The idea of a ‘citizen’s income’ has made a real splash on the UK political agenda. The new year started with the Green party announcing a universal, non-means tested weekly payment of £72 to every British adult as its flagship economic policy.
The idea of replacing means-tested cash benefits with an unconditional, universal weekly payment to every adult citizen as a right of citizenship will soon be tested at the Swiss ballot box, with a referendum on basic income in Switzerland due sometime this year.
The growing British interest in a citizen’s income scheme coincides with an announcement last month that two major UK public pension funds – the Greater Manchester Pension Fund (GMPF) and London Pensions Fund Authority (LPFA) – will form a joint infrastructure investment venture worth $500 million. In doing so, they are heeding Boris Johnson’s calls for a ‘citizen’s wealth fund.’ Of course, this modest joint fund proposal, at just half a billion pounds, hardly competes with the holdings of the world’s largest public pension funds, such as the Netherlands’ ABP ($375 billion), Canada’s Public Pension Plan Investment Board (CPPIB) and Australia’s Future Fund ($92 billion). Nevertheless, the announcement represents a step towards the creation of a British nation-building fund.
Thus far, these separate proposals for a UK citizen’s income and citizens’ wealth fund have not been linked in the public debate. However, a working model for how these policies might be connected together and how they can support one another does exist.
Alaska is the only state in the world to pay its individual citizens an annual, equal income, known as the permanent fund dividend (PFD), and this ‘basic income’ is financed by the investment returns of its sovereign wealth fund, the Alaska Permanent Fund (APF). While it remains an isolated example, the Alaskan model offers insights for Britain as it considers the appropriateness of a citizen’s income and wealth fund.
In form and effect, the Alaskan PFD closely resembles a basic income. Its supporters claim that it has helped to make Alaska the most equal state in the US, provides a safety net for all citizens, helps to reduce poverty and ease unemployment traps, and promotes worker freedom. Although these outcomes cannot be entirely attributed to the dividend, studies have shown that Alaska’s equality of income distribution and poverty alleviation improved dramatically since the dividend’s introduction.
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