The Ownership Society (Revised)
Jeff Alworth
When you're within spitting distance of your 40th year, a few things become clear. In my own case, barring a terrible catastrophe at the Rose Garden, the likelihood of me playing point for the Blazers has passed. I'm also thinking it's now a longshot I'll win that Yale poets-under-40 prize. (I'm old enough to run for President, though, so I got that goin' for me.) Finally, I am never going to have the kind of money so that my income will come from capital gains. In terms of ownership, I'm a paycheck man.
This is not exactly what the GOP means when it promotes "the ownership society." Although it's cleverly packaged to emphasize freedom and controll ("In the ownership society, patients control their own health care, parents control their own children's education, and workers control their retirement savings"), what what the ownership society mainly liberates is the very wealthy from their obligation of contributing to the federal tax base.
If you're extremely wealthy, health care is cheaper than income tax. Since capital continues to generate wealth whether you're employed or retired, those with ample stores would prefer not to chip into Social Security--they've already got theirs. Education is likewise for the masses, not for the wealthy whose kids already attend Choate. Why pay twice for an education?
If this sounds like class warfare, it is. Best get used to it and the fact that, unless you're perusing that Choate brochures, you're probably getting jobbed by the "ownership society." Working stiffs own one thing--their paycheck--and we've done a rotten job protecting it.
Since the grand Republican revolution, median incomes have stagnated while the wealthy have seized a greater proportion of the US lucre. You know the stats: since 2001, when the GOP really consolidated power, the median income has fallen. The top 20% of American families now own over 50% of the wealth--a record.
Meanwhile, because the radicalized government has made privatization a fetish, there have been no investment in, in in some cases defunding of, public and higher ed, medical care, defined benefit pensions, and so on. The median household that in the 70s received health care from work, put their kids through school--the good old days before fees, when your daughter might have studied viola--and looked forward to decent Social Secuity benefits to augment their pension, now has to buy all of it on their own. On the same salary.
The rich own half the wealth and we own bills. Nice system if you're in the top 20%.
On this day after labor day, I think it's time to join the class war. It's time for average workers to stake their claims. We need to go back to a time when we collectivized risk and demand that our federal dollars support things we actually own, not the Wall Street and real estate speculation of the ultra-rich:
- Health care. Should be a right of every citizen, and every citizen should have to pay into the system to support it. Far from bankrupting the country, it will save us money, costing only the private health providers and insurers who are making windfall profits.
- Public education. Public schools should always be funded first, at an adequate level, before any funds flow to private educators.
- Minimum wage. No family in America should work full time and not be able to feed their family. (This isn't as pressing an issue in Oregon.)
- Higher education. The surest way to get ahead is an education. That is currently becoming the domain of the upper classes, and the federal government is defunding public assistance to students.
- Defined benefit Social Security. Dubya would love to turn Social Security into a vast 401 (k) scheme where citizens would lose the assurance of a regular check for the risk of regular investments into a system that may be bankrupt when we retire. This is an egregious attack on the poor and middle class--and worse, on the elderly who are least able to absorb the shock of poverty.
- Bankruptcy protection. Given all the burdens placed on citizens by the plutocrats in power, it is plainly immoral to remove bankruptcy as a last-resort method of escaping debt, as the GOP did a couple years ago.
These are bare minimums. We could add child care and transportation to the list, but you get the idea. Thanks to a generation of GOP rule, we have begun to think of these things as frilly extras in a life of Darwinian survival. It doesn't need to be that way, and the only thing stopping a return to sanity is accepting the "ownership society" as responsible governance.
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12:31 p.m.
Sep 5, '06
Sign me up.
It's been clear for some time that when Republicans bemoan class warfare what they mean is that they think the top 10% have a divine right to continue to roll over everyone else unopposed. Their argument is that no matter the scorched-earth policy of those at the top, it's not really warfare if no one is shooting back.
1:36 p.m.
Sep 5, '06
Of course the Republicans will immediately attack the class warfare as un-American even while they conduct class warfare in every economic bill they pass.
