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