Econ Blog Post
A Newborn Idea to Fix Wealth Inequality
It is not an unknown fact that when it comes to wealth in the United States it is not equal but when you look into the statistics, even more, they are staggering. In America, the 1% owns 40% of all of America's wealth and the 1% own half of America’s stocks, bonds, and mutual funds. (politizane). This shows how hard it is for the poor, middle class and even the rich to grow their wealth. In fact, Nearly a third of American households now have $0 in wealth, according to Deutsche Bank. This is the worst it has been since the early 1960s when the US government started to keep this statistic. Many economists have been trying to solve the problem of Wealth Inequality but have not concerned it. However, Darrick Hamilton of The New School and William Darity of Duke University has proposed a start to fix this problem. The idea is that to give every newborn in the country a “Baby Bond” account that would range from $500 to $50,000. Neither the parents or the kids would be able to touch the money until the child turns 18. They could then spend the money on college, buying a house or starting a business. “The key ingredient of how successful you will be in America is how wealthy your family is,” Hamilton says and baby bonds are one way to fix the gap. The proposal would give families who are extremely wealthy $500 and families who are extremely poor would receive $50,000. Hamilton says the average middle-class family will receive $20,000. If Baby Bonds were to go through it would not fix the wealth inequality in this country but it could be a good start.
Many people would be concerned with how the US would fund this program but Hamilton has an answer for that. Hamilton estimates that Baby Bonds would cost $80 billion a year which is about 2% of America’s $4 trillion in annual federal government spending. If the plan was to go through Hamilton says it will not be implemented for 18 years so that there could be time to build up a budget for Baby Bonds.
People of color have also struggled to decrease the gap in wealth inequality in that past years. The median net worth for white family households is 10 times greater than a family of color. Hamilton says “People like to argue if only poor black and Latino families were more responsible and made better decisions than inequality could be dramatically reduced,” but Hamilton shows examples that do not support this. Most college-educated African Americans have less net wealth than whites who dropped out of high school. Having Baby Bonds would help these people do something with their degree out of college.
Baby Bonds will not fix all of the problems in wealth inequality but it is worth looking into. With people who are under 55 having less wealth than in past generations, it shows how the middle class is falling behind today and needs a change. This could be one of many solutions to get back on track.
Long, Heather. “Economist Proposes Giving Every US Baby $20,000 or More.” Economist Proposes Giving Every US Baby $20,000 or More, 8 Jan. 2018, www.msn.com/en-us/money/markets/economist-proposes-giving-every-us-baby-dollar20000-or-more/ar-BBI7yhb.
politizane. “Wealth Inequality in America.” YouTube, YouTube, 20 Nov. 2012, www.youtube.com/watch?v=QPKKQnijnsM.