The Permanent Fund Dividend Is The Speed Bump For Legislative Spending

This hit me as I was reading a letter to the editor today that said the PFD is a 'gift.'  After reading Hammond's autobiography, it's clear he conceived of it differently.  Hammond tells us the Alaska constitution says the resources belong to the state and the people are the state, not the government.  So instead of a private developer getting the money, it's divided among all the population.

I think we can argue over that in a lot of ways.  Why not just give all the money away to the people?  Hammond does respond that it's for future generations, not just the one that exploited the resources.  And I'm of the opinion that the Fund earnings would make a great trust from which the state could pay for a significant part government.

But Hammond argues that the dividend is much more equitable - the poor get the same as the rich.  In fact, the dividend has a much greater positive impact on the poorer folks than on the richer.  While a progressive  income tax would take more from those who can afford to pay more.  And it would also catch folks who work in Alaska but live Outside.

Hammond also felt that the dividend gave the public an incentive to pay attention to the state budget.

And that's the part that made me think about a speed bump.

People drive faster than they should.  To slow them down, we build speed bumps.  Most people can't stand the bumps.  They are a pain to drive over, even slowly.  And they cost money to build and maintain.  BUT without speed bumps, people drive too fast.  We simply won't voluntarily drive slowly.  So, speed bumps are there to stop us from doing what we shouldn't do, since we can't seem to stop ourselves from doing the right thing.

I see the dividend - even if you disagree with most of Hammond's points - acts like a speed bump on governmental spending.  The public pays attention when their dividend is going to be cut because the legislature needs their money to pay for government.  Legislators just can't help themselves from spending more money than we have.  The dividend is a speed bump to slow down the spending.

It's not a perfect metaphor, but it helps frame one aspect of the dividend clearly.