A new route to universal national service and economic fairness.
It is time to enact a baby bond/national service program in America. There is a crisis of civic participation in America, one that marches in step with the erosion in social trust over the past several decades. Notwithstanding the Tea Party (which is more a governmental phenomenon than a grassroots social one) and Occupy Wall Street movements, we’ve become increasingly a nation of cynical spectators, not participants, in our own governance. No democracy can be healthy with the levels of mistrust and alienation that exist today in America. (Although, as California’s catastrophic referendum politics illustrates, it may be possible to overdo democratic participation.) We need to recreate a culture of national service that will have long-lasting benefits for civic participation, that will frontload some equity for those younger Americans who don’t experience equality of opportunity, and that, above all, will refurbish our country’s depleted stock of social capital. Once we get the plague of plutocracy under control, here’s how we can do it.
When an American citizen is born, the U.S. government should create, along with a Social Security number, a savings account for that child into which between $5,000 and $7,500 is placed—called a baby bond or, as some prefer to call it, a service bond. That child’s parents, family, and friends may contribute to that fund until the child becomes eighteen, and those contributions are treated like charitable deductions for tax purposes (assuming the continuation of the current tax structure), and can be subtracted from taxable income. Through the miracle of compound interest, every child will have a considerable nest egg upon reaching the age of consent—upward of $20,000 to $30,000.
The baby bond or service bond idea has been operating in this way in Great Britain on a modest scale since 2003; even if we just copied that model, it would be a way to get equity spread around to more young people who can put it to productive use.
But under my plan, the model would be expanded: to access the accumulated money, every citizen would have to perform national service in one of eight categories: the military, the Peace Corps, Educore (an organization like Teach for America), forestry and environmental remediation, urban “broken windows” brigades, hospice and elderly care, hospital ship duty, and a Habitat for Humanity-style program. (Military service should be made to attract only a small percentage of baby bonders, because the last thing our generals want or need is a huge number of untrained short-timers to put up with. We need to be clear that the baby bond/national service concept is not a smokescreen for a new military draft.)
The first twelve- or eighteen-month stint of service, complete with training, would have to be fulfilled between the ages of eighteen and twenty-five, and would entitle a person to three-fourths of his or her bond. Another nine- or twelve-month stint, performed at any time (including after age sixty-five, or the official retirement age), would entitle the person to the rest. The funds would simply stay in the same account earning interest until the owner chose to withdraw them. We would be crazy—we are crazy—not to encourage and incentivize our older citizens to share their experience with others.
The first period of service, in any of the eight categories, would have to be performed away from a person’s home area. The government would provide a stipend for basic subsistence housing and board (financed in part by the interest-earning money being held in maturing baby bond accounts), just as City Year and AmeriCorps do now.
A key reason for “circulating” our young adults is to break the cycle of poverty, drug addiction, and hopelessness that afflict far too many inner-city residents and a significant number of rural poor as well. A way to solve this problem is to remove disadvantaged young people from those harmful environments and have them come face-to-face with people of their own age from different places and circumstances. The best way to generate real understanding among young adults from all walks of life is to have them get to know each other—and, potentially, work alongside each other—in a neutral environment. The military draft once helped to fulfill this function; we need a new method through which we can increase our reserves of social trust.
Once they have fulfilled their first service period, young adults can use their bond money to pay for college or vocational training, put a down payment on a home, or start a business. This is the way to create a real shareholder mass democracy. The skills they learn during their service stint might alone be worth the price of the program in the long run.
Most Americans understand and support the rationale for Social Security: as a society we hold ourselves morally responsible for providing basic minimum care for our elderly out of respect for their humanity and an abiding sense of fairness toward them. If we are concerned about our elderly enough to pool social resources on their behalf, why don’t we take a similar attitude toward our young people, who not only deserve a fair start but whose accomplishments in constructive lives ahead of them will benefit us all? Baby bonds are not charity or welfare; they are socially selfish, since their results benefit everyone.
Because of the overall benefits to society, businesses and state and local government will have good reason to offer partial or full matching funds to encourage baby bonders to spend their money at colleges or in areas those entities want to support. If Pittsburgh, say, wanted in-state baby bonders to invest in real estate or businesses in certain parts of the city, the municipal government could offer special incentives to attract bond resources. If General Electric wanted to encourage more students to go into electrical engineering, it could offer to match any baby bonder funds used to pay for an academic major in that field. The possibilities, if not literally endless, are certainly extensive.
This proposal would integrate the many private volunteer and public service programs already in existence, and perhaps add a few more. It would entail dramatically scaling up and incentivizing in a new way what we already do in a fragmented and inadequate way. Still, a national service program of this magnitude would not be cheap. Even if we used existing nonprofit infrastructures to their maximum, the government would have to put aside (but not initially spend) money for baby bonds, pay out money when service is rendered, and pay for the operational costs of the program. According to one estimate, initial costs could run about $26 billion per year.
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