I’m not a complete idiot, so I know that politics in the United States would not favor a universal inheritance at this time, for a variety of practical and ideological reasons.
Yet pursuing the thought experiment to the point of figuring out how this could ever pass is the least I could do for such an intriguing idea.
The universal inheritance, in Atkinson’s proposal, would be funded by proceeds of an estate tax. That’s never going to work.
While that funding source has a certain pro-equality appeal, it also conflates an idea that could stand on its own merits (universal inheritance) with a political landmine, the estate tax (aka Death Tax). While I’m pretty pro-Death Tax myself, at least in the United States (and I imagine in the Atkinson’s UK as well), one should pick one’s battles carefully.
The estate tax in the United States currently raises approximately $9 billion in revenue. Upping the rate or lowering the estate tax threshold so that it fully funds what I imagine to be a $35 billion cost could represent a challenge.
When I think about the political challenges of advocating for a transfer payment like ‘universal inheritance,’ I think of another transfer payment that actually got passed.
In 2015, we don’t (well, most of us don’t) have that grumbly feeling about retirees receiving Social Security. Those payments now seem somehow ‘fair,’ although a quick scan of history tells us Social Security appeared to some as competition- and business-destroying and when first introduced in 1935. So our notion of what’s fair can shift over the years.
So if I love the idea so much, how would I make this happen?
Here’s how to do it: We link the $8,100 universal inheritance for 18 year olds to Selective Service Registration, which is still a requirement for males, even without the military draft. We make selective service a requirement for women as well as men (obviously), making all eighteen year olds eligible for their universal inheritance.
If you really want to make this universal inheritance a reality, appealing to the broadest political spectrum in the US, then the $8,100 payment gets made contingent upon the completion of compulsory National Service. Compulsory service would be military in some cases, although we can imagine a wider variety of service employment for young people.
My sense is military folks are not eager for the re-introduction of a compulsory universal draft, so it probably suits the national good to have both military and non-military compulsory service.
Anyway, that’s my brief thought experiment on universal inheritance, and how to make it politically palatable.
I thought I’d heard all the important arguments on the topic, and then this economist comes along with a totally bonkers idea that will never work.
“Hahaha, that Atkinson, what a goofy dreamer” I said to myself.
And then, over the next few days, I kept thinking about one of his totally bonkers ideas. It gnawed at me. And I realized that – practical and political objections be damned! – that is a pretty awesome idea.
That’s the way I feel about Atkinson’s ‘Universal Inheritance,’ which goes something like this.
Every eighteen year-old, upon gaining the right to vote, automatically receives an ‘inheritance’ from the federal government of some amount of money. Atkinson proposes a universal inheritance in the UK of 5,000 pounds, or about US$8,100 per kid.
Now, as a father I’ll be the first one to say, instinctually, kids shouldn’t inherit money. I mean, their brains have under-developed frontal lobes! They’re undeserving and can’t handle that kind of responsibility.
Also, as an American deeply immersed in the dominant financial paradigm that ‘Money for Nothing’ works as a Dire Straights anthem but not as social policy, my first grumbly thought about this idea was ‘those kids will probably just squander their $8,100!’
I can already picture the insidious marketing campaigns launched by Las Vegas casinos as soon my legislation for ‘universal inheritance’ for 18 year-olds passes Congress.
Because of curmudgeonly American fathers like me and similarly grumpy readers like you, clearly Atkinson’s universal inheritance has ZERO chance of happening anytime soon in the United States. Yet I’m intrigued by the thought experiment so let me tell you why I see this as an interesting, possibly awesome, idea.
And by the way, for those of you reading this, who picture a Red Socialist hammer and sickle above my head, I really don’t see this in bleeding-heart liberal terms. I see it as an affordable solution to a failure of the free market, the under-development of talent in an economy.
For the poor but ambitious, could a universal inheritance be the key to continuing their education?
For a huge number of 18 year-olds today, a lack of capital will prevent their enrollment in the next educational program beyond high school, whether that’s an apprenticeship/internship at a business, an associate’s degree, a state college, or an elite four-year private university.
Yes, scholarships exist in limited form to help some of those kids, and yes, some of the ambitious poor will manage to bootstrap their way to educational success. But even those lucky few will find financial roadblocks that scholarships don’t cover, like SAT prep courses, application fees, book fees, and transportation costs.
Clearly, with the cost of higher education these days, a $8,100 inheritance doesn’t get you very far along in a multi-year degree program. But it might be enough to make a start possible.
Who Owns What In America?
Why do I like the idea of a ‘universal inheritance’ rather than just further federal subsidies for student loans? I think because the universal inheritance is more flexible – it allows for more solutions than simply more ‘higher education.’
In my optimistic imagination the starter funds of a universal inheritance prevent the national tragedy of young people stuck in an economically-inefficient rut.
For a cohort of eighteen year-olds, a lack of capital may prevent their move from one employment backwater (a small town, a one-company suburb, a dying inner-city) to a more vibrant economy, in need of young workers.
In Queens, New York last month the young woman helping us at the car rental counter mentioned that “If I could just get $5,000 together somehow, someway, I could finally pursue my dream of moving down to Florida and becoming a designer. But until then, I’m stuck here.”
The way she described it, her $5,000 dream in life seemed like it might be years away. I’m picturing this universal inheritance as a one-time opportunity, if used wisely, to fulfill a dream otherwise impossible for children who come from poorer households.
I obviously don’t know what household situation the counter worker at Budget Rental comes from. I do know $5,000 doesn’t hold back other children, who drew a luckier lottery ticket by virtue of their birth family, from pursuing their life’s dream.
For the poor and entrepreneurially ambitious, could a universal inheritance be the key to starting a business?
The bus or the airplane ticket out of town. The first few months’ rent away from home. The new clothes for work, or for a job interview. The tools of a trade. The instruction manuals or training software and laptop. The initial inventory for a sales project. Partial tuition to a computer coding school.
With approximately 4.3 million 17 year-olds in the US, the annual cost of the universal inheritance program could be around 35 billion.
Clearly, the universal inheritance would make little difference to 18 year-olds from the top 10 percent of households, who control over 70 percent of the nation’s wealth, and even less difference to the top 1 percent of households who control close to 35 percent of the nation’s wealth. For them, this universal inheritance is just a lovely perk, a nice trip to Europe or an extra cushion for college expenses.
What that means, in practical terms, is that half of all teenagers become adults with no capital from their families at all to assist their next move in life, whether it’s work or further education.
In my optimistic imagination this one-time infusion of capital for everyone could create some opportunities.
See upcoming post:
The only feasible way ‘Universal Inheritance’ happens
UK economist 
