Bill Ackman: Give Every Child $6,750 So They Retire Millionaires

[Crtcl Rice Theory 2,432]

 

The American dream has “become a disappointment” for many Americans, Bill Ackman recently argued in a New York Times DealBook essay. Ackman, the CEO of Pershing Square Capital Management, noted that an impetus for rising inequality in America is the stagnation of wage growth vis-a-vis the boom in investment returns, which disproportionately favor wealthy Americans. To reduce inequality, Ackman proposes funding an investment account for every newborn in the US that “makes every American an owner of the compound growth in value of corporate America.”

 

 

$6,750 Cradle-To-Millionaire Proposal

Ackman’s proposal aims to tackle wealth inequality by “creating a way for those with no investment assets to participate in the success of capitalism.” He would have the government create and fund an investment account for every child, which he dubs a “Birthright fund”, that would be invested in zero-cost equity index funds. Individuals would be prohibited from accessing and withdrawing the funds until at least age 65.

 

The concept harnesses one of the most important and magical principles of personal finance: the time value of money. By allowing an initial investment to compound for 65 years, an investment at birth could help create long-term financial security for every new baby. Ackman uses a stylistic example showing how a Birthright account funded with $6,750, would grow to $1 million in 65 years and $2 million after 74 years, assuming an 8 percent annual return. A $6,750 per baby plan would cost the U.S. government roughly $26 billion each year, given current birth rates

https://www.forbes.com/sites/shaharziv/2020/12/07/bill-ackman-give-every-child-6750-so-they-retire-millionaires/

 

 

[Dashinka 25,891]

Who would manage the fund to ensure an 8% return?  The same folks that handle the SSA?

[Crtcl Rice Theory 2,432]

1 minute ago, Dashinka said:

Who would manage the fund to ensure an 8% return?  The same folks that handle the SSA?

That and several other questions, but the concept is brilliant.

[Burnt Reynolds 5,058]

15 minutes ago, Dashinka said:

Who would manage the fund to ensure an 8% return?  The same folks that handle the SSA?

" Ackman, the CEO of Pershing Square Capital Management"

 

This is the math I see.

[moxy 1,051]

Tax money to turn millionaires into billionaires, and billionaires into multi-billionaires: hey, that's just how supply-side economics works, maybe get a job loser

Tax money to offset wage stagnation and inequity: hand-outs to people who don't deserve it, socialism, communism

 

I don't know if Ackman's plan has merit, but defending the current system of making the wealthy wealthier while destroying the middle class and a boot heel on the poor is just nuts.

[Burnt Reynolds 5,058]

Over the last century taxpayers are funding more and more wealth distribution by the government yet the same wealthiest and most powerful are the beneficiaries of it (given the greatly expanded wealth and power disparities), to which the bright idea of that same government doing the same thing but on a much larger scale (of wealth distribution) is proposed. 

 

This idea is like facedesking, complaining about it being painful, then suggesting to solve the pain one should facedesk much harder. 

 

This is something I'd propose if I really hated a country and wanted to see it implode. I'm skeptical after all these years that this is simply imagination run amok. 

Edited December 8, 2020 by Burnt Reynolds

[Dashinka 25,891]

55 minutes ago, CanAm1980 said:

That and several other questions, but the concept is brilliant.

I would think that concept could be conveyed without the use of taxpayer money.  Teach a person to fish comes to mind.

[yuna628 9,873]

Not really something I can get behind. If you want to have a kid, I'd hope a parent would try and set aside something for their future if that's really what they wanted to do.

[Prizm123 1,086]

i am dubious about anything that  assumes 8% returns consistently for 65 years.

what happens if the person dies before 65?

what happens if they get really sick and need that money before then?

 

this is as unrealistic as UBI

[Crtcl Rice Theory 2,432]

4 hours ago, Prizm123 said:

i am dubious about anything that  assumes 8% returns consistently for 65 years.

SP 500 returns 8% since 1952, 10% since 1922. If you want safety lower your returns with 80/20 to bonds.

