Creating a Sovereign Wealth Fund that Works for All

Rethinking Capitalism Part 1

Jul 20, 2025

“I think one of the things that makes capitalism not work as a system is that it was built on the idea of carelessness. Literally, the entire purpose of it was that people should build wealth for themselves and that other people didn’t matter – you couldn’t care about them. …

We have built into the very institution itself (B Corps or Benefit Corps) the idea of care as the opposite of carelessness. You’re not just here to do good; you’re here to care for your workers, your community, your planet.”[1]

Andrew Kassoy
Former private equity investor, co-founder of the B Corp Movement

"I have received the Alaska Permanent Fund as a child, college student, young father with a family, and single dad, and have a son who got it, too. At all those stages and in various states of employment it made a difference in different ways. As a child it contributed to the family's income and was often translated into paying for school clothes or supplies. It helped with unplanned bills and the higher cost of living."[2]

Nathan Zierfuss-Hubbard, resident of Fairbanks, AK,

Bottom Line Upfront: BLUF

1. The Middle-Class Dream Wasn’t Always So Broken

Brigham reflects on his family’s economic journey growing up—two public school teachers who afforded a middle-class lifestyle, paid off a mortgage, and sent their kids to college without debt. That American dream now feels out of reach for most, as costs for essentials like housing, healthcare, and insurance have skyrocketed. Despite years of modest reforms, U.S. capitalism continues to favor the wealthy. The author suggests it’s time for more than just tweaks; it calls for bold rethinking—including public ownership and redistribution models such as sovereign wealth funds, which could return collective value to everyday people.

2. Reclaiming Public Wealth with a Citizen’s Dividend

Mariana Mazzucato’s work questions the idea that only private companies drive innovation. From life-saving medications to the digital infrastructure of Silicon Valley, many breakthroughs have been funded with public money—yet most profits go to private entities. This shows that much of private innovation relies (sometimes heavily) on public investment. Mazzucato suggests that governments should do more than just rescue failing markets; they should actively shape them to promote the public good. She recommends creating a sovereign wealth fund supported by value generated publicly—like profits from tech or pharmaceuticals—and advocates for a Citizen’s Dividend so taxpayers who take on the risk of innovation can also share in its rewards.

3. The American Solidarity Fund: A Wealth Stake for Everyone

Matt Bruenig advances the case for a “Social Wealth Fund” that every American co-owns—each holding a single, nontransferable share. Modeled after Norway’s government-managed funds or Alaska’s oil dividend program, the proposed American Solidarity Fund would invest in diversified assets and distribute returns through an annual dividend. Unlike charity or welfare, this approach considers every citizen a shareholder in the nation’s collective wealth. With effective policies—such as taxes on market capitalizations, financial transactions, and repurposed federal assets—the fund could reduce inequality, shift economic power from a few to many, and provide lasting financial security.

4. Learning from Alaska (and Texas, Oregon, & Utah)

Alaska’s Permanent Fund demonstrates that this idea is practical. Funded by oil royalties and distributing annual dividends to all residents, it has acted as a stabilizing force—especially for women and lower-income families. Similar but more narrowly focused funds exist in Texas, Utah, and Oregon, and over 80 sovereign wealth funds are now active worldwide. These aren’t bureaucratic waste: they’re affordable, high-yield tools for shared prosperity. Bruenig mentions the fund could expand from one-time and ongoing taxes on corporate activities, IPOs, and wealth transfers—essentially taxing the extraction of public resources for private benefit and redirecting the gains to the people.

5. An AI Dividend from a Public Computational Trust

With AI poised to transform the economy—and potentially displace millions—Stanford professor Adam Bonica proposes an AI Dividend that turns AI infrastructure into a publicly owned utility, ensuring its gains aren’t hoarded by tech elites. By taxing computational power and capturing public revenue from AI-driven productivity, a “Public Computational Trust” could fund dividends for everyone, easing the shocks of automation. Like electricity before it, publicly stewarded AI infrastructure could serve as the foundation for a new social contract—one rooted not in disruption (which tends to concentrate wealth and power further), but in shared prosperity.

Introduction

For most of my adult life, I have been a profound skeptic of our American form of capitalism, while loathing the Soviet Union’s communist economic system and cautiously admiring democratic socialism, as practiced in places like Norway and Sweden.

The bottom line for me is that no nation has cracked the code for creating an economic system we need, one that prevents irreversible harm to the climate and planet, while also being fair, equitable, and just to its citizens and residents living within it.

What I share today is an important economic concept: sovereign wealth funds.

I don’t pretend to be an expert in macroeconomics, but I do try to track ideas that will help us break free from the old, tired, endlessly tweaked systems that only benefit the few and the wealthy.

