Two emeriti ISER directors, Scott Goldsmith and Gunnar Knapp, debated how best to manage the Permanent Fund at a Commonwealth North lunch at the Petroleum Club on November 8, 2019. The specific resolution for the debate was: “Resolved: The Alaska Constitution should be amended to specify that the Permanent Fund should be managed as an endowment, with a limited and sustainable annual distribution.” Under the format of the debate, a coin was flipped at the beginning of the debate to determine which side each debater would defend. Knapp drew the “pro” side and Goldsmith the “con.” To learn more, check out a video of the debate.
On the pro side, Knapp made two primary arguments. First, a constitutionally defined limit on the withdrawals from the Permanent Fund is necessary to avoid the temptation to use unsustainable draws to avoid the hard political choices facing Alaska over spending, the size of the PFD, and increased taxes. Second, under the current constitution, it is possible that the Earnings Reserve would not have enough funds to pay the sustainable percent-of-market-value draw that was defined by SB 26. Goldsmith made three counterarguments. First, we need the flexibility in the current structure to deal with unexpected events like a major earthquake. Second, changes in the constitutional language can create unexpected consequences that we cannot envision. Third, the current system has served Alaska well for over 40 years and does not need to be changed.
The debate was judged by both the audience and by a panel of high school debaters from Lumen Christi High School. The audience voted on the resolution before the debate and again after the debate. Because the audience shifted from 19% against the resolution before the debate to only 18% after, Goldsmith changed the most minds and hence was judged the winner. The debate team from Lumen Christi, however, judged that Knapp was the winner.
The debate was originally scheduled to be between Knapp and current ISER director Ralph Townsend with Goldsmith as the moderator. Goldsmith gamely stepped up to the debating role with 16 hours’ notice when Townsend broke his leg the evening before the debate.
While at ISER, Goldsmith produced a number of analyses of the Permanent Fund, such as his 2011 study “The Alaska Permanent Fund Dividend: A Case Study in the Direct Distribution of Resource Rent.” ISER researchers continue to explore how the Permanent Fund affects the social and economic fabric of Alaska. In 2019, Mouhcine Guettabi published a summary of recent findings “What do we know about the affects of the Alaska Permanent Fund Dividend?”