
The movement to give every American a trust fund at birth - robg
http://www.boston.com/bostonglobe/ideas/articles/2009/02/01/cash_on_delivery/?page=full
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RobGR
I found this article fascinating. I don't think it has any hope of working at
all, however.

Sci-fi writers and "Futurist Societies" have talked about an "End of Scarcity"
which will occur when we can give every new baby it's own super-powerful
robot, and the kid can tell the robot to make more robots, and if he wants a
castle or spaceship he can tell his robot to make the robots that will make
the robots that will make it, and just wait. Predicting a society of lazy
slobs or a society of refined scientists is up the particular author's view of
humanity.

In late-night bull sessions I have discussed the "End of Scarcity" thing [1],
and in particular why it could not be done with investment money. You can
immagine everyone having a robot, but if everyone where a trust fund baby, who
would borrow the money from the funds and work hard in order to pay back
interest ?

Given the current economic and political situation, there is a chance we will
actually try this. The conservatives and financial industry love the 401k
plans [2], and this could be sold to do them as another 401k plan, and sold to
the left as a morally justified leveling of opportunity. It may not happen
under the name "universal trust fund", but it could happen under the guise of
various similar entitlement programs.

However, the money to put in those trust funds (however they are called) will
be borrowed, they will not be funded on a balanced budget. They will therefore
be accompanied inflation and mounting debt, and will by correspondingly less
for their beneficiaries.

In addition, the proposals discussed in this article do not give the trust
fund babies complete freedom in how to spend the money. The money is to be
drawn for higher education and housing (both are bubbles, and Americans
generally buy more of those than they need), and for "retirement", which is
kind of insulting in my opinion -- is 65 the new age of majority ?

What kind of withdrawals are allowed from the funds will likely become an
object of a huge amount of corrupt politicing and lobbying, similar to the
mortage tax exemption. Rather than an opportunity, the funds might become like
a bad inheiritance incumbered by some crazy grand uncle's will. They mention
that the funds should hold $20,000 when the beneficiary is in their 20s --
will they beneficiary be allowed to withdraw all the money and attempt to
start a business, making them into a kind of nationwide YC program ? It seems
unlikely, although that might be the best use of the money for many people.
Instead, the money will be used to make a down payment on a plaster board
castle in some gaudy neighborhood, tossed into a black hole of college
tuition, or used to bolster the social security program which will have been
massively damaged by the inflation.

Of course, after all that, it is justified to ask "well, what would you do to
address inequality and lack of opportunity ? Offer something constructive !"

I think the most important thing to do is generally assure we have a
prosperous nation. That basic fundamental is in doubt. The federal budget
should be balanced; those who lend their money to the government through
bonds, will be forced to find other ways to spend and invest it anyway,
creating a "stimulous" similar to what happened when Clinton/Grinrich last
balanced the budget, but without the debt and inflation. This can probably
only happen by pissing off conservatives by raising taxes and slashing
"defense" spending and pissing off liberals by slashing "education" and
"social" spending. For example, we might cancel the "future combat systems"
program and also stop medicare / medicaid payments on all medical procedures
not statistically shown to improve life expectancy, which would include many
things people consider necessities, such as balloon angioplasty.

There are more positive things we can do, other than just halting certain
things, and thankfully many of them can be done by individuals and carried out
regardless of what bills pass congress. I think that we should revive the idea
of apprenticeships, and adapt them to high-tech vocations. I think that making
small amounts of credit available to entrepreneurs and business startups
through sites like prosper.com is very promissing thing . . . or making more
YC clones.

[1] My prediction is that humans couldn't handle the End of Scarcity, and to
protect ourselves from it we would create fake needs that could not be
adaquately met, and huge propaganda efforts would line the roads with signs
and be interspersed into every form of entertainment to remind us that we
needed something we couldn't quite afford, but a small subset of humans would
see through the propaganda, and live quietly amid the chaos gleaning ample
shelter from the packaging of robotically produced artificial-necessities and
plenty of cast off over-produced food. I call my fantasy "The Present", and
the smart subset are "hobos."

[2] 401k plans are a disaster. The main purpose they served was to increase
the amount of money going into the stock market, which benefited the people
who run the stock market and hurt the rest of the country and gave us a big
bubble. By tying so many people's perception of their financial security to
the stock market, the 401k plan also created a dangerous political situation,
with the government feeling obligated to take unwise steps to prop up the
market, and a possibility for political extremism when that inevitably fails.

