Dear Editor,
Every resident of Alaska receives an annual cash dividend called the Permanent Fund Dividend, from the Sovereign Wealth Fund of the state oil revenues. This proven model can help to remake our economy to work better for all Guyanese.
There are many good signals on the steps being taken to ensure accountability and transparency for the management of our emerging oil and gas sector. The introduction of a Sovereign Wealth Fund, the separation of policy development and regulation monitoring, the pursuit of onshore development and broad local content support among other positive developments, encourage hope that we can emerge as a successful resource rich nation. Finally, I am most impressed by efforts to address skills development – with strong leadership also coming from some private groups – particularly in engineering. One thing I have learned from being around the engineers is that it is of critical importance to get the conceptualization phase right. And with all the good work being done to ensure that we have good governance of our oil and gas sector, I urge that we adopt the dividends-for-all approach from the first oil revenues. Attempting redistribution to address inequality at some later point is a far less desirable approach.
The economic stakes are beyond anything we have wrestled with and some players, particularly the seasoned industry titans, are positioning or positioned to do very well. All the posturing for good governance can quickly evaporate if greed and mismanagement permeate. And with the stakes this high, it is likely if not inevitable, that powerful alliances will emerge and hijack the effective implementation of good governance.
For the many positive signals that I have seen, the most worrisome for me is the unusual silence of Guyanese on social media when the second major find by ExxonMobil was announced. The international community seems to be more appreciative of the significance of the emergence of Guyana as a real find, while at home the populace seems disengaged.
I believe it is critical that the public remains vigilant, and so I urge that we go the path of Alaska by adopting a model of dividends for all. The introduction of the Alaska model of paying dividends to every Alaskan from their oil and gas resources would work wonders to strengthen the good governance model and ensure an engaged populace. In too many corners of the earth today we see nations experiencing strong economic growth while at the same time poverty increases and the middle class dwindles.
In his book With Liberty and Dividends for All, Peter Barnes offered that the idea is that all persons have a right to income from wealth we inherit or create together. He references Thomas Paine in describing our right to property, reminding us that there are two kinds of property: firstly, natural property, which comes to us from the Creator of the universe – such as the earth, air, water; secondly, artificial or acquired property – the invention of men. The latter kind of property must be distributed unequally, but the first belongs to everyone equally. And he importantly makes the point that land, air and water could be monetized, not just for the benefit of a few but for the good of all.
There are many who will argue against this idea because they are against handouts and a welfare state. These arguments, however, ignore the facts and the evidence. The fact is that in capitalist economies, dividends are a form of non-labour income. But non-labour income doesn’t flow to nearly enough people; the beneficiaries are an elite minority. And the evidence from Alaska which has been paying dividends to every resident for more than 25 years, is compelling.
The belief that this model is one that will hurt growth and the entrepreneurial spirit ignores some important realities. The cry for jobs is not new and will not go away anytime soon. The cry for good-paying jobs will be even louder – just talk to our many university graduates to understand that many well educated and hardworking people will need their fair share of the wealth that rightfully belongs to them in order to sustain and grow our middle class. And all Guyanese have a right to share in our common wealth.
The big, rarely asked question about our economy, according to Barnes, is who gets the benefits of co-owned wealth? No one disputes that private wealth creators are entitled to the wealth they create, but who is entitled to the wealth we share is an entirely different question. His contention is that the rich are rich not so much because they create wealth but because they capture a much larger share of co-owned wealth than they’re entitled to.
Introducing dividends and making it universal is essential. Universality guarantees no discrimination based on age, gender, race, class, location, education, religion, sexual orientation or political allegiance – it is one dividend per person. And once this is put in place, we the people will not allow any politician to interfere with our rights, but instead demand that the government maximize returns from our common wealth. Additionally, the paying of dividends reduces the opportunity for politicians to squander the rest of it. This simple measure can be the recipe we need to ensure that we have a government that includes us.
The Alaska Permanent Fund Dividend gives back to the people a portion of earnings from invested oil wealth that belongs to the people. The benefits outlined from a universal dividend include:
– Reduces inequality – according to a study (Hammond) Alaska is the only state in the U.S. in which the gap between the haves and the have-nots has narrowed over the last twenty years.
– Easy and inexpensive to administer
– Powerful bottom up economic stimulus
– Offshoots – once an oil and gas dividend system is in place, it can add features and revenue with ease.
– Effective cure for the resource curse is to transfer the proceeds directly to the people.
– Studies show that most recipients use the money wisely.
As we design our oil and gas governance model, I urge that we join the movement for dividends for all and move to adopt the Alaska model.
Yours faithfully,
Selwin Asafa George
