One of the nearest real-world examples of Oil-to-Cash is Alaska, which has paid an annual dividend to every state resident since 1982. One of the presumptive lessons drawn from Alaska’s experience has been that once a dividend was in place, political forces aligned to protect it from politicians. Yet last week, Alaska Governor Bill Walker announced the first-ever cut to the Alaska Permanent Fund dividend.
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The President of Gabon, a small petro-state wedged between Cameroon and Congo, has announced that he’s giving some of his inheritance back “to the people of Gabon.” It’s a good start, but surely he can do better.
India is getting some serious cash from coal. According to official estimates, the government will get nearly $250 billion in revenues over a period of 30 years from the sale of over two hundred coal blocks to private bidders. Given India’s record of corruption and mismanagement of natural resources, it is difficult to be optimistic that it will be able to cash in on this windfall and use it for development. But there are a few silver linings that may prove us (happily) wrong.
What would happen if a country that struck oil decided to share the income directly with its own citizens? That’s precisely the question that Caroline Lambert, Stephanie Majerowicz, and I try to explore in our new book Oil to Cash: Fighting the Resource Curse with Cash Transfers.
As we’ve shared the idea of Oil to Cash—that a portion of resource revenues be given directly to citizens in a regular, transparent, and universal dividend—we’ve heard a lot of concerns, such as that it’s impractical or that it’ll make people lazy.
Donald Kaberuka, the President of the African Development Bank and the leading voice for forward-leaning economic policy on the continent, has come out publicly in favor of paying some portion of natural resource windfalls as a direct dividend to citizens. We’re pretty excited about this policy idea at CGD, and have been thinking through some of the pros, cons, and practicalities of what we call Oil-to-Cash. Watch this space for our Oil-to-Cash book later in 2014.
This is a joint post with Stephanie Majerowicz.
When we share the Oil-to-Cash idea with people who are hearing about it for the very first time, the typical response is almost always viscerally negative. (If you aren’t familiar with Oil-to-Cash, here’s the web page and a 4-min jellybeans video.) They usually say “That won’t work because of X” or “Sure, that works in Alaska, but my country Y is very different” or “No, the money would be much better spent on Z”. Often, by the second or third time we talk with people about citizen dividends, however, they start to come around. In a few cases, we’ve even had former skeptics pitching us ideas of how it could work better.
This is a joint post with Stephanie Majerowicz. Venezuelan President Hugo Chavez hasn’t appeared in public since his cancer surgery last December and, given his sharply deteriorating health, it seems a safe bet that the country will be having another national election sooner rather than later. When that happens, the opposition will have a rare opportunity outflank the populist Chavistas and offer voters a share in the country’s oil wealth through direct payments of part of the revenue (see the recent WSJ article). Such a program has the twin advantages of being potentially hugely popular and of reducing corruption, strengthening accountability and curbing waste. Here at CGD we call this idea “oil-to-cash.”
The Washington Post reported yesterday that India will, starting Jan 1st in 51 districts, pay cash directly into the accounts of poor families as it begins unraveling its convoluted web of food, fuel and other subsidies. India’s been toying with this idea for a while, so it’s good news that it’ll finally kick-off in the New Year. Many others will be watching.