by Karl Widerquist | Dec 13, 2017 | Opinion, The Indepentarian
This essay was originally published in the USBIG NewsFlash in October 2005.
Dividend checks from the Alaska Permanent Fund (APF) go out this month paying $845.76 (US), to every Alaska resident. (The APF is the only existing Basic Income in the world. It pays yearly dividends based on earnings from an investment fund created out of the state’s oil tax revenues.) The amount is down slightly from last year. The reason for the decline is that each year’s returns are tied to stock market returns over the last five years, and recent market returns have been much lower than returns in the late 1990s. The recent increases in oil prices are increasing the total size of the fund, but it will be years before their effects are felt in the yearly dividends.
The idea of the fund is gathering more and more attention around the world. The Alberta government is preparing to send checks of $400 (Canadian) to every resident of the province. The checks are a one-time response to the province’s large budget surplus, which has been caused largely by the recent increase in oil tax revenue. Although this is a one-time grant, the program’s architects credit the APF as inspiration. New Mexico, which also has a growing budget surplus thanks to the recent increase in oil prices, maybe the soon follow suit. Governor Bill Richardson and prominent members of the state legislature have been discussing a one-time tax rebate in the neighborhood of $50 (US) per person.
The spread of the Permanent Fund idea does not stop with Alberta and New Mexico. Recent editorials have discussed the idea around the world. Kevin O’Flynn, writing for Newsweek International, mentioned the APF as one of the possible models for reform of Russia’s oil industry. Two recent editorials have argued for a permanent oil dividend in Iraq. Lenny Glynn, writing for The Weekly Standard, argues than enshrining an oil dividend into Iraq’s constitution would be a force for democracy, national unity, and economic development. It would almost certainly make the constitution more popular. Ronald Bailey, writing for Reason on line: Free Minds and Free Markets, includes the creation of an “Iraq Permanent Fund” in his list of things the Bush administration should have done for a successful post-war Iraq (https://www.reason.com/links/links081805.shtml).
Petroleum.com: Latin American Energy, Oil & Gas included a commentary by Michael Rowan, entitled “the Sinkhole,” praising Permanent Fund and comparing it to Venezuela’s nationalization of its oil industry. Governor Jay Hammond began setting up the permanent fund at about the same time that Carlos Andres Perez nationalized Venezuela’s oil industry in 1976. Rowan argues that nationalization of 100% of Venezuela’s oil revenues had no noticeable effect on poverty in Venezuela, but the Alaska fund, which distributes only a fraction of the taxes on Alaska oil revenues, has provided a real and verifiable benefit to low-income Alaskans—and has been especially important in reducing poverty among indigenous Alaskans. “If [Perez] had done what Hammond did in 1976, Venezuela’s Permanent Fund would have about $120 billion this year, paying a dividend of $1,500 to each of 8 million Venezuelan families.” The editorial is hostile to activist government policies, but it is not hostile to policies that effectively help the poor. Rowan’s endorsement shows that the Permanent Fund idea is a good way to promote anti-poverty policies with the political right, but that’s not all there is to it. People who normally favor redistribution should not ignore Rowan’s argument that getting money into the hands of the poor can be more effective toward economic equality than putting a government in direct control of resources. Rowan’s commentary is online at: https://www.petroleumworld.com/Ed081105.htm.
-Karl Widerquist, Oxford, UK, October 2005
by Karl Widerquist | Dec 7, 2017 | Opinion, The Indepentarian
This essay was originally published in the USBIG NewsFlash in August 2005.
Jay Hammond, the governor of Alaska from 1975 to 1982, who led the fight to create the Alaska Permanent Fund, was found dead at his Homestead about 185 miles southwest of Anchorage, on Tuesday, August 2, 2005. He led an amazing life. Hammond was a laborer, a fur trapper (by dogsled), a World War II fighter pilot, an Alaskan bush pilot, a husband, a father of three, a wildlife biologist, a backwoods guide, a hunter, a fisher with the U.S. Fish and Wildlife Service, and a homesteader. Hammond was one of the last people to take advantage of the Civil-War-ear U.S. law giving away land. Other than a requirement to build a house and farm the land for five years, it was given away free—no strings attached.
