Assets and the Poor: A New American Welfare Policy.

  By Michael Sherraden. M.E.
Sharpe, Inc., 80
Business Park

Drive, Armonk, New York 10504.1991. 324 pages. $34.95.

Social welfare policy in the United States is in serious trouble, says author Michael Sherraden. Welfare programs have done something to lessen the degree

Sherraden offers a new perspective on the goals of welfare policy, one based on the traditional American notion of asset accumulation for savings and investment, rather than just focusing on providing income for spending and consumption. His theory builds on the idea that providing people the resources to save and accumulate wealth will give them more incentive to become stake-holders in their own personal futures and thus improve the quality of their lives and their communities.

Sherraden looks at the accomplishments and failures of the welfare system, concluding that much of the failure of the system is a result of negative public perceptions of how the system works and the stigma on people who receive the benefits. Another major factor in the system's failure is too much emphasis on the flow of income, rather than on the accumulation of assets, as the yardstick of health and well-being.

Sherraden then describes his asset-based welfare theory and the policy mechanisms that would support it. He advocates establishing "individual development accounts" (IDAs) patterned after individual retirement accounts (IRAs), except that they would be available to all Americans and not just wage earners and their spouses.

IDAs would allow people to invest money over the long term for specific purposes, such as post-secondary or graduate education. There would be heavy penalties for uses other than those designated, the author suggests.

Like IRAs, IDAs would be long term in scope and vision, and, as a result, would be most beneficial to young people. For the underprivileged, there might be matching funds. While anyone could open an IDA to invest for their goals, only the underprivileged would meet the government's criteria for matching funds.

IDAs would assist the poor in accumulating assets, rather than focusing solely on income and consumption. Such a system would offer the poor incentives to ameliorate their situations without stigmatizing them for "being on welfare," Sherraden believes.