Karl Widerquist and Michael Howard, Alaska’s Permanent Fund Dividend: Examining its suitability as a model, Palgrave Macmillan, 2012, xvii + 267 pp, hbk, 0 230 11207 0, £62.50
In 1967 oil was found in the relatively new state of Alaska; in 1976 a constitutional amendment established the Alaska Permanent Fund (APF) to receive 25% of oil royalties; and in 1982 the fund paid out the first Permanent Fund Dividend (PFD) to every Alaskan citizen: the same amount to every individual. The world had its first Citizen’s Income.
This important edited collection tells the political and legislative story of the APF and PFD, explains their operation, and discusses the dividend’s economic impacts ( – from being the US state with the most unequal net incomes in 1980, Alaska is now the state with the least net income inequality: p.53). Chapter 5 shows how distributing a dividend from a permanent fund generates political protection for resource revenues; chapter 6 explores the trade-off between higher average dividends and lower volatility facing any permanent fund administrators; and chapters 7 and 8 ask what will happen when the oil stops flowing: Will the Alaskan economy be in sufficiently good shape for the Permanent Fund to remain a political possibility?
In the second part of the book a number of authors debate the ethics of the Alaskan model. They find that Left-Libertarianism requires the collection and distribution of the natural resource components of all privately owned wealth; that the PFD constitutes a kind of Citizen’s Income (though the fact that it fluctuates compromises its ability to behave like one); that if the dividend were to be transformed into a capital sum for every citizen at the age of majority, then citizens would become genuine stakeholders in the economy (with the temptations that that would bring); that the dividend only ambiguously coheres with a republican ‘freedom-as-nondomination’ perspective; that registering for the PFD makes the individual citizen complicit in the oil industry’s contribution to climate change (though if Alaskan citizens were at the same time to prevent the same amount of climate change as Alaska’s oil industry causes then they would escape this charge); and that a Citizen’s Income can be consistent with a variety of moral theories. Finally, Widerquist and Howard draw a number of lessons: that resource dividends work, that they are popular, that they can be established anywhere politicians are willing to look for opportunities (as Governor Jay Hammond did); that governments need to assert community ownership of resources; and that coalitions need to be built if resource dividends are to be established and then defended.
We have waited a long time for a thorough book-length treatment of the APF and PFD, and Widerquist and Howard have served us well by pulling together such a relevant and coherent collection of essays. The one weakness is not of their making: As Scott Goldsmith suggests in chapter 4, there has been too little research on the economic and social impacts of the APF and the PFD. The research needs to be done and a second edition of the book then published so that we can all benefit from the results.
As part of the University of Alaska Anchorage’s Institute of Social and Economic Research series of lunchtime talks, “Understanding Alaska,” Todd Moss discussed whether something like Alaska’s Basic Income, the Permanent Fund and Dividend, could work in Iraq and other countries. Todd Moss, editor of The Governor’s Solution and vice president of the Center for Global Development. The Governor’s Solution features the firsthand account of Governor Jay Hammond that describes, with brutal honesty and piercing humor, the birth of the Alaska Permanent Fund dividend, which has been paid to each resident every year since 1982.
Todd Moss
The event was held at the University of Alaska Anchorage, 3211 Providence Drive Room 307, Consortium Library, Anchorage, Alaska 99508
More information about the event can be found at the following two websites:
Michael Howard is a professor of philosophy at the University of Maine and co-editor with Karl Widerquist of the forthcoming book “Exporting the Alaska Model: How the Permanent Fund Dividend Can be Adapted as a Reform Model for the World” (Palgrave MacMillan).
Michael W. Howard is professor emeritus of philosophy at the University of Maine, past president of the U.S. Basic Income Guarantee Network, past co-editor of Basic Income Studies, and co-editor, with Karl Widerquist, of two books on Alaska’s Permanent Fund Dividend. On 6 January 2023 the prestigious magazine, Scientific American published an article by him entitled “The U.S. Could Help Solve Its Poverty Problem with a Universal Basic Income”.
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.
