What if a single, cheap, easy-to-administer, and race-neutral policy could help close the country’s chasmic racial wealth gap in less than a generation?
Reader, it exists. It is called a baby-bond program. For something like $80 billion a year—roughly 2 percent of the annual federal budget, less than a tenth of the annual cost of Social Security—the United States could not only end its most pernicious forms of poverty, reduce wealth inequality, improve social mobility, foster self-sufficiency among poor families, and increase family net worth en masse, but also put black and white families on more equal footing.
There is a strong moral case for doing that, and a strong economic case, too. The average white family is 10 times wealthier than the average black family. Black families with kids have a single penny in wealth for every dollar that white families with kids have. And white high-school dropouts have a higher net worth, on average, than black college graduates. Black individuals cannot close this gap on their own. Washington created the wealth gap. Washington needs to fix it.
Today’s racial wealth inequality is a product of many decades of government policy, not the differing actions and choices of black and white individuals. The Social Security Act, for instance, initially excluded agricultural and domestic workers, who were disproportionately black. The GI Bill offered college tuition, home loans, and unemployment benefits to white veterans, while excluding black veterans. The Federal Housing Administration instituted redlining and fomented racial housing segregation. “It’s not about savings,” Thomas Shapiro, the director of the Institute on Assets and Social Policy at Brandeis University, told me. “It’s about institutional practices.”