In President Bush's upcoming State of the Union Address, we are going to hear alot about something called an "Ownership Society." The idea is thatAmerican workers aspire to be owners - owners of stock for their retirement, owners ofhomes, owners of businesses, owners of good health insurance, and owners of theskills that they need to navigate multiple changes of jobs and careers. It sounds justgreat.
Take a closer look, however, and you will recognize the trademarked Bushcombination of inspiring themes coupled with a complete absence of usefultools. In other words, bait-and-switch.
Other recent examples include No Child Left Behind (millions were); theMedicare drug bill (covers less than half the costs and mainly subsidizes drugcompanies) and three rounds of huge tax breaks that went mostly to the wealthy.But I digress.
How does Bush propose to create this "Ownership Society?" Mainlythrough .more tax credits. If people lack reliable health care, there will betax-favored savings accounts to buy health insurance. If we need more secure retirement,there are new tax incentives to set aside savings. If jobs are precarious,there are tax credits to purchase re-training when your job moves to China.
What's wrong with the entire approach? For starters, the very people who lackthe decent health insurance, and the retraining, and the secure nest-eggs, areshort of adequate earnings from which to take out savings. So most of the taxbreaks, like the rest of the Bush program, will go to people who don't reallyneed them, while those who rely on genuine help will come up short.
And the hallmark of the Bush era has been rising incomes at the top andstagnant wages for the rest. The increased national income in the currenteconomic recovery has gone mostly to corporate profits, and a record low proportion towages. If we want an "Ownership Society" based heavily on increasedindividual savings, let's start with decent incomes so that ordinary people can afford to save.
But individual savings, alone, aren't enough. Look at how America actuallybecame a society of broad middle class ownership in the years after World WarII. Wages went up (thanks in part to unions), so that it became possible for workingpeople to imagine buying cars, homes, and the other material trappings of thegood life. Corporations started paying decent pensions and health insurance benefits.
Radical conservatives think that government help undermines individualinitiative. But government programs like the GI Bill, FHA loans, Pell Grants,community colleges, and federal aid to public schools, allowed a lot of individual hardwork to pay off. Social Security institutionalized the custom of retirement,which stimulated supplemental retirement plans. Guess who opposes all this?
Decent wages and benefits and real government help are the part that Bush'sOwnership Society leaves out. To Bush, ownership means the lone individual is made the sole owner of the problem. Lost your job? Better get yourself some newskills. Corporation cancelled your pension? Better sock away more savings.Company health insurance plan raising premiums and co-pays? Congratulations - you're anowner!
This Ownership Society walks away from the social investments of the past sixdecades that actually made America a society in which most people could reasonably aspire to be owners. It leaves people on their own with a fistful oftax credits that most people can't even afford to use.
Interestingly, there is a very different version of an Ownership Society, whichactually works, called asset development. Tony Blair, in Britain, has alreadymade a start on this approach, by giving every child a subsidized savings account, atbirth, which grows and compounds, and then can be used in adulthood tosubsidize everything from education to first time home-ownership, and ultimately tosupplement retirement.
In the U.S., Al Gore proposed a variant of this. Larry Brown, one of thepioneers of this whole approach, based at the Asset Development Institute atBrandeis University, proposes an even bolder version as does Yale's Bruce Ackerman.
But the difference is that genuine asset development gives people realopportunities, using real public outlays, the way the G.I. Bill did. Bush'sapproach relies mainly on the funny-money of tax credits, which are often useless to the verypeople who need them most.
An ownership society is a wonderful idea. Liberals have been expanding it eversince the New Deal. So, when you hear about Bush's Ownership Society, read the fine print and keep your hand on your wallet.
Robert Kuttner's is co-editor of The American Prospect. A version of this column ran in Wednesday's Boston Globe
