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 | Oct 13, 2017 | News, Research
Congressional Quarterly (CQ) has published a research paper on basic income (BI) that explains its universal popularity due to automation growth estimates worldwide. The CQ Researcher covers everything from Scott Santens’ crowdfunded self-financing mechanism to U.S. ex-President Obama’s belief that the debate may last 10 to 20 years.
The 21-page research paper, written by London freelancer Sara Glazer, includes an explanation of the Alaska Permanent Fund Dividend (PFD) – a basic income like payment to all residents – and revels in the prediction of automation worldwide. Predicted percentage of job losses are shown in charts for 8 countries, as well as for the Organization for Economic Co-operation and Development (OECD) (made up of 21 countries).
BI appeal to the political Left is explained as the continuation of a welfare state. Its appeal to the political Right is explained as a libertarian limit on government intrusion and cost. However, the research warns that many people believe the poor may be worse off: “Some anti-poverty advocates say a UBI would increase both poverty and inequality by using welfare funds now spent on the poorest two-fifths of the population to provide cash to people of all income levels“.
The report also mentions the current endorsement of Facebook co-founder Mark Zuckerberg, as well as other Silicon Valley entrepreneurs like Chris Hughes. Moreover, references are made to the 1960s precedent of U.S. President Lyndon Johnson’s instituted War on Poverty as well as U.S. President Richard Nixon un-instituted 1970s negative income tax credit. This latter issue has been today resurrected by Congressman Ro Khanna, by his proposed bill for extending the earned income tax credit for the poor.
The Canadian 1970s experiment, called Mincome, is described as a positive pilot project, acting as a precedent for current basic income pilot projects in Finland, the U.S. (California ), Canada (Ontario ), Spain (Barcelona), Africa (Give Directly) and the Netherlands. In this report Karl Widerquist says that, with a BI, people will be allowed without fear to work the way they feel best. In an opposite viewpoint, Pavlina Tcherneva argues that a Job Guarantee program would be a better, less costly, way to make sure everyone had work they cared for.
More information at:
David Wheeler, “What if everybody didn’t have to work to get paid?”, The Atlantic, May 18th 2015
Chris Weller, “President Obama: We’ll be debating unconditional free money over the next 10 or 20 years” Business Insider, October 12th 2016
Kate McFarland, “SPAIN: Barcelona prepares study of Guaranteed Minimum Income”, Basic Income News, February 26th 2017
Peter Vandevanter, “United States: Ro Khanna introduces EITC bill, garners comparison to BI”, Basic Income News, October 2nd 2017
Kate McFarland , “THE NETHERLANDS: Government authorizes social assistance experiments in first five municipalities”, Basic Income News, July 11th 2017
Ashley Blackwell, “KENYA: GiveDirectly’s Guaranteed Monthly Income Expands to 200 Villages Fall 2017”, Basic Income News, September 10th 2017
Kate McFarland, “FINLAND: First Basic Income payments sent to experiment participants”, Basic Income News, January 12th 2017
Peter Vandevanter, “United States: Ro Khanna introduces EITC bill, garners comparison to BI”, Basic Income News, October 2nd 2017
Ashley Blackwell, “KENYA: GiveDirectly’s Guaranteed Monthly Income Expands to 200 Villages Fall 2017”, Basic Income News, September 10th 2017
Kate McFarland, “FINLAND: First Basic Income payments sent to experiment participants”, Basic Income News, January 12th 2017
by Michael Lewis | Sep 18, 2017 | Opinion
Michael A. Lewis
I recently read Kate McFarland’s very informative overview of several basic income “experiments.” The quotes are around that last word in my previous sentence because, as McFarland notes, not all these projects are truly experiments, at least not if the word “experiment” is being used the way it is in the social and biomedical sciences. As we use this term in the social sciences, an experiment is a study with the following features:
- Study participants or a cluster of them are randomly assigned to at least two groups
- At least one of the groups is a treatment group, while at least one is a control group
- The treatment group receives the intervention of interest, while the control group does not receive intervention.
Feature one above is key.
What random assignment does is make it very likely that the treatment and control groups will be balanced. “Balanced” roughly means that the distribution of variables related to both the intervention and outcome of interest are the same across treatment and control groups. So if after the data are analyzed we find a difference in the outcomes between treatment and control groups, we can attribute such a difference to the intervention of interest.
The random assignment feature is why Eight’s study in Uganda, as McFarland points out, has limited “usefulness as an experiment.” I think it is fair to say in fact, that social scientists would not consider what Eight is doing an experiment at all. I am not saying that Eight’s study has no usefulness whatsoever. It may be useful when it comes to keeping BI “in the spotlight” and, thereby, help to maintain attention on this movement. For those of us who, at least in principle, like the idea of a basic income, this is a good thing. But we should be careful when it comes to considering what we can learn from the Uganda “experiment.”
