How the US Just "Broke" the Red Queen’s Race
Author: William Moulod
For the last half-century, the American working class has been running on a treadmill that keeps speeding up. You know the feeling: you work harder, get a raise, and yet, by the end of the year, you can afford less than you could before. Housing is up, stocks are up, groceries are up.
In economics, this is often called the Red Queen’s Race—a reference to Through the Looking-Glass, where the Red Queen tells Alice: "Now, here, you see, it takes all the running you can do, to keep in the same place."
For decades, the only people who escaped this race were those who owned equity. If you owned capital, you didn't have to run; the ground moved for you. But last month, with the operational rollout of the "Trump Accounts" under the One Big Beautiful Bill Act, the US government effectively broke the race.
They didn't slow the treadmill down. They just gave every single newborn a seat on the machine.
The Old Trap: r > g
To understand why this is a paradigm shift, you have to look at the formula made famous by economist Thomas Piketty: r > g.
r is the Return on Capital (investments, stocks, real estate).
g is Economic Growth (wages, salaries, the economy at large).
Historically, r is almost always higher than g. That means if you work for a living (labor), you will mathematically fall behind those who invest for a living (capital). The "Red Queen" is simply the market compounding faster than your paycheck can keep up.
The New Reality: Universal Equity
The new policy, which began depositing funds for children born after January 1, 2025, changes the equation. By seeding every American newborn with $1,000 in a tax-advantaged index fund (boosted by private billions from the likes of Michael Dell for lower-income zip codes), the US has nationalized the mechanism of wealth, without nationalizing the means of production.
Here is why this "breaks" the race:
1. The Eighth Wonder of the World
Albert Einstein reportedly called compound interest the "eighth wonder of the world." Previously, the bottom 50% of Americans had zero exposure to this force. They lived paycheck to paycheck.
With Trump Accounts, a child born today in Ohio has money working for them while they sleep. That $1,000 seed (plus the $250 Dell kicker) sits in the S&P 500. If the market rips 20% like it did in 2025? That baby just made $250 without lifting a finger. They are now participants in r, not just subjects of g.
2. Aligning the Incentives
Historically, when the stock market hit an all-time high, it was a mixed bag for the working class. It often meant asset inflation—rents going up, houses becoming unaffordable.
Now, there is a psychological shift. When the S&P 500 hits a record high, it technically increases the net worth of every single child in America. It turns the entire population into a "shareholder class." The success of American corporations is no longer just good for Wall Street; it is mathematically good for the crib in Main Street.
3. The Flywheel Effect
Critics argue it’s a debt-funded handout (and they aren't wrong; the initial seed is taxpayer money). But supporters argue it fixes a structural flaw. By locking these funds until age 18 (or retirement), the government has created a massive, steady influx of capital into the US markets, which in turn drives up the value of the accounts, which increases the wealth of the citizens. It is a self-reinforcing loop—a "Capitalist Universal Basic Equity."
The Bottom Line
We won't know the full social impact for 18 years. But the immediate signal is clear: The US decided it couldn't win the Red Queen's race by trying to suppress the speed of the market. Instead, they decided to strap everyone in.
For the first time in history, being born American doesn't just grant you the right to work; it grants you the right to own. And that might just be the only way to win the race.
