Capitalism and community aren’t natural allies. Capitalism’s
emphasis on individual acquisition and consumption is usually antithetical
to the needs of community. Where capitalism is about the pursuit of self-interest,
community is about connecting to — and at times assisting — others.
It’s driven not by monetary gain but by caring, giving, and sharing.
While the opportunity to advance one’s self-interest is essential
to happiness, so too is community. No person is an island, and no one can
truly attain happiness without connection to others. This raises the question
of how to promote community. One view is that community can’t be promoted;
it either arises spontaneously or it doesn’t. Another view is that
community can be strengthened through public schools, farmers’ markets,
charitable gifts, and the like. It’s rarely imagined that community
can be built into our economic operating system. In this chapter I show how
it can be — if our operating system includes a healthy commons sector.
The Idea of Birthrights
John Locke’s response to royalty’s claim of divine right was
the idea of everyone’s inherent right to life, liberty, and property.
Thomas Jefferson, in drafting America’s Declaration of Independence,
changed Locke’s trinity to life, liberty, and the pursuit of happiness.
These, Jefferson and his collaborators agreed, are gifts from the creator
that can’t be taken away. Put slightly differently, they’re universal
The Constitution and its amendments added meat to these elegant bones. They
guaranteed such birthrights as free speech, due process, habeas corpus, speedy
public trials, and secure homes and property. Wisely, the Ninth Amendment
affirmed that “the enumeration in the Constitution, of certain rights,
shall not be construed to deny or disparage others retained by the people.” In
that spirit, others have since been added.
If we were to analyze the expansion of American birthrights, we’d
see a series of waves. The first wave consisted of rights against the state.
The second included rights against unequal treatment based on race, nationality,
gender, or sexual orientation. The third wave — which, historically
speaking, is just beginning — consists of rights not against things,
but for things — free public education, collective bargaining for wages,
security in old age. They can be thought of as rights necessary for the pursuit
What makes this latest wave of birthrights strengthen community is their
universality. If some Americans could enjoy free public education while others
couldn’t, the resulting inequities would divide rather than unite us
as a nation. The universality of these rights puts everyone in the same boat.
It spreads risk, responsibility, opportunity, and reward across race, gender,
economic classes, and generations. It makes us a nation rather than a collection
of isolated individuals.
Universality is also what distinguishes the commons sector from the corporate
sector. The starting condition for the corporate sector, as we’ve seen,
is that the top 5 percent owns more shares than everyone else. The starting
condition for the commons sector, by contrast, is one person, one share.
The standard argument against third wave universal birthrights is that,
while they might be nice in theory, in practice they are too expensive. They
impose an unbearable burden on “the economy” — that is,
on the winners in unfettered markets. Much better, therefore, to let everyone — including
poor children and the sick — fend for themselves. In fact, the opposite
is often true: universal birthrights, as we’ll see, can be cheaper
and more efficient than individual acquisition. Moreover, they are always
How far we might go down the path of extending universal birthrights is
anyone’s guess, but we’re now at the point where, economically
speaking, we can afford to go farther. Without great difficulty, we could
add three birthrights to our economic operating system: one would pay everyone
a regular dividend, the second would give every child a start-up stake, and
the third would reduce and share medical costs. Whether we add these birthrights
or not isn’t a matter of economic ability, but of attitude and politics.
Why attitude? Americans suffer from a number of confusions. We think it’s “wrong” to
give people “something for nothing,” despite the fact that corporations
take common wealth for nothing all the time. We believe the poor are poor
and the rich are rich because they deserve to be, but don’t consider
that millions of Americans work two or three jobs and still can’t make
ends meet. Plus, we think tinkering with the “natural” distribution
of income is “socialism,” or “big government,” or
some other manifestation of evil, despite the fact that our current distribution
of income isn’t “natural” at all, but rigged from the get-go
by maldistributed property.
