With Beltway Democrats flirting with millionaire taxes, Occupy Wall Street is raising a more existential question: the economic crisis is crushing the hopes of the younger generation. Unemployment in 2010 was 9.6%, but it was 15.5% for Americans between 20-24 and 10.9% for those between 25-29. Astonishingly, people in their early twenties face an unemployment rate similar to high-school dropouts.
Most young households don't have a rainy day fund to weather the storm. They own less than a fifth of average household wealth. If you don't have rich parents, you are in deep trouble in today's America.
But that's where the safety net comes in, right? You'd think so, but no. Each state sets its own unemployment insurance rules, and a typical program requires a recent history of sustained paid employment -- precisely the track-record young people lack. Many states also restrict welfare benefits to families, shutting out childless workers altogether.
Only far-reaching reforms can change this bleak picture. Our solution envisions the introduction of a stakeholder society -- in which each high school graduate begins adult life with an $80,000 stake to pursue higher education or otherwise prepare himself for economic success. There are about 3.6 million Americans who would qualify for the stake each year. Based on data reflecting the impact of the current recession, this initiative could be funded by an annual two percent wealth tax on the top three percent of households, holding more than $1.5 million in assets. Our estimate assumes a 28 percent tax evasion rate; if the economic elite prove to be more responsible, their tax rate would be lower.
There is nothing magical about our $80,000/ 2% formula. The crucial issue is moral: America is allowing the children of the rich to thrive while the overwhelming majority are left to struggle against economic forces beyond their control.
The United States was built by citizens of all sorts -- school-teachers and cotton-pickers no less than stock-brokers and entrepreneurs. It needs a new social contract between generations, under which market-winners in one era assure a fair starting point for their fellow citizens who succeed them.
Over the course of American history, the principle of citizenship inheritance has been expressed in different forms -- from homesteading to the G.I. bill. But during the past decade, stakeholding has been gaining ground in America and the world. In her presidential campaign, Hillary Clinton proposed that each child should receive a stake of $5,000 at birth in the form of a "baby bond" which would yield more than $10,000 by the time he or she became an adult. In advancing her proposal, Clinton was building on a striking achievement by Tony Blair, whose government passed legislation granting a "baby bond" to every British child born between 2002 and 2010 that provides a modest economic head-start at 18.
Instead of building on Blair's breakthrough, the conservative Cameron government has recently eliminated future baby-bonds as a "cost-saving" measure. This is profoundly shortsighted. But the best way to respond to the current crisis is to take a bolder step. Instead of deferring the promise of "baby bonds" to young adults reaching maturity in 2030, we should create a stake-holding program for young adults right now. Eighty thousand dollars would keep some in college who would otherwise drop out, and send others to college who can't afford it today.
Others will decide that university isn't for them. But they will use their $80,000 to gain technical education, to pay off debt, buy a house, or otherwise gain a stable foothold in adult life. To gain their citizenship inheritance, they will only be required to win a high school diploma -- thereby providing them with a powerful incentive against dropping-out. Once they reach 21 or so, all high school graduates should be treated as competent adults, with the right to a fair starting point in economic life.
Some people will blow their stakes in Las Vegas and if they do, they should be provided with a minimal safety net. But unlike today, the overwhelming majority will no longer rely on the gap-ridden American welfare state. Instead, they will use their stakes to build up their lives in dignity. In short, the existence of some "stakeblowers" shouldn't deprive tens of millions of others of the stakes they require to cope constructively with the challenges of a globalizing economy.
Stakeholding isn't the only possible response to the existential crisis expressed by the growing wave of unrest. But its vision of democratic capitalism would put Wall Street decisively at the service of ordinary citizens.
Bruce Ackerman and Anne Alstott are professors at Yale and the authors of The Stakeholder Society (Yale University Press).
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If we extend heavy subsidies then people will not have to think more carefully about having children and whether they can really do the job well enough.
I do think the state should set some boundaries for parenting, though, with at least a better quality unpaid leave or part-time requirement for both sexes in the first two years of a child's life.
