Alaska’s universal basic income problem

Alaska gives each resident a check every year. It’s cut poverty — and warped the state’s politics.

What if we just give people money?

Yet when one considers the political ramifications of the largest and longest-running UBI experiment in America — Alaska’s Permanent Fund Dividend (PFD) — giving out cash appears to create unforeseen problems, and advocates for basic income would do well to incorporate Alaska’s latest experience into their conceptions of the policy.

Former Gov. Jay Hammond, the mastermind behind the fund, created the dividend system as a way to ensure Alaska’s nonrenewable resources could provide an everlasting return to the state. In his words, he “wanted to transform oil wells pumping oil for a finite period into money wells pumping money for infinity.” Paying out $1,000 to $2,000 per person per year — every Alaskan gets the same amount — was Hammond’s plan to protect the fund. If every Alaskan were a stakeholder in the Permanent Fund’s future, surely no politician could dismantle it without paying an electoral price.

For decades, Hammond’s system was an unprecedented success. But in 2015, plunging oil prices created major shortfalls in the state’s budget. In response, then-Gov. Bill Walker deviated from the traditional PFD formula and reduced the value of the check for 2016. Doing so allowed the government to continue funding state services and ensured the sustainability of the fund. Instead of a check for $2,052, as they would have received with the traditional formula, Alaskans that year got a comparatively paltry $1,022.

In 2018, Republican state Sen. Mike Dunleavy saw an opportunity. Despite traditional Republican aversions to handouts, Dunleavy ran for governor on the campaign platform of increasing the PFD. He promised every resident up to $6,700, to make up for Walker’s cuts in 2016 and 2017 — though he was foggy on how the state could pay.

The result? Dunleavy won by a landslide.

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