Trump Accounts: Capitalism by Permission

One of the more interesting announcements from Donald Trump has attracted little discussion. According to The Independent, Every American child born between January 2025 and the end of 2028 is to receive an investment account seeded with one thousand dollars from the Federal Government. Families, employers and anyone else willing to contribute may add to it. The money will be invested in American index funds, and the child will gain access on reaching adulthood, subject to restrictions on how it is spent. Billionaires have already begun competing with each other in promises of additional contributions. Michael Dell has pledged billions. Others have hurried after him.

The immediate reactions have been predictable. The Left complains that richer families will still end up richer than poorer families. The libertarian purists grumble that the State should not be involved in investment. Neither response tells us much. The question is why this policy exists at all. Why has an administration that speaks endlessly of markets and private enterprise decided that the Federal Government should create investment accounts for newborn children? The answer, I suggest, lies not in economics but in politics.

For almost half a century, the governing classes of the Western world have pursued policies that steadily detached ordinary people from productive ownership. Houses became investment vehicles rather than homes. Savings were quietly confiscated by inflation. Small businesses disappeared beneath regulation or were swallowed by giant corporations. Secure employment gave way to precarious contract work. Pension schemes became financial abstractions managed by institutions that treated their nominal owners as an inconvenient afterthought. The promise remained that everyone could become prosperous. The reality was that fewer people owned anything of lasting significance.

This mattered less while asset prices continued rising. A man who owned a house that doubled in value every decade could persuade himself that the system worked in his favor. But every financial bubble reaches its limits. Housing has become unattainable for most of the young. Stable employment has become elusive. Student debt has become normal. The result is a generation that hears constant sermons about capitalism while owning almost nothing that capitalism is supposed to protect.

No political system can survive indefinitely on contradictions this big. Capitalism draws legitimacy from ownership. Once ownership becomes the privilege of a narrowing minority, capitalism itself begins to lose legitimacy. It should therefore surprise no one that socialism has returned as a respectable doctrine among younger voters. People who own nothing are naturally inclined to support those who promise them something. Trump appears to understand this. His answer is not to promise redistribution. It is to manufacture capitalists.

The phrase deserves emphasis. The declared purpose of the scheme is not merely to help young people accumulate wealth. It is to ensure that every child begins life as an investor. According to Brad Gerstner, one of the businessmen supporting the proposal, “The answer to more socialism is more capitalism.” Quite so. But that admission also reveals the anxiety behind the proposal. No one attempts to create millions of capitalists unless he fears that capitalism itself has begun to lose its hold over public opinion. This is why the scheme deserves attention. It is not a financial reform. It is a political counter-offensive. Whether it succeeds is another matter.

Trump describes the accounts as ownership. Strictly speaking, they are nothing of the sort. The child cannot choose whether to have the account. The investments are prescribed. Access to the money is delayed until adulthood. Even then, the purposes for which it may be spent are closely regulated. Everything about the arrangement is supervised by the American Government.

This is one of the habits of modern governments. They increasingly redefine liberty as participation in systems designed by themselves. You are free to own, provided ownership occurs exactly as prescribed. You are free to invest, provided the investment follows approved channels. You are free to dispose of your own money, provided the bureaucracy approves your purposes. The old liberals regarded property as a sphere beyond politics. The modern State increasingly treats property as another administrative category.

None of this means the proposal is necessarily bad, or even another Trump scam. There is an obvious attraction in encouraging long-term saving rather than immediate consumption. Many eighteen-year-olds would show little wisdom if handed unrestricted access to several thousand dollars. Prudence has never been the defining characteristic of youth. Yet we should notice how instinctively every modern government assumes that private ownership must remain under official supervision.

There is another feature of the proposal that deserves examination. Observe the enthusiasm of America’s corporate aristocracy. Michael Dell, Ray Dalio, Sanjay Mehrotra and others are donating vast sums to expand these accounts. Their generosity may be sincere. I do not question their motives. Even so, the pattern is revealing. The great philanthropists of the nineteenth century founded universities, libraries, hospitals and museums. They created institutions outside the direct control of government. Their wealth strengthened civil society. Modern billionaires increasingly donate to programs designed by government and administered alongside government. Philanthropy has become another arm of public administration. The rich remain generous, but they are generous almost entirely within frameworks already approved by the State. This marks a subtle but profound change in the nature of power.

There is, however, another explanation for the proposal, and I suspect it is the more important. For thirty years, American policy rested on financialization. It scarcely mattered where goods were manufactured, provided financial markets continued rising. Ownership became increasingly detached from production. America could import what it consumed while exporting dollars and Treasury bonds. The arrangement looked permanent while the rest of the world accepted it.

The world has changed. China manufactures. Russia produces energy and raw materials. Supply chains have become geopolitical weapons. Even the United States has rediscovered words such as industry, tariffs and strategic production. Wealth can no longer be measured simply by the movement of figures across electronic screens. It requires factories, engineers, technicians and entrepreneurs. This requires a different kind of society. A nation of permanent debtors cannot easily become an industrial power. A people who regard capitalism as a confidence trick are unlikely to build businesses or invest patiently for the future. If America wishes to recover industrial strength, it must also recover the moral habits on which capitalism once depended. Saving, ownership, investment and delayed gratification all become politically valuable once again.

Trump Accounts fit within this wider transformation. They are not intended merely to produce larger bank balances eighteen years from now. They are intended to produce a generation psychologically invested in the existing economic order. Whether this is sufficient is doubtful. Real ownership cannot be manufactured by Treasury regulations. It grows out of conditions that governments have spent decades undermining. It needs stable money. It needs affordable housing. It needs secure property rights. It needs limited regulation. It needs the freedom to accumulate family wealth across generations without inflation or taxation quietly confiscating it. These were once the ordinary assumptions of American life. They have become increasingly exceptional.

The Federal Government now proposes to restore, through another federal programme, the habits of ownership that previous governments spent half a century eroding. That irony should not prevent us from recognizing the merits of the scheme. Better that children should own shares than merely accumulate welfare entitlements. Better that they should think of themselves as investors than as permanent clients of the State. Ownership remains morally superior to dependency. Even so, we should not mistake symptom for cure.

A society where every child requires a government investment account in order to acquire meaningful capital is already admitting that something has gone badly wrong. The proposal is less a celebration of American capitalism than a confession that American capitalism has become so attenuated that it now requires sponsorship from the Federal Government.