30 October 2024
As the wealth gap grows to its largest in recorded history, the US’ poorest feel again the pressures of profit’s impossible standards. While the media places its criticism on inflation, opening the rhetorical door for the ubiquitous attack on minimum wages and rent control, corporate grosses soar to record highs, juicing the labor class for every cent salvageable. With nearly 72% of citizens living paycheck to paycheck, and 50% of households holding fewer than $166,000 in total assets, every provisional dollar can be vital to the safety and survival of the workingman [1]. Decades have passed with proposals for solutions failing to pass legislative muster as frequently as they’re brought to table; regularly heard characterizations of such measures are the classic “communist,” “socialist,” or the perennial “un-American” monikers. These criticisms, as inflammatory and intentionally antagonistic as they are, serve to radicalize the American constituency against its own interests; to be seen as supporting any measure of the so-called ‘socialist agenda’ akin to excommunication in some circles. Necessarily, proposals that seek acceptance within the US-media framework must be grounded in unassailable precedent, such that its policies can take root before the political Round-Up that is Congress can prevent it. The Alaska Permanent Fund is that precedent for the establishment of a Universal Basic Income for the US nationally.
Alaska’s proven oil reserve sits, as of 2024, at 3.357 billion barrels [2]. Disregarding any other part of the US, AK alone holds a larger crude reserve than that of seventy nations. The capacity for power generation buried beneath its tundra and ice shelves are hard to quantify –much less comprehend– but they do remain finite. The Alaskan government, headed at the time by Governor Jay Hammond, sought to design a mechanism to create recurring and perpetual wealth for the citizens of the state far after the final barrels of oil had been excavated. Since at the time the Alaskan Constitution did not permit the establishment of permanent funds, a referendum was held for its amendment. The citizens of Alaska voted 75,588 to 38,518, thus laying the founding statutes and guidelines for the Alaska Permanent Fund. Established by constitutional writ, the APF places at least 25% of annual oil profits from across the state into a holding account, wherein the money can accrue interest and be reinvested to disseminate into the Alaskan community. This reinvestment is spread across public and private equities, fixed return bonds, real estate, and other asset classes to guarantee an effective return [3]. This initiative has been monumentally successful. Beginning with $734,000 in 1977, the account has grown to a total fund value of $79.15 billion USD [4]. The fund’s earnings are annually applied to the Permanent Fund Dividend, a direct sum paid to each citizen of the state who has been in residence for at least one year. Averaging across the Fund’s entire lifespan, the annual dividend is ~$1600 USD, an incredible benefit that has directly reduced the number of impoverished Alaskans by 20%–40%. Poverty rates amongst rural indigenous Alaskans has reduced from 28% to just 22%, and the number of children living in poverty has been reduced state-wide by 50%. The fund has directly helped Alaskans to put food on their tables and gas in their cars; it’s helped prevent child hunger and protect citizens from inflation’s cutting edge. The fund’s effects have been uniquely beneficial for Alaska as a constituency and state [5].
Common to any anti-Universal Basic Income argument is the implication that a UBI would create a so-called ‘nanny’ or ‘welfare’ state, whose coddling arms would reduce the essential ruggedly individual American spirit to little more than a yowling toddler, unable even to sit up without aid from its fiscal caretaker. This argument is twofold false: first in its mis-characterization of the American spirit, and second (and more importantly) in being just flat out wrong regarding a UBI’s effects upon their model of the American work ethic. A UBI, fundamentally, does not prevent nor discourage citizens from pursuing jobs, and Alaska’s here again a perfect example. The Alaska Permanent Fund has been providing its statewide dividend for just under 50 years, and in that time there has been no discernable link between the fund and a decline in employment. In fact, the contrary is true: the Fund has been directly tied to an increase in part-time workers by 17%, statewide [6]. The implication here is that a UBI is, contrary to popular argument, an economic stimulant; and if it works so well in Alaska, a UBI on a national scale could be borderline miraculous.
We’ll presuppose for the creation of a national analog to the APF that funding tenets would remain exactly the same: 25% of profit from mineral and oil rights would be annually applied to the principal of the fund, with similar management permitting reinvestment for consistent increases outside of corpus. We’ll also presume this fund is managed by a Congressionally-approved bureau and operated exclusively as a pool for income provision. The US Dept. of the Interior values the total of 2023’s “Domestically Mined Mineral Raw Materials” at $105 billion USD, with the value added to the US’ annual GDP by industries consuming those materials reaching a truly astronomical $3.84 trillion USD [7]. We’ll take the former number to remain conservative and add its applied 25% to the US’ annual oil exports. The US Energy Information Administration reports 1.49 billion barrels of oil exported in 2023 alone, which amounts (using an average of $80.3 per barrel that year) to $119.647 billion in gross. Adding 25% of that metric gives us an annual addition to principal of $56.16175 billion USD [8]. This single year’s funding already nearly exceeds the APF’s aggregate 50 year; its financial power on a larger time scale would be calculable, but it would be huge.
The core benefit of a UBI from a purely economic perspective is the inherent power it provides to the worker. Under the current labor system (at least in the US), workers are really given two choices: work, or die. With the homeless forcibly removed from public spaces and social welfare programs stripped straight to the trabecular tissue, one labors, or one never labors again. This puts workers in a bit of a bind; their bargaining power with employers for fair wages (a core component of pure-market capitalism, for those to whom that’s important) is dramatically reduced by their alternative being ‘go without food or shelter;’ they can be forced to work for far less than their labor is actually worth. With a UBI, workers are given bargaining power, reducing the overwhelming pressure bargaining under our current paradigm presents. This increased leverage reifies wage increases without the minimum wage form of governmental fiat so many fears, leading necessarily to a more prosperous economy through increased fiscal security for the poorest of the nation.
Universal Basic Income’s vilification at the hands of political rhetoric has made its proposition all but impossible to the average American; The Alaska Permanent Fund presents UBI as the economic stimulus grounded in domestic production and genuine short- and long-term benefit. In bypassing the hem-haw stage of initial adoption, Alaska has set precedent for an effective, substantial national income which would directly boost the economic power of the median American, promoting the US as a whole.
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Works Cited
[1] Batdorf, Emily. “Living Paycheck to Paycheck Statistics 2024.” Forbes, April 2, 2024. https://www.forbes.com/advisor/banking/living-paycheck-to-paycheck-statistics-2024/.
[2] U.S. Energy Information Administration, Form EIA‐23L, “Annual Report of Domestic Oil and Gas Reserves,” 2021 and 2022.
[3] “Diversification Framework – Asset Allocation.” Alaska Permanent Fund Corporation, September 25, 2024. https://apfc.org/diversification-framework-asset-allocation/.
[4] Alaska Permanent Fund Corporation, FY 2024 Financial Statement. Juneau, AK: The Alaska Permanent Fund Corporation, 2024.
[5] Berman, M. (2024). A rising tide that lifts all boats: Long-term effects of the Alaska Permanent Fund Dividend on poverty. Poverty & Public Policy, 16, 126–145. https://doi.org/10.1002/pop4.398
[6] Jones, Damon, and Ioana Marinescu. The labor market impacts of universal and permanent cash transfers: evidence from the Alaska Permanent Fund, February 2018. https://doi.org/10.3386/w24312.
[7] U.S. Geological Survey, 2024, Mineral commodity summaries 2024: U.S. Geological Survey, 212 p., https://doi.org/10.3133/mcs2024.
[8] U.S. Energy Information Administration. Petroleum & Other Liquids § (2023).
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