The Trustees

The problem

A permanent fund has one enemy, and it is not the market. It is the people who will run it, and the people who will appoint them, in the fortieth year, when nobody who built it is alive and the balance is large enough to solve any problem a legislature has. Every fund that has lasted has answered that problem with structure. Every fund that has failed, from state development banks to pension systems raided for a budget year, failed because the structure was a governor's phone call away.

Alaska shows both halves. Its fund is protected in the state constitution, which is why the principal has survived forty years of oil crashes and hostile sessions. Its board is not. The Alaska Permanent Fund Corporation has six trustees, all appointed by the governor, two of them sitting cabinet members, and in December 2021 that board dismissed its executive director, who had presided over the fund's best decade, without a stated reason and after she had disagreed publicly with the governor's plan for the fund. By early 2025 the governor had left board seats unfilled for months. The principal was safe. The stewardship was not.

Norway's answer is a division of labour that no one may cross. The Storting sets the fund's law. The Ministry of Finance owns the fund and writes its mandate, including the index and the risk limits of № 065. Norges Bank Investment Management, a separate office, executes the mandate and may not depart from it, and the ministry may not reach past the mandate to touch a trade. A minister who wants the fund to do something new has to change the mandate in public, and the Storting has to agree. The arrangement has held since 1998, through every change of government, because each party to it can only do its own job.

№ 001 proposed the fund. № 023 locked its principal against debt. № 050 gave every citizen the report. This proposal is the board.

The proposal

A Board of Trustees for the American Permanent Fund: nine members, fourteen-year staggered terms, nominated by the President and confirmed by the Senate, no more than five from any one party, no sitting official or employee of any government among them, removable only for cause stated in writing. The trustees hold a fiduciary duty, in statute, to the citizens living and to those not yet born. They set nothing Congress has set and execute nothing themselves; an investment office under a director they appoint executes the mandate, and the trustees oversee it.

How it would work

1. Nine, for fourteen years, staggered. The term is borrowed from the Federal Reserve's governors, and for the same reason: a single president appoints at most three or four in two terms, and no trustee serves at the pleasure of the person who appointed them. Terms end in different years so the board is never replaced at once.

1. Five from one party, at most. The rule of the Securities and Exchange Commission and the Federal Election Commission, applied to the fund. It does not make the trustees apolitical. It makes a partisan board arithmetically impossible.

1. No officials. No member of Congress, no cabinet officer, no state official, no employee of any government, and nobody who has been any of those things in the previous three years. Alaska's board seats its revenue commissioner by law. The fund's board will not seat the Treasury Secretary, whose interest in a trillion dollars is exactly what the board exists to resist.

1. For cause, in writing. A trustee may be removed only for cause, stated in writing and published, and reviewable in court. "Loss of confidence" is not cause. Disagreeing with the President about the fund is not cause. It is the job.

1. The oath. Each trustee swears a fiduciary duty to the citizens of the United States living and not yet born, in those words, and the statute makes the duty enforceable: a citizen may sue a trustee for breach, as a pension beneficiary may. The phrase is not decoration. It is the legal ground on which a trustee refuses a Congress that wants the money now.

1. The division of labour. Congress writes the law: the Index Rule, the Debt Covenant, the Spending Rule of № 067. The trustees adopt the mandate within the law and publish it. An investment office, with a director the trustees appoint for a fixed term and may remove only for cause, executes it, and reports to the trustees monthly and to the public quarterly. The trustees may not trade; the office may not depart from the mandate; Congress may not reach past either without changing the law in public.

1. The revolving door, bolted. No trustee or senior officer of the investment office may work for a firm that manages, advises, or sells to the fund for five years after leaving. Compensation is fixed in statute, at the level of a federal judge, and may not include any bonus tied to return. A trustee who wants to be rich should be a fund manager, not a trustee of the public's fund.

1. The audit and the report. An independent audit every year, by a firm rotated every seven, and the Shareholder's Report of № 050 as the public face. The Comptroller General may examine the fund at any time and publish what is found.

The numbers

What it costs. Nine trustees at a federal judge's salary, an investment office of a few hundred people on Norway's model, and an audit: on the order of $100 million a year, or one-hundredth of one percent of a trillion-dollar fund, within the cost cap of № 065.

What structure has been worth. Norway's fund has grown from zero to two trillion dollars across nine governments without one of them touching the principal. Alaska's fund, with constitutional protection of the principal and none of its board, has paid a dividend for over forty years and spent the last decade in a running fight over its governance. Texas's Permanent School Fund, the oldest of all, moved in 2021 to a single nine-member corporate board after decades of divided management. Every fund that has lasted has converged on the same shape.

What the alternative costs. A fund that can be captured is worth, to the people who capture it, everything it holds. A trillion dollars is the largest prize in American public life, and it will be appointed to, lobbied at and legislated around every year of its existence. The structure is what makes the prize not worth the trouble.

The honest objections

"Nine unelected people controlling a trillion dollars is an affront to democracy." The trustees control nothing that Congress has not already decided: what the fund buys is the Index Rule, how much it pays is the Spending Rule, whether it may borrow is the Debt Covenant. The trustees' entire discretion is to execute those rules honestly and to refuse to break them. A democracy that wants the fund to do something new changes the law, in public, as Norway's does. What the trustees are insulated from is not democracy but a phone call.

"Presidents will appoint cronies, and the Senate will confirm them." Some will be cronies. The fourteen-year term means a crony outlasts the president who appointed them and answers to no one after. The five-of-nine rule means the cronies of one party can never be a majority. And the trustees have, by design, nothing to give a crony: no stock to pick, no contract to award, no bonus to earn. The job is to say no. A crony who says no is doing it.

"Congress will raid the fund anyway, whatever the board says." Congress can repeal any statute, and this catalog does not pretend otherwise. What the board does is make the raid a public act against a board with a legal duty to resist it, a lawsuit from any citizen, and a Dividend Day on which every citizen learns what was taken. Alaska's principal has survived because the constitution protects it; the eventual answer for the national fund is the same, and the trustees are the bridge until an amendment can be passed.

"For-cause removal makes bad trustees impossible to fire." It makes them slow to fire, which is the point; a trustee who is corrupt, incapacitated or in breach of the fiduciary duty is removable, in writing, with a court to check the reason. A trustee who merely disagrees with the President is not, and should not be.

"This is just the Fed's structure again, and the Fed is not exactly beloved." It is the Fed's structure for tenure, and for the same reason: the Fed has held its independence for a century through presidents who wanted very much to take it. The fund borrows what has worked. It leaves the rest, including the Fed's discretion, at the door, because the fund has none.

Sources

• Alaska Permanent Fund Corporation, Alaska Constitution and Statutes: The Alaska Permanent Fund, board composition and removal provisions, apfc.org; Anchorage Daily News and Alaska Journal of Commerce on the December 2021 dismissal of the executive director and the 2025 vacancies
• Norges Bank Investment Management, Governance structure and Management mandate, nbim.no; Norwegian Ministry of Finance, White Paper on the Government Pension Fund 2025
• Texas Permanent School Fund Corporation, Senate Bill 1232 (2021) and board structure, texaspsf.org
• Federal Reserve Act, 12 U.S.C. § 241, on governors' terms; 15 U.S.C. § 78d and 52 U.S.C. § 30106 on partisan-balance requirements at the SEC and FEC
• Proposals № 001 (The American Dividend); № 017 (Dividend Day); № 023 (The Debt Covenant); № 050 (The Shareholder's Report); № 065 (The Index Rule); № 067 (The Spending Rule, forthcoming)