A Public Inheritance?
A Minimum Intergenerational Transfer
Post 18: 29 April 2025
The question today is whether a full set of social rights ought to include a “public inheritance”—one or more universal lump-sum transfers intended to help individuals make the transition to adulthood, pay for advanced education, or start a business.
The Idea
In 1797, Tom Paine proposed that every man and woman in England ought to receive £15 when they reached the age of 21. He called this a “natural inheritance”—that part of “natural property” unaffected by the “improvements” upon which private ownership is grounded.1 This is not a large stake, £15 then is supposedly worth only about £2500 today,2 and no country adopted this proposal. But the idea has been out there since.
In 1999, Bruce Ackerman and Anne Alstott proposed what they called “the stakeholder society.”3 In their plan, every person would receive $80,000 in four lump-sum payments ($156,000 in 2025) made between the ages of 21 and 24, except that college students may take their stake earlier to pay for college. The core argument they offer is not that different from Paine’s. They start with the conviction that everyone ought “to begin adult life under fair conditions” that can only be ensured with a stake of property.4 They further assert that “each citizen has a right to a fair share of the patrimony left by preceding generations.”5 Like Paine, they affirm the institution of private property but nonetheless accept that no legitimate process can privatize all of the wealth of the nation. In a later paper, Alstott calls these grants a “public inheritance” that promises to “give every individual the financial means to start adult life from a position of equality.”6
To date, active political proposals in this vein have been much more limited than Ackerman and Alstott’s vision of universal inheritances. Typically, what is proposed are “baby bonds” that mainly serve to promote private savings through government subsidy (tax breaks and seed money), often to limited means-tested populations. The modern wave of these programs started with Tony Blair’s “baby bonds” proposal (the “Child Trust Fund”). A centerpiece of Labor’s return to power in 2001, the program was small (initial grants were only £250) and it operated for only a few years, with new spending stopping in 2010.7
U.S. states have enacted variations on this idea. The 2021 Connecticut baby bonds program is probably the first. It allots $3,200 for each baby enrolled in the Medicaid program. This coverage is very limited and, even with 18 years of compounding, the grants are too small to have the sort of impact envisioned by stakeholding, but it is hard to see the downside in this plan. The California HOPE Trust Account Program (est. 2022) is similar. It created trust funds for foster children and children orphaned during the COVID pandemic. The total value of these funds does not appear to be great, however; one estimate I saw put the real value of each trust at about $4,500 (at age 18). Senator Cory Booker proposed a much broader national program in 2018 and in subsequent sessions.8
Stakeholding as a Social Right
The social rights of citizenship, I have written elsewhere, are public guarantees to the resources we need to participate fully in society. Each person ought to have a set of life choices comparable to others and the capacity to choose among them. By life choices I mean the important things—decisions about schooling, occupational choice, marriage and family, where to live, and so on. Our sense of ourselves as the authors of our own lives rests on our ability to make these kinds of choices. As a practical matter, it is how we experience freedom. To be a free person, Philip Pettit wrote, is to “think of yourself as someone able to choose.”9
We make these sorts of big decisions across a complete life but they are often bundled together in time and concentrated during key points, like the transition from adolescence to adulthood. The general social rights claim is that every exercise of right demands some personal resources and capacities, but this is especially clear for these major decisions. Choices about schooling, occupational training, moving, buying a home, and so forth require large investments of time, effort, and often money.
Which brings us to today’s question.
In our lived experience, we know that intergenerational transfers of advantage contribute a great deal to life chances. Some of this advantage—defined as being well positioned in the race of life—arises from privilege—having one’s own favorable set of rules in the race—and can therefore be attacked as illegitimate.10 But a great deal of inequality today is attributable to the ordinary and legitimate ways through which advantage is transferred across generations. I want to talk about wealth today, but well-positioned parents also help their children to succeed by making large investments in their education and by transferring essential cultural knowledge, among other things. This challenges our liberal sensitivities. Parents want to help their kids and ought to be free to make these choices, but this may be the main mechanism for the replication of social class.11
Social citizenship promises an effective way to think about and respond to inequality. It does not aim for material equality or equal outcomes but instead represents the aspiration for equal status within a capitalist framework. The social rights of citizenship, if established, would fight inequality by ensuring that every person has access to an adequate level of resources to support the range of life choices we collectively recognize as essential to our common experience of membership. They will lessen inequality, not just because these rights raise the floor significantly, but also because they ensure that everyone has full access to the set of tools they need to resist the domination of others. This will help us all fight exploitation, discrimination, and privilege, but what about well-meaning parental generosity?