 

4 hours ago, Prizm123 said:

what happens if the person dies before 65?

What happens to a 401k when someone passes? The wealth is passed to the heirs, this is about wealth creation so the wealth stays with the heirs. 

 

4 hours ago, Prizm123 said:

what happens if they get really sick and need that money before then?

We have an existing Social Security for death of a parent and disabilities.  Short term disabilities would need another plan. You would also want to.

 

4 hours ago, Prizm123 said:

this is as unrealistic as UBI

ubi?

[Dashinka 25,891]

4 minutes ago, CanAm1980 said:

SP 500 returns 8% since 1952, 10% since 1922. If you want safety lower your returns with 80/20 to bonds.

 

What happens to a 401k when someone passes? The wealth is passed to the heirs, this is about wealth creation so the wealth stays with the heirs. 

 

We have an existing Social Security for death of a parent and disabilities.  Short term disabilities would need another plan. You would also want to.

 

ubi?

Universal Basic Income.

 

As to comparing this to a 401K if someone passes, this plan, if ever enacted, would probably not be the same since it was initially funded with taxpayer money.  I would expect any Act that created this would include the money coming back to the government if not used.

[Crtcl Rice Theory 2,432]

24 minutes ago, Dashinka said:

Universal Basic Income.

This is absolutely not UBI, this would actually reduce ongoing expenditures at the Fed, state and local level for seniors in poverty.

 

This is a plan that would give a new generation to retire in dignity regardless of what the previous generation was able to leave them. SSI is simply not enough for the majority of people.

 

I guess there is a hazard that people with compulsions might destroy themselves or others with gambling or substance abuse, but there would also be families impacted but a number of social ills outside their control lifted out of poverty.

 

24 minutes ago, Dashinka said:

As to comparing this to a 401K if someone passes, this plan, if ever enacted, would probably not be the same since it was initially funded with taxpayer money.  I would expect any Act that created this would include the money coming back to the government if not used.

At this point we are talking thought experiment but:

It would be their asset at age 65. If the government wants to tax it as special income or claw a portion back via death tax that is another dimension. 

[Crtcl Rice Theory 2,432]

6 hours ago, yuna628 said:

Not really something I can get behind. If you want to have a kid, I'd hope a parent would try and set aside something for their future if that's really what they wanted to do.

I am focused on the outcome for all children, not just those with means. Families with means are likely transferring wealth between generations throughout their life.

 

With the investment at birth roughly equivalent to one year of school, the burden of poverty in retirement could be all but eliminated. 

[Burnt Reynolds 5,058]

I think we need to separate if these ideas are simply "assuming the right conditions" or under these corrupt institutions that have shown that letting them control wealth in this fashion doesn't work out the way you want it to. In a practical sense, if one is talking "wealth transfer" (which is better than simply printing out endless currency), there's plenty of billionaires right this minute who are comically advocating such guaranteed income ideas and yet not putting their money where their mouth is. They could do this at any given moment, instead they're using other government mandates to further expand those financial disparities. No way.

Edited December 8, 2020 by Burnt Reynolds

[Dashinka 25,891]

34 minutes ago, CanAm1980 said:

This is absolutely not UBI, this would actually reduce ongoing expenditures at the Fed, state and local level for seniors in poverty.

 

This is a plan that would give a new generation to retire in dignity regardless of what the previous generation was able to leave them. SSI is simply not enough for the majority of people.

 

I guess there is a hazard that people with compulsions might destroy themselves or others with gambling or substance abuse, but there would also be families impacted but a number of social ills outside their control lifted out of poverty.

 

At this point we are talking thought experiment but:

It would be their asset at age 65. If the government wants to tax it as special income or claw a portion back via death tax that is another dimension. 

Yeah, I was only clarifying your question as to what “ubi” meant.  As to the other stuff, the problem is that I believe these were the same justifications used for starting SSI.  As I said earlier, not sure how this would be any different with the government involved.