Hammond was also a hero to everyone who believes that no one should be barred from the resources they need to meet their basic needs—no strings attached.
Hammond got the idea for a resource dividend when he was mayor of a small town on Bristol Bay, Alaska in the 1960s. He realized that salmon were being taken out of the area without necessarily helping the town’s poor. He proposed a three percent tax on all fish caught in the area to be redistributed to all residents of the town. By an enormous stroke of luck, the man who had that idea (and saw it work in Bristol Bay) would be elected governor of Alaska just as the state was beginning construction of the Trans-Alaska oil pipeline. Oil companies stood to make billions of dollars, and of course, they argued that Alaskans would benefit through new job opportunities, but Hammond knew one way to make sure that every single Alaskan would benefit from the pipeline.
And so the Alaskan Permanent Fund was born. For the last 20 years, every Alaskan has received income from state oil revenues. A portion of the state’s taxes on Alaskan oil goes into an investment fund, which pays dividends from the interest on those investments—hence the permanent fund. Dividends vary, but they are usually more than $1,000 per year for every man, woman, and child living in the state.
The system is not perfect. Hammond told Tim Bradner, of the Anchorage Daily News, that his biggest regret was to let the legislature eliminate the state’s income tax. Without the citizens’ responsibility to pay taxes to support state services the fund will be vulnerable, and the legislature has been trying to raid the fund ever since. So far, the enormous popularity of the fund has protected it fairly well. Hammond also regretted that the fund was too small. Only one-eighth of the state’s oil tax revenues go into the fund. If half of oil tax revenues went into the fund, as Hammond envisioned, every Alaska family of four could expect to receive more than $16,000 this year. Hammond died campaigning to increase the size of the fund.
But the most important thing about the fund is that it exists. It’s simple, it works, and everyone in the state benefits from it every year. How many elected officials can say they did that? According to Sean Butler in Dissent Magazine, Nobel Prize-winning economist Vernon Smith, called the Permanent Fund, “a model governments all over the world would be wise to copy.” It is a pilot program for resource taxes and basic income plans all over the world. Economists have recommended the Alaska solution for resource-rich, poverty-ridden countries from Nigeria to Iraq. Just this summer the government of Azerbaijan sent a delegation to Alaska to study the Permanent Fund. You can’t keep a good idea down.
Jay Hammond spoke at the 2004 USBIG Congress in Washington, DC. Here is how Butler describes the event: “The father of the Brazilian basic income, Senator Eduardo Suplicy, also presented at the USBIG conference last year. During his speech, he noticed Jay Hammond sitting in the front row, and, to warm applause from the assembled crowd, descended from the stage to shake his hand. The two basic income pioneers had at last met. Hammond and Suplicy make an odd couple. The Republican Hammond, with his Hemingway-like white beard and grizzly build, wears his far north ethos of self-reliance with pride. Suplicy, a founding member of the left-wing Brazilian Workers Party and a U.S.-trained economist, has the dignified appearance of an intellectual and professional politician. Its tropical socialism meets arctic capitalism; yet somehow, when the two come together over basic income, they get along.”
I had the good fortune to attend that event and meet Governor Hammond. He was warm and engaging. He wasn’t there to bask in the glory of people who admired his past achievements but to fight to keep improving the APF. He was a genuine hero.
An article on Hammond and basic income by Sean Butler, entitled, “Life, Liberty, and a Little Bit of Cash,’ appeared in Dissent Magazine just a few weeks before he died.
