by Karl Widerquist | Jun 4, 2013 | News, The Indepentarian
According to the Associated Press, the Alaska Legislature approved a measure to designate July 21 as Jay Hammond Day. As governor of Alaska from 1974 to 1982, Jay Hammond was instrumental in the creation of the Alaska Permanent Fund in 1976 and of the Permanent Fund Dividend in 1982. The Dividend is Alaska’s basic income, given out as a yearly dividend varying in size depending on stock market returns over recent years. Alaska probably would have had the Permanent Fund with one of many other politicians in office as governor, but the Dividend is very unlikely to have happened with Hammond’s eight years of campaigning and lobbying for it.
For news stories about the creation of Jay Hammond Day, go to:
https://www.ktuu.com/news/legislature-approves-designating-jay-hammond-day-ktuu-20130412,0,3031759.story
https://www.therepublic.com/view/story/da2ed54b23504210a71a9c68f3fb384b/AK-XGR–Jay-Hammond-Day
https://radiokenai.net/jay-hammond-day-bill-going-to-gov-parnells-desk/
by Karl Widerquist | Feb 8, 2013 | Research, The Indepentarian
This commentary argues that Alaska should change the formula for calculating its yearly Permanent Fund Dividend (Alaska’s basic income) to create more stable dividend payments.
Widerquist “Commentary: Let’s change the way Alaska Permanent Fund pays dividends,” the Alaska Dispatch, December 5, 2012
https://www.alaskadispatch.com/article/lets-change-way-alaska-permanent-fund-pays-dividends
by Karl Widerquist | Dec 3, 2012 | News, The Indepentarian
Alaska distributed its yearly Permanent Fund Dividend (PFD) on October 4, 2012. The amount was disappointing, only $878—down from last year’s dividend of $1,174 and the smallest dividend since 2005. The 2012 dividend was only the second dividend in the last 20 years to be below $900, and it is well below the all-time highest dividend of $2,069 in 2008 ($3269 including a one-time supplement the state added to the 2008 dividend).
The PFD is a sort of a yearly, variable basic income, given to all U.S. citizens (men, women, and children) who fill out a form showing that they meet the state’s residency requirement for eligibility. This year nearly 650,000 Alaskans received the dividend. It is financed by the Alaska Permanent Fund (APF), which is a sovereign wealth fund owned by the state and financed in turn by the accumulated savings from the state’s oil exports. The dividend varies considerably from year-to-year because the amount is calculated from a complex formula averaging the last five years of returns to the fund. The dividend is down this year because of the poor performance of international stock and bond markets over the last five years.
Even this year’s small dividend will come to $4,390 for a family of five, and the dividend makes a big difference in the lives on many Alaskans. The dividend is one reason Alaska is the most economically equal of all 50 states. According to Russ Slaten, “the oldest applicant was 107 years-old, and the youngest was born minutes before the qualification deadline on December 31 of last year.”
According to Jeff Richardson of the Fairbanks Daily News-Miner, Alaskan retailers have seen a smaller-than-usual bump in sales around dividend time this year because of both the smaller changes and in the higher cost of fuel oil. The smaller effect on retail sales might also be partly attributable to the increase in people donating all or part of their PFDs to charities through the state’s Pick-Click-Give program that allows people to direct some or all of their PFD to the charity of their choice in a few steps on the internet. This year, 23,000 Alaskans gave more than $2.2 million through the program, four times as much as they gave in the first year of the program (2009).
The PFD has largely escaped the demonization given to many programs that promote equality, probably because it provides tangible benefits all Alaskans, rich and poor alike. According to Jeanne Devon, “Even those who gripe about it in theory don’t want to actually give up their own Alaskan ‘entitlement.’ It is our oil, after all.”
