The Futures Account

A bold proposal to sustain the American middle class long into the future.

Appeared in: Volume 10, Number 1 | Published on: August 15, 2014
Richard J. Gelles served as dean of the School of Social Policy & Practice at the University of Pennsylvania from 2001 to 2014. He currently holds the Joanne and Raymond Welsh Chair of Child Welfare and Family Violence.
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  • wigwag

    What I conclude from reading this article is that Joanne and Raymond Welsh have not gotten their money’s worth from the chair that they endowed at the University of Pennsylvania. If this is the best that the incumbent who holds their chair can do, they would have been better off saving their money, spending it on a nice vacation or passing it along to their children.

    The idea that what ails the American middle class can be substantially remediated by the creation of the types of accounts recommended by the author is simply laughable. So is citing the GI Bill and the policies enacted in the aftermath of World War II as a justification for Professor Gelles’ lame brained scheme.

    Perhaps it has’t occurred to Professor Gelles, but the circumstances that existed in the late 1940s in no way resemble what Americans confront in 2014. Europe and Asia aren’t in rubble with the United States thriving as the only remaining nation with an intact economy; there was a baby boom then but there is none now; the pent up demand in the aftermath of an extraordinarily destructive war is not present in the contemporary economy and the rate at which automation is eliminating middle class jobs bears no relationship at all to the situation that existed at the conclusion of World War II.

    It pains me to agree with Walter Russell Mead, but he’s on to something when he suggests that the United States economy is on the verge of revolutionary transformation. Yes, Mead exaggerates and he tends to cite evidence that supports his thesis and ignore evidence that casts his thesis in doubt, but Mead’s analysis is far more sophisticated than the dreck offered up by Professor Gelles.

    What will save the middle class (if it is to be saved at all), is a higher education system that provides a better education and a dramatically reduced cost; a health care delivery system that provides high quality care without bankrupting the economy, a research and development plan that insures that the United States remains the most innovative nation in the world and a series of productivity improvements in the service sector (especially government) that matches what we have seen in the manufacturing sector.

    What do you suppose an endowed chair and former Dean at the University of Pennsylvania earns in a year? My guess is somewhere between $150,000-$300,000 per year. In Henry VI, Part 2, Act 4, Dick famously suggests,

    “The first thing we do, let’s kill all the lawyers.”

    I would suggest substituting the Professors for the lawyers. Metaphorically, of course.

  • Boritz

    Interesting idea. &nbspBefore we do this let’s move the social security fund out of the general fund back into individual accounts and re-stock it with dollars to replace the IOUs that reside there now. Then maybe we can trust the government to administer a baby fund without raiding it for current spending, &nbspThey are already salivating over all the money in private 401K accounts and would like to take those the way of social security as well.

    • rheddles

      social security has never had individual accounts. it has always been pay as you go.

  • qet

    An entire socio-economic class created and maintained by the central government. That those proposing such a thing today are not even (necessarily) socialists says a great deal about the evolution of our intellectual class these past 50 years. No self-respecting policy wonk would advocate just simply giving each person $X. No, no. They might not spend it “correctly.” No–we must set all kinds of conditions (calling them “incentives” doesn’t change their patronizing character). Conditions would end up being the main game in any such scheme. Conditions will fill the pages of the journals the tenure-seekers will need to be published in to advance their careers. You can have money if you do A, B and C when we tell you and where we tell you and how we tell you, all because we are only thinking of your best interests and know them better than you because we are scientists and experts and look only to the “data” when deciding how your life will be governed. I mean, we have doctorates for Chrissake!

    This kind of program will be an indentured servitude in all but name.

  • FriendlyGoat

    1) There might be lots of room for debate about the amounts and mechanisms for these kinds of accounts, or even about whether to do them at all. But if we ever do anything like this, then Mr. Gelles is right about two of his principles:
    They should be universal with no means testing to exclude rich families, and universal with no eligibility conditions that could exclude ANYONE else, period.

    2) The third sentence of the second paragraph seems to imply that the only purpose of high taxes on high incomes is to raise revenue for government use or for redistribution to the needy. To our detriment, we no longer seem to notice that high taxes could prevent ridiculous and costly excesses from siphoning money out of our middle class to begin with—–and that such taxation was once effectively in place. Do we not know that we’re all paying too much to financial traders, CEOs, trial lawyers and entertainers (including sports), perhaps in that order of severity of problem? Do we not know why this is now the case, after 35 years of tax cuts?

