Originally published at nationalreview.com on May 19, 2026.
Progressives love to talk about “taxing the rich.” But here is a question we should really ponder: Why can’t ordinary Americans simply be allowed to invest like the wealthy do?
For decades, working Americans have been told to save early for retirement, contribute consistently to their 401(k)s, and trust the miracle of compounding to realize the American Dream. We are told financial independence depends on discipline, and that retirement security depends on ownership. But when ordinary workers ask for access to the same investment opportunities routinely used by wealthy elites, Washington suddenly discovers the need for firm constraints.
Originally published at nationalreview.com on May 19, 2026.
President Donald Trump’s Council of Economic Advisers estimates that allowing broader private-market access in 401(k)s could add $35 billion to U.S. GDP. America’s retirement system has roughly $30 trillion in assets but invests only about 0.1 percent in private markets, while public-pension funds allocate closer to 20 percent. In other words, teachers, firefighters, and government workers often benefit from private-market exposure through pensions, while ordinary 401(k) savers are told those same investments are too risky.
Senator Jack Reed, a Democrat from Rhode Island, warned that allowing private-market investments inside retirement accounts could threaten the retirement security of American workers. Democratic Representative Richard Neal demanded that the Government Accountability Office investigate the growing role of private credit in retirement plans. Both congressmen frame the issue as one of risk, transparency, and consumer protection.
Beneath the polite language and feigned concern is an all-too-familiar condescension: Ordinary Americans cannot be trusted with the same investment tools available to elites. They’ve essentially adopted the soft bigotry of low expectations.
Private equity, private credit, infrastructure, real estate, and other alternative assets are not exotic toys for billionaires. They are core components of modern institutional investing that are used by public-pension systems, the managers of university endowments, and wealthy families. Sophisticated investors use them because they offer diversification, exposure to private growth, and the potential for long-term returns — all of which are largely unavailable in ordinary public-market portfolios. By contrast, the typical person saving through a 401(k) is confined to a narrow menu of mutual funds, index funds, and target-date funds that are designed more for legal defensibility than maximum opportunity.
And so America has created two classes of retirement savers: One class gets access to the full economy, while the other gets a neutered imitation of it.
The economy has changed. Companies stay private for much longer. Infrastructure, energy, technology, artificial intelligence, and private credit markets increasingly operate outside public exchanges, which means that the most dynamic growth in the economy often occurs before ordinary investors ever get a chance to participate. By the time many companies reach the stock market, much of the wealth creation has already happened.
As a result, millions of Americans are being told to build retirement security in a marketplace that no longer reflects the full scope of American capitalism.
Public markets, bonds, inflation, and any form of “planning ahead” carries risk. But concentrating millions of workers into similar portfolios built around the same public stocks and bonds carries risk too. Since all investments carry tradeoffs, the relevant question is not whether private assets involve risk. Instead, we have to compare the available options.
There’s also risk in exclusion. Every day, workers pay for this in lost wealth. Over the 24 years ending in 2024, private equity outperformed public stocks by more than 4 percentage points annually, even after fees, beating the S&P 500 by roughly 5 percentage points a year. For a worker earning $50,000 and consistently maxing out a 401(k), excluding those returns could mean more than $200,000 in lost retirement savings.
Workers are not told how much they sacrificed to a retirement system that is specifically designed around the fear of lawsuits. Most 401(k)s are not purely individual investment accounts. They are employer-sponsored retirement plans governed by the Employee Retirement Income Security Act of 1974 (ERISA), which makes plan sponsors fiduciaries responsible for selecting and monitoring workers’ investment menus. Under that regime, plan sponsors face a relentless risk of litigation. Employers have learned that unconventional investment options can invite lawsuits, discovery, settlements, and reputational damage. So they choose the safest legal path, while the wealthy keep investing.
That is the hypocrisy Congressmen Reed and Neal refuse to confront. They would prevent ordinary Americans from trying the same investment strategies used by people who already have money.
If private markets require better disclosure, then improve disclosure. If private-market investments require better disclosure before being included in ERISA-governed retirement plans, then require it as a condition of eligibility. Private companies need not be regulated like public companies, but products offered inside 401(k)s should provide plan sponsors and participants with clear information about fees, valuation methods, liquidity limits, conflicts of interest, and risk.
If fees need scrutiny, scrutinize them. If valuation practices need clear standards, create them. If plan sponsors need safe harbors, provide them. And if policy-makers want guardrails, impose reasonable caps on initial allocations to private-market options — not caps on holdings after appreciation. No worker should be forced to sell a successful private investment merely because it grew too valuable.
Retirement savers do not need politicians deciding that wealth-building tools are too sophisticated for them. Instead, they deserve a system that treats them like adults. They need access, transparency, choice, and fiduciary rules that judge decisions by reasonableness at the time, not by hindsight after markets move.
The goal should be equal opportunity. President Trump’s push to democratize access to alternative assets in retirement accounts is a step in the right direction. It should be combined with congressional tort reform, a safe harbor for clarity, and red-tape cutting through changes to outdated regulations to expand access to private markets.
Those reforms should be paired with Department of Labor rulemaking that clarifies how ERISA fiduciaries may prudently offer asset-allocation funds that include alternative assets. The department has already rescinded Biden-era guidance that discouraged fiduciaries from considering such investments, and it has announced plans to propose rules addressing fiduciary duties and potential safe harbors. That clarity matters: Plan sponsors will not offer broader, better diversified investment menus if every new option looks like an invitation to be sued.
The American promise was never that government would shield citizens from every risk. On the contrary, the promise of liberty allows us to take risks, and free people can build, own, invest, and rise. While Democrats in Washington remain obsessed with redistributing the wealth that already exists, the more urgent moral and economic imperative is removing the barriers that prevent ordinary Americans from creating it in the first place. Instead of endlessly asking how to tax the rich, Congress should let us invest like the rich.