[ed. I remember thinking I'd frame my first PFD check because distributing free money to people for just living in the state seemed like a dumb political stunt (and there were many of those back then). It didn't take long to be disabused of that view. All of my son's checks were saved over the years and helped considerably in funding his college education.]
Every year, the state of Alaska hands each of its citizens hundreds to thousands of dollars, no strings attached. The only requirement for receiving the cash is that a person has a) held residence in Alaska for more than one year and is b) alive.
To citizens in the state, the Permanent Fund Dividend is a deeply beloved if sometimes controversial policy. To those outside it, it’s often regarded as a curiosity. The annual payout makes headlines when it happens—Alaska’s giving people free money!—and has, typically, been forgotten just as quickly.
Recent years, however, have seen a groundswell of attention to the underlying concept. Interest in basic income ideas continue to percolate worldwide. As grim studies portend incoming job shortages, as inequality festers, and as automation threatens to throw economies into turmoil, the notion that a state could give a regular, guaranteed income—a minimum salary distributed to every citizen, regardless of age, employment, or social standing—has been sounding better and better. And Alaska’s been doing it for years. A miniature version of it, anyway.
“The Alaska dividend is pretty much the closest thing the world has to a universal basic income anywhere,” Scott Santens, who is perhaps the web’s most active basic income advocate, told me. Not only that, he says, but a basic income could help citizens fight the impacts of climate change. President Obama’s recent trip to Alaska was focused on highlighting the calamity that human-induced warming is bringing to the region; perhaps we should be paying attention as well to a policy, found only here, that may help keep society stable and more equal in the face of a warmer, job-scarce future.
Alaska’s Permanent Fund was established in 1976, in the midst of a black gold rush; the massive Trans-Alaska pipeline was in the process of being built, and the state had reaped $900 million in revenue from the sale of drilling leases in Prudhoe Bay, the largest oil field in North America, in a matter of years. In a matter of a few more, it’d spent it. Alaskans soon recognized that their enormous oil reserves were nonetheless limited, so, with a kind of longterm forward-thinking rarely seen in politics today, they voted to add an amendment to the state constitution to establish a fund that would protect a portion of all incoming oil wealth for future generations.
“There was a general recognition that the mineral royalties the state was creating weren’t going to go on forever,” Valerie Mertz, the CEO of the Alaska Permanent Fund, told me. “The idea was to take this nonrenewable resource and turn it into a sustainable resource for the state. A way to lock some money away from a time when the state’s doing well, to save it for a rainy day, if you will.”
The amendment stipulates that "at least 25 percent of all mineral lease rentals, royalties, royalty sales proceeds, federal mineral revenue-sharing payments and bonuses received by the state be placed in a permanent fund, the principal of which may only be used for income-producing investments." The Alaska Permanent Fund, a state-owned corporation, was created to manage and invest that revenue.
The governor at the time was Jay Hammond, a rugged, barrel-chested New York transplant and army vet. As the mayor of Bristol Bay, the story goes, Hammond saw the unfairness inherent in a foreign company coming in and profiting off of natural resources that belonged to everybody. He enacted a three percent tax on fish caught in the area, which was distributed directly to everybody else.
Once in the state’s highest office, according to The New York Times, “Mr. Hammond, a Republican, persuaded voters to approve the establishment of a permanent fund to handle the state's petroleum royalties.” (His original plan, which was passed but ruled unconstitutional, was known as “Alaska, Inc," and was designed to bequeath shares in the fund to every Alaskan once a year.) In 1980, Hammond pushed another amendment to the state constitution, creating the Permanent Fund dividend (PFD) that would pay out a portion of the Fund to everyone. The first payment, of $1,000 to each citizen, was made in 1982.
“Oil is not the most important thing about what's been happening in Alaska since 1982,” Santens says. “The most important thing is that instead of resources being freely given away, rent is instead being earned on shared resources and every resident is receiving an equal share of the fruits of that rent.”
In 2014, the net income of the fund was $6.8 billion dollars and the dividend doled out $1,884 to 640,000 citizens, despite a decline in oil revenues that year. Once the tally for the earnings of the fiscal year is made, the corporation makes a transfer to the state, which determines the size of the dividend. The calculation that figures the amount of the payout in a given year is enshrined in state law and is based on the average cash earnings of the Fund over five years—the whole formula is here—but generally, the higher the earnings of the Fund and the revenue from oil leases, the higher the payout. It's a somewhat confusing process, and even Alaskans are apt to confuse the Permanent Fund, the corporation that manages the oil wealth, and the Permanent Fund Dividend, the annual mass payout by the state.
This year, the payment to every man, woman, and child (yes, children get the payment too, though it is entrusted to their guardians) is expected to surpass $2,000. The Fund, in other words, is huge. Interestingly, Mertz credits the payouts with driving the investment success of the corporation, which now employs 42 people. “It’s been very successful,” she tells me, “the dividend component of the program keeps people tuned into the Fund, and that in turn motivates us to do the best we can.” When it began, the Fund was worth barely more than one billion dollars.
