would be willing to pay higher taxes to fund it. Moreover, the Economic Security Project study revealed a drop in support for a “base income” from 45 to 39 percent, and an increase in opposition from 35 to 50 percent, after respondents were informed that the program “would be paid for by tax revenues”. Notably in the latter case, the survey respondents were not told specifically that they themselves would have to pay higher taxes.
It is not uncommon to hear American basic income advocates speak of a US$1000 basic income funded in part by an increase in personal income taxes. However, there are other reasons why details are not immaterial. For one important example, note that UBI proponents also frequently cite the popularity of Alaska’s Permanent Fund Dividend (PFD), an unconditional cash payment to all state residents, to argue that the policy could garner mainstream appeal in the US. The PFD, however, is a vastly different program from the description specified in the Data for Progress poll: Alaska’s PFD is distributed annually rather than monthly, closer to US$1000 per year than per month (its amount varies but stood at US$1100 in 2017 and US$1022 in 2016), and funded not from personal income taxes — Alaska is, in fact, one of a handful of US states with no state income tax — but from investment earnings on revenue from oil and other state-owned resources.
I will make one final note on questionnaire wording before turning to examine some results of “Polling the Left Agenda” in more detail: it is also important be mindful of what details are not explicitly noted in the survey question on UBI, such as the fact that the payment is not conditional on work or other requirements. The previously cited Economic Security Project survey found that support also declined when respondents were directly told that receipt of a UBI “is not tied to work or having a job” or that the money “could be used for anything”. Although the unconditionality of the grant is implicit in the description of “giving every American a monthly check”, individuals’ reactions and responses can vary depending one what is made salient and explicit when questioned.
Additional Survey Results
Race and Education Level
The UBI proposal received the strongest support from people of color and non-college educated Americans (or “working class” as Data for Progress labels the latter group).
As Data for Progress summarized what it referred to as the “key finding” of its study, UBI “is most popular among working class people of color, followed by college educated people of color” and “net support among working class whites” while being “rejected by college-educated whites”.
Black respondents supported the proposal by a margin of 49 percent to 19 percent (with 33 percent expressing strong support), while Hispanic respondents supported it by a much narrowed margin of 36 percent to 34 percent. In contrast, 47 percent of white respondents opposed the policy (with 35 percent strongly opposing it), while 36 percent supported it.
Across education levels, the policy proposal received net support only among those with no college education (40 percent in support to 29 percent opposed). Overall, over 40 percent of college graduates strongly opposed the policy.
Cross-tabulated data tables from Data for Progress.
These demographic trends remain consistent with the results of the 2017 National Tracking Poll conducted by Morning Consult and Politico, which queried over 1400 eligible US voters on their support or opposition to “a proposal in which the government would provide all Americans a regular, unconditional sum of money, sometimes referred to as universal basic income” (see the discussion by Patrick Hoare in a Basic Income News article on the survey).
Political Alignment
The UBI proposal also received majority support from respondents who voted for Democratic candidate Hillary Clinton during the 2016 presidential election, with 35 percent of Clinton voters strongly supporting the policy. (We might here note that, while Clinton herself is sometimes classified as a UBI supporter due to a jettisoned proposal described in her memoir, she opposed UBI during her campaign, and her rejected proposal was for a resource dividend inspired by Alaska’s PFD, not financed by a higher personal income taxes.)
In contrast, less than 17 percent of Trump voters in the survey supported the idea of an income-tax-funded UBI. Indeed, among those who voted for the Republican candidate, 64 percent strongly opposed the policy.
Once again, this result aligns with last year’s National Tracking Poll, which found that 56 percent of Clinton voters supported a UBI, with 28 percent opposed to the proposal. In contrast, only 32 percent of respondents who voted for Trump expressed support for the idea of UBI, while 52 percent expressed opposition. Similarly, the Gallup poll found that only 28 percent of Republican respondents supported UBI as a policy to address technological unemployment, in contrast to 65 percent of Democrats.
Some UBI supporters, being keen to depict the policy as broadly trans-partisan (“not left or right but forward”), might balk at portraying the idea as specifically “progressive” or as a potential part of “the left agenda”. If these recent surveys are a valid measure, however, there is evidence that UBI is indeed an idea that strikes a much greater resonance with America’s left.
Other Demographic Categories
The poll also suggests that an income-tax-funded UBI is more popular among women, younger Americans, and lower-income individuals, and less popular among men, older Americans, and higher-income individuals.
Women displayed a slight margin of net support for the proposal (39 percent to 37 percent), although 10 percent remained unsure, while male respondents rejected the idea 50 percent to 35 percent (with 4 percent remaining unsure).
Additionally, while the policy proposal garnered net support from young voters (in both the “under 30” and “30-44” age groups), it received net opposition from those 45 and older, and nearly half of respondents over 65 strongly opposed it.
Again, these general demographic trends tend to reflect previous survey research, such as the 2017 Gallup poll, which found greater supporter for UBI among female respondents and declining support through each of its four age categories. The National Tracking Poll also revealed stronger opposition from older age groups (especially among those over 65). In the latter survey, however, men were seen to be slightly more favorable to a general UBI proposal than were women.
Finally, the Data for Progress poll showed that lower incomes tend to be associated with a higher degree of support for UBI; while supporters outnumbered opponents among respondents with family incomes under US$40,000 per year, opponents predominated in higher income categories. This finding also remains consistent with other recent studies.
Reaction from The Nation
So, then, is basic income a viable progressive proposal? Should Democrats back the idea in the 2020 election? Journalist Clio Chang is one commentator who believes that the survey results do indeed suggest an affirmative answer, as she writes in The Nation, the popular American progressive political journal:
“[S]ome sort of cash welfare should be part of the progressive agenda, not in small part because it would help blow up the racist idea that benefits should be tied to work and finally kill Reagan’s welfare-queen myth. As the polling shows, even the most radically progressive proposals are not the political death sentences that critics would have you believe.”
CIRS, 
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