The Deciding Decade: Professor Darrick Hamilton on ‘baby bonds’ and the future of our economy post-COVID

Pete Buttigieg: Hi, I’m Pete Buttigieg and this is The Deciding Decade.

Our economy is in rough shape right now. There’s no denying that. Well some people, of course, deny it and they mostly work in the White House. But even before COVID and this terrible crash, we were all wrestling with the glaring issues within our economic system. On the campaign trail I certainly learned a lot debating my competitors and I think you’ll see in the conversation with my guest today — who I should say was an active Bernie supporter — that we really all do tend to agree on the fundamentals much more than we disagree on some of the specifics.

This is the time for all of us to be thinking about how we can rebuild our economy better than ever before. And that means actively thinking about and considering the factors that have shaped our economic system — namely, racial and social inequities. When it comes to delivering greater racial equality and preparing a future generation for success, two different questions are coming before us at the same time: How do we save our economy, in the context of the pandemic, and how do we make permanent decisions that will make our society and our economy more equitable?

My guest today is Professor Darrick Hamilton of The New School. He is the founding director of the new institute for the Study of Race, Stratification and Political Economy, he’s a leading scholar in a field called stratification economics. I’m going to ask him what that means. He is someone whose work largely focuses on the causes, consequences, and remedies of racial and ethnic inequality in our economic, health, and education systems.

He’s also one of the leading proponents of baby bonds, a topic that I’m very much looking forward to discussing. And his ideas on how to close our wealth gap and move our society towards greater equity and civic participation have had a big impact on how our country and figures in politics and governments now talk about economic equality. Welcome professor, really great to have you.

Darrick Hamilton: What a generous introduction. I’m so glad to be here.

Pete Buttigieg: Well, thanks. I’m really excited to be able to talk. Just before we jump into economics and policy, I wonder if I could start on a more personal note, if I may. You’ve been open in the past about how the experience of losing your parents in high school shaped your trajectory. And I think we’re at a moment right now where our country is facing loss, and many are experiencing levels of personal vulnerability and pain. Would you say that that experience propelled you into the field of economics? And how has it shaped the way that you think about your work?

Darrick Hamilton: There’s no question it’s had profound influence on my life. We get compelled in ways that we may or may not completely understand. I’ve tried to shy away from using my experience as if I’m more expert than someone, but I also embrace my experience and I’m proud of it and want to honor what my parents have done and try to create a different pathway. Because I believe ultimately, it was stress that killed them. I believe that my parents desired for their children to have better outcomes in their lives. I grew up in Bedford–Stuyvesant. We did not have silver spoons. But they were working class individuals, and they desired for us, me and my sister and other siblings, to be able to go to the best education they could afford. And in so doing, they were in over their heads in being able to provide those tuition dollars.

Pete Buttigieg: Do you feel like there’s still a sense of detachment from the life stories and experiences you’re talking about and the discipline of economics? And I remember arriving in college and feeling like… They call it the dismal science. It’s a field that’s viewed as a wash in numbers, and sometimes maybe aloof to the concerns of everyday life. How did that strike you when you were first studying, and how does that now strike you as a professional and a leading economic scholar?

Darrick Hamilton: The discipline of economics purports itself as being scientific, as being rigorous. And if you could see me, I would have air quotes up. It is supposed to be, and I’m using again air quotes, a serious endeavor that doesn’t involve feelings. But the problem is, ironically, that it almost becomes dogmatic to think of us as atomistic agents floating around, and that by our sheer effort, our sheer know-how, we will be compelled into distribution, I think is a problematic understanding of society. There is a whole lot of value and usefulness that comes out of economics, but there’s great limitations.

And I’d say that at the root of those limitations, there’s a conception of power, a conception that we aren’t just atomistic agents floating around, that there are power dynamics by which we enter relationships beyond even income. So one’s race, one’s gender sadly might have productive capacities in individual transactions. And we would desire that that’s not the society we live in. We would hope that we’re able to live by what we purport, which is individual effort, ingenuity, and know-how could lead to a one having agency in determining their outcome. But that’s an aspiration. And in order to achieve that aspiration, I think it’s critical for us to understand structures that aren’t just random, that are cumulative effects of our past that have led to institutions as well as relationship dynamics by which one’s identity could have impact in transaction.

Pete Buttigieg: So, is it safe to say that’s a definition of stratification economics, that it’s a kind of economics that takes account for these forms of power in these kinds of structures?

