It is, by now, not an exaggeration to state that the traditional American Dream—work hard, buy a house, raise a family, and retire securely—is failing. It was built for a labor-based economy in which steadily rising wages allowed ordinary families to accumulate wealth. But America has become an asset-based economy, and ownership of those assets is extraordinarily concentrated.
Since the 1980s, the returns from capital have far outpaced the returns from labor. Inflation-adjusted wages for ordinary workers have risen only modestly, while the real value of equities has multiplied many times over. Housing, education, healthcare and childcare costs have soared, employment has become less secure, and defined-benefit pensions have largely disappeared. Even two-income households with respectable jobs often struggle to buy a home, build savings and accumulate enough for retirement.
Meanwhile, the wealthiest 10% of households own roughly 87% of directly and indirectly held corporate equities and mutual-fund shares, as well as approximately two-thirds of total household wealth. The bottom half owns only a small single-digit percentage. Wealth derived from appreciating assets compounds faster—and is frequently taxed more favorably—than wages.
Hard work still matters, but it is no longer enough. Unless people acquire appreciating, income-producing assets early in life, they may remain financially insecure regardless of how steadily they work. Artificial intelligence, automation, age discrimination and periodic mass layoffs are likely to deepen that insecurity.
Social Security cannot solve the problem. Declining birth rates mean fewer workers supporting more retirees. Under current projections, the retirement trust fund will become unable to pay scheduled benefits during the 2030s, potentially requiring cuts of more than 20% unless Congress acts.
America therefore confronts three related problems: the transition from labor-generated prosperity to asset-generated wealth; falling birth rates partly driven by financial insecurity; and a retirement system approaching a funding crisis. A majority excluded from the asset economy will increasingly resent those who benefit from it, intensifying political polarization and making radical redistribution appear attractive.
Higher taxes and larger transfer programs do not address the underlying dynamic. Nor would Universal Basic Income. UBI would require enormous recurring expenditures while creating no corresponding asset. It treats insufficient income as the problem when the deeper problem is unequal ownership of the capital that generates wealth.
If America has become an asset-based economy, the logical response is to make asset ownership universal.
An American Birthright Account
The recently created “Trump Accounts” point in the right direction by providing eligible children with a $1,000 investment account to which families, employers, and others may contribute. But $1,000 invested at 7% annually would grow to only about $15,000 after 40 years. A meaningful solution must be much larger.
Suppose every American child received an individually owned Birthright Account at birth, containing $35,000 invested in a diversified portfolio of American stocks and bonds. Assuming a 7% nominal annual return, 2.5% inflation, and low management fees, that account could grow over 50 years to approximately $300,000 in today’s purchasing power—or about $1 million in 2076 dollars.
The principal could not normally be withdrawn before age 50, and gains would be tax-free once the beneficiary reached that age. Parents, relatives, friends and employers could make additional tax-advantaged contributions. Even $50 a month could add approximately $79,000 in today’s purchasing power after 50 years.
With roughly 3.6 million births annually, the initial federal investment would be about $126 billion per year, plus modest administration and brokerage costs. This is substantial, but it should not be viewed like Medicaid or another consumption expense. It would be an annual asset purchase: a national investment held in private accounts for American citizens.
The money would begin working immediately. A permanent annual flow of $126 billion into American securities would provide patient capital to businesses, increase demand for Treasury and corporate bonds, and modestly reduce market volatility. During recessions, the program would continue buying, allowing accounts to acquire more shares at depressed prices.
Over several decades, the accounts could accumulate trillions of dollars. That capital would belong not to foreign governments, large institutions or a small affluent minority, but to ordinary Americans. After 30 years, the program could hold nearly $12 trillion in nominal assets, making its beneficiaries one of the largest ownership constituencies in corporate America.
Paying for It
The program should not be financed by printing money or simply adding to the national debt. Instead, several dedicated sources could be combined.
First, a U.S. sovereign wealth fund could receive income from federal mineral, oil and gas rights, spectrum auctions, government equity holdings, surplus federal property and federal loan portfolios.
Second, a 0.01% levy on secondary-market purchases of stocks, bonds, exchange-traded funds and selected derivatives could generate an estimated 30–35 billion annually. It would add only 50 cents to a $5,000 ETF purchase.
Third, an “AI productivity dividend” could dedicate part of the corporate tax revenue arising from highly automated, exceptionally profitable businesses to the citizens whose employment prospects automation may weaken.
Fourth, federal research grants could sometimes include small public equity stakes in recipient companies, producing revenue when successful firms go public. Carefully verified reductions in waste, fraud and administrative costs could provide a smaller supplementary share.
The accounts would require strong statutory protection against political raids, cancellation or diversion. Assets should remain individually owned and professionally managed, with strict custody safeguards. Limited borrowing against a minority of the account might be permitted for a first home or a privately financed business, but the central purpose—creating long-term financial security—must be protected.
Giving Every American a Stake
Birthright Accounts would not eliminate inequality. Affluent parents would still provide their children with greater advantages. The proposal would instead close the enormous gap between inheriting assets and beginning adult life with nothing.
Every American would become an investor at birth and would eventually own a share of the companies whose productivity generates national wealth. That ownership could encourage financial education, entrepreneurship and public support for policies that sustain long-term economic growth. It could also reduce future dependence on Social Security, housing assistance and other transfers.
Most importantly, the proposal addresses economic inequality at its source. Rather than repeatedly redistributing income after wealth has been created, it distributes ownership of the assets that create wealth in the first place.
The economy’s operating system has changed. A policy designed for an age when wages reliably produced security can no longer meet the needs of an economy in which capital appreciation increasingly determines who prospers.
The choice is ultimately straightforward: America can leave future generations an ownership stake in the nation’s productive wealth—or leave them only an increasingly unpayable share of its debt.
Paul Maglione is an American entrepreneur and writer currently living in Europe. He writes mostly about politics, society, and entertainment.
