Humans aren’t very good at understanding big numbers. That’s why, when confronted with stats like the number of digits pi has been calculated to or how many billion tons of ice has been lost over one year in Greenland, writers often resort to snappy real-world comparisons like the equivalent in grains of rice or football stadiums.
For example: did you know that Warren Buffet is so rich that he could afford to give every child on Earth $43 and still have half a billion dollars left over? Sounds amazing, right? Here’s the chaser: it might just happen.
It’s a pretty big might, to be clear – but according to a recent Wall Street Journal investigation, one possible plan for the billionaire Berkshire Hathaway CEO’s fortune after he dies is to distribute it into a world children's savings bank. The exact details aren’t yet known, but one former employee at the Bill and Melinda Gates Foundation – which is set to receive the majority of the Buffet bucks – told the Journal that each child could receive thousands of dollars that “sit on a shelf, like a battle plan.”
It's a proposal that could have huge economic consequences. Baby bonds have the potential to close wealth inequality and benefit entire generations – according to one 2019 study, “baby bonds considerably narrow wealth inequalities while simultaneously improving the net asset position of young adults and alleviating asset concentration.”
In the wake of certain other billionaires complaining about the declining birth rate, it could also help with another problem: approximately two out of every five people who don’t have kids, but want them, cite the prohibitive cost of living as a reason for their choice.
If the Journal’s reporting is accurate – which, it should be said, Buffett has denied – that worry may be alleviated. “If we take 100 people to represent the United States and $100 to represent its wealth, $40 would go to just one guy,” pointed out Naomi Zewde, author of the 2019 study. “Another $40 would go to the next nine. That leaves about $20 to distribute across the remaining 90 Americans, a dime here and a penny there.”
However, baby bonds “would reduce generational wealth disadvantages,” Zewde wrote, and would “alleviate the effects of differential access to inheritance and gifts.”
Depending on how the money is distributed – we don’t know if the Gates Foundation has a flat sum per child in mind, or some kind of means-tested gift, or something else entirely – the money may go some way to addressing racial disparity in countries like the USA, or across the world.
For now though, we’ll just have to wait and see. Since Buffett’s wealth is tied up in investments, there’s still time for his multi-billion-dollar portfolio to grow even further, making the 99 percent of his wealth he’s pledged to donate worth even more to the children of the world.
And the best news of all for the kids? He’s said he wants the money spent as quickly as possible – within 10 years – so there shouldn’t be too much waiting around when it’s time for your life-changing inheritance to turn up.