My Political Idol

I've finally gotten around to reading Jay Hammond's second book, Chips From the Chopping Block.

For those of you who don't know of the venerable Jay Hammond, he is the (now deceased) former governor of the State of Alaska who, among other things, presided over the creation of the Alaska Permanent Fund Dividend--the big check Alaskans get every year, which is a piece of the revenues of the Prudhoe Bay oil bonanza.

Hammond was a canny pragmatic politician, a Republican moderate with an instinctive understanding of some of the theoretical models that Political Scientists now use to model political behavior, and more than any other politician who I've ever heard of, the individual whose personal political philosophy matches my own.

Jay was a fiscal conservative who was also a conservationist. Also a bush pilot, big game hunter, amateur body builder, and all around smartass.

The creation of the Permanant Fund Dividend was a particularly brilliant political move. Hammond, a moderate, hoped to conserve Alaskan wilderness, but knew that staving off oil development on the North Slope was impractical, mostly because of the huge revenues it was likely to bring into the state. He was worried, however, not only about the ecological impact of the Alaska Pipeline project and other oil-related infrastructure, but he was concerned about the influxes of huge amounts of cash on Alaska's tiny economy. In a nutshell, he felt that politicians would face strong incentives to spend as much money as they could as quickly as possible. The result would be big infrastructure projects that the state would be faced with maintaining long after the oil began to run dry (as, in fact, it now is).

In order to prevent the money from being used in an irresponsible way, he created the permanent fund, and started paying out dividends based on the interest on investments made with permanent fund revenue.

The result was to create a political constituency (Alaskans who receive checks every year) who would fight tooth and nail to protect the fund. Politicians, from time to time, attempt to dip into the money, and voters force them to back off.

The result is that the fund has gotten quite large, and the state is in reasonably good financial straits. The problem is that they also have no state income or sales tax, which is another story...

But for the meantime, the permanent fund