The United States needs a Permanent Fund Dividend

For Alaskans, few things are sweeter than the sight of $1,600 in Permanent Fund Dividend money rolling into our checking accounts. Many of us will spend our cash on new laptops, plane tickets and snow machines. With Black Friday quickly approaching, there’s no doubt we’re due for long lines at Fred Meyer and the outlet stores at malls.

Yet, many of us forget that, for many Alaskans, the PFD is the difference between getting by and being unable to afford basic expenses. Though we often splurge on products and luxuries, much of the $1 billion distributed on Thursday won’t circulate through the Alaskan economy. Only 8 percent will end up in Alaskan businesses, and luxury spending on non-essentials usually only occurs in the short-term.

Far more common are the Alaskans who set aside their money to ensure their kids can afford college or who lodge their money in savings accounts to weather financial troubles. Without the PFD, basic needs like food, housing amenities and school supplies are out of reach for poorer Alaskans. New research from the University of Alaska Anchorage’s Institute for Social and Economic Research finds that the PFD lifts somewhere between 15,000 and 25,000 Alaskans above the poverty line each year. The same research concludes that those effects are most evident in rural populations, particularly among Alaska Natives.

By all means, the PFD serves as a universal basic income for many Alaskans. It has even been successful in closing the income gap between rural Alaska Natives and urban Alaskans. But for the more than 40 million Americans who remain in poverty outside Alaska, little is being done to bridge the growing income divide.

Perhaps it’s time for the federal government to take the Alaska model to the national level. It’s far better than alternatives failing in the status quo: underfunded and broken welfare programs, state-led spending and tax-breaks for wealthy Americans and corporations don’t seem to be doing it the trick.

A national PFD might even be easier to fund than our own. Taxes on certain types of wealth, such as property and bequests, could be used to disburse across income levels, which would eliminate poverty for millions of Americans. Matt Bruenig, founder of the People’s Policy Project, suggests a “social wealth fund” that accumulates stakes in equity, property and bond markets and then disburses a share of its investment. This is quite similar to the way the PFD works: royalties from oil revenues are thrown into a diversified portfolio which is spread to Alaskans through a yearly dividend.

A national PFD surely has its concerns. Many fear that free money would discourage people from working. To the contrary, not only is there no evidence that our own PFD discourages labor participation, but also that the capital spent on goods and services promotes the creation of jobs. A 2016 report from ISER showed that capping the PFD would have a net negative effect on jobs on 892 jobs.

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Areas that would benefit the most in U.S. are communities suffering from structural unemployment. Midwestern states like West Virginia and Michigan that have been ravaged by automation and outsourcing are unlikely to see their jobs come back anytime soon, leaving citizens stranded in economic wasteland. A national PFD would alleviate increasing rates of poverty, allowing those left behind to afford basic needs. The proliferation of crime and opioid use that comes as a result of mass job loss and poverty would also likely slow down.

Additionally, historically marginalized communities would disproportionately benefit from this policy. Governments have actively disenfranchised communities of color through discriminatory housing policies, educational inequities and mass incarceration. As a result, African Americans, Hispanics and Native Americans are far more likely to be poor than whites are.

More importantly, policies to rectify these inequities have been either counterproductive or negligible in effect. The most immediate, tangible way to address systemic poverty resulting from racist policies is to give capital back to those communities.

Alaska is known for doing things differently. We legalized abortion years before Roe vs. Wade passed, spearheaded a successful automatic voter-registration program that’s becoming the norm across the country and implemented the first and only successful social wealth fund in the U.S. The federal government should try things the Alaskan way and adopt a universal policy that would benefit millions of Americans trapped in structural poverty.