In my last newsletter, I discussed some of the main economic disparities that have created an economy favoring the wealthy and causing too many Americans to struggle.

Eric Basmajian from EPB Research shared this week what this looks like more specifically for millions of Americans on X: “Why does the average consumer feel worse off? Because 41% of consumer spending goes to housing, healthcare, medications, and insurance. This was 16% in 1947, 30% in 1980, and 35% in 1990.”[3]

This aligns with a puzzle I’ve been wrestling with for the second half of my adult life:

How did my Dad, who was an elementary school teacher for 34 years, and my Mom, also an elementary school teacher but who didn’t start teaching until I was 13 (1974), afford a middle-class home in a middle-to-upper-middle-class neighborhood, raise three kids, and send two of us to four years of college without debt? How did they pay off their mortgage in 30 years and retire comfortably with enough pension and 401K savings starting in the early 1990s?

You literally cannot do that anywhere in the United States anymore.

You cannot even come close to pulling that off.

So, what are some ways we can change key elements of our economic system to enable many more Americans to benefit? Today, I want to explore three different but overlapping ideas for what a sovereign wealth fund might look like. In future newsletters, I’ll examine other ideas that could change, sometimes fundamentally, what we prioritize in our economy. One of those will be to look at Benefit Corporations (aka, B Corps), referred to above in Andrew Kassoy’s quote.

Implement a Citizens’ Dividend

What if our federal government started privatizing risks and socializing rewards (instead of vice versa)?

That’s what University College of London professor Mariana Mazzucato argues brilliantly in her essay, “Capitalism after the Pandemic: Getting the Recovery Right,” She says governments have long socialized risks while privatizing rewards. Such practice causes a profound imbalance between the public and private sectors. [4]

What is an example?

For starters, during the COVID-19 pandemic in 2020, the federal government subsidized the Gilead corporation with $70.5 million to develop remdesivir, which then charged patients $3,120 for the treatment. She highlights that, from 2010 to 2016, the National Institutes of Health (NIH) contributed to the development of all 210 drugs approved by the Food and Drug Administration (FDA), but received nothing in return. The companies selling these drugs set the highest prices anywhere, allowing them to patent the final product and the drug development process to protect their substantial profits.

However, this dynamic is not just true with Big Pharma. Many of the technology products developed by Silicon Valley companies and others over the past thirty years owe a great debt to the work of the National Science Foundation, the U.S. Navy, and the Defense Advanced Research Projects Agency (DARPA), among other important federal agencies. U.S. taxpayers funded these technologies, and then the technology companies built their products based on the results of these vital research and development efforts. Due to our laws, enormous profits are generated by extremely wealthy technology companies, which then exploit loopholes in our tax code to pay far less than their fair share of taxes.

As Mazzucato writes:

“Publicly funded technology needs to be better governed by the state – and in some cases owned by the state – in order to ensure that the public benefits from its own investments. … All of this suggests that the relationship between the public and the private sector is broken. Fixing it requires first addressing an underlying problem in economics: the field has gotten the concept of value wrong. …

For too long, people have acted as if the private sector were the primary driver of innovation and value creation and therefore were entitled to the resulting profits. But this is simply not true. Pharmaceutical drugs, the Internet, nanotechnology, nuclear power, renewable energy – all were developed with an enormous amount of government investment and risk taking, on the backs of countless workers, and thanks to public infrastructure and institutions. … The road to a more symbiotic partnership between public and private institutions begins with the recognition that value is created collectively.”[5] (emphasis mine)

How should we organize as a society to collectively create and utilize that value?

Mazzucato stresses that the government should not only intervene during market failures, such as the corporate bailouts at the start of the Great Recession, but also actively shape markets to reach societal goals. This could include transitioning to a Green Energy-based economy or preparing for the next global pandemic. She highlights that, for example, the prices of medicines and other technologies supported by federal dollars reflect the public investment in their development.

Mazzucato proposes that any federal government around the world should function like a venture capitalist by creating a wealth fund from a percentage of profits generated by companies through government investments, then distribute a small portion of the fund as a Citizens’ Dividend at the end of each year.

This co-created wealth would come from proceeds from natural resources or from “public investments in medicines or digital technologies that have involved a collective effort.”[6] Such a fund would allow every American to benefit from how their tax dollars have been used to support wealth creation.

You can read more of Mazzucato’s influential writings HERE, as well as ACCESS an article of hers published by the International Monetary Fund: Policy with a Purpose, Mazzucato article.

The American Solidarity Fund

In a similar vein, Matt Bruenig from the People’s Policy Project argues in “The Social Wealth Fund for America” that we must address wealth inequality by establishing a social wealth fund, where every American receives one share of ownership. Why does he propose this?