In theory, social rights would minimize the relative benefit of having well-situated parents. Consider education, by far the most important tool in this kit. If everyone had access to a truly adequate primary and secondary education, the advantage created by access to private schools, tutors, and international travel would be less stark. The logic is that this source of inequality is tolerable so long as the social rights of citizenship are robust enough to guarantee a “full” set of life choices for everyone else. That, and the fact that all parents would want to be free to make these sorts of transfers if they were able, suggest that this is the best we can do. 12
To focus our thinking, consider again those choices that require big investments like advanced education and training, buying a home, or starting a business. A young adult with helpful wealthy parents would find it much easier to do all of these things than a similarly well-prepared peer without that advantage. Social rights like access to decent work and a right to an adequate education would give less advantaged persons some capacity to catch-up to their more advantaged peers, but the other social rights—health care, housing, even minimum income protections—do not specifically facilitate the kinds of accumulations these big investments require. This logic suggests that some sort of lump-sum payments might be required for every new adult to have equal opportunity, even if the other social rights of citizenship, the ones on FDR’s list, perhaps with some broad basic income guarantee as well, were well established.
Inheritance or Access to Capital?
A public inheritance may be part of the solution, but a simple system of one-time grants like that envisioned in The Stakeholder Society, even if it were adequately generous, will not ensure that every person has a set of life choices that are comparable to others in society. I have three comments on this point.
First, as with basic income, a public inheritance would have little value if we fail to entrench the other social rights of citizenship. If we fail to provide an adequate education, the lump-sum payment envisioned here can’t really be used for advanced education or training. The same holds, to a lesser degree, for starting a small business. We all need a certain level of personal capacity before we can make good use of a resource like this.13 Similarly, if we are suffering severe financial hardship, are heavily in debt, or are supporting an extended family, the lump sum is likely to be consumed by immediate needs rather than invested in the future.
Second, the two main purposes for which such a grant could be put—advanced education and starting a business—demand substantially separate treatments. They fall into different places of a complete life and are not simple substitutes. It is normal for young adults to focus on education and training but would-be entrepreneurs usually need more experience in their industry before starting their own shop. The business enterprise may also follow schooling. It seems obvious that public support for these two types of activities ought to be considered separately and, even if many of these grants are concentrated in early adulthood, they should not be limited to this time of life or even be exclusively one-time events. This event-based approach may still leave some room for a general purpose public inheritance awarded to young adults.
Third, addressing barriers to opportunity requires fair access to capital. A public inheritance can help with this, serving as a down payment, for example, but for this to be effective, governments must require that financial institutions to serve all Americans as a condition of doing business. They cannot be allowed to abandon whole segments of the population within the geographic areas they serve. To facilitate this, governments ought to take a greater role in guaranteeing loans as a way of significantly leveraging the grants associated with public inheritance programs.
This brings me to a general public policy point. We should think of grants and loans as interchangeable over time. We can multiply the amount of resources deployed for useful purposes by publicly securing private debt, but every loan secured by the public ought to be convertible to a grant through one or more processes, such as through public service or through debt forgiveness after good-faith income-sensitive repayment efforts. This is not a small matter. Investments can be expanded by two to five times using these methods.
In The Tools to Be Free14 I made my own proposal for how I believe we ought to support Americans’ post-secondary aspirations. It bears some resemblance to the stakeholding proposals. I will write more about that at a later time (next week?), but in summary: Americans ought to earn educational benefits through public service and pay for other costs by taking on publicly-secured income-sensitive loans. A broad-based service program after high school could create a universally accessible pathway to post-secondary education, provide some space for under-prepared students to mature and catch-up to their peers, and provide an experience that all Americans can share. The book did not emphasize this, but this program would be available to Americans across their whole lifetime, not just when they are graduating from high school.