Darrick Hamilton: That pretty much is what it is. It’s trying to build and improve upon the discipline of economics at its foundation, but also incorporate ideas from sociology. When one thinks about social hierarchy and identity, ideas from social psychology. When one thinks about the role in which things like cognitive dissonance, things like stereotype threat, social stigma might impact a relationship. Political science, understanding power, it tries diffusing ideas from multiple disciplines to understand how identity itself can have productive capacities.

Pete Buttigieg: So this comes to the heart of one of the things that I think is most interesting about your work, which is this question or this tension between policies that are neutral, at least on their face when it comes to things like race, and policies that take account of that. For example, you’re one of the leading proponents of the concept of baby bonds which, if I understand it right and in your conception, is a universal program. It has impact on things like the racial wealth gap. But it would be set up in a way that every infant born in America gets an endowment that one day they are able to tap into and use for whatever purpose suits them best.

In other words, in its design, it sounds like a race-neutral, or I might even say a colorblind policy. At the same time, you’ve spoken about reparations. The definition you just offered of stratification economics talks about why we have to take account of the primary, not just peripheral effects of things like race, and gender, and economic outcomes. And I assume that means also in our policies. So how do you weigh those things? How do you fit together a worldview in a policy program that includes both things that have a race-neutral design and things that specifically contemplate the specific racial reasons or other structural reasons why we have the inequalities we do today?

Darrick Hamilton: Right. And let me say a couple of things at the outset, which is baby bonds is not intended to replace reparations but rather compliment reparations. Reparations is a retrospective approach that’s aimed at addressing both racial injustice as well as economic injustice that’s specific towards those people that were affected by that previous injustice. Baby bonds, on the other hand, is a prospective policy aimed at endowing everybody at birth independent of their race, gender, or other characteristic with at least a capital foundation.

And let me be careful. I know you use the term race-neutral and colorblind to elicit a response. And the response is, in fact, it’s intended by design to not be race-neutral or colorblind, to rather redress some of the racist structures that have led to disparate outcomes at endowment based on one’s race, or even patriarchy in our society in which we might leave an inheritance to a male offspring different than a female offspring. It’s saying that, as a birthright, regardless of the circumstance in which you’re born in terms of class, gender, race, you will have provided to you a capital endowment that you can use when you become an adult so that you will have a chance to accumulate assets over your life course.

Because blacks and whites are so disparate in terms of wealth, it becomes actively anti-racist if, one, the criteria for inclusion is wealth and two, the outcome intended to be redressed is wealth. We know a lot of the New Deal policies by both design and implementation were actively racist although they were seemingly race-neutral. For example, Social Security at its inception excluding domestic and agricultural workers, whom at the time, Black women who were employed 90% of them worked in that field and over a half of Black men, was a design issue that was racist.

Pete Buttigieg: Right. So there’s no mention of race in the text of the policy. But the text of the policy excludes whole categories of workers, and the effect of that is unmistakably and profoundly racist.

Darrick Hamilton: Perfect. It would be naive to think that that was just coincidental. It wasn’t designed in a vacuum. So now, thinking about baby bonds, although it might facially, and again I’m putting air quotes up, seem race-neutral, it was intentional in its design and as well as the implementation to be anti-racist. Not exclusionary for certain race groups, because of course there are many white individuals that grow up without assets or access to assets as well. At birth, you would be seated at this account in a progressive way based on the family position in which you’re born-

Pete Buttigieg: So the less wealthy you are, the bigger your initial endowment? Is that the idea?

Darrick Hamilton: That’s right.

Pete Buttigieg: Okay.

Darrick Hamilton: And then, when you become a young adult, it is restricted… Not to be paternalistic, but it’s restricted because the program design is aimed at addressing wealth inequality to some asset-enhancing endeavor. And that would be something like owning a home, basically a down payment on a home, some seed capital to start a business, or being able to finance an education without debt. And if you’re not ready to use it, you won’t be forced to use it. It could roll over in an IRA-type retirement account until you’re ready to use it or you have additional resources towards your retirement.

Pete Buttigieg: I want to come back to what you were saying about the New Deal. You mentioned some of the ways that the New Deal 1.0 helped create a lot of white wealth, but its implementation and even its design was something that really increased racial inequity in a lot of ways. I’ve heard you speak of a new New Deal. So what has to happen not just theoretically, but maybe politically so that New Deal 2.0, if we’re headed that way, can do better when it comes to equity than the original?