The study in Uganda is usually called a pre-test/post-test study. In such studies, measures are taken before an intervention of interest (the pre-test part), after the intervention is implemented (the post-test part), and then these “before and after” measures are compared to one another. If certain changes are observed, these may be attributed to the intervention in question. The problem with such studies is that we do not know what would have happened to the group which received the intervention had it not received it. Maybe the observed changes in the relevant measures would have occurred even if there had been no intervention. The reason we want control groups in experiments is to allow researchers to estimate what would have happened to the group that received the intervention had it not received it. Without a control group, the Uganda study simply may not tell us much about the effects of the cash grants they are testing.
The third feature above has to do with the intervention of interest. This is very pertinent to the experiments McFarland wrote about, as well as BI experiments in general. Following BIEN, McFarland defines BI as “a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement.” As I read her piece, I thought she was interpreting this definition to mean that if a policy provides a cash payment, exactly as spelled out in the definition, but also decreases the payment if a recipient obtains an income from selling their labor, then such a policy wouldn’t be a basic income. Alaska has no income tax, but it does have the Permanent Fund Dividend. Since it gives folks the dividend but does not tax any of it back in the form of an income/earnings tax, its grant would be an example of a basic income. But if the U.S. or any other nation, granted people money unconditionally, periodically, on an individual basis, and without a means test but also taxed all sources of income, including earnings, then that country would not have a basic income. This may seem like a mere semantic point, having nothing to do with BI experiments. But I think it is incredibly relevant.
McFarland makes it clear that some places are assessing the effects of a BI as defined by BIEN. Others are testing the effects of programs similar to BI, as defined by BIEN, but with the added feature of a decrease in the BI grant if someone works. I think she refers to this as a guaranteed minimum income.
I suspect that if the U.S. ever did anything like a BI, it would be this guaranteed minimum income version. I think this is because of the vulnerability of a BI, as McFarland defines it, to what I call the “Bill Gates objection”—why give really rich people more money? If one can respond that rich people will not be net recipients because they would pay more in income taxes than they would receive in the BI, this might be a viable response to the objection.
If I am right about this, then studies like the one in Finland, which focuses on a BI, might not tell those of us in the U.S., or in other nations following a similar course, as much as we would hope. That is because the effects of a BI might differ from the effects of a guaranteed minimum income. As an example, if one could get a BI and keep all their earnings without any loss in the amount of their BI grant, such a policy could have a different effect on labor supply than one which would curtail the grant when income from earnings increased. All this means that BI supporters who get enthusiastic about findings from BI experiments ought to take a moment to see if what was studied is what they actually have in mind.
About the author:
Michael A. Lewis is a social worker and sociologist by training whose areas of interest are public policy and quantitative methods. He’s also a co-founder of USBIG and has written a number of articles, book chapters, and other pieces on the basic income, including the co-edited work The Ethics and Economics of the Basic Income Guarantee. Lewis is on the faculties of the Silberman School of Social Work at Hunter College and the Graduate and University Center of the City University of New York.
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 Kate McFarland | Jul 25, 2017 | News
Facebook founder and CEO Mark Zuckerberg has recently been traveling the United States on a listening tour, during which he aspires to visit every state in which he has not previously spent time, learning about the concerns and perspectives of residents. While in Alaska, Zuckerberg mentioned the state’s Permanent Fund Dividend (PFD) in a Facebook post, calling a “form of basic income” and commending it as a model for social welfare policy [1]:
Alaska has a form of basic income called the Permanent Fund Dividend. Every year, a portion of the oil revenue the state makes is put into a fund. Rather than having the government spend that money, it is returned to Alaskan residents through a yearly dividend that is normally $1000 or more per person. That can be especially meaningful if your family has five or six people.
This is a novel approach to basic income in a few ways. First, it’s funded by natural resources rather than raising taxes. Second, it comes from conservative principles of smaller government, rather than progressive principles of a larger safety net. This shows basic income is a bipartisan idea.
This post was Zuckerberg’s second public commendation of the idea of basic income. During his Harvard commencement address on May 25, Zuckerberg recommended exploring the policy, stating, “We should explore ideas like universal basic income to make sure everyone has a cushion to try new ideas.”
In general, Zuckerberg’s remarks on the PFD were well received by the basic income community, who welcomed the high-profile endorsement and opportunity to raise awareness of the PFD, which is widely perceived as evidence that a basic income can be practically implemented. (For more on Alaska’s PFD, including recent updates, see “ALASKA, US: Survey shows support for Permanent Fund Dividend amid continued legal controversy” in Basic Income News.)
Some commentators, however, were less sanguine. Writers like Clio Chang (in New Republic) and Sonia Sodha (in The Guardian) worry that Zuckerberg–like many right-wing and libertarian supporters of basic income–sees the policy primarily as an excuse to cut other programs, as evidenced by his praise for “conservative principles of smaller government” and apparent opposition to raising taxes, which might leave many low-income Americans worse off.
Despite speculation that the tech billionaire is contemplating a 2020 run for US President, Zuckerberg denies that he is running for public office, maintaining that his tour of the US is only a means to broaden his perspective and understand his customers.
Photo: CC BY-NC-ND 2.0 kris krüg
