People aren’t good at understanding large numbers. When faced with numbers such as the number of digits pi or the amount of ice that has been lost in Greenland over the past year, writers resort to quick real-world comparisons, such as the equivalent in rice grains or football stadiums.
You might be surprised to learn that Warren Buffet has half a million dollars and can afford to give each child $43. It sounds amazing, right? Let’s see if it happens.
This is a very large might. However, according to a Wall Street Journal investigation, Berkshire Hathaway CEO, a possible strategy to transfer his fortune into a savings bank for children around the world after his death. Although the exact details of the plan are not known, a former employee of the Bill and Melinda Gates Foundation, which is expected to receive most of the Buffet bucks, told the Journal that each child could be given thousands of dollars that would “sit on the shelf, like a battle strategy.”
This proposal could have enormous economic implications. Baby bonds could close the wealth gap and benefit whole generations. According to a 2019 study, baby bonds “significantly reduce wealth inequalities while simultaneously improving young adults’ net assets and alleviating asset concentration.”
It could help address another problem, as well, given the complaints of billionaires about declining birth rates. Around two-thirds of all people who do not have children but desire them cite the high cost of living.
This worry could be eased if the Journal’s reporting proves accurate, which Buffett has not denied. Naomi Zewde (author of the 2019 study) stated that if 100 people were chosen to represent the United States, and $100 would represent its wealth, $40 would be given to one man. Another $40 would be distributed to the nine next men. This leaves us with $20 to spread across the remaining 90 Americans. A dime here, a penny there.
Zewde stated that baby bonds would reduce generational wealth disadvantages and “alleviate the effect of differential access to inheritance or gifts.”
We don’t know whether the Gates Foundation is planning to distribute the money in a flat amount per child, or if they are giving out a type of means-tested gift or something else altogether. The money could be used to address racial disparities in countries such as the USA or around the globe.
We’ll have to wait and watch for the future. Buffett’s multi-billion dollar portfolio is still a work in progress. This will allow him to invest more and make the 99 percent of his wealth available for charity.
The best news for the children? He said that he wants to spend the money as soon as possible, within 10 years. This means there shouldn’t be any waiting for your life-changing inheritance.