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A 52 year old California State Employee will receive an average $62,700 annual pension for life, a pension COLA, and medical insurance for life. The present day value of this retirment package is just over $3,500,000. This does not bother progressive democrats.
A 52 year old private sector worker that has scrimped and saved over the years and has a $1,500,000 net worth is in the top 1% of wealth holders. This bothers the progressive democrats a lot.
Liberal progressive democrats don't hate folks with a lot of wealth as long as those folks work for the government and their wealth is in the form of a pension.....but let one of us self employeed folks try to make a good life for ourselves and the progressives hate us for it. How could anyone justify a wealth tax on a private sector employees $1.5M retirement savings but not apply the exact same tax a government employees retirement package that has a value much higher??
Please open up your eyes!! The progressive democrats DO NOT plan on taxing ALL households that pass the 1 million mark...they only plan on taxing us Joe Average private sector workers. Government employees can have $4 million or $5 million net worth.....but because their wealth is hidden in a pension....they won't pay this wealth tax. Those of us in the private sector don't have a vehicle to hide that kind of wealth. We will pay...they won't. Is that fair ??
Hard work and rugged individualism are what drive American success, not hand outs from the government by stealing from, I mean taxing, people who have started at the bottom and climbed their way up.
To the extent that we substitute "the government" for "the parents" we are, counter-intuitive though it may be, aggravating the very situation we are trying to remediate.
Morgan Stanley, the legendary Wall Street investment banking company founded by J.P. Morgan that took $10 billion in federal bailout funds back in 2008 during the financial crisis, is a "Corporate Partner" providing funding to the Carol Baldwin Breast Cancer Research Fund. Named for and listing as chairwoman actor Alec Baldwin's breast cancer survivor mother.
With Alec Baldwin himself serving on the Fund's "Advisory Board."
Merrill Lynch, owned by the Bank of America, is also a "Corporate Partner" with the Baldwins, the company famously teetering on the edge in the 2008 crisis and being purchased by BOA. It was eventually revealed that Merrill Lynch used some $3.6 billion to pay out in "bonuses" -- approximately a third of the amount received in federal TARP (Troubled Asset Relief Program).
Must be nice to play both sides.
And contrary to your stunted memory, the unemployment rate during Carter's Presidency never went over 8%. Perhaps relative to today's increased USA population, that equates to about what we're experiencing now, but it's hardly "much higher than it is now". Here's your sign:
http://www.jlaforums.com/viewtopic.php?t=16361833&start=20
You seem to think that there are jobs out there for everyone who wants one. You would be wrong. Keep up with what's going on NOW.
Pull your head out of the sand, this isn't the same America you came of age in.
I was giving one example of jobs that are out there for HS grads, and a company that can't find HS grads to even apply. There are plenty of good paying jobs for HS grads, they just have to look and again think outside the box. Your idea that manufacturing is the only place for a HS grad to gain a good job is naive.
Nearly all railroad corridors (not including local transit rail systems) are owned by private companies that provide freight service
College is good but that doesn't meant they will have a college job waiting for anyone. You have to shop around and see what fits you. I doubt that anyone knows what they will do for a living at a young age but you can build up the practical experience along the way. That is necessary process.
"But unlike today, the overwhelming majority will no longer rely on the gap-ridden American welfare state." - - - And to compliment the poison fang, a delusional fairyland. All this would do is create a huge and profitable business based on stripping these incompetent, irresponsible individuals of their grub stake, a task that ought to take about 6 months per capita.
The financial crisis, I think you know, is and was due to government forcing banks to lend money to people that couldn't pay it back.
I have a 19 year old son. He is popular in many areas of life and doesn't live his life in one arena. The vast majority of his friends are angry with democrats and their "Only Government Knows Best For You And Me". What I see here in my blue state, NY, is not good for democrats, or any other entity that thinks government can solve this.
It is over for you guys. I recommend that policy "wonks" and PAC employees go back to school and get a degree in engineering or math - now. You're gonna need it soon. It's over and you need to face it now.
I can't predict what will happen. But, I would not be surprised to see them voting conservative this election or next. Many on my side believe this as we believe the kids are simply misguided.