The late John Rawls, one of America’s leading philosophers, distinguished
between pre distribution of property and re distribution of income. Under
income re distribution, money is taken from “winners” and transferred
to “losers.” Understandably, this isn’t popular with winners,
who tend to control government and the media. Under property pre distribution,
by contrast, the playing field is leveled by spreading property ownership
before income is generated. After that, there’s no need for income
redistribution; property itself distributes income to all. According to Rawls,
while income re distribution creates dependency, property predistribution
But how can we spread property ownership without taking property from some
and giving it to others? The answer lies in the commons — wealth that
already belongs to everyone. By propertizing (without privatizing) some of
that wealth, we can make everyone a property owner.
What’s interesting is that, for purely ecological reasons, we need
to propertize (without privatizing) some natural wealth now. This twenty-first
century necessity means we have a chance to save the planet, and as a bonus,
add a universal birthright. ...
A Children’s Opportunity Trust
Not long ago, while researching historic documents for this book, I stumbled
across this sentence in the Northwest Ordinance of 1787: “[T]he estates,
both of resident and nonresident proprietors in the said territory, dying
intestate, shall descent to, and be distributed among their children, and
the descendants of a deceased child, in equal parts.” What, I wondered,
was this about?
The answer, I soon learned, was primogeniture — or more precisely,
ending primogeniture in America. Jefferson, Madison, and other early settlers
believed the feudal practice of passing all or most property from father
to eldest son had no place in the New World. This wasn’t about equal
rights for women; that notion didn’t arise until later. Rather, it
was about leveling the economic playing and avoiding a permanent aristocracy.
A nation in which everyone owned some property — in those days, this
meant land — was what Jefferson and his contemporaries had in mind.
In such a society, hard work and merit would be rewarded, while inherited
privilege would be curbed. This vision of America wasn’t wild romanticism;
it seemed quite achievable at the time, given the vast western frontier.
What thwarted it, later, were giveaways of land to speculators and railroads,
the rise of monopolies, and the colossal untaxed fortunes of the robber barons.
Fast-forward to the twenty-first century. Land is no longer the basis for
most wealth; stock ownership is. But Jefferson’s vision of an ownership
society is still achievable. The means for achieving it lies not, as George
W. Bush has misleadingly argued, in the privatization of Social Security
and health insurance, but in guaranteeing an inheritance to every child.
In a country as super-affluent as ours, there’s absolutely no reason
why we can’t do that. (In fact, Great Britain has already done it.
Every British child born after 2002 gets a trust fund seeded by $440 from
the government — $880 for children in the poorest 40 percent of families.
All interest earned by the trust funds is tax-free.)
Let me get personal for a minute. My parents weren’t wealthy; both
were children of penniless immigrants. They worked hard, saved, and invested — and
paid my full tuition at Harvard. Later, they helped me buy a home and start
a business. Without their financial assistance, I wouldn’t have achieved
the success that I have. I, in turn, have set up trust funds for my two sons.
As I did, they’ll have money for college educations, buying their own
homes, and if they choose, starting their own businesses — in other
words, what they need to get ahead in a capitalist system.
As I hope my sons will be, I’m extremely grateful for my economic
good fortune. At the same time, I’m painfully aware that my family’s
good fortune is far from universal. Many second-, third-, and even seventh-generation
Americans have little or no savings to pass on to their heirs. Their children
may receive their parents’ love and tutelage, but they don’t
get the cash needed nowadays for a first-rate education, a down payment on
a house, or a business venture. A few may rise because of extraordinary talent
and luck, but the majority will spend their lives on a treadmill, paying
bills and perhaps tucking a little away for old age. Their sons and daughters,
in turn, will face a similar future.
It doesn’t have to be this way. One can imagine all sorts of government
programs that can help people advance in life — free college and graduate
school, GI bills, housing subsidies, and so on. Such programs, as we know,
come and go, and I prefer more rather than less of them. But the simplest
way to help people advance is to give them what my parents gave me, and what
I’m giving my sons: a cash inheritance. And the surest way to do that
is to build such inheritances into our economic operating system, much the
way Social Security is.