Darrick Hamilton: I think the New Deal is a good model. The problem and the lessons to learn from the New Deal is that maybe the new iteration we should call it anti-racist, anti-sexist New Deal so that we are actively creating design and implementation issues that are inclusive. The New Deal was racist by design and implementation but there’s still lessons to be gathered. It created an asset-based white middle class. It provided literal entitlements, and we don’t like this word in our political jargon today, but they were set asides and giveaways, literally giveaways as part of the New Deal. And those giveaways weren’t to disincentivize people, they were to give people the foundation so they can build upon. So I think the lesson is, government has a role to provide a set amount of economic resources so that people can have agency in their lives.

If you don’t have capital, you don’t have agency. The other lesson from the New Deal is that there was no one silver bullet policy. It was comprehensive. It was resources dedicated towards education, towards home ownership, towards actually having a job where the government literally provided jobs to people. It was jobs that built our infrastructure. So I think those are clear lessons to learn and think about what we can apply today not only to redress our pandemic emergency and risk of going into a depression, but to build a new future promoting shared prosperity.

Pete Buttigieg: Now, you mentioned another dimension of the New Deal, not just the entitlement part, but the work part, creating an opportunity for more people to work. There are trails and parks and structures right here in South Bend. For example, down by our river, we still call it the WPA walk, because it was built by people in the Works Progress Administration under the New Deal. But if I’m not mistaken, that program did not include a guarantee of work for every American. You’ve proposed a federal jobs guarantee. How’s that different, and why is that important at a time like this?

Darrick Hamilton: The WPA might not have used the word guarantee but in a lot of places, it was practically a guarantee. Not only will it ensure that anyone who desires to work will have a productive job, but it will provide one of the best labor market bargaining power for existing workers already in place. And that is the removal of the threat of unemployment. So if we think about a lot of workers… I use this example a lot: If our society where women put up with a lot of sexual harassment at work, if you’re a waitress working somewhere to feed your child and your livelihood is dependent upon your job, and you put up with some customer as well as coworker discrimination, having the ability of an alternative is empowering. You can tell the customers and your employer right then and there that this is not tolerable without the threat that you won’t have that job and literally be a pauper.

Pete Buttigieg: And one of the main things we’ve seen right now, I think, is the reduction in the power of workers over the years. So this sounds like this speaks to, again, that power equation you were talking about in the ways that you approach economics.

Darrick Hamilton: A lot of our rhetoric around work has to do with disciplining workers. We want to keep workers sufficiently low wage so that employers will have greater leverage. That is some horrible rhetoric, and a framing of political economy that we ultimately need to change. A notion that if we simply have a supply side economic policies, that this is going to create some dynamism, that it’s going to trickle down to all of us.

We have not observed that. We’ve observed stagnant wages and all the productivity gains in America going to those that are elite and wealthy for the last 50 years. And a lot of that has been the result of that narrative and that policy framing. What something like a federal job guarantee does, it flips that narrative on its head. It says, let’s discipline the workplace. If you want to hire American workers, you have to at least offer this level of wages. It becomes a way of ensuring that at a minimum, you will have decent wages, decent benefits, and decent working conditions so that you really can have agency and dignity in your life.

Pete Buttigieg: Now, another remarkable thing that happened this year was, again, because of an emergency, the fact that the federal government cut a check to every American. So when I was campaigning for president, Andrew Yang was a proponent of the idea of universal basic income. And it was an idea that had been discussed a little bit but felt pretty far out to be discussed by a presidential candidate. And yet, a few months later after Andrew and I left the race, it was actually happening almost overnight with bipartisan consensus. True, not a policy of universal basic income, but a decision to send income to every American. I remember you told me earlier that you’re skeptical of universal basic income, but you support guaranteed income. So first of all, what’s the difference between those two things? And then, why is guaranteed income a better approach than what we think of when we hear about that idea of universal basic income or UBI?

Darrick Hamilton: So universal basic income as discussed by Yang during the campaign was one where every American would get the same dollar amount regardless of income and everything. To me, that approach dilutes the power of income. It is almost a definition of inflation, that you literally have raised the price level in income by a certain dollar amount. Another problem is that you are almost definitionally subsidizing the wealth of those that are wealthy, because those that are wealthy don’t have to consume that money because they have a good amount of consumable income to begin with. So they end up using it to increase their portfolio, asset portfolio, where a poor person by definition is a subsistence person and ends up spending that money. So that’s another.

It becomes inequality enhancing. And then another critique is, even in his proposal, it included a tragic choice on poor people in my estimation where they would be asked to choose between the basic income or some of the social safety net benefits that they’re currently getting. So asking a poor person to choose between a TANF, or a SNAP, or some other asset that they might be getting in order to receive the basic income, that also is not only not necessarily improving their real situation, but again, why are we asking poor people to make these type of tragic choices? They don’t have adequate income. And if we want to address that, then simply offer them those resources so that they can make really good decisions in their lives. So I guess I saw the framing also as grounded in this neoliberal notion, that as a substitute for our current social safety net that will supply people with income.