The yearly fluctuations in the fund do not signal a long-term threat to the PFD. The fund has had a healthy grown trend since its inception, and it continues today. The bigger worry for the future of the Alaska Dividend is gradual decline in the state’s oil revenues. The amount of oil flowing through the Trans-Alaska Pipeline System is getting dangerously close to the minimum level needed to keep the pipeline system open. Most of the state’s operating budget comes from oil exports, and the state budget is not well prepared for the loss of oil revenue. Gradual decline (or a sudden drop) in oil exports would put enormous pressure on the state budget and might inspire the legislature to divert returns currently used to financed the PFD toward regular government spending.
For more recent stories on Alaska’s PFD, see the following stories:
“Alaskans to get $878 in yearly oil wealth payout”
By Rachel D’Oro Associated Press, September 18, 2012
https://bigstory.ap.org/article/amount-annual-alaska-dividend-be-announced
“Smaller Alaska dividend check likely to disappoint … for good reason”
Carey Restino, Bristol Bay Times, Sep 20, 2012
https://www.alaskadispatch.com/article/smaller-alaska-dividend-check-likely-disappoint-good-reason
“Dividend set: Alaskans shouldn’t forget fund’s purpose”
Fairbanks Daily News-Miner Editorial Sep 18, 2012
https://newsminer.com/view/full_story/20186798/article-Dividend-set–Alaskans-shouldn%E2%80%99t-forget-fund%E2%80%99s-purpose?instance=home_opinion_editorial
“2012 Permanent Fund Dividend is $878”
SIT News Ketchikan, Alaska, September 18, 2012
https://www.sitnews.us/0912News/091812/091812_pfd.html
“Permanent Fund Dividend Lowest Since 2005”
Russ Slaten, Your Alaska Link, Sep 19, 2012
https://www.youralaskalink.com/news/Permanent-Fund-Dividend-Lowest-Since-2005-170382336.html
“With Alaska’s higher costs, dividends won’t go far”
Mark Thiessen, Associated Press, Sep 18, 2012
https://www.businessweek.com/ap/2012-09-18/with-alaskas-higher-costs-dividends-wont-go-far
“PFDs still good for business, but not like the glory days”
Jeff Richardson, Fairbanks Daily News-Miner, Sep 19, 2012
https://newsminer.com/bookmark/20198521-PFDs-still-good-for-business-but-not-like-the-glory-days
“Happy Socialist Money Grab Day, Alaska!”
Jeanne Devon, the Mudflats, September 19, 2012
https://www.themudflats.net/?p=33271
“By the numbers: Alaska Permanent Fund Dividend”
Eric Christopher Adams, The Alaska Dispatch, Sep 18, 2012
https://www.alaskadispatch.com/article/numbers-alaska-permanent-fund-dividend
“Alaskans donate $2.2 million from PFDs using Pick.Click.Give.”
Alaska Dispatch, Oct 06, 2012
https://www.alaskadispatch.com/article/alaskans-donate-22-million-pfds-using-pickclickgive
“Count the ways Alaskans spend their $878 Permanent Fund check”
Alaska Dispatch, Oct 05, 2012
https://www.alaskadispatch.com/article/count-ways-alaskans-spend-their-878-permanent-fund-check
“It’s time to cut state spending: The numbers show future has arrived”
Bradford Keithley, Fairbanks Daily News-Miner, Oct 07, 2012
https://newsminer.com/view/full_story/20385563/article-It-s-time-to-cut-state-spending–The-numbers-show-future-has-arrived?instance=home_opinion_community_perspectives
PFD program generates record amount for Alaska nonprofits
Anchorage Daily News, October 5, 2012
https://www.adn.com/2012/10/05/2652015/pfd-program-generates-record-amount.html
by Citizens' Income Trust | Oct 18, 2012 | Opinion
Matthew C. Murray and Carole Pateman (eds), Basic Income Worldwide: Horizons of Reform, Palgrave Macmillan, 2012, xv + 271 pp, hbk, 0 230 28542 2, £57.50
This book is a most useful survey of international experience of Basic or Citizen’s Income, of benefits sufficiently similar to enable them to be regarded as on the way to a Citizen’s Income, and of significant legislative attempts at Citizen’s Incomes. The book complements Basic Income Guarantee and Politics, edited by Richard Caputo and recently published by the same publisher, with which it overlaps to some extent, but not too much. Both books are essential reading for anyone interested in how experience of Citizen’s Income, and debate about it, are developing worldwide.
