Alaska Permanent Fund

Does the future of the $80 billion Permanent Fund in Alaska depend on the future of the dividend paid out to Alaskans?

That was just one of many questions asked in a University of Alaska Fairbanks web forum, “The Permanent Fund Dividend: Past, Present and Future.”

The forum looked at the evolution of the Permanent Fund dividend in Alaska, its impact on the lives of residents and the increasing attention it receives by proponents of a universal basic income in the U.S.

UA’s Institute of Social and Economic Research hosted the online forum that included university researchers and economists who have studied Alaska’s Permanent Fund since its inception. They talked about the history of the Permanent Fund dividend and its role in Alaska today.

Panelists discussed some of the research questions studied over the years on the Permanent Fund dividend’s impact in Alaska. They include: How do dividends impact consumer behavior? Do Permanent Fund dividends help households buy big-ticket items they otherwise could not afford? And what are there long-term impacts from continuous annual dividend payments over many years?

“We are fortunate as a state that the framers had ideas and were willing to debate those ideas” for growing an investment fund “that most other states would love to have today, and that will benefit current and future generations,” said Matthew Berman, an economist and University of Alaska Fairbanks professor.

But Berman also noted that dividends from the Permanent Fund, paid annually to every eligible adult and child regardless of age, had a greater role 20 years ago in reducing poverty than today.

“In the last decade, since 2011, the dividend is less able to keep poverty from rising,” Berman said. “The Permanent Fund dividend is less able to reduce poverty in Alaska households than it has done in the past.”

Still the payments make a difference among many low-income Alaska families in remote and isolated communities where it is harder to earn a sustainable living. He said this is especially true in some rural Native households, where the poverty rate would be higher without the payments.

Scott Goldsmith, an economist and retired UA Anchorage professor, said there is increased interest in looking at the role of dividends in fostering well being and what the threshold is for making a meaningful difference.

“Would a $3,000 dividend get people’s attention in ways that $1,000 would not?” Goldsmith asked. “And what are the implications of that?”

More researchers from outside Alaska are looking at the Alaska Permanent Fund dividend as they explore and examine the potential impact of a universal basic income, also known as UBI, in an era of job loss to automation and mechanization.

“There is a greater look from the outside at the idea of a permanent income,” Goldsmith said. “This is the idea of giving every citizen a cash transfer to achieve public policy objectives. Researchers studying UBI are less interested in jobs created but how income is spent and the impact on social well being.”

Brett Watson, a University of Alaska researcher and economist, said that researchers are asking “How can we use Alaska for a case study on universal basic income, around thinking about the big structural changes underway in the U.S. economy?” He noted economic displacement of many Americans from the hollowing out of the rust belt, the increase in global trade and the rise of urban centers as concentrations of wealth.

Watson said that Andrew Yang proposed a universal basic income of $1,000 per month as a platform, when he ran for U.S. president in the last election.

“UBI represents payments distributed without regard to socio-economic status,” Watson said. “There are no strings attached. It is your money to use as you see fit.”

Alaska is unique for giving out universal cash, he said, making its features important and useful to scientists and policy makers.

While Alaska has the Permanent Fund dividend as well as taxes and royalties on natural resource wealth, there are broader proposals in the U.S. for more traditional financing for a UBI, such as a value-added tax, revenue from carbon or pollution taxes, or imposing fees on tech giants like Facebook that now extract enormous value from uploading individuals’ data for free.

Economist Gunnar Knapp, a retired UA professor, emphasized that Alaska has challenges today on funding dividends, state government programs and savings in an era of declining oil revenues.

“We face major fiscal choices going forward,” Knapp said. “How much we spend for government and how much we pay out for dividends, and how much we save or draw down from savings, these are annual choices we keep getting hung up on, because they are extremely difficult to solve politically.”

He said that the choices are intertwined. “What we do with dividends affects our options with other choices,” he said.

Knapp said that it is important to remember that prior to Alaska’s oil wealth, “Alaska paid broad-based taxes, did not save a lot of money and did not pay dividends.”

“That huge North Slope income allowed for us to do all of that,” Knapp said. “As North Slope oil declines and is not fully replaced, how will those choices change?”

Contact Linda F. Hersey at 907-459-7575 or at lhersey@newsminer.com. Follow her at twitter.com/FDNMpolitics.

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