  • Corlyss

    “Economic mobility has declined”

    Well, that ain’t true. [] []
    It always makes me nervous when I spot a bit of propaganda in a professional’s analysis before I get to the bottom of the screen.

    • Andrew Allison

      Corlyss, that was only half of it. The rest is, “Ladies, please remain seated throughout the entire performance.” [/grin]

      • Corlyss

        LOL. He didn’t tell me that part because I gather he didn’t peek into the ladies rooms!

        • Curious Mayhem

          It’s true: economic mobility has not declined, and, if you include benefits, real per capita wages are still rising. But it creates a bit of a problem when people don’t have the growth in *discretionary* real per capita income and instead when that growth is already spoken for in the form of higher medical and education costs.

          This notion of having “allowances” for this and that, while ignoring the explosion of costs of middle class life (health case, education, and more), is myopic. In Europe, child allowances have done nothing to halt their demographic slide, which is probably headed into an inevitable abyss.

          The problem is that making a good middle-class living has just gotten very expensive in the last 20 years or so. The combination of exploding medical, educational, and public services costs (in the form of higher state and local taxes, mainly) has changed the situation a great deal from what it was 30 or 40 years ago. If you look at the differences in costs between predominatly “blue” states and predominantly “red” ones, and note the consequent differences in jobs and economic growth, you’ll have the explanation.

          There are too many parasites in our system, all engaged in what economists politely call “rent seeking” — figuring out ways of making themselves both unavoidable and expensive to the rest of us.

  • Fat_Man

    This proposal strikes me as an instance of Reynolds’ Law:

    “The government decides to try to increase the middle class by subsidizing things that middle class people have: If middle-class people go to college and own homes, then surely if more people go to college and own homes, we’ll have more middle-class people. But homeownership and college aren’t causes of middle-class status, they’re markers for possessing the kinds of traits — self-discipline, the ability to defer gratification, etc. — that let you enter, and stay, in the middle class. Subsidizing the markers doesn’t produce the traits; if anything, it undermines them.
    Dubbed Reynolds’ Law

    It is expensive and it won’t help.

    • Corlyss

      The proponents always point to the success of the GI bill. They have lost a bit of historical consciousness somewhere along the line, probably in the bin labeled “all purpose self-flattering propaganda.” The GI bill was specifically intended to avoid the demobilization consequences that attended every major war, including WW1, i.e., the mobs of rootless, homeless men wandering around the landscape and setting up hobo jungles, demanding services in urban areas, menacing law-abiding residents, etc. The GI bill wasn’t NEARLY as charitable as people think, just like the child labor laws were not nearly as charitable as they are always taught, even in my history classes. They were tools of the unions who struggled against cheaper child labor.

  • Antonov Norilsk

    “Can we help expand the middle class and re-open the doors for upward mobility in 2014? Absolutely. The method would model the GI Bill, but use the form of what are called “Baby Bonds” or “child allowances.””

    No. This is mistaken in the way so much of modern Liberalism (4.1) is mistaken. The 4.1 Liberal sees something that he thinks everybody should have in the name of “equality.” In this case, Professor Gelles wants everybody to own homes, go to college, and start businesses. He then proposes to buy all these things for everybody by plugging everyone into the giant reservoir of money known as the US Treasury.

    I heartily agree with Fat_Man above who notes that this mode of thinking commits the fallacy of Reynolds law, but I want to take issue with another aspect of this type of thinking. Professor Gelles claims that he wants to do this ‘on the model’ of the GI bill. But the GI bill was not a blanket giveaway for the sake of giving money away. It was a back-payment to the men who served in the crusade to liberate the world from Nazism and Japanese Feudal Imperialism. The government said, in effect: “In gratitude for your multi-year sacrifice in uniform fighting the evils of this age in one of the most destructive conflicts mankind has ever known, we will help you build your own home.” Professor Geller’s proposal would represent the government saying: “Because you exist, you deserve to have stuff.” For Professor Geller to compare this idea with the GI Bill is an insult to the Greatest Generation (before you ask, I’m not a part of it; I’m in the Gimme Generation, otherwise known as the Millennials).

  • Andrew Allison

    The US would do well to look at Australia’s experience. Desperately needing to increase it’s population, the country offered $5,000 per baby. The result was an influx of, largely uneducated, foreigners who proceeded to procreate madly. Needless to say, the policy has been changed.

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