These remarks only begin to scratch the surface. I expect I will return to this topic at a later time.
Proposed for next week: College Access as a Social Right (6 May 2025)
<All of the posts in On Social Citizenship connect. I recommend that readers go back and read the first entry in the series.>
Notes
The image: I asked for “Tom Paine pushing a wheelbarrow full of money.” It doesn’t look like Tom Paine, but it got the hat right, I think. Here he is without a hat…
Tom Paine, “Agrarian Justice”, in Philip Foner, ed., The Complete Writings of Thomas Paine (Citadel, 1945) 605-623.
I question this calculation, which I got from the Measuring Worth site. I suspect that £15 in 1797 would be worth a lot more today, but can’t prove it at the moment. Paine also proposed £10 per year as a public pension. If I take the lump-sum standard as 150% of this retiree minimum, then, in current U.S. dollars, the inheritance would be something more like $75,000.
Bruce Ackerman and Anne Alstott, The Stakeholder Society (Yale, 1999).
Bruce Ackerman and Anne Alstott,“Why Stakeholding?”, Politics and Society (32:1, 2004), 42.
Stakeholder Society, 9.
Anne Alstott, “Equal Opportunity and Inheritance Taxation”, 121 Harvard Law Review 469, at 472.
The Wikipedia entry for Blair’s program is good. https://en.wikipedia.org/wiki/ Child_trust_fund. In the 2008 campaign for president, Hillary Clinton floated something similar.
For more on the Connecticut program, see their web page. Similarly for the California program, though it is difficult to get much out of this site. The current U.S. proposal, now led by Cory Booker in the Senate and Ayanna Pressley in the House, calls for initial grants of $1000 per child, followed up with income-sensitive annual additions. These numbers are still not large enough, in Ackerman-Alstott terms, but they are getting closer. For more, see Booker’s press packet on the proposal. I note that many of the U.S. proposals are packaged as a response to the racial wealth gap. While they would certainly be a decent response to that problem, I don’t think that framing is politically helpful.
The expression “author of one’s own life” comes from Joseph Raz, The Morality of Freedom (Oxford, 1986). The Pettit quote is from Philip Pettit, On the People’s Terms (Cambridge, 2012), 32.
We often confound the concepts of advantage and privilege to our detriment. While related, their remedies are very different. This will get its own post. Some of the problem is marginal. For example, we presently reduce federal revenues by about $50 billion each year by allowing unrealized capital gains to pass untaxed to the next generation, according to the U.S. Treasury. To qualify as privilege (or its inverse, discrimination), there has to be some element we would recognize as moral cheating—some unpunished or unpunishable violation of a general rule. This is a big topic; hence the promise of its own post.
I am not prepared to parse the sources of inequality here, but some of it is attributable to the ordinary actions of people acting in acceptable ways, indeed, ways in which we ourselves would act if we had the opportunity. There is a reason why Rawls admitted that the problem of intergenerational justice “subjects any ethical theory to severe if not impossible tests”. [John Rawls, A Theory of Justice. 2e (Harvard 1999), §44.]
This arrangement satisfies the Rawlsian criteria for justice. It is, most importantly, a set-up that everyone can agree to (it satisfies the “strains of commitment”). Within the constraints we have imposed on ourselves [we could just abolish private schools, for example, but that is wildly unlikely], it also provides the maximum possible benefit to the least advantaged (it satisfies the “difference principle”). See John Rawls, A Theory of Justice. 2e (Harvard 1999).
This is why all the “baby bonds” programs include a financial literacy component (during high school, I suppose).
Stephen Minicucci, The Tools to Be Free: Social Citizenship, Education, and Service in the 21st Century, Lexington Books, 2004. Use promo code LXFANDF30 for 30% off (the very high list price).