When Jefferson substituted pursuit of happiness for Locke’s property,
he wasn’t denigrating the importance of property. Without presuming
to read his mind, I assume he altered Locke’s wording to make the point
that property isn’t an end in itself, but merely a means to the higher
end of happiness. In fact, the importance he and other Founders placed on
property can be seen throughout the Constitution and its early amendments.
Happiness, they evidently thought, may be the ultimate goal, but property
is darn useful in the pursuit of it.
If this was true in the eighteenth century, it’s even truer in the
twenty-first. The unalienable right to pursue happiness is fairly meaningless
under capitalism without a chunk of capital to get started.
And while Social Security provides a cushion for the back end of life, it
does nothing for the front end. That’s where we need something new.
A kitty for the front end of life has to be financed differently than Social
Security because children can’t contribute in advance to their own
inheritances. But the same principle of intergenerational solidarity can
apply. Consider an intergenerational transfer fund through which departing
souls leave money not just for their own children, but for all children.
This could replace the current inheritance tax, which is under assault in
any case. (As this is written, Congress has temporarily phased out the inheritance
tax as of 2010; a move is afoot to make the phaseout permanent.) Mind you,
I think ending the inheritance tax is a terrible idea; it’s the least
distorting (in the sense of discouraging economic activity) and most progressive
tax possible. It also seems sadly ironic that a nation that began by abolishing
primogeniture is now on the verge of creating a permanent aristocracy of
wealth. That said, if the inheritance tax is eliminated, an intergenerational
transfer fund would be a fitting substitute.
The basic idea is similar to the revenue recycling system of professional
sports. Winners — that is, millionaires and billionaires — would
put money into a kitty (call it the Children’s Opportunity Trust),
to be divided among all children equally, so the next round of economic play
can be more competitive. In this case, the winners will have had a lifetime
to enjoy their wealth, rather than just a single season. When they depart,
half their estates, say, could be passed to their own children, while the
other half would be distributed among all children. Their own offspring would
still start on third base, but others would at least be in the game.
Under this plan, no money would go to the government. Instead, every penny
would go back into the market, through the bank or brokerage accounts (managed
by parents) of newborn children. I’d call these new accounts Individual
Inheritance Accounts; they’d be front-of-life counterparts of Individual
Retirement Accounts. After children turn eighteen, they could withdraw from
their accounts for further education, a first home purchase, or to start
Yes, contributions to the Children’s Opportunity Trust would be mandatory,
at least for estates over a certain size (say $1 or $2 million). But such
end-of-life gifts to society are entirely appropriate, given that so much
of a millionaire’s wealth is, in reality, a gift from society. No one
has expressed this better than Bill Gates Sr., father of the world’s
richest person. “We live in a place which is orderly. It’s a
place where markets work because there’s legal structure to support
them. It’s a place where people can own property and protect it. People
who have the good fortune, the skill, the luck to become wealthy in our country,
simply have a debt to the source of their opportunity.”
I like the link between end-of-life recycling and start-of-life inheritances
because it so nicely connects the passing of one generation with the coming
of another. It also connects those who have received much from society with
those who have received little; there’s justice as well as symmetry
To top things off, I like to think that the contributors — millionaires
and billionaires all — will feel less resentful about repaying their
debts to society if their repayments go directly to children, rather than
to the Internal Revenue Service. They might think of the Children’s
Opportunity Trust as a kind of venture capital fund that makes startup investments
in American children. A venture capital fund assumes nine out of ten investments
won’t pay back, but the tenth will pay back in spades, more than compensating
for the losers. So with the Children’s Opportunity Trust. If one out
of ten children eventually departs this world with an estate large enough
to “pay back” in spades the initial investment, then the trust
will have earned its keep. And who knows? Some of those paying back might
even feel good about it. ... read
the whole chapter