No, there are certain issues in which our social safety net is still very valuable and needs additional investments, not divestment. Given those critiques, I am totally on board with the principle that we can literally eliminate poverty in America by offering income, an adequate amount of income, to lift everybody out of poverty. We have enough resources in America by using the tax code. The earned income tax structure is basically a negative income tax.

We made a political decision to restrict it only to those people that are working, but that’s a political decision. From an economic standpoint, we could literally offer earned income tax credit, call it something else if you want, guaranteed income. We can use the tax code to literally eliminate poverty in America and stretch out their earned income tax well beyond working poverty towards lifting families up to the middle class.

Pete Buttigieg: So I want to pull you again a little more into the realm of politics. The Democratic Party is famously a big tent. We’ve got a lot of different voices and a lot of different perspectives. You were involved with Bernie Sanders campaign. You’re a proponent of baby bonds which was championed by Cory Booker among others. You’ve worked with Democratic candidates and policy makers really across the party. I wonder what lessons you might have learned or what conclusions you might have drawn about what the party is, and where the party is headed, and how fractured or unified we might be on my side of the aisle especially as we contemplate what it might look like to govern under a potential Biden administration, and perhaps even with a senate majority?

Darrick Hamilton: If we think about the Democratic Party more broadly, we’ve moved a lot. The party has moved a great deal. It still has a long way to go. But if we think about the conversations on those debate stages this round versus years past, we got to recognize there’s been progress.

The conversations around race are not as euphemistic as they have been in the past. We can have a conversation about reparations. I love the fact that it almost became a platform idea that everybody was at least at the stage of H.R.40. Of course, we need to go further or whatever, but that’s progress. The biggest constraint on the Democratic Party is PayGo.

PayGo is an albatross on the Democratic Party, that big ideas get stopped before they even get started by this notion of, how are we going to pay for it? And now, again, let’s add some context. We just passed a $2 trillion tax cut over the next decade that is simply going to enrich those that are at the top, exacerbate racial inequality. And PayGo, or how are we going to pay for it, had nothing to do with the conversation. And it will further constrain future big ideas if we’re stuck in this PayGo framework. So let’s acknowledge that. Let’s acknowledge that empirical reality. And in terms of the conversation around whether deficits are bad for our country or not, maybe we shouldn’t even talk about investments in the American people as deficits, maybe we should talk about them just as that, investments in the American people. We somehow have a magic belief that if we cut tax rates on corporations, that was going to deliver growth in our economy to overcome the deficits or-

Pete Buttigieg: They told us it would pay for itself.

Darrick Hamilton: Yeah, exactly. We were told-

Pete Buttigieg: We tried it and it didn’t, right? It’s not a theoretical question anymore.

Darrick Hamilton: Exactly.

Pete Buttigieg: One of the things that amazed me seeing the economist, Arthur Laffer, get the Presidential Medal of Freedom was that this is an economist who theorized that if you cut taxes on the wealthy, you’d actually wind up with more revenue coming into the treasury. They tried it, and the opposite happened. It was called the Laffer Curve. Empirically, it just failed. And yet, this individual was highlighted at a White House ceremony. I do wonder just intellectually, where do you think the Republican Party is going to wind up? As you said, they don’t seem to actually be committed to fiscal discipline. There’s definitely not a lot of what we used to hear in terms of beliefs about personal conduct, or rectitude, or even faith, national security, some many of the ideas that held together at least the Republicans, growing up in Indiana, that I knew seemed to have been just detonated by this administration. Do you think there is some kind of intellectual future for conservatism or is the GOP not even a conservative party anymore?

Darrick Hamilton: The Republican Party and the whole neoliberalism that even many people on the Democrat side adhered to and put forth, that narrative is very powerful because it’s about agency. They use terms like choice, freedom. And they also use race in a strategic way. They also demonize the government in a way of tilting the scale in favor of undeserving welfare queens, undeserving deadbeat dads, and super predators.

Those narratives were very appealing. And they were appealing to Democrats, Republicans, blacks, and whites alike. You know, when I was coming up, a lot of my brethren bought into the notion that if I just went to that Ivy League college, I too could make it in America. I’ll do better than those Black people that aren’t pulling their pants up. You know what has happened now and what might be driving a new narrative is that we had a generation that came of age during the last Great Recession, whose job market prospects were dismal, who went to college because we told them, “Go to college, get some skills, better yourself so you can have a great future,” ended up accruing an inordinate amounts of debt.

