‘Baby Bonds’ Could Help the U.S. Wealth Gap

Wealth inequality—and specifically the yawning racial wealth gap (the median black family has about one-tenth the net worth of a white household)—is a thorny challenge for U.S. policymakers. One solution increasingly discussed by progressive politicians but seen as lacking popular support would be for the government to pay reparations to black Americans for the wealth lost during generations of slavery and discrimination. Duke University professor William “Sandy” Darity and his onetime student Darrick Hamilton, currently serving as director of Ohio State University’s Kirwan Institute for the Study of Race and Ethnicity, have proposed an interim step dubbed “baby bonds.” The bonds, averaging $25,000 but rising to as much as $60,000 for the poorest children, would be federally managed to increase by a guaranteed annual rate of 2 percent. The cost of up to $100 billion would be less than 3 percent of the U.S. budget. As they explain to Bloomberg News’s Matthew Boesler, the bonds would seek to minimize the wealth disparity between the richest and the poorest, regardless of race.

Matthew Boesler: What are baby bonds, and how would they work?