Some of the material in the first part of the book will be familiar to readers of this Newsletter, but some will not be. The Alaska Permanent Fund Dividend will be well known, but less well known will be some highly positive results from United States and Canadian Negative Income Tax experiments. This Newsletter has already reported stunning results from the Namibian Citizen’s Income pilot project, but less well known are the complexities of Brazil’s and Canada’s political economies and their effects on benefit reform.
The second part of the book describes Basic Income proposals for East Timor, Catalonia, South Africa, Ireland, Germany, New Zealand, and Australia. The overall impression is of a widespread global debate, different in different countries, but with lots of connections between the different national debates.
Murray’s concluding chapter is understandably effusive about the results of the Namibian pilot project, and about the brake on inequality provided by the Alaskan Permanent Fund Dividend. Conditional schemes, on the other hand, are found to lead to new inequalities (p.253), and tax credit and negative income tax schemes to have similar problems (p.255). Murray recognises the different effects of different political contexts, and this reviewer was particularly struck by ways in which more federal political arrangements, such as those in the USA and Brazil, can make the debate more possible locally but quite complex nationally.
One issue over which the editors seem to be somewhat confused is that of terminolog. In this book, ‘Basic Income’ usually means an unconditional and nonwithdrawable income for every citizen, but sometimes it means a class of benefit types of which an unconditional benefit is one member (e.g., p.251), which leaves the unconditional and universal benefit without a name. A similar problem arises in the introductory chapter, which lists some important questions: What form should the payment take? How much should it be? Should it be unconditional? Should it be universal? Can it be afforded? How should it be funded? Some of these questions are ‘controversial questions’ surrounding ‘Basic Income’ (p.2) if ‘Basic Income’ is understood as an unconditional, nonwithdrawable and universal income: but some are not. The question ‘Should the payment be universal?’ is a question about whether we should have a Basic Income. It is not a question about a Basic Income. Similarly, ‘Should the income be paid unconditionally?’ is a question about whether or not we should have a Basic Income. By the end of the introduction we are entirely unsure about what the term ‘Basic Income’ means.
I know that this has been said in these pages before, but it clearly needs saying again: clarity of definition is essential to rational debate.
Our position is this: A ‘Citizen’s Income’ or a ‘Basic Income’ is an unconditional, nonwithdrawable income for every individual as a right of citizenship. The terms should not be used for anything else. Other terms, such as ‘social dividend’ and ‘universal grant’ are equivalent, but only if they mean the same thing. (We do not use ‘Basic Income Guarantee’ because a guaranteed income can mean an income achieved by means-tested benefits.) Widespread agreement on the meaning of terminology would considerably help the clarity of debate, both individual national debates and the global debate, and it would have helped the editors and authors of the book under review to express themselves more clearly.
But having said all that: Murray and Pateman have provided us with a most useful collection of essays on some highly significant Citizen’s Income experiences and debates, and anyone interested in that debate should read this book.
by Karl Widerquist | Sep 16, 2012 | News, The Indepentarian
Alaska’s Permanent Fund Dividend (PFD) is volatile and uncertain reflecting the Alaskan economy, which—typical of resource-exporting regions—is subject to volatile commodity prices, fear that resource exports will soon run out, and hope that a new export boom could be about to begin. The dividend is likely to decline this year as more difficult news about the state’s finances comes out, but new drilling could bring the first increase in oil exports in years.
The PFD is the only existing basic income in the developed world. Each year it pays an equal amount in cash to all citizens who meet the residency requirement, but the amount varies each year. The PFD is funded by the returns to the Alaska Permanent Fund (APF), a pool of investments created out of savings from the state’s oil revenue. The APF accumulates investments each year as new savings are deposited into it, but its value fluctuates with the world economy. The Alaska Permanent Fund Corporation (APFC), the state-owned corporation that manages the fund, uses a complex formula to make the yearly dividend less volatile than the yearly returns to the fund, but the dividend still is rather volatile.
