Universal Basic Capital: Wealth Accumulation That Makes Sense for the 21st Century

Berggruen Institute
2 min readSep 4, 2020

In recent years, American society has been increasingly burdened by economic stagnation and pervasive inequality. 40% of adults in the United States don’t have $400 to spare in an emergency, and medical emergencies are now the primary cause of most personal bankruptcies. Without universal minimum provisions covering health, disability, and retirement, anyone’s household’s wealth can be destroyed by a random personal calamity.

A popular proposal that has garnered much public attention has been Universal Basic Income (UBI). UBI addresses many problems for very simply delivering support income but it fails to meaningfully address the roots of the vast disparities in wealth and power that exist within the current economy. For one, UBI does nothing to tackle the greatly unequal returns on wealth between the wealthy and the poor. A basic income alone cannot close the structural inequalities that drive the wealth gap.

Universal Basic Capital Explainer Video

On the other hand, Universal Basic Capita (UBC), is a predistribution mechanism to address wealth inequality, as opposed to simply income inequality like UBI, by using public ownership to grow personal assets. Building wealth provides necessary benefits that income alone cannot. For instance, the value of one’s combined assets can serve as a buffer in times of income fluctuation or emergencies. Having a liquid and protected safety net to fall back on also puts workers in a fairer bargaining position. The Berggrue Institute’s proposals of UBC and predistribution will have a more meaningful effect on inequality than UBI’s single goal of raising income.

UBC consists a series of ideas such as:

1. Postal Banking System and a guaranteed high yield savings accounts managed by the postal bank.

2. Baby Bonds: Bonds from birth funded directly out of Treasury and held in account by the federal government, similar to Social Security.

3. Government Retirement Accounts: Administered by either the Treasury or Federal Reserve as a pooled pension plan, GRAs would be individually owned accounts, returning individual contributions just like 401(k).

A postal banking system with guaranteed savings accounts, baby bonds, and guaranteed retirement accounts together provide the basis for a necessary and effective personal wealth-accumulation strategy that makes sense for the economy of the 21st century. No one should have to be entirely dependent on their employers or live in fear that an unforeseen medical emergency will put them under. Capitalism has conquered the world but now it needs to be reimagined so that can everyone can have a fair stake in the future.

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Berggruen Institute

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