‘Ownership’ Swindle

‘Ownership’ Swindle

George W. Bush hasn’t even spelled out the details of his plan to privatize Social Security and it’s already in trouble, even among some Republican lawmakers–for good reason.


George W. Bush hasn’t even spelled out the details of his plan to privatize Social Security and it’s already in trouble, even among some Republican lawmakers–for good reason. There’s mounting evidence that privatization won’t solve any of the system’s financial problems, which loom far in the future and can be easily fixed, but it will worsen the government’s fiscal condition and reduce future benefits even below what would result if Congress did nothing at all.

Yet Bush will likely push ahead with this cornerstone of his “ownership society”–an agenda rooted in decades of right-wing opposition to the New Deal, driven by ideology and political strategy as well as a brazen desire to help the rich get richer. Progressives can and should fight privatization by highlighting its blatant shortcomings, but they must also confront the long-term strategic battle of which it is a part.

Bush’s ownership society is a cleverly packaged assault on the idea that government should work for the common good and that there should be an expansive social contract. It advocates shrinking and privatizing government (including Medicare), undermining public education through vouchers, and reducing taxes on accumulated wealth. It even involves moving away from comprehensive government- or employer-provided health insurance to high-deductible “health savings accounts”–which will provide tax breaks for the rich, help few of the uninsured, prompt businesses to dump traditional health insurance for their employees and give less healthcare and more money problems to most people. The ownership society further shifts risk from corporations and the government to individuals–promoted as enhancing personal choice–and transfers income and wealth to those who already have it.

The ownership society gambit is part of the Republicans’ class warfare. By encouraging people of middling income to think of themselves as owners of some small bit of property, the right hopes to create an “investor class” that links every owner of a bungalow or paltry private retirement account with executives and the economic elite–the 1 percent of Americans who own more corporate stock than the bottom 90 percent. As an article in National Review, reprinted in the Republicans’ Social Security playbook, argues, “Participation in capital markets changes people’s political attitudes and behavior” and “pro-investor policies tend to perfect themselves over time,” so that small tax breaks “generate a constituency that wants bigger tax breaks.” The hope is that every private-account holder will see trial lawyers, government regulation, corporate taxation and union drives as a threat to his or her retirement security.

There is a long tradition of American capitalists not only mobilizing small-business and professional support for the elite, but also shifting working-class aspirations to undermine the potential of radical labor and political movements. Instead of delivering on the promise of upward mobility, American capitalism in the late nineteenth century delivered home ownership as a substitute for owning one’s land or tools. After the elites forcibly smashed working-class organizations, like the Knights of Labor and anarchists, that demanded an end to wage slavery during the post-Civil War industrialization, the workers’ movement increasingly turned toward securing an American, or living, wage instead of demanding control over industry. In the early twentieth century, after Populists and Progressives raised public awareness about the corrupting power of big corporations, there was a wave of interest in industrial democracy as a necessary complement to political democracy. During the 1920s, America began to develop consumer capitalism and a democracy of shoppers alongside a brief infatuation with stock markets.

Then the Depression and the New Deal changed the way America looked at itself: There was a new focus on guaranteeing economic security, securing economic and social rights, expanding a militant labor movement and creating a social contract that reduced inequality. Although the social contract was sustained during the cold war, the New York Stock Exchange’s answer to communism in the 1950s was “people’s capitalism,” or widespread stockholding. More important, people increasingly sought self-realization not through work they controlled but through the things they could buy. The trend is clear: Americans are discouraged from thinking of themselves as workers or citizens in control of their work lives and their own society; they are encouraged to regard themselves as consumers, taxpayers and, now, owners.

The ownership society is promoted as an adaptation to a new economy. But it fails to reflect the economic experiences of most Americans. Forty percent of wage earners save nothing and spend more than they earn. The real problem for most working people and for a growing number of those over 65, according to a recent study by Demos, a New York research group, is that they’re living in a “debtorship society,” in Michael Kinsley’s phrase. They need higher incomes, better and more secure jobs, and unions to fight for them at work. If they made more money, they could save more–even own more.

Bush’s proposals to expand tax-free savings vehicles will almost exclusively benefit the wealthy, not the average worker. Even now, only 5 percent of wage earners contribute the maximum to their IRAs and 8 percent contribute the maximum to their 401(k)s. Stock ownership has skyrocketed, but most people only have small nest eggs, and public opinion polls and experience with private accounts in several states indicate that Americans overwhelmingly prefer financial security to “freedom” to invest. Most workers would be better off with well-funded defined-benefit pensions than with their meager portfolios. Also, as stock owners they have no influence over corporations. But as members of giant pension funds, some have a voice for corporate reform [see William Greider, “The New Colossus,” February 28].

The ownership-society strategy taps into some deep strains of American culture, but it may be less formidable than Republicans think. A Zogby poll found that people who own stock split nearly evenly between Republicans and Democrats. And polling also indicates that 86 percent of Americans think the government should provide a job to anyone who wants one. There’s a deep reservoir of support for expanded social and economic rights, despite profound political ambivalence.

The answer to Bush’s ownership society is strengthening the rights of Americans as workers and as citizens, not capitulating to the rhetoric of the right. Progressives certainly don’t oppose a more egalitarian and broad distribution of wealth, which would be more meaningful than Bush’s ownership society. But in an increasingly insecure and unstable economy, workers need both a greater voice at work and the guarantee of healthcare, education, a decent retirement and other social protections that were advocated by Franklin Roosevelt, as University of Chicago law professor Cass Sunstein argues in his new book, The Second Bill of Rights: FDR’s Unfinished Revolution and Why We Need It More Than Ever. With more social and economic security, Americans will have far more freedom as individuals, and the country could adapt to a turbulent world more successfully and with far less hardship. Bush says he wants to encourage ownership because “we want more people to have control over your own life.” But the control and ownership that Americans need most is control over their work, and ownership of their country.

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