And now, we’re facing this pandemic, and they have not bought into that rhetoric. They are fighting back. They are promoting a rhetoric, a new framing, that is grounded in justice, that is saying, we don’t care. Racial injustice is intolerable. Gender injustice is intolerable. The risk of our planet going under to climate catastrophes is intolerable. We are fighting back, and we demand that our government act. So hopefully, this is an Overton time period in which we can get new narratives that I think are more factual and grounded in reality as well as policies that accompany those narratives to really get us towards economic, racial, and gender justice.

Pete Buttigieg: So one last policy question, which is, I would say statistically, many if not most people my age or any younger are on track for a problem when it comes to retirement. The rhetoric around Social Security is overblown. Of course, if we make some reasonable adjustments to the way that Social Security is funded, it will definitely be there and it will be solvent well past the time when I’m planning to retire.

But it is true that more and more Americans don’t have the retirement savings or aren’t on track for the retirement savings that they’re going to need. So, so many of the ideas that we’ve talked about that you’ve described during our conversation are prospective, the idea of a baby bond will set up somebody who’s going to be retiring in the 2090s beautifully. But what about somebody who’s going to be retiring in the 2050s or the 2060s? What steps have to accompany those things that are going to build us up for the long run to better serve that generation that did come of age during this season between the Great Recession, and whatever we’re going to call this pandemic recession, and those to come after?

Darrick Hamilton: Your framing of on-track I think is spot on. Because using the framing on track means that we could have a different track. That it’s not our destiny. That is something else that I think I would love for the American people to grasp, that inequality despair is not destiny, but really policy choices. Take baby bonds because you presented it as an example. The only reason why I started with babies was political, to refute the narratives around deserving and undeserving. It’s hard to argue that a baby is deserving or undeserving. It’s a baby. It didn’t make any choices, right?

Pete Buttigieg: It’s the original position or as close as we get to it.

Darrick Hamilton: That’s right. But the key policy feature is capital itself, ensuring that young adults have capital. We could have started when people are 18, 17, etc. That’s not the critical policy design. So similarly, we could make a different policy choice for millennials for, I even forget, Generation Z. I almost the forgot the name of the generation. We can make different policy choices for that generation to alter the track that their life course might be on right now if we do nothing so that they too can have economic security.

Pete Buttigieg: As we think to the future, I want to just ask you to consider, if a young Black man is born tomorrow in Bedford–Stuyvesant, how’s his life going to be different, and how’s it going to be similar to yours? What are the circumstances that he’s going to see and grow up in, and how might they compare to what would have been true the day you were born?

Darrick Hamilton: I’m going to be tongue-in-cheek and respond to you that Bed-Stuy today is very different than Bed-Stuy when I grew up.

Pete Buttigieg: Fair enough.

Darrick Hamilton: They would be growing up in a million-dollar home today, but just-

Pete Buttigieg: It’s a very different Brooklyn, fair enough.

Darrick Hamilton: That’s right. That’s right. But the point of your question, I would say that they’re living in a new political economy where, again, if we use that word Overton, they are coming up with social movements today that could very well change their realities in ways that my generation unfortunately got seduced into different political rhetorical reality.

Pete Buttigieg: The potential there is enormous, right? I imagine the potential for mischief as well as for great things to come. But of course, that’ll be up to us to set them up for success by the time they’re taking over for the generations who are making decisions now.

Darrick Hamilton: That’s right. One other lesson to learn from the New Deal is when FDR said, “Make me do it,” when he was talking about his actions with regards to policy, when progressives were trying to push him. He was, again, being tongue-in-cheek, making a case to build a political movement so that I have to do it. And I think that’s the lesson to take to the American people today. That again, our despair and inequality is not our destiny. We could talk about individual politicians and policymakers. But at the end of the day, the power rests with us. It is our economy, it is our money, and it is our government. And when we seize it, that’s when the change towards shared prosperity will happen.


Pete Buttigieg: What a great conversation, and hopefully you can see why I think that Professor Hamilton is going to be really shaping a lot of policy conversations in the years ahead. And especially as we try to confront the economic situation our country’s in and the need for racial justice and equity. There’s so many ways where that can be one in the same, whether it’s baby bonds or some of the other ideas that he discussed. I think that conversation brings out why that’s true. I hope you enjoyed it as much as I did and I’m looking forward to seeing where these policy opportunities shape up in the years ahead.

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Pete Buttigieg

Pete Buttigieg


Personal account. Husband, father, veteran, public servant. Always answer to Mayor Pete.