An economist has a wild proposal to give all kids in the US up to $60,000 at birth
Education is often considered the great equalizer, the tonic that will erase all injustice and inequality. As Nelson Mandela once said, "Education is the most powerful weapon which you can use to change the world."
But an economist is calling for a fact-check on the old advice to stay in school and study hard.
Darrick Hamilton, a professor of economics and urban policy at The New School, believes that a good education won't get you very far without some cold hard cash to go along with it.
"Wealth is the paramount indicator of economic security and well-being," Hamilton told a crowd at the TED Conferences headquarters in New York last week, as world leaders were gathering nearby for the United Nations General Assembly.
In the US, Hamilton is advocating a new kind of federal cash-flow pipeline: a wildly ambitious trust-fund scheme that would endow each American baby with a nest egg of cash, retrievable when they reach adulthood. It's essentially like Social Security in reverse; he described it as "an economic birthright to capital for everyone."
"Without capital, inequality is locked in," Hamilton said. "It is time to get beyond the false narrative that attributes inequalities to individual personal deficits while largely ignoring the advantages of wealth."
He said that what's "glaringly missing" from our narrative about success is the role of power and capital in society and how they can be used to "alter the rules and structure of transactions and markets in the first place."
In the US, for example, the top 10% of earners hold about 75% of the wealth in the country, and the wealth gap disproportionately affects people of color, like Hamilton.
That inequality trickles down from one generation to the next. Today, race is the single greatest predictor of a child's economic opportunity in the US. And as the economy's gains in recent years have gone straight to the richest among us, the average American worker's wages have stagnated.
Hamilton thinks that adding cash to the equation could help push society into fairer territory so the American dream is more accessible for everyone.
The cash could finance things like a private education, a decent healthcare safety net (healthcare costs are among the leading causes of bankruptcy in the US), and a home in a good neighborhood.
Hamilton said that under his plan, the average endowment would be about $25,000 per kid, rising to $60,000 for the poorest children in America. Those born into the wealthiest tax brackets would not be excluded from the trust-fund scheme, and every child in the US would get at least $500.
The money would be set aside in federally managed coffers, growing at about 2% a year (to adjust for inflation) until a kid reaches adulthood. At that point, they'd decide what kinds of "asset-enhancing activity" they want to invest in for themselves, whether it's higher education, a new home, or their own business.
The baby-trust-fund idea is not a full-blown proposal at this point, and even Hamilton acknowledged that there were "many details" to be worked out.
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