The Last Frontier has given us gas, gold, and glory. It’s time for us to borrow some economic policy, too.
Alaska, a state most Americans know best for its iconography of Denali and a grizzly bear snatching a salmon between its teeth, is an American outlier in many regards. The state’s political leanings are no exception—Alaska has the largest number of Independents in the Union, a symptom of its citizens’ distrust of the nation’s political institutions. Even though Alaska’s populace overwhelmingly identifies as Independent, much of its polity subscribes to the Republican ideology of small government on all but one issue: Alaska’s Permanent Fund Dividend (PFD), a state program that pays out oil revenue to Alaskan citizens annually. While the popularity and success of this quasi-socialist program in a solid red state could flummox many a great political mind, the state’s policy exemplifies why a national implementation of Universal Basic Income (UBI) is more popular and attainable than one may think.
The fuel for Alaska’s PFD is oil—a lot of oil. Thanks to the 1968 discovery of Prudhoe Bay, the largest oil field in North America, the state has sold billions of barrels of oil, amassing over $180 billion in revenue. After hitting nature’s jackpot, Republican Governor Jay Hammond decided the state’s newfound wealth was better in the pockets of its citizens than those of its government, creating the first iteration of the PFD. The rules are simple: Every man, woman, and child living in the state is eligible for the dividend, which is allotted by dividing the fund’s net income after administrative costs by the number of eligible recipients.
When one thinks of traditional Republican ideals, they think of self-reliance, small government, and the oft uttered phrase, “pull yourself up by your bootstraps.” For decades, Republicans have railed against cash payments to American citizens. In 1980, then presidential candidate Ronald Reagan promised to rid the country of supposed ‘welfare queens’ who were buying coupes de villes and getting pedicures on the taxpayer’s dime. Alaskan Senator Dan Sullivan frequently denounces the ‘socialist’ Democrats’ spending agenda, especially direct payment programs such as the child tax credit. Yet, Republican state representatives in Alaska are in a constant mode of one-upmanship, with each politician fighting to spend more of the state’s budget on dividend payments for its citizens. So, what’s the story?
In its youth, the PFD was unpopular at the statehouse due to fears that citizens would use their cut of the crude revenue on unnecessary goods that wouldn’t benefit the economy. But as the fund grew, skepticism dwindled, and Republican politicians arrived at a “Eureka!” moment: People love free money. Governor Sarah Palin, the same Tea Party Republican who once suggested the United States should eliminate the federal income tax, imposed new taxes on oil companies, winning Alaskans a record high $3,269 dividend as a result. As someone who helped popularize the slogan, “Drill, baby, drill!” in her vice-presidential run, the irony of Palin’s policies shows the sheer political power of the PFD.
The PFD has become popular to a point of no return. In 2014, Governor Bill Walker ran as a conservative Independent promising, like every other politician in the state, a higher PFD. But soon after winning the Governor’s seat, Alaska entered a deep recession and Walker, looking for budgetary fat to cut, founded the PFD. In a historic move, the Governor slimmed Alaskans’ checks to half of the expected amount to help balance the state’s budget. When faced with a financial crisis, surely his conservative voting base would understand the necessity of these reductions in spending, right? Wrong. The public was so incensed at Walker’s decision to reduce the size of the checks that he decided not to seek reelection for his second term. Walker’s replacement, conservative Republican Mike Dunleavy, campaigned in 2018 on larger PFD payments and has since proposed almost $5,000 checks through other budget cuts. Clearly, politicians who are worried about a dip in the polls have nothing to fear from UBI.
The dividend’s popularity is easy to understand in the context of its notable impact on the people of Alaska. Research from the Economic Policy Institute shows that income for the poorest fifth of Alaskans in the last decade has increased 28 percent, 2.5 times more growth than the national average. $2,000 can make all the difference for Alaskans on the verge of poverty. Rural Alaskans use the dividend to survive, buying fuel to heat their homes for the cruel winter ahead. In the case of Native Alaskans, a study conducted by the University of Alaska-Anchorage estimates that without the yearly dividend payments, over 10,000 more Natives would live below the federal poverty line.
In 2020, Andrew Yang ran for the Democratic presidential nomination on what he called the “Freedom Dividend,” a monthly $1,000 check sent out to every American adult. By touting the concept of UBI, Yang’s unlikely campaign raised $16.5 million in a single fundraising quarter in 2019. Unsurprisingly, Republicans challenged the efficacy of UBI, arguing that the checks would reduce incentive to work. Yang cited Alaska’s PFD to prove them wrong. Researchers at the Roosevelt Institute tested his claim and found that there has been no change in the percentage of Alaskans in the workforce since the creation of the PFD in 1980. Before the Covid-19 pandemic, Yang’s campaign was largely dismissed by mainstream media outlets as a fringe movement. But the American people have now witnessed the successful rollout of two direct payments without the economic fallout that Republicans fearfully described. In a recent Doxo poll, 95 percent of respondents said the Covid-19 stimulus checks helped improve their finances over the last year, with 37 percent indicating that the checks helped “a great deal.” Americans are more open to the concept of UBI than ever before, with nine US cities from Compton, California to Pittsburgh, Pennsylvania launching some rendition of a direct payment program in 2021. This leads us to the penultimate question—how are we going to pay for this?
Not every state can be home to the nation’s largest oil field. But when Jay Hammond created the PFD, he did it because he thought the state was obligated to use the land’s resources for the “maximum benefit of its people.” Right now, America’s resources are being used for the maximum benefit of its corporations. It is time to collect some of Amazon’s $1.7 trillion net worth as payment for its thousands of delivery trucks causing traffic, pollution, and damage to public roads. Let’s institute a carbon tax on the nation’s biggest corporations, many of whom make up the 100 companies responsible for 71 percent of the world’s carbon emissions. These corporations would simply be paying US citizens a form of reparations for their monopolistic use of the country’s finite resources. If Republicans in Juneau, Alaska can fight over who can get their constituents more government assistance, then politicians in Washington can, too.
I once asked an Alaskan what he thought the biggest difference was between Alaska and the other 49 states: “Most places when you crash your car people will just drive past. In Alaska, you always stop when someone’s on the side of the road, ‘cause you know it could be you tomorrow, and a car crash in -20 degree weather is a life or death situation.” The answer surprised me given the state’s proud association with rugged individualism, but nature’s brutality in Alaska has forced a sense of community on its people—a unity reflected in the PFD. Economic inequality and the pandemic have left millions of Americans broken down on the side of the road. Let’s pull over.