There have been many good tributes to Hammond in the news and on the internet since his death. Here are just a few:
Frank Murkowski, current governor of Alaska, “Hammond’s Legacy Will Stand Out,” Alaska Daily News
Tim Bradner, “Hammond has passed; his ideas must live on,” Alaska Daily News
Douglas Martin, “Governor of Alaska Who Paid Dividends,” New York Times
by Furui Cheng | Oct 14, 2017 | News, Research
Jay Hammond
Jay Sterner Hammond (July 21, 1922 – August 2, 2005) was an American politician of the Republican Party who served as the fourth Governor of Alaska from 1974 to 1982. Hammond was born in Troy, New York and served as a Marine Corps fighter pilot in World War II with the Black Sheep Squadron. In 1946, he moved to Alaska where he worked as a bush pilot. Hammond served as a state representative from 1959 to 1965 and as a state senator from 1967 to 1973. From 1972 until 1974 he was the mayor of the Bristol Bay Borough. In 1974 he was elected governor of Alaska. He oversaw the creation of the Alaska Permanent Fund in 1976, which, since the early 1980s, has paid annual dividends to Alaska residents. From 1985 to 1992 he hosted a television series called Jay Hammond’s Alaska. He wrote three autobiographies. This article is a short introduction of his last book.
Petroleum is the devil’s excrement, warns Juan Pablo Pérez Alfonso, a Venezuelan founder of OPEC. Waste, corruption, consumption, and failing public services are repeated curses in oil rich countries. But Alaska managed to avoid much of the befouling of “devil’s excrement” by actions that served to at least halfway pin on a “diaper.”
Article 8, Section 8, of Alaska’s constitution states: “The legislature shall provide for the utilization, development, and conservation of all natural resources belonging to the state, including land and waters, for the maximum benefit of its people.” This clause prompted Hammond to attempt to assure that all Alaskans received a discernible share of those benefits and to avoid the common past practice of selectively benefiting the favored few at the expense of the many. This battle to avoid selective benefit still continues today.
Before the permanent fund dividend, Hammond had tried several ways to comply with the mandate of the aforementioned constitution, but all fell flat. His first attempt was to abolish fish traps in the Bristol Bay Borough in 1965. A whopping 97 percent of the fishing payday made within the boundary went to others and local residents got but a paltry 3 percent! He proposed a use tax to be paid by all fishermen on their catch. To offset the impact on local fishermen already paying high property taxes, he proposed to putting tax money into a conservatively managed investment account, then each year issuing residents one new share of dividend-earning stock. He called the concept “Bristol Bay, Inc.” The word “tax” made most Alaskans oppose it.
With passage of the Alaska Native Claim Settlement Act (ANCSA) in 1971, Alaska’s aboriginal peoples were accorded 44 million acres of land and $900 million by the U.S. Congress. Hammond proposed again to follow the Bristol Bay, Inc. model to manage ANSCA grants: create a conservatively managed investment account and spin off equal dividends to every Alaska Native. This account was proposed to be managed by professionals under counsel supplied from an elected advisory board of Natives representing every Native group in Alaska. People would have the opportunity to lift themselves up by being stockholders, providing themselves with the means (along with the responsibility) to use it for their collective best interests. Hammond’s proposal failed in the face of obstructions by lawyers, financially and politically powerful Natives, and other local forces.
His third attempt was to assure that the more affluent rural areas with a sufficient tax base help fund government services the same way as urban centers are required to do. Under his proposed statewide property tax, affluent municipalities, such as the North Slope Borough with high oil property values, would have to assume more of their local government service costs than would those that were virtually destitute. That proposal also fell flat on its face. Unfortunately, inequitable taxation continues to contribute to Alaska’s urban/rural divide.
In another effort to reduce crippling costs of services to hundreds of economically unviable communities – many of which were not connected by roads and lacked adequate housing, schooling, and basic services – he proposed to provide population centers with the greatest economic potential with topnotch schools and other services as a means to encourage migration from other communities. Once again the proposal fell flat.