“At the end of the fiscal year on June 30th the Fund was worth $51.2 billion,” Achee says.
Every year, the state of Alaska hands each of its citizens hundreds to thousands of dollars, no strings attached. The only requirement for receiving the cash is that a person has a) held residence in Alaska for more than one year and is b) alive.
To citizens in the state, the Permanent Fund Dividend is a deeply beloved if sometimes controversial policy. To those outside it, it’s often regarded as a curiosity. The annual payout makes headlines when it happens—Alaska’s giving people free money!—and has, typically, been forgotten just as quickly.Recent years, however, have seen a groundswell of attention to the underlying concept. Interest in basic income ideas continue to percolate worldwide. As grim studies portend incoming job shortages, as inequality festers, and as automation threatens to throw economies into turmoil, the notion that a state could give a regular, guaranteed income—a minimum salary distributed to every citizen, regardless of age, employment, or social standing—has been sounding better and better. And Alaska’s been doing it for years. A miniature version of it, anyway.
“The Alaska dividend is pretty much the closest thing the world has to a universal basic income anywhere,” Scott Santens, who is perhaps the web’s most active basic income advocate, told me. Not only that, he says, but a basic income could help citizens fight the impacts of climate change. President Obama’s recent trip to Alaska was focused on highlighting the calamity that human-induced warming is bringing to the region; perhaps we should be paying attention as well to a policy, found only here, that may help keep society stable and more equal in the face of a warmer, job-scarce future.
Alaska’s Permanent Fund was established in 1976, in the midst of a black gold rush; the massive Trans-Alaska pipeline was in the process of being built, and the state had reaped $900 million in revenue from the sale of drilling leases in Prudhoe Bay, the largest oil field in North America, in a matter of years. In a matter of a few more, it’d spent it. Alaskans soon recognized that their enormous oil reserves were nonetheless limited, so, with a kind of longterm forward-thinking rarely seen in politics today, they voted to add an amendment to the state constitution to establish a fund that would protect a portion of all incoming oil wealth for future generations.
“There was a general recognition that the mineral royalties the state was creating weren’t going to go on forever,” Valerie Mertz, the CEO of the Alaska Permanent Fund, told me. “The idea was to take this nonrenewable resource and turn it into a sustainable resource for the state. A way to lock some money away from a time when the state’s doing well, to save it for a rainy day, if you will.”
The amendment stipulates that "at least 25 percent of all mineral lease rentals, royalties, royalty sales proceeds, federal mineral revenue-sharing payments and bonuses received by the state be placed in a permanent fund, the principal of which may only be used for income-producing investments." The Alaska Permanent Fund, a state-owned corporation, was created to manage and invest that revenue.
The governor at the time was Jay Hammond, a rugged, barrel-chested New York transplant and army vet. As the mayor of Bristol Bay, the story goes, Hammond saw the unfairness inherent in a foreign company coming in and profiting off of natural resources that belonged to everybody. He enacted a three percent tax on fish caught in the area, which was distributed directly to everybody else.
Once in the state’s highest office, according to The New York Times, “Mr. Hammond, a Republican, persuaded voters to approve the establishment of a permanent fund to handle the state's petroleum royalties.” (His original plan, which was passed but ruled unconstitutional, was known as “Alaska, Inc," and was designed to bequeath shares in the fund to every Alaskan once a year.) In 1980, Hammond pushed another amendment to the state constitution, creating the Permanent Fund dividend (PFD) that would pay out a portion of the Fund to everyone. The first payment, of $1,000 to each citizen, was made in 1982.
“Oil is not the most important thing about what's been happening in Alaska since 1982,” Santens says. “The most important thing is that instead of resources being freely given away, rent is instead being earned on shared resources and every resident is receiving an equal share of the fruits of that rent.”
In 2014, the net income of the fund was $6.8 billion dollars and the dividend doled out $1,884 to 640,000 citizens, despite a decline in oil revenues that year. Once the tally for the earnings of the fiscal year is made, the corporation makes a transfer to the state, which determines the size of the dividend. The calculation that figures the amount of the payout in a given year is enshrined in state law and is based on the average cash earnings of the Fund over five years—the whole formula is here—but generally, the higher the earnings of the Fund and the revenue from oil leases, the higher the payout. It's a somewhat confusing process, and even Alaskans are apt to confuse the Permanent Fund, the corporation that manages the oil wealth, and the Permanent Fund Dividend, the annual mass payout by the state.
This year, the payment to every man, woman, and child (yes, children get the payment too, though it is entrusted to their guardians) is expected to surpass $2,000. The Fund, in other words, is huge. Interestingly, Mertz credits the payouts with driving the investment success of the corporation, which now employs 42 people. “It’s been very successful,” she tells me, “the dividend component of the program keeps people tuned into the Fund, and that in turn motivates us to do the best we can.” When it began, the Fund was worth barely more than one billion dollars.
“At the end of the fiscal year on June 30th the Fund was worth $51.2 billion,” Achee says.
by Brian Merchant, Motherboard | Read more:
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