He writes, “[b]roadly speaking … capitalist economies contain feedback loops that cause relatively minor differences in initial endowments or incomes to become amplified over time. Those with more wealth receive more income; those with more income save at higher rates; and those who save at higher rates accumulate a larger share of the national wealth. In other words, wealth begets wealth.”[7]

That is why, in the 21st century, the average wealth of the top one percent increased by nearly $5 million, while the wealth of the average family declined by more than $40,000.

Citizens would not be permitted to sell shares. Instead, they would receive a “universal basic dividend” annually from the fund’s earned income.

This is not a new idea. Between 2010 and 2018, four books were published proposing such a fund as a way to address wealth inequality. Additionally, Greece’s Finance Minister expressed support for this idea for Europe in 2016, and two UK think tanks promoted such a fund in 2017.

And it is an idea that has been adopted by governments in over 60 countries, totaling 80 sovereign funds, demonstrating that “a government can own and manage large pools of income-generating assets without significant problems.”[8]

Norway, for example, manages three such wealth funds, and their holdings total 271% of the nation’s GDP. As a result, Norway’s government owns nearly 60% of the country’s wealth.

You might think that the administrative costs for managing these funds by a government entity would be high, but they are not. On average, they range from .06 to .07 percent of assets, which is comparable to the expense ratios of the most efficient private asset management firms.

Norway does not pay out the annual returns from these funds as dividends; instead, it incorporates them into Norway’s fiscal budget (limited to 4% of the funds’ assets each year) to support public services and infrastructure projects.[9]

Alaska’s fund is unique among social wealth funds because it is generated from oil royalties each year. It distributes an annual cash dividend to every citizen living in Alaska. Many see it as a model for what should happen at the national level.

By 2017, the fund managed about $60 billion in assets, or more than 100% of the state’s gross domestic product (GDP). It invests in a highly diversified portfolio of real estate, bonds, and stocks. The dividend Alaskans receive is calculated as “21 percent of the net income of the fund for the last five fiscal years.” In the 21^st century, for example, Alaska’s dividend payouts have ranged from $844 (2005) to $3,200 (2022) for all 600,000+ citizens, averaging $1,229 annually over the past 43 years.[10] Alaska just released its latest dividend last week, to the tune of $1,700 for every citizen.

Upper-income Alaskans say that the dividends don’t significantly affect their lives, but nearly 80% believe they make an important difference for them and their community. The dividends have the biggest impact on women—those who are unmarried, lack a college degree, have children, or are Native Alaskan.

And Alaska’s is not the only social wealth fund found stateside. “There is the Permanent School Fund and Permanent University Fund in Texas,[11] The State School Fund in Utah,[12] and the Common School Fund in Oregon,[13] to name a few.”[14] [Take a closer look by clicking on the links in each of these footnotes.]

Bruenig writes that some thought leaders believe the fund could be launched by encouraging wealthy Americans, who are often already major donors to philanthropy, to make donations of up to half their holdings “while living or upon death,” which, along with substantial corporate donations (as good PR), could significantly grow the fund within a few decades.

He suggests that there’s reason to doubt whether funding it this way will be effective, so it shouldn’t be relied upon as a primary strategy.

He cites the writings of Detter and Folster, who suggest, instead, that the federal government could deposit large amounts of physical assets (such as millions of acres of land, hundreds of thousands of buildings, thousands of infrastructure projects, portions of the electromagnetic spectrum, etc.). The fund could then rent them out or sell them, using the proceeds to buy other stock and bond assets that would appreciate.

Bruenig then lists a series of levies, taxes, and fees that could, in some combination, help launch and sustain the fund, such as:

A one-time market capitalization tax of public companies of up to 3%
An ongoing market capitalization tax of something like .5% annually
A tax on initial public offerings
A mergers and acquisitions tax of 3% of the transaction value
A financial transactions tax of .1 to .2%
A securities custodian tax of .1%
Inheritance and gift tax on very large estates
Eliminate certain tax breaks (serving essentially as give-aways to the rich) and direct revenue from re-institution of these taxes to the fund[15]

Bruenig proposes that the American Solidarity Fund Corporation (ASFC) should be managed by the Treasury Department creating a state-owned enterprise/corporation. This is the method used in Alaska and Norway.

The fund’s assets would be invested in “easy-to-manage listed securities like domestic and international equities and bonds. As the fund gets bigger and the ASFC becomes a more mature organization, it may make sense to broaden the ASFC portfolio to include unlisted assets like private equity and real estate.”

What’s the ultimate benefit of this fund? A Universal Basic Dividend (UBD).

How might that work?

Every eligible citizen should be granted one nontransferable ownership share in the ASF, which entitles them to receive the UBD. The Alaska Permanent Fund, for example, does not issue any formal ownership shares, but residents of the state still see themselves as co-owners of the fund. Citizens would be able to monitor the value of their single share over time on the fund’s website.