After becoming governor in 1974, he proposed that 50 percent of all mineral leases, bonuses, royalties, and severance taxes be deposited into a conservatively managed investment account. Each year one-half of the account’s earnings would be dispersed among Alaskan residents, each of whom would receive, annually, one share of dividend-earning stock. The other half of the earnings could be used for essential government services.
Hammond had many reasons for creating such an investment account to which all Alaskans would be shareholders:
- To encourage contributions into the investment account and to protect against its invasion by politicians.
- To transform oil wells pumping oil for a finite period into money wells pumping money for infinity.
- To pit collective greed against selective greed.
- To eliminate the magnetic attraction for others from elsewhere who might otherwise be inclined to flock to Alaska in order to get big money in a short term.
- To instill a sense of ownership in all Alaskans that would incline them to support healthy resource development and resist unhealthy versions that would damage the environment or otherwise.
- To eliminate controversial state expenditures for such things as abortions or family planning. Individuals wishing for these services could pay for it from their dividends or utilize free ultrasound or abortion assessment services.
To promote these concepts, fashioned after his failed Bristol Bay, Inc. proposal, Hammond created “The Alaska Public Forum”. Fortunately, this attitude came in the wake of a $900 million windfall in 1970 from leases issued in Prudhoe Bay which had been “blown” in the eyes of many people. To their credit, however, a sufficient number
of legislators were successful in passing legislation creating what they termed “The Alaska Permanent Fund.” This statute at least created a semblance of Alaska, Inc., but fell far short of what Hammond had hoped for.
For more detailed information about the book, please click here.
Many thanks for Russell Ingram’s reviewing and editing.
by Peter Vandevanter | Aug 11, 2017 | News
Despite endorsing a larger carbon footprint for Alaska, the Permanent Fund Dividend (PFD payment, according to a survey released last week, of one thousand employees), encouraged only one per cent of recipients to work less.
Perhaps the oldest, continuous, Basic Income-like social program is the Alaska PFD, going since the 1980s and currently paying every adult citizen $2,072 annually. Last year’s report indicated that PFD has kept 2-3 per cent of Alaska’s population – some 15-20,000 people – above the poverty line since 1990.
Wrote Jack Thorold in a blog for RSA (a charity which encourages the release of human potential to address the challenges that society faces):
“…it’s a fair guess that at least for some the PFD frees them to do other valuable activities: caring for relatives or learning new skills, for example.”
Also, according to another survey, Alaskans don’t spend their PFD on frivolous things. Instead, 72 per cent of Alaskans report earmarking their dividends for essentials such as paying off debts, education and saving for retirement or emergencies. Thorold went on in his blog to discuss the disappointing – especially relative to the idea of a universal basic income – recent results of the Trussell Trust report on foodbank usage in the UK, which contain:
– 78 per cent of those referred to foodbanks are severely food insecure, meaning that they had gone without eating, perhaps for multiple consecutive days, in the last twelve months;
– 40 per cent of users are driven to foodbanks as a result of a delayed benefit payment;
– About two thirds of foodbank users had recently been hit by an ‘income shock’, most commonly sharp rises in food or housing costs.
Thorold ended his blog, going back to the Alaska PFD: “Alaska’s PFD provides good evidence that unconditional payments can work, and we should take notice.”
More information at:
Kate McFarland, “Alaska, US: State senator prepares bill to restore full amount of 2016 PFD”, Basic Income News, October 9th 2016
Nathaniel Herz, “Alaska lawmaker stokes Permanent Fund fight with push to add $1,000 to dividends” Alaska Dispatch News, October 6th 2016
Paula Dobbyn, “State senator prepares bill to restore full amount of 2016 Permanent Fund dividend” KTUU, October 5th 2016
Travis Khachatoorian. “With reduced PFDs on the way, protests expected at budget forum” KTUU, September 30th 2016
by Dave Clegg | Aug 2, 2017 | News
Scott Santens. Credit to: Singularity Bros.
