Many details of a national baby stock plan merit further debate, including rules about additional contributions, age and rate of withdrawals, potential incentives or disincentives, loans, tax breaks, merging with retirement accounts, and how to adjust the plan for historical injustice. Other macro level questions include how the U.S. should tax foreign investors, how to handle private equity, and whether baby stocks should use individual funds from private companies or build a central government index. For now, I shall simply invite public discussion of these important questions because our national conversation should focus on how, not whether, to implement baby stocks. Some general answers to likely concerns are outlined below.
Would baby stocks replace Social Security?
No, because this program is essential for fighting poverty. Baby stocks would supplement Society Security and provide a new safety net for the second half of life when people often struggle with the competing demands of funding homes while also saving for retirement, paying off educational loans, starting a business, dealing with divorce, and facing mounting medical bills. Baby stocks would also protect Americans against emerging threats such as the looming insolvency of Social Security and job losses due to automation and AI.
Are baby stocks expensive?
No, they are the most cost-effective form of social spending because they leverage the power of compound interest. As per calculations explained here, the U.S. could easily create universal financial security by simply collecting unpaid taxes from America's richest tax evaders and investing these revenues in baby stocks.
Should baby stocks be adjusted for family wealth level and/or other demographic markers of historical injustice?
Ideally, yes. However, given the current level of political polarization in the U.S., voters may only be able to agree on a flat grant for all citizens. Even so, flat grants are still progressive because they give more to the poor than the rich as a proportion of net worth, whereas flat taxes are inherently regressive. Also, note that if we give baby stocks to America's richest 1-5% of families, we will simply be taxing them in order to return assets which they already own, while baby stocks would give the bottom 50% of Americans assets which they have never had.
Are there any health risks to owning the U.S. stock market?
No, as proven by this study which showed that risky health behaviors and self-reported health were equivalent for stockholders and non-stockholders during market crashes. Furthermore, extensive medical evidence suggests that wealth improves health, and if the opposite were true then that would be another reason to redistribute ownership of the U.S. market in order to improve the health of the wealthy.
Would baby stocks disincentivize saving?
No, because child savings accounts that include stocks and bonds have already been shown to promote both saving and health. Moreover, if we are truly worried that financial security is a disincentive to working and saving, then we should tax large inheritances and estates at 100% so that rich children don't get lazy. Also, from an economic perspective, even if some Americans were to blow their baby stock payouts on shopping sprees and fancy vacations, then they would simply stimulate the economy in the same way that rich trust fund babies already do. Morality lectures delivered to the poor but not the rich are ploys that capitalism uses to justify inequality.
Would baby stocks destabilize or “distort” the free market?
No, baby stocks would stabilize markets by promoting long-term holding rather than speculation and short-term trading, and there is no evidence that widespread use of index funds has harmed the market. In fact, baby stocks would liberate markets from their existing distortions of racism and plutocracy and thus make markets freer than they are today.
How large should a national stock plan be?
Up for debate. Given that the U.S. already lets foreigners own 23-40% of its stock market tax-free, I think the American people should get at least 25-51% tax-free. Note that if the People’s portion were at least 51%, then compound interest would constantly deconcentrate wealth from the top towards the bottom of the wealth distribution and thus serve the egalitarian ideals of American democracy.
What about the first half of life?
Initially, baby stocks would be a national financial plan for the second half of life, while other programs are needed to address poverty, insecurity, and inequality in the first half of life. However, eventually baby stocks would start to impact the first half of life, as well, when the bottom half of Americans start to transmit wealth across generations via inheritance just like the rich do now. Since up to 50% of total wealth is attributable to intergenerational transfers, baby stocks would eventually allow everyone to build wealth across generations.6
Share this website with friends and family, ask editors of websites and journals to cover baby stocks, write to your elected state and federal represenatitives, and tell all political candidates that you will only vote for those who support making some of the American stock market belong to the American people. Remember, in a democracy the People can vote to own a piece of their stock market!