Friday :: Aug 27, 2004

Bush and the Ownership Society

by soccerdad

The Financial Times is report that Bush's speech at the RNC will concentrate on the theme of "The Ownership Society".

"One of the most important parts of a reform agenda is to encourage people to own something," Mr Bush says in a television advertisement broadcast this month. "Own their own home, own their own business, own their own healthcare plan, or own a piece of their retirement."

A preview of his ideas can be seen on the Bush Website. The emphasis is on owning something, personal control, and personal choice. The site details some of the Bush initiatives with respect to health care, Retirement, and home ownership.

The Ownership Society has the support of the Cato Institute, a libertarian think tank who has a site dedicated to this philosophy.

The concept of "ownership society" has been embraced since the time of Aristotle and has found adherents among such thinkers as Thomas Aquinas, John Locke, and most pertinent to today's debate, the American Founders. The central tenet of the ownership society is that we tend to take best care of the things we own, and through which we exercise our liberty; property rights inspire people to act responsibly, to treat one another with dignity and respect, and to create wealth for themselves and others

Certainly the words have a great appeal to them. Ownership, everyone would like to own their own house. Its hard to argue with the idea that ownership will tend to promote responsibility and give people a sense of pride and a sense of control over their lives.

Much is made of the philosophy of John Locke and his influence on the founding fathers.
From the Cato article
James Madison, primary author of the U.S. Constitution, directly connected property and rights, for "as a man is said to have a right to his property, he may be equally said to have a property in his rights." (Property, National Gazette, March 29, 1792) Indeed, the terms "property" and "rights" are used virtually interchangeably during the Founding period.
emphasis mine.

Two things struck me in this Cato piece. 1. The sentence above stating that rights and property were used interchangably in the Founding period. Does this mean that if you don't own property you have no rights? 2. That the prime supporters of such a philosophy were all from a time where the society was fundamentally different than the one we live in today. America was an agrarian society. People were and had to be much more self-reliant then. You grew your own food etc. Now this may be just rhetoric, since using the Founding Fathers makes for a feel-good endorsement of what ever policy you are trying sell.

So it seems to me that although the rhetoric of an "Ownership Society" has attractive and inuitive ideas, e.g. ownsership promotes responsibility,the devil may well be in the details. This is not a new approach for Bush. This was part of his State of the Union Speech.

What should we expect to hear from Bush on "Ownership". From his website
I would expect him to emphasize small business, healthcare, and home ownership.
With regards to healthcare, he may talk about Health Savings accounts (combines health insurance with tax-free savings accounts), Association health Plans (allows small businesses to band together and negotiate on behalf of their employees and their families,). He may also cite his medicare Drug program.
He also may cite initiatives for helping people obtain home ownership. On retirement he may talk about making social security stronger as well as "expanding owwnership of retirement assets" and new savings opportunities. He may also stress amaking things better for the small business man by making the tax cuts permanent.

Lets go back to the time of Locke and the Founding Fathers and take a simplistic look at property in America and I will talk in generalities in order to make some points. Property for the most part was land. I think of the farmers and the movement west where people moved just to own a piece of land. In those days if you owned a decent size piece of land and if you did the work you were able to be self sufficient for the most part. For the most part, the land was yours. If you failed it was likley that it was because you didn't put in the work (barring natural diasters). So effort and responsibility were rewarded. The harder you worked and the more clever you were the better you did.

Now lets think about today and those programs Bush talked about. First, today the land you own provides sheleter but does little to sustain you unless you are one of the few farmers.

Now when you start talking about such things as the Medicare drug program or individual retirement accounts this "ownership" analogy really breaks down in my opinion. The reason is very simple actually. It is because you do not control any of those things. You control how much money you put in but you have no control of how well the fund performs or how much the drug costs. You are turning your money over to a third party to manage for you and that third party's driving force is not your well being but profits.

Robert Kuttner has called Bush's Ownership Society just another bait and switch. Bush's 'ownership' scam

Like most of Bush's economic plans, providing tax cuts/credits for items like health savings accounts and retirement funds don't help the people who need the most help, those at lower end of the income spectrum. For the lower, middle class and below, its likely that any tax cut/credit will be small and will probably go towards sustaining themselves, i.e. food, shelter, utilities etc. Those at the high end will get a bigger tax cut but they will need it the least. For people to be able to save they first need a decent income. Hey this isn't rocket science!

Decent wages and benefits and real government help are the part that Bush's Ownership 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 new skills. Corporation cancelled your pension? Better sock away more savings. Company health insurance plan raising premiums and co-pays? Congratulations - you're an owner!

This Ownership Society walks away from the social investments of the past six decades 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 of tax credits that most people can't even afford to use.

So under Bush's concept of an "Ownership society" if you can't afford to buy in you can't have the perks like retirement funds etc. Even if you can buy in, its now your responsibility to figure out if you are getting a good deal from which ever bank/corporation you've bought from. The reported experiences with the Medicare Drug cards does not give one confidence that it will work out well for many people. Well it has to be good for someone, right? Well the answer is obvious. Its good for the corporations and banks and the people who own them. Its no accident that during this "recovery" corporate profits are way up and real wages are stagnating. Its no accident that Medicare is not allowed to negotiate with the drug companies for the best prices while drug company profits are rapidly increasing. Its no accident that Halliburton receives no bid contracts, is poorly audited and sees its profits sky rocket. Its no accident that the Government gives companies money for maintaing health benefts at current levels even as they shift the cost to the worker.

So, when you hear about Bush's Ownership Society, read the fine print and keep your hand on your wallet

lPaul Krugman makes some excellent points on this issue.

Call me naive, but I thought all Americans have a vital stake in the nation's future, regardless of how much property they own. (Should we go back to the days when states, arguing that only men of sufficient substance could be trusted, imposed property qualifications for voting?) Even if Bush is talking only about the economic future, don't workers have as much stake as property owners in the economy's success?

Here you have it the crux of the Bush policy. Bush and his team do not value work. Look at the decrease in union influence, the lack of a rise in the wages at the lower end of the spectrum, and, of course, big tax cuts for the wealthy. So its not wages that are important but investment. Note Bush's cut of capital gains as an example.

The political problem with a policy favoring investment returns over wages is that a vast majority of Americans derive their income primarily from wages, and that the bulk of investment income goes to a small elite. How, then, can such a policy be sold? By promising that everyone can join the elite.

But the reality is that the elite keep moving up and the rest of us stay the same or even get worse.

I found it interesting that people have used Locke's total body of work to argue that the ownership paradigm was actually used to keep the laboring class down.

Locke's quotes:

“the laboring class [in 17th century England]…do not and cannot live a fully rational life” and “are not in fact full members of the body politic and have no claim to be so.”

"only those with ‘estate’ can be full members…and only they are fully capable of that rational life…[t]he laboring class, being without estate, are subject to, but not full members of, civil society…[A]ll men [are] members for purposes of being ruled and only the men of estate as members for the purposes of ruling.”

Gives one pause doesn't it.

John Locke on Property: Critical Analyses for one anlysis of Locke's Philosophy.

soccerdad :: 6:50 PM :: Comments (18) :: Digg It!