Scott Santens, writer and long time UBI advocate, speaking at the Davos World Economic Forum 2017, views the Alaska Permanent Fund as a foundational aspect for the funding for a Universal Basic Income – a UBI. Santens, and a growing number of people all over this planet are coming to the conclusion that something like a UBI is required in order to provide an effective counterbalance to the inequality of wealth distribution that currently plagues the world’s populations and the human ramifications of automation, robotization of the workplace.
Santens points out that, in a democracy, all citizens are deemed equal under the law and the Alaskan fund offers an excellent example of how the wealth being extracted from a communities resources must first and foremost benefit the people that comprise that community. The Alaskan fund extracts a percentage of the wealth being extracted from its resources and that money is then used to fund Alaska’s social programs as well as annually depositing as much as a thousand dollars or more into the pockets of every Alaskan citizen. A sort of pay to dig policy. That Alaskan Fund is now worth some fifty billion dollars. Conversely, in a similar but more aggressive manner, some years ago Finland was adamant that its offshore oil resources must benefit all of the Finnish people. Finland took money off the top of the oil profits and put it into what is now a trillion dollar fund that is currently benefiting everyone in Finland.
But for Santens, resource funding is only one of a nation’s assets from which a UBI can produce a revenue flow that can both enrich and empower the populations it will serve.
Santens points out that a related resource, land itself, needs to be re-evaluated. Land is not just where we build our homes, grow our crops and where our businesses and factories operate from. Land is where wealth is invested and from which wealth is extracted. People can hide their money and their wealth, but they can’t hide their land. Therefore a Land-Value Tax would provide “… an extremely progressive tax on both corporations and individuals because land is so unequally distributed towards the top.” Instead of the value of the land being decided by the owner, the land would be valued for the wealth it represents. A vacant downtown lot would then be as valued as the next door highrise and further motivate the owner to develop the land.
Secondly, for Santens a strong, social motivator for a UBI is the ever shrinking workplace where employees are increasingly being undervalued and then victimized by the threat of automation and robotization these days. Santens provides graphic representations of how the decline of collective bargaining, worker’s rights and our wages – which not too long ago had almost balanced out income distribution – have been declining proportionate to the increase in income inequality for years now. Santens understands that a UBI is not just an income supplement whereby workers canweather technological changes in the workplace, but a means whereby we finally achieve the freedom to refuse to take work that is unsafe or underpaid and, instead, achieve an equality of empowerment when bargaining with prospective employers. An equality of needs as it were.
Thirdly, Santens offers that a “annually rising intellectual property fee could be added to any intellectual property wishing to be monopolistically excluded from the public domain, with the revenue returned to citizens universally for their co-ownership of the government granting such protection.” Santens uses the example of data miners like Google and Facebook that extract information from their hundreds of millions of users for free, and then they sell that information to third party profiteers, as the reason why that information must come with a price to the data miners. When you profit from us you pay us for the privilege.
Then there is the creation of money itself. Not that long ago only the state could create new money but corporate and financial lobbyists were able to convince many governments that the commercial banks could be trusted with this responsibility. Santens wants governments to take back this responsibility and thereby put themselves back in charge of first determining the value of the money and secondly setting the value of the money significantly above the cost of producing it so as to ensure adequate funding for that nation’s UBI.
For Santens these three pillars, resource and land value funding, worker empowered bargaining and intellectual property/data mining are all keys to diminishing and, hopefully, continuing to bring greater balance to the economic inequality we see today. But Santens cautions that none of these changes will ever occur, or if they do they will not survive the reactive response of the wealthy set. For without real, effective democratic reform none of these progressive ideas will survive for long. Santens points out that “barriers to voting must be torn down, and the franchise must be expanded” if we wish to implement such radical but much needed changes to the inequality that is plaguing this planet’s populations.
