Michael and Susan Dell's astonishing pledge to establish children’s savings accounts may also show the way to save Social Security.
My first piggy bank. by Michael and Susan Dell of a $6.25 billion pledge to fund the savings accounts of 25 million children exemplifies what makes the U.S. so positively unique. Detractors of America should take note, but won’t.
The Dells want to expand the reach of a program Congress passed last summer, which would set up special savings accounts for children. For those born between January 1, 2025 through December 31, 2028, the government would provide an initial $1,000. The babies would have to be U.S. citizens and have Social Security numbers. Those accounts, called Trump accounts, could be supplemented by deposits from parents, relatives or even employers. The money would be invested in low-cost, U.S. equity index funds covering the broad U.S. market. The Dell accounts would start with $250 and cover kids up to ten years of age who were born before January 1, 2025. Eligibility would be limited to those in zip codes where the median household income is below $150,000. Like the Trump version, the Dell accounts could be supplemented with future deposits and grow tax-free. A number of administrative details have still to be worked out. What the Dells are doing reflects unique and strong characteristics of America. It illustrates what Alexis de Tocqueville observed nearly 200 years ago, when he visited this country. If Americans saw a need or an opportunity for something, they didn’t ask authorities for permission or wait to be told what to do as would be the custom in Europe with its medieval past. They just did it. That kind of initiative gave the U.S. an exhilarating energy. As a youngster with a tiny savings account, Michael Dell experienced the power of compound interest and what enabled his money to grow. It was an early lesson in free markets and wealth creation. As an entrepreneur, Dell sold his products directly to customers. His charitable giving has the same aspect: straight to the beneficiaries. He and his wife, Susan, personify the seeming paradox of America. It’s the most commercial nation ever created and also the most philanthropic. Commerce and philanthropy are not polar opposites; both involve meeting the needs and wants of others. They’re two sides of the same coin. Free markets and the Dell-like entrepreneurship and creativity they enable create an ever-higher standard of living—and the expansion of resources to help others. The Dell accounts will kindle among countless youngsters an interest in commerce and a growing grasp of money and finance, things schools don’t teach today. In helping people, the Dell approach is light-years ahead of such nostrums as a guaranteed income or various redistribution schemes. It creates capital and opportunity, while those other approaches destroy it. What the Dells are doing also will make young people receptive to the only idea that will save Social Security: personal accounts. Numerous studies have shown that such accounts, with proper safeguards, will give beneficiaries several times more income in retirement than our current, financially rickety Social Security System does today. Of course, we’ll have to be ever vigilant in protecting such Dell- and Trump-like accounts from the depredations of the Washington politicians, with laws that explicitly spell out that they are individual, not government, property, period.
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