It always amazes me when I hear people claim that the PFD is “socialism.” What’s the ordinary meaning of socialism? Government ownership or control of the means of production across the economy. Alaska doesn’t run oil companies, grocery stores, or construction firms. It leases state-owned subsurface resources, collects royalties and taxes, and invests the proceeds.
Yes, Alaska’s constitution leans communitarian on natural resources. Article VIII, §2 directs the Legislature to manage resources “for the maximum benefit of its people.” Courts have treated that phrase as a policy directive implemented by statute, not a command for government to seize industry. In practice, the Legislature created a sovereign wealth fund (the Permanent Fund), invests resource revenues, and, when appropriated, pays a uniform dividend from investment earnings.
Some call the PFD “socialism,” but Alaska’s own case law shows it is nothing of the sort. In Wielechowski v. State (2017), the Alaska Supreme Court held that dividends are paid only when the Legislature appropriates Permanent Fund earnings and the Governor does not veto them. In other words, Article VIII’s “maximum benefit” clause is a policy framework carried out through statutes and the annual budget, not a guarantee of any particular payout.
This, of course, is extremely favorable to constituencies which have figured out how to get into and remain in the state’s deep pockets. The Wielechowski litigation also unfolded in a political climate where many policymakers and constituencies favored more flexibility to use Permanent Fund earnings for government operations. When considering the outcome of the case, some observers note a familiar courtroom maxim, lawyers are generally taught not to ask a question unless they already know the answer. Others also view the case as consistent with an effort to clarify that dividends depend on appropriation and the state needs the funds more for its operations than its citizens.
Whatever one’s reading of the strategy, the legal outcome is clear. There is no judicially enforceable right to a fixed dividend, absent an appropriation. That reality undercuts claims that the PFD is a socialist entitlement. It is, instead, a policy-driven resource dividend subject to the ordinary budget process.
The PFD is a resource-dividend program. Eligible Alaskans, collective owners of the State’s natural-resource rents, receive a share of earnings when their elected officials appropriate it, much like shareholders receive dividends when a board declares them. No industries are socialized. This is simply the distribution of investment returns from publicly owned assets through the normal budget process. Ultimately, it’s up to you and me to elect legislators who will set, and fund, the PFD policy we want.
ALASKA WATCHMAN DIRECT TO YOUR INBOX
Equal treatment reinforced that design. When Alaska once tried to weight dividends by length of residency, the U.S. Supreme Court in Zobel v. Williams (1982) struck down the tiers under Equal Protection. If the State distributes dividends, they must be uniform among bona fide residents. Again, that’s not socialism; it’s a rule-of-law constraint on how a legislatively created dividend may operate.
There’s also practical economics. The PFD isn’t a command-and-control wage or price. It’s a distribution of resource rents, returns from leasing and investing a shared natural endowment. That’s closer to a Georgist/resource-dividend (think charge rent; pay landlord as in the eligible public) or sovereign wealth model (think Norway) than to State ownership of the wider economy. Alaskans are, in effect, the ultimate owners of the resource base. The State captures value, invests it, and shares a slice of the earnings in response to elections.
While many understandably call the PFD “socialism” because everyone gets the same check, the mechanics are different. The PFD is a universal dividend from collectively owned natural assets, distributed via the same appropriations process that governs every other State expenditure. If the Legislature appropriates it and the Governor signs it, it’s paid; if not, it isn’t. That’s public finance and corporate-style dividend logic, not socialism.
The PFD is best understood as a corporate mirror of sharing gains through dividends, Alaskans as shareholders, resource rents as profits, investment returns as earnings, implemented by statute and appropriation. Article VIII supplies the policy purpose; Wielechowski and Zobel set the guardrails.
The views expressed here are those of the author.
17 Comments
This article is a great example of logical, lucid and supportable facts. I wish more of this type of discourse and less of the wackadoo religious zealotry.
Agreed
I love Jesus with zeal! If that makes me illogical, confused and unsupportable in your obviously closed mind, so be it. Let us know how being your own god works out for you long term.
Freedom: you are illogical, confused and have an unsupportable obviously closed mind.
I don’t collect the PFD. Therefore the PFD cannot be used as a political cudgel against me. I still vote for balanced extraction of our own natural resources, just like all the other rich countries do. Energy independence!
So what do you call the PFD when people demand it as their right even if the state starts imposing income and sales tax?
Alaskans have “collective ownership of resource rents?” Hey what’s it called when the members of a society own a resource in common?
It can’t be “socialism”. They need to invent a new word/ideology.
Michael Tavoliero: government distribution of public wealth is a hallmark of SOCIALISM. I will concede a weak point though. The definition of socialism in Alaska includes, “The current method of funding is socialist because with it government owns the means of production–oil and stocks. The state of Alaska owns stock in publicly traded corporations and so owns portions of those companies.” That’s what one fellow claimed and it opens a lot to unpack. I’m not sure it’s accurate. I’m not going to try. It’s not my expertise.
But consider the incessant whining about services for the poor, like the homeless or kids who can’t afford breakfast and lunch. There’s always some right wing wag that proclaims that the parents should get a third job, cuz while the family (a concept we all revere) needs the money, it’s not up to the State to reverse their poor life choices. Same with homeless people, the right wing considers them bums and not deserving of State largesse. However not so with the class called Alaskan residents. Their need for State largesse is not in question, their need is the fact that they had the good sense to be an Alaskan and nothing more and we reward them with no consideration of their means or needs. Free money to every Alaskan unless you really need it!
Yes . IT”S PEOPLE let’s further define that the Corporations PEOPLE??? Are we all shareholders ? Wally thought we were! Jay did too! Does the legislature beleive it? NO but they beleive we are dependant’s … end of my comment !
I want the full PFD and the back amount withheld by various governors.
I agree. Money that was stolen from us.
LOL………..still haven’t read Weilechowski v Alaska? Or do you just ignore it because you don’t like it? The decision is nine years old now, and has firm constitutional footing, and loads of precedent support it.
Go ahead and wait…..and wait……..and wait……….and wait………..
Only way the legislators are going to listen is when they get voted out of office and realize that there are political consequences for them not appropriating a full statutory dividend. Otherwise, same old, same old. Enjoy your PFD table scrap leftovers after the budget process.
100%
This goes on and on. It’s way too easy for government to spend your money when there is a source that is not collected via a direct tax on individual taxpayers. In fact it is so easy, legislators will consume that source of funding and shoot past it, way past it, with even more spending. Then you’ll have your feared taxation in spades. And no PFD to boot. The PFD pumps cash into the private economy (sourced from resource extraction & sale proceeds) via all the legal residents spending or savings (to be spent later) which is what AK needs. Not more government. It only took on socialist connotations when it became legislatively appropriated funding & no longer had first draw to the people via the formula. Everybody understood it went up and down before. Market forces are understandable. Political forces pushing different funding & spending is another story. Good luck all.
It would be nice if employee Yundt read this article. After that attempt to blow smoke up his employer’s keesters, this was a refreshing read. Thank you.