Listening to The Takeaway this morning (6-7 A.M. here in our west coast town), I heard a new idea for bridging the growing income inequality in this country.
The greatest cause for the ongoing disparity of opportunity for minority groups is the lack of inter-generational wealth. Well-off young adults (predominately white) receive money from their families—as gifts, loans or inheritances—and use this to build future wealth. Poor families do not have this advantage.
Hamilton and Garrity’s idea is for the government to create Baby Bonds, an endowment put aside for each newborn, which grows to maturity with the child, free of the parents’ finances, and is available to start a business or for a down payment on a house—the building blocks of asset development. The poorer the child, the larger the endowment, but they recommend $20,000 for the poorest, which would grow to $60,000, at a government insured rate of 1.5%.
As the playing field is leveled, Hamilton said, Baby Bonds will decrease the dollars needed for other government-supported programs for the poor.