The Big Idea: Asset Building

A novel solution to yawning inequality in America is on the horizon: widespread wealth creation. Usually, alarms of gaping inequality are met with calls for boosting the minimum wage, the earned-income tax credit, and unions (all good ideas), or redistributing wealth through higher taxes. But wealth creation has been a great idea for the U.S. historically, and now we just need to do it for the majority of Americans that have little or no wealth.

And it is a majority. While 20 percent of Americans control 83 percent of the nation's wealth, 60 percent -- a hands-down majority -- own less than 5 percent.

A great place to start is at the beginning. At a cost of about $8 billion a year, every baby born in the U.S. gets a "start in life" deposit of $2,000. The interest-bearing lifetime account would be topped off at the completion of grade school and high school. This account -- which would then be the centerpiece of further public and private contributions -- would be restricted to economy-boosting assets such as college, a first home, a small business, or a nest-egg for retirement. For the working-poor, we should expand "individual development accounts," matched savings accounts that already are starting to transform the lives of about twenty thousand people nationwide. And finally, our massive public and private retirement systems could be "democratized" and reoriented toward wealth accumulation through a combination of matches and refundable tax credits.

Thomas Jefferson argued that widespread property ownership was the basis of a sound democracy. He was right then, and his principle is right now, in ways he couldn't have imagined.