Two entirely different perspectives on the Permanent Fund earnings stream …

FB Ad Pic (with text)This week I am guest hosting The Michael Dukes Show.  Yesterday (Tuesday) I invited Casey Reynolds to join me on the show during the 7am block to discuss his The Midnight Sun blog (& podcast), the coming legislative session and anything else that came up along the way.

In the final segment of that hour we finally turned to the legislative session and, as part of that, the fiscal issues facing the state.  Quickly, we fell into a discussion about the use of the Permanent Fund earnings stream, particularly that portion used to fund the Permanent Fund dividend, which then led to a discussion as much about “who owns” the stream than anything else.  Because we were in the middle of that discussion as we approached the top-of-the-hour break we continued it over also to the first segment of the 8am hour of the show.

What I didn’t realize at the time but subsequently learned from a listener was that Casey also had talked about the issue — and my position — the preceding weekend on The Midnight Sun podcast.  Because his comments during the podcast are a good introduction also to the position he took during our discussion I have included both clips with this post.

For those of you that want a quick orientation before listening to the clips, here is what Casey said on his podcast during a discussion with his co-host, Forrest Dunbar about the

Governor’s new budget (beginning at about 11:30 into the full version, which is available here):

Casey:  … But to me, it [the limited spending cuts contained in the Governor’s proposed budget] is more of a reflection that I feel like, we’ve had some kind of massive cuts the last couple of years and we’re getting down to the point where you’re no longer going to see massive cuts, you’re going to see annual trimming of the budget to try to bring it back in line.  You’re not going to see massive chunks of the budget cut out ….

Forrest:  How are we going to do that when there’s already basically no capital budget.  At some point we have to spend money on capital as well, right?

Casey:  Well that’s the argument about the broad based tax. If we don’t do something with the PFD and don’t have a broad based tax, you know you don’t have money to spend on that kind of thing.  That’s why I disagree with the likes of people like Brad Keithley out there. First of all differentiating between a public and private economy, which isn’t true.  Anybody who has taken political economy classes … politics and economy goes hand in hand.  You can’t have an economy without property rights being protected; the only one that can protect property rights is the government.  So … they [the private economy and government] are inseparable in my mind.  But where I think they get it wrong is you have things like the capital budget that underpin certain parts of the private economy and if the government doesn’t have resources, they can’t spend there and certain, you know, the construction industry which is a big private sector enterprise, right, is not entirely built on government spending, but largely built on government capital.

In sum — my takeaway — both the Alaska private and government economies derive from the government and so, as Casey went on to argue on The Michael Dukes Show segment, the government has the right to determine and redetermine the allocation of resources — including the Permanent Fund earnings stream — between the two.  Taken broadly, that argument leads to the conclusion that there really is no such a thing as a “private” economy except to the extent the government agrees, but the government can change its mind — as some have proposed to do with the PFD — from time to time and at any time.

As readers of these pages will realize, that significantly departs from my view, particularly about the use of the Permanent Fund earnings stream.  While a party inclined to do so potentially could attempt to reconcile our views by suggesting that our debate is more about what the proper resource allocation is, rather than who has the right to determine it, I continue to think it is the latter and, besides, given Casey’s position stated above and during our discussions, the debate about what the proper allocation of the Permanent Fund earnings should be would likely lead to the same place.

In any event, for what it is worth, here are both clips.

* The clip from The Midnight Sun podcast (which starts at around 11:30 of the podcast in order to provide context to the discussion quoted above) is here:

 

* The clip from yesterday’s Michael Dukes Show (which starts at the beginning of the final segment of the 7am hour, where Casey and I started to discuss the coming legislative session, and continues through the first segment of the 8am hour where we ended) is here:

 

One response to “Two entirely different perspectives on the Permanent Fund earnings stream …

  1. Wait, What?!?! I never argued that the economy “derives” from government nor did I argue that the government “has the right to determine and redetermine the allocation of resources” or that there is no such thing as private property rights. I also don’t agree that anything I said leads to that conclusion. I stated that the economy and government are co-existing forces that can’t be separated into mutually exclusive fields the way Brad suggests. I also argued the Permanent Fund and the Dividend are public sector activities, not the poster child of the private sector, which is how Brad casts it.

    I would also point out that I specifically said that I was describing the situation as it IS, not making a value judgment or arguing for how it SHOULD be.

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