Profits to every citizen

April 09, 2014

NAJMA SADEQUE

 

There’s a certain state in an otherwise corporate-controlled industrialized country, where a public corporation especially designed to distribute profits to all its citizens annually, does just that. That too without managers lining their own pockets and running it into the red, as commonly happens here.
In 1959, Alaska discovered its largest oil reserve. The great wealth from it was initially spent on developing the state’s infrastructure and services.
In the 1970s while the Trans-Alaska Pipeline was under construction, the treasury was flooded with money from exploration leases and drilling rights awarded to oil companies. Once the pipeline was complete, profits boomed. Those in charge began to think about how all Alaskans could continue to benefit, even after the oil ran out, which it would eventually. Something no one in Pakistan considered when gas was discovered, and gold and other mineral deposits were confirmed.
For a start Alaska set up a mechanism that would ensure all citizens and future generations would continue to receive direct benefits. – By placing 25% of sovereign funds representing public wealth, in a Permanent Fund. But the state constitution didn’t have that written in; after all, they hadn’t anticipated so much oil wealth when it was originally made. So the matter was put to vote in 1976 to amend the constitution to that effect. Two-thirds of the voters voted in favour, and it went through.
Future politicians wouldn’t be able to undo it – without being instantly caught for cheating citizens of their share. The constitution now spelt out in black and white why the Fund was created and what the citizens were to expect regularly, namely:
“to provide a means of conserving a portion of the state’s revenue from mineral resources to benefit all generations of Alaskans; to maintain safety of principal while maximizing total return; and to be a savings device managed to allow maximum use of disposable income for purposes designated by law.”
After four years of public debate over whether the Permanent Fund should be managed as an investment fund or an economic development bank, the former was decided on. In 1980, the Alaska Permanent Fund Corporation was created by the state legislature.
The Fund’s task was to manage investment of its revenues and to create the first Permanent Fund Dividend programme. In 1982, the Fund distributed its first dividend check of $1,000 to each and every Alaskan, adult and child alike. Then, not enough time had passed to accumulate profits substantially, so dividends were paid from surplus oil revenues, not return on investments. Within a few years however, the Fund was ranked in the top 9% of all public funds in the US.
In 1990 the Fund started investing abroad. By 1993 it was worth $15 billion. In 1998, its earnings exceeded state oil revenues for the first time, reaching $25 billion. Most importantly, the Alaska Constitution disallows the Fund from spending its principal amount, and dividends may be paid only from Fund earnings.
It begs the question: how far does Pakistan’s constitution protect citizens from arbitrary handling of public assets and ensuring public benefit? Not enough apparently, given that plum assets have already been sold out so they no longer earn for the state, let alone the people.
In Alaska, if earnings reserve were to be zero or negative on June 30, no money could be paid out, although that never happened. A constitutional amendment was made in 2001 to remove the distinction between principal and earnings, and people would receive annual payouts at a fixed 5% percent of the Fund’s total value, irrespective.
Realizing that greedy politicians and private interests would try to hijack the institution for exclusive benefit, the Legislature changed the state law in 2004 to help insulate Board members from political pressure. Henceforth, it required cause to be shown why any of the public members of the Board of Trustees should be removed.
Thereafter, the Legislature laid down clear guidelines under which decisions could be made only under strict ‘prudent investor’ rules. Because it was founded on solid assets, the Alaska Fund withstood the stock crash of 2008. But it moved to take pre-emptive measures to remove any risks in the future, by grouping investments according to market conditions of assets.
Today the Fund boasts its value at 50 billion dollars. Its success is due to several factors, including legislative oversight and constantly being in the public eye. People would notice immediately if they didn’t get their share of money automatically.

The concept of the Commons has existed for thousands of years everywhere. The obvious was recognized – that natural resources were not created by man, and were fundamental to survival. That some factors only worked in tandem with one another – such as pastures, forests, water-bodies – and were never allowed to be private property, but commonly owned and used by locals of each area and community.
In Pakistan it took only a century of colonization to wipe out most vestiges of what was once self-evident truth. The new leaders should have revived what were basically human rights principles and practices, but they didn’t. In its place came colonial-style constitutions and democracies that could be bent by convenient interpretation to suit vested interests and those at the helm. Feudalism and patronage remained in force and infiltrated government and parliament.
Today, democracy is deemed old hat by businessmen-politicians posing as sophisticated globalists. It’s been displaced by corporatism, unrestrained by political borders on grounds of greater efficiency, productivity and profits, albeit for the few. That it deprives the masses of their rights despite colossal waste and permanent environmental damage, isn’t seen as unconstitutional or as a violation of human rights.
Much of the credit for creating and championing the Alaskan Fund goes to former Republican Governor Wally Hickel who tried to spread the idea to other countries. Not surprisingly, the corporate-molded or lazy media seldom reported it, so that it remains largely unknown. Hickel sadly died in 2010. But not before leaving a video-conferenced message to the world.

The 90-year-old Hickel said:

“In Alaska, we live on the commons. We benefit from the commons. We care for the commons. From common ownership of our land and our resources, has emerged a new model for modern society. We call ourselves the OwnerState. And what we own is the commons. We believe our model surpasses both capitalism and socialism. When this approach is understood, worldwide, there will be no legitimate reason for poverty.”
The Alaska Fund model would have to be adjusted country to country to suit national conditions, but it amply demonstrates how people can ensure getting their fair share from natural resources that by right belong to everyone, including from corporate entities that exploit resources.
There can only be one reason why our leaders and planners wouldn’t want to. And every reason why the rural-urban labour-majority have to get into the act.

 

This article was published in The Nation on 9 April, 2014

http://www.nation.com.pk/columns/09-Apr-2014/profits-to-every-citizen

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About denebsumbul

Documentarian, Activist, Journalist, Photographer, Capacity Trainer
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