I dont like the

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I don’t like the term “add-on accounts” which, to me, frames the issue poorly and suggests a feeble-minded tactical response to the effort to phase-out Social Security. Programs designed to broaden the scope of asset ownership in America are more than defensible on their own terms, and like lots of other things I support (health care for the uninsured, a military capable of handling post-conflict stabilization missions better, etc.) shouldn’t really be viewed as either a substitute for, or an enhancement of, Social Security as such.

The narrow economistic case for asset-building is simply that the national savings rate is very low and there’s reason to think we’ll be more prosperous in the long tun if we can turn that around. The broader moral case, however, is more important. The remorseless logic of technological progress and globalization is that the trend toward income inequality will continue apace. Inequality per se isn’t the worst thing in the world. In addition to the bad inequality of the 1980s and 2000s where folks near the bottom see their income fall even as the economy grows and the rich get richer, you can get the 1990s full employment scenario where everyone wins. But it’s not the best thing in the world, either. We can — and should — try to combat the trend through policies aimed at full employment and strengthening labor unions, but this is a tough nut to crack and it’s worth deploying every tool one can think of.

The idea of asset-building is that instead of relentlessly inegalitarian capitalism or infeasible collective ownership of the means of production, that we ought to build what John Rawls called a “property-owning democracy” where productive assets are in private hands (like in today’s America), but they’re also widely dispersed (unlike in today’s America) so that everyone has a stake in economic growth and everyone reaps the gains of growth.

It’s an idea that’s very much in the best American tradition. The Homestead Act in the 19th century created a situation where the government would give away for free the main productive asset of the era — farm land — to anyone willing to work for it. That’s not feasible today, but the basic picture of letting every American who’s willing to work hard acquire ownership over a home and some assets is still a sound one.

How to do it? Well doing it right would be hard, but fortunately this is an ambitious agenda that can be implemented in steps. The first step we should take is the surprisingly easy one of changing the default rules for 401 (k) plans. Right now, to start a 401 (k) you need to fill out a bunch of forms. A better plan would be to automatically enroll people in 401 (k) plans and make it so that you need to fill out forms in order to not contribute. This sounds pointless, but research indicates that it would dramatically broaden participation in these useful savings vehicles. There’s also no reason for this to face opposition from any sort of entrenched interests or even the no-taxes brigade in the GOP. The next step, as Gene Sperling has argued is to switch the tax treatment of savings and investment around to make it more friendly to middle- and working-class people: “Without measures to have robust matching credits for low- and moderate-income workers and tax reform that would lead to a flat tax credit for savings, those arguing only to make 401K enrollment more automatic will do little to reach the huge numbers of Americans who are falling through the cracks or to turn our upside-down system for savings incentives right side up.”

On top of that you could add some version of the ASPIRE Act which would give each child born in the United States “a starter deposit of $500 from the government and children from households below the national median income would be eligible for a supplemental contribution up to an additional $500.” Those numbers are pretty modest, but it would be a foot in the door for bigger things to come, and could easily be linked up to some version of the Automatic 401 (k) which, in turn, should be given a more appealing name. A revived estate tax would seem to be a fitting and proper way of financing this sort of thing. At any rate, there’s plenty of room for disagreements about the details here, but the Sperling article linked to above provides what are, I think, sound guidelines for what is and is not acceptable from the liberal point of view.

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