My blog has recently referred to some of the great and the good advocating Universal Basic Income. One of the quotes was from Mark Zuckerberg, who was singing the praises of the Permanent Fund Dividend in Alaska. So, what is this Dividend? And does it mean that UBI is already happening, albeit in the 50th State at the top of the world?

The easy answer is that, no, Universal Basic Income is not happening in Alaska. This is not a Basic income because it does not cover all basic needs. However, it is Universal, because everyone in Alaska is entitled to it. And because of that, it’s free money for everyone, regardless of need, merit or justification. If you accept that this is one of the reasons why UBI has been so far resisted by politicians – because they can’t sell the idea of money going to citizens irrespective of whether they need or deserve it – then it is worthwhile to look further into the Alaskan system.

The Alaska Permanent Fund (to give it it’s proper name) was established by amendment to the Alaskan state constitution in 1976 and has been run by a state-owned corporation since 1980. It has since 1982 enabled all 650,000 residents of Alaska to receive a dividend from all oil exploration in Prudhoe Bay. The dividend is the interest payable on a capital fund raised from oil exploration revenue and has meant that residents have received an average over the last ten years of $1322 per person per annum. In fact, the capital fund has been so successful that legislative action has been required in recent years to reduce the annual payment to less than the actual dividend. For any investment geeks out there, the Fund (as of 30 June 2018) has $64.9 billion of assets under management and has a rate of return of 10.74%.

It appears that one of the ways that this generosity with private funds has been justified is that oil revenues are, by their nature, limited to the oil resources which are capable of being extracted. The fund is therefore to help the State of Alaska prosper for the long term from its good fortune in the short term. However, it is still interesting that the assumption from the start seemed to be that individual citizens of Alaska should be able to prosper from the speculation and investment by private oil companies. It’s almost as if the Fund dividend is a tacit admission that private citizens are entitled to a share of their nation’s wealth.

However, it is not only the assumptions about entitlement which underpin this Fund that are interesting. A study in 2018 by Damon Jones and Ioana Marinescu concluded that the "the dividend had no effect on employment, and increased part-time work by 1.8 percentage points (17 percent)… our results suggest that a universal and permanent cash transfer does not significantly decrease aggregate employment." (as taken from the Abstract of the paper).

Can it be that, on average, if people are in receipt of free money, it does not necessarily reduce their demand for paid work? If this is true, then this would certainly present a counter-argument to certain assumptions that people who don’t need to work don’t work. Which must be something worth looking into. But what do you think?

David R Thompson

p.s - any residents of Alaska who think they should be getting this? You can apply here