Berggruen Institute's Pre-Distribution Agenda Advances

Nathan Gardels

As the U.S. begins to grapple with its huge inequality chasm, this general idea of pre-distribution is gathering traction. In a recent op-ed in the Los Angeles Times, three close associates of the Berggruen Institute — Bob Hertzberg, the majority leader of the California State Senate, former Google CEO Eric Schmidt and Snap cofounder and CEO Evan Spiegel — promoted just this approach. They wrote: “The equality gap continues to grow, especially between those who own capital assets that appreciate in value and those who work and live paycheck to paycheck. The richest 10% own 87% of all equity in the U.S. One way to start closing this gap is with a program to foster an ownership share for all Californians in the wealth produced here. We call the concept universal basic capital.”

Their essential idea is for the state to use its post-COVID surplus to seed a wealth fund in which Californians over 18 would own shares in a diversified pool of investments across the economy, including in start-up ventures. This fund could be further seeded, they write, by equity contributions, particularly from the state’s high-tech companies, in exchange for the kind of tax benefit they would get from donations to nonprofit universities.

Pre-distribution through universal basic capital, Rana Foroohar recently wrote in her Financial Times column, is “an idea whose time has come.” “Capital for the people,” as her headline reads, is “well suited to an age in which network effects and intangible assets are concentrating wealth not only in fewer hands, but in fewer businesses that can generate outsized gains with far fewer employees.” It is increasingly apparent that the best way to fight inequality is by spreading the equity around.