Several years ago, Bruce Ackerman and Anne Alstott proposed that government
give every young American adult a stake of $80,000 as a birthright of citizenship. The stake should be financed by an annual wealth tax, equal to 2 percent of every individual’s wealth in excess of $180,000.
The idea is to give every young American – especially those born to poorer families – a stake in America, seed-corn for their start in life. Those Americans who benefit sufficiently from this $80,000 will repay it to the government when they die, out of their estates. Similar (although not identical) proposals are endorsed in today’s New York Times (by columnist David Brooks) and in today’s Washington Post (by the New America Foundation’s Ray Boshara). As Boshara explains,
Congress should establish a privately owned "KIDS Account" at birth for each of the 4 million children born in this country every year and fund those accounts progressively — thus creating a lifetime platform for saving, asset accumulation, retirement security and wealth that can be bequeathed.
Awful idea. Here are just some reasons why.
– Giving people other people’s money is less likely to instill in the beneficiaries a sense of achievement, self-respect, and responsibility than it is a sense of entitlement.
– Such a government program further erodes family responsibilities; no longer is it mom’s and dad’s responsibility to help Johnny and Suzy pay for college or come up with down-payment on their first houses – it’s the responsibility of distant, faceless taxpayers.
– Reflecting on both points above, ask which of the following two arrangements is best for the young person: First, mom and dad tell 12-year-old Johnny “Son, don’t worry. When you’re 21 we’ll give you $100,000. In the meantime, don’t bother us; we’re busy.” Second, mom and dad tell Johnny “Son, we’ll not give you any money later on – we won’t even help you pay for college – but we’ll love you, do our best to teach you right from wrong, make sure you graduate from high school, coach your little-league baseball team, and take you to DisneyWorld and to New England to see the Fall leaves and on other family vacations. We’ll eat dinner together every night as a family. And we’ll love you no matter what – even when you gripe about doing your chores – and we’ll be genuinely and deeply proud of all of your honest achievements.”
Surely the second scenario is better for Johnny than the first. I realize that scenario number one is stark. I realize that a family can be emotionally supportive and nurturing as well as be financially supportive. I realize that support on both fronts is better than support on only one. My point is that what matters most, at the margin that most young Americans find themselves on, is not money – it’s that mix of effort and concern that good parents expend to raise their children well – to teach children responsibility, patience, politeness, regard for others, the importance of hard work, of learning, of honesty, and of simple decency. Anyone brought up in today’s America in such a way has human capital of very high value – worth far more to that person’s life prospects than any middle-class sum of $$$.
In short, such a program rather crassly elevates $$$ to outlandish importance. It celebrates, venerates, obsesses on $$$ to an unhealthy degree. But $$$$ is not all that matters; actually, it matters surprisingly little. What matters much more is the set of institutions – social and personal – that make its lawful acquisition possible.
– Another very different problem with such a program is that it will likely further intensify hostility toward immigrants. If American taxpayers are committed to giving to each child born in America a substantial sum of $$$ as a ‘birthright,’ be assured that political pressures to keep foreigners out of the U.S. will grow. (In the extreme, decisions to have children will come to be seen as decisions that properly can be regulated by government, in the same way that people now say “Oh, the government must require motorcyclists to wear helmets because taxpayers pick up such a large part of each person’s medical expenses. The motorcyclist who doesn’t wear a helmet risks not only his own well-being, but the financial well-being of millions of his fellow citizens.”)
I see other problems, too, but I’ll end here – for now.
