Monday, January 26, 2004

Gov't Handouts For Demon Youth?

Harold Ford, Jr. had a thought-provoking op ed in Sunday's Washington Post, outlining a couple of proposals intended to build assets among people with moderate income.

His central proposal is to provide "American Stakeholder Accounts" of $1000 in investment funds for each child born in the United States ($2000 for children born into families below the poverty line). The accounts would accrue interest until the child was 18, at which point the money could be withdrawn tax-free and used for... well, whatever the kid wants to use the capital for, I suppose. Ford offers a list of sober, reasonable choices - "to pay college tuition, purchase a home, start a business or invest for retirement" - but his program is modeled after a British program in which, apparently, the 18-year-old recipient just gets free ownership of the money.

I don't think this program will ever get off the ground, if only because the primary beneficiaries are teenagers - one of the most despised groups in America. But it's an interesting prospect. My cynical initial reaction was that we'd see more 18-year-olds driving nice cars than ever before, but in retrospect, that may be unfair. Maybe kids who grew up knowing that they'd have a financial stake coming to them would think about money differently. Our society currently treats youth as irresponsible children who can't be trusted to make their own choices, and who can be expected to be dependent on adults until somewhere in their mid-twenties. Accurate perception, or self-fulfilling prophecy?

We'd certainly have to start raising and educating teenagers differently if we knew that, at the end of their minority, they'd all have full control of $6,000 or so. We could, of course, put heavy restrictions on how the money could be spent. It could be limited to the list of adult-approved uses Ford suggests, things like college tuition or job training. But it would be far more interesting to provide a mandatory high school course in money management - principles of investing, for example, and how to avoid scams - and then just turn young adults loose. Maybe they'd want to pour the money into world travel or political activism or the charity of their choice or a really nice ride. Maybe they'd waste it all on clothes and CDs, and in six months they'd be crying that it was all gone. Probably they wouldn't make the precise choices that adults would make for them.

But growing up conscious that, at a defined age, they'd be handed the adult-level status and responsibility that comes with a significant amount of money to spend or invest - that just might push back the ludicrously extended adolescence our society has imposed on young people, and prompt them to take themselves seriously, as adults. In turn, it might prompt adults to take them more seriously, as well. I'm all for that.