Could Baby Bonds Help Reduce Wealth Inequality In America?
At the birth of this nation, Thomas Paine called for government baby bonds — savings bonds for every child. The idea has been given a fresh coat of paint, and is being proposed as a low-cost government program to tackle the vast inequality in today’s America.
Darrick Hamilton, executive director of the Kirwan Institute for the Study of Race and Ethnicity. Professor of policy, economics and sociology at Ohio State University’s John Glenn College of Public Affairs. (@DarrickHamilton)
Wendy Jones, author and playwright. Publisher of Ida Bell Publishing, LLC. Writer of “In Pursuit of Justice: A One-Woman Play about Ida B. Wells.” Fiction editor for The Raven’s Perch, an online literary magazine.
Oren Cass, executive director of the conservative think tank American Compass.
Sen. Cory Booker, Democratic U.S. senator for New Jersey. (@CoryBooker)
On how baby bonds could help level the economic playing field
Darrick Hamilton: “The idea is that even if you have a society where you want people to benefit off of their ingenuity, off of their hard work, without capital all we do is lock in inequality. The difference between a renter and a homeowner is a down payment. The difference between a worker and an entrepreneur is, you know, a worker could have all the best ideas in the world, but if they have no capital, they can’t bring it to fruition. So what baby bonds does is provide everybody a birthright to the capital. It doesn’t guarantee an outcome, but it provides everybody with at least a shot to accumulate wealth over their life course. So the numbers would be, you know, we like the stakeholder framing that was offered by Thomas Paine and also continued to today when we talk about programs like Social Security. So everybody would get some endowment at birth. You could imagine that if you’re born into the most wealthy family, you would get something more nominal in the range of, say, 500 to 1,000 [dollars]. But if you’re born into a poor family, a family without assets, you can get upwards of 50 or 60 thousand dollars in the version that I put forth. And the average endowment would be about 25,000 dollars.”
On how capital can expand one’s life possibilities
Wendy Jones: “My mother probably wouldn’t have had to work three jobs so that I could go to private school and later to Yale and Columbia, and also, I mean, I did become a writer, but I had to take a detour and do a lot of other things first. You don’t have the option to do something that isn’t at least bringing in some income because you don’t have that cushion. You know, the idea of being a writer or something that’s not usually well paid is not something that you can just do without having some kind of cushion. So that that’s the difference it would have made, and it would have been wonderful for my mother to be able to do something on her own. She had ideas about, you know, starting a business in the brownstone with the people in the neighborhood. Giving them nutritious food is a particular concern… There’s a lot she could have done for the community because she wouldn’t have had to work those three jobs and could have concentrated more on what she wanted to do with her own talents.”
On how baby bonds could narrow the racial wealth gap
Sen. Cory Booker: “We are still in a nation which, because of the willful acts of government — everything from redlining to denying Social Security and the G.I. Bill to African-Americans — where Black Americans have about one tenth of the wealth that white Americans do. And this is a bill that actually, for those young people, creates a level economic playing field in a pretty substantive way. So for those reasons, I think this is one of the big ideas catching steam. It’s an idea that has come from both sides of the political aisle, this idea that you have a bond at your birth that will mature over time that you can use to help you build and gain wealth in this country where that is so determinative of a person’s well-being.”
From The Reading List
The Atlantic: “A Cheap, Race-Neutral Way to Close the Racial Wealth Gap” — “What if a single, cheap, easy-to-administer, and race-neutral policy could help close the country’s chasmic racial wealth gap in less than a generation? Reader, it exists. It is called a baby-bond program. For something like $80 billion a year — roughly 2 percent of the annual federal budget, less than a tenth of the annual cost of Social Security — the United States could not only end its most pernicious forms of poverty, reduce wealth inequality, improve social mobility, foster self-sufficiency among poor families, and increase family net worth en masse, but also put black and white families on more equal footing.”
Urban Institute: “How Baby Bonds Could Help Americans Start Adulthood Strong and Narrow the Racial Wealth Gap” — “US Senator Cory Booker (D-NJ), whose presidential campaign ended last week, introduced a bill to create American Opportunity Accounts, or ‘baby bonds,’ as a bold solution for closing the racial wealth gap. But this proposal has yet to be fully tested at a large scale. It is time to invest in a demonstration and evaluation of this idea. The racial wealth gap has become a widely-discussed issue not only by scholars, but also by the media, advocates of economic security, and 2020 presidential candidates.”
The Washington Post: “Cory Booker wants a ‘baby bond’ for every U.S. child. Would it work?” — “Cory Booker’s plan to fight intergenerational poverty, a cornerstone of his presidential bid, includes a novel proposal: a trust fund for every American child seeded by the federal government that could eventually provide up to nearly $50,000 for college tuition, buying a home or starting a business. The ‘baby bond’ measure is among some bold and often controversial policy ideas animating the Democratic presidential primary, a reflection of how the candidates vying for the party nomination are focused on addressing historical inequities in American society.”
The Atlantic: “Why Black Families Struggle to Build Wealth” — “There’s little disagreement about the fact that economic inequality is problematic. But arguments persist over its origins, solutions, and which economic gaps are ultimately the most pernicious. In his new book, Toxic Inequality: How America’s Wealth Gap Destroys Mobility, Deepens the Racial Divide, and Threatens Our Future, Tom Shapiro, a professor of law and sociology at Brandeis University, lays out how government policy and systemic racism has created vast gaps in wealth between white and black Americans. Shapiro and his colleagues followed 187 families from Boston, St. Louis, and Los Angeles. Half of the families were black and half white. They interviewed them in 1998 and then again in 2010, to see what had changed: how were their kids faring, how had they weathered the recession — were they any better off in 2010 than they had been in 1998?”
The Atlantic: “American Wealth Is Broken” — “Wealth is a number, sure, but it’s also a feeling. I grew up living with my mom and maternal grandparents, while my dad played and coached in the NBA. For a time, our family’s safety net was held together by my grandfather’s HVAC business, but in 2001, it nearly came apart. That year, the company worked on a project performing mechanical-contracting work at Lincoln Financial Field, the home of the Philadelphia Eagles. The timeline did not account for delays. My grandfather estimates that the company lost $4 million on the project. Our house was put on the market shortly after. I loved that house because it felt like home, but also because it made me feel at home in a predominantly white world, where I felt as if my every move was on display. The house served as a symbol of wealth to justify belonging. When we sold it, I felt exposed, as though my family was showcasing the fragility of black wealth for all to see. I told friends that my family wanted to downsize. I’m sure they saw through the lie.”
This article was originally published on WBUR.org.
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