After reaching a high of $2,069 in 2008 ($3269 if the one-time energy rebate is added), returns over the past three years have been $1,305 in 2009, $1,281 in 2010, and $1,174 in 2011. According to a recent press release by the APFC, the dividend level is likely to decline a little more this year. APFC will designate $605 million for distribution as dividends this fall—nearly $200 million less than the $801 million it designated for dividend payments in 2011. Therefore the dividend might slip under $1000 for the first time since 2005. The exact amount of the dividend will be announced in a few weeks and dividends will be distributed in October.
The main reason for the decline is the poor performance of world stocks. Although the APF has recently moved some of its funds into real estate investments, which have been doing well, they have not done well enough to make up for poor stock performance. The APF finished its fiscal year on June 30th with a yearly return of 0.02%.
Some recent news has been troubling for the future of the dividend. As discussed in this column recently, Alaskan oil exports have been declining for 20 years, but oil revenue has so far been buoyed by rising oil prices. However, according to the Fairbanks News-Miner, the recent decline in oil prices has threatened the state’s budget. “To cover the state budget for the coming fiscal year, which begins July 1, oil prices must average at least $104 per barrel.” But oil prices have recently been as low as $100, a price that would put the state budget into deficit if it were to continue.
Reduced oil revenue does not immediately threaten dividends, but it will reduce new deposits into APF, which will have a negative effect on dividends over time. If the state finds itself in permanent deficit, it is constitutionally prohibited from spending the APF principal, but it has the authority to reduce or cancel the PFD and use APF returns for other purposes. Whether the state would have the political will to do so is uncertain. It would probably depend on whether popular opinion was more strongly against elimination of PFD or the reintroduction of state sales or income taxes.
Typical of a resource-exporting region, Alaskans live with the constant fear of lost resource revenue and with the constant hope that new sources of resource revenue will be found. Not long ago there was a great deal of talk about a new natural gas pipeline that might replace oil revenue when North Slope oil runs low. The recent decline in the price of natural gas has made such a pipeline less attractive in the near future.
The latest new hope in Alaska is for offshore oil drilling. According to Alex DeMarban of the Alaska Dispatch, Shell Oil is about to start exploratory drilling off the Alaska coast. Federal law makes offshore oil the property of the federal government rather than the various state governments. However, several states along the Gulf of Mexico have recently made an agreement with the federal government to share more than one-third of the royalties for oil drilled off their coasts. This agreement might be precedent setting. If Alaska can get a similar deal, offshore oil will prove lucrative for the state and for the PFD, but not as lucrative as on-shore oil has been.
For more on these issues see the following links:
Alex DeMarban “Will offshore oil development in Alaska’s Arctic make the state rich? Don’t count on it.” The Alaska Dispatch, July1, 2012:
https://www.alaskadispatch.com/article/will-offshore-oil-development-alaskas-arctic-make-state-rich-dont-count-it
The APFC’s press release on its performance for the 2012 fiscal year (Permanent Fund flat for Fiscal Year 2012) is online at:
https://www.apfc.org/home/Content/pressroom/pressStory2009.cfm?story=Permanent%20Fund%20flat%20for%20Fiscal%20Year%202012&s=1
“Volatile stock market hinders return for Permanent Fund”
KTOO News Department, August 2, 2012. Online at:
https://www.ktoonews.org/2012/08/02/volatile-stock-market-hinders-return-for-permanent-fund/
“Alaska Permanent Fund’s 2012 investments flat, PFD payout smaller”
Alaska Dispatch, Aug 2, 2012
https://www.alaskadispatch.com/article/alaska-permanent-funds-2012-investments-flat-pfd-payout-smaller
Becky Bohrer, “Alaska Permanent Fund dividend likely to shrink this fall”
The Associated Press, Aug 02, 2012
https://newsminer.com/view/full_story/19671261/article-Transfer-into-Alaska-Permanent-Fund-dividend-account-smaller-than-2011?instance=home_news_window_left_bullets