The Artificial Intelligence Dividend

Finally, I present a third perspective on the concept of national dividends: The Artificial Intelligence (AI) Dividend.

If you’ve been watching the quick rise of AI in the workforce and education, along with the obvious risk of AI replacing millions of jobs across various sectors, this approach might also be reasonable.

To some, in essence, we may be facing one of the most significant economic changes (and challenges) the nation (& the world) has seen, but which could happen in a very short time. What might that mean? It could mean “we risk creating a permanent rentier class that owns the ‘means of computation,' while the rest of us are left behind.”[18]

Stanford Political Science Professor Adam Bonica writes on Substack that we should consider a new social contract which “actively democratizes the gains” of AI’s disruption, essentially proposing a new contract centered around an AI dividend.

How would that happen? He proposes creating “mass-scale computational infrastructure as a public owned utility.” He argues that the “productivity gains from the powerful AI systems represent a public inheritance built on centuries of human ingenuity. This isn’t a handout; it’s a rightful return.”[19]

This dividend would be funded by creating a Public Computational Trust that operates essential cloud infrastructure. Similar to how the Federal Reserve sets interest rates, it would help control the pace of AI development by increasing “the price of computation” where it could slow down AI automation. This would allow workers to stay competitive and ensure that AI is used for “genuine productivity gains, not just because it is marginally cheaper.”[20]

It could also set the price in a way that exceeds the “raw cost of processing power” and capture the difference as public revenue. This would help increase the flow of money into the Trust and provide more citizens with a greater sense of economic security, addressing vulnerabilities created by AI in the workplace.

Is this just fantasy?

Bonica writes that the building of massive AI infrastructure is already underway. Earlier this year, Tr*mp announced $500 billion for Stargate, a public-private AI infrastructure investment. He argues both China and the U.S. are treating this as critical federal infrastructure.

Regarding skeptics dismissing this idea as just more unnecessary federal intervention, Bonica, who is working with other researchers and stakeholders on a multi-year project to design a new social contract for the AI age, reminds us that when the innovation of electricity emerged, it didn’t stifle innovation when we created it as a public utility. Instead, it led to the creative development of countless devices and machines that use it. A public cloud-computational utility “can provide a stable, accessible infrastructure that fosters more innovation atop it.”[21]

He concludes, “let’s chart a course into the future that promises not displacement, but a shared prosperity in which we all have a claim.”

For an additional view on a new AI social contract, check out this article from Chris Kremidas-Courtney and Joe Litobarski, “A New Social Contract for the Age of Artificial Intelligence,” https://defenddemocracy.eu/a-new-social-contract-for-the-age-of-artificial-intelligence/.

#CitizensDividend, #AIDividend, #SovereignWealthFund, #RethinkingCapitalism

Footnotes

[1] The B Corps Movement, https://www.bcorporation.net/en-us/.

[2] Richard Ferloni, “Nearly everyone living in Alaska gets about $2,000 a year from the state’s $65 billion fund. We asked 9 Alaskans how they spend it,” Business Insider, February 17, 2019. https://www.businessinsider.com/alaskans-spend-permanent-fund-dividend-2019-2.

[3] Eric Basmajian, Post on X, July 15, 2025 (@EPBResearch).

[4] Mariana Mazzucato, “Capitalism After the Pandemic: Getting the Recovery Right,” Foreign Affairs, October 2, 2020, https://www.foreignaffairs.com/articles/united-states/2020-10-02/capitalism-after-covid-19-pandemic.

[5] Mariana Mazzucato, “Capitalism After the Pandemic.”

[6] Mazzucato, “Capitalism After the Pandemic.”

[7] Matt Bruenig, “The Social Wealth Fund for America,” People’s Policy Project, https://www.peoplespolicyproject.org/projects/social-wealth-fund/.

[8] Ibid.

[9] Ibid.

[10] Dorothy Neufeld, “Here's How Much You Could Get Paid for Living in Alaska,” Investopedia.com, June 29, 2025, https://www.investopedia.com/get-paid-for-living-in-alaska-11745087.

[11] “The Permanent University Fund,” The University of Texas System, https://www.utsystem.edu/puf and “Investing for Texas Public Schools, Texas P.S.F Corporation,

https://texaspsf.org/

[12] “Permanent State School Fund,” Utah State Legislature, https://cobi.utah.gov/fund/3555.

[13] “Common School Fund,” Oregon Department of State Lands, https://www.oregon.gov/dsl/pages/common-school-fund.aspx.

[14] Bruenig.

[15] Ibid.

[16] Ibid.

[17] Ibid.

[18] Adam Bonica, “The AI Dividend: Turning Computational Power into Shared Prosperity,” On Data & Democracy (Substack), June 29, 2025,