In The Left Alternative, Unger suggests a nationalized personal endowment fund available to everyone at birth. The fund would be available to draw upon at various times (paying for school, a house, starting a business, contributing to retirement savings if any is left over, and so on). I think such a proposal would have to be paired with a Universal Basic Income (UBI) and guaranteed employment in order to ensure that day-to-day needs are met, but it’s an interesting proposal because it goes above and beyond the UBI by promoting social mobility as well as dampening the effects of poverty.
Unger suggests increasing the amount available to draw based on “merit,” which he says should be defined broadly. I’m attracted to the idea of a true meritocracy in theory, but I’m also highly skeptical. Even in a radical social democracy as imagined by Unger, there are bound to be inequities of wealth and power that affect how merit is defined and awarded.
Paying for such a radical social democratic transformation is politically difficult but could be done. A VAT and financial speculation tax could fill the coffers of another trust fund a la Social Security and Medicare. VATs are regressive taxes because they affect everyone equally, and as such the burden is much higher on people who have less. However, the regressive Social Security payroll tax, where high-income people are no longer subject to the tax after they make more than $114,000 in a year, demonstrates that a regressive tax can ultimately serve a more progressive purpose, and a 10-20% VAT could fill the coffers of a Personal Endowment Trust Fund very quickly, especially if paired with a modest financial speculation tax.
Another option – more radical and less likely – would be an incredibly punitive inheritance tax, somewhere in the region of 90%. Most property would default to the state upon death. From a radical perspective, this would encourage spending rather than saving and probably completely undermine banking, finance, and perhaps capital as a whole. It would also piss off rich kids. On the other hand, it’s still an imperfect leveler because the rich kids would still have tremendous advantages during the lifespans of their rich parents, which are long right now and will only get longer even if it’s paired with something like Piketty’s global wealth tax proposal.
To pull back to social democracy from revolutionary change, the endowment fund doesn’t seem too far-fetched from a policy perspective, and it’s an interesting complement to a UBI for increasing social mobility for those not blessed to be among the inheritors of wealth.
The post Personal Endowment Funds: a complement to UBI appeared first on Conor F. McGovern.