I would suggest that you take another look at where the cut-off is however. While the top 20% are still better off than 80% of the rest of America, my memory says that the bulk of them haven't done much better than the rest of the country in recent years. Keeping in mind that only 2% of estates pay the inheritance tax, I remember reading somewhere that most of the growth in wealth since Bush came into office went to the top 1/4 of one percent. I would defer to Chuck Sheketoff on the exact cut-off, but would suggest that a higher number will win more allies. More people believe they are in the top 20% than actually are, but a lot less think they are in the top 1-2%.
Sep 5, '06
My blue collar parents (dad was a shoe salesman, please no jokes) struggled to send me to a prestigious private university and law school. My wife's wheat farming parents in Eastern Oregon struggled to send her to an Ivy League medical school. Between the two of us, our income is within the top 5 percent. That does not influence our mutual support of liberal and progressive candidates, or our efforts to end poverty in Oregon and our fight to adopt a single payer medical system to eliminate uninsured citizens.
So what is the point of talking about income levels? Some of the most active liberals in the US are from high income families - the name Kennedy rings a bell. Some of the most right wing red necks are from the lower end of the economic ladder. Who cares!
End of sermon. Go in peace.
2:00 p.m.
Sep 5, '06
It's true that many people believe they're in the upper eschalons of income earners, but I think that's part of the problem. There has been a cultural shift as Americans move from the industrial workplace to the office and retail. Most workers now see themselves as less like the construction workers outside their window and more like their corporate bosses. I'd like to go back to the effective dichotomy of wage-earners versus capital owners, because that really tells the story. The ownership society has gutted wage-earning wealth and transferred it to capital owners--exactly the opposite of what happened during the great compression under progressive policies.
I'm a worker whether I wear a hard hat or not, and I'm damn happy to cop to it.
2:02 p.m.
Sep 5, '06
So what is the point of talking about income levels? Some of the most active liberals in the US are from high income families - the name Kennedy rings a bell. Some of the most right wing red necks are from the lower end of the economic ladder. Who cares!
Uh, I do. Not being in the top 5%, I actually care a great deal. I can't afford the same nobility with which you wash your hand of these petty economic issues. Nor can most Americans.
Sep 5, '06
Jeff:
As always, it's good to see a post from you. However, I'm going to challenge the Social Security bullet. This is the one area that the left has all wrong, IMHO. The system is unsustainable. Everyone knows that. A payroll pay-as-you-go DB plan is a disaster every time. Ask the airlines, the automakers, the states (PERS), and the Social Security Administration. You bemoan low incomes, but if the system is not overhauled, low-income workers will be forced to pay exceedingly harsh payroll taxes to support their parents (the booomers) who are just now starting to enter SS retirement age.
If we privatize SS, then workers will get far better retirements and Congress can NEVER take away the money the workers own. You don't own your social security. But you should. It's your money. You should own it. Your children shouldn't be paying for your retirement, you should.
If you're concerned about the stock market being too risky, then force people to invest in only bonds. I don't care. Bonds are going to get you 5-8% over time. The problem with the 401(k) system is not that people have choice of investments, it's that they can choose not to participate. If everyone was forced to save money for retirement and not allowed to withdraw those funds, everyone would have more than enough regardless of market ups and downs to have a decent retirement.
Now, I don't advocate forcing people to do anything. I'm a libertarian, but I'm also a realist. I know that retirement always sounds so far away and people in their forties don't even save for retirement, mostly because they believe the government won't let them fail. Take the 15% that goes to SS now and give people accounts that actually are theirs. Defined contribution. But don't let them take it out. How hard is that? What could go wrong? Politicians can't raise the age of retirement, change the monthly benefit, or steal from the system, because it's your pile of cash.
I understand your fears about bankruptcy, but if that's your fear, the horse your backing is far more likely to destroy the economy than mine.
I'll get into education later, but that, too, is a system that the left has all wrong. Higher ed is a joke these days, and K-12 is losing ground because the government micromanages to death our system and there is no real way out in the current system.
Sep 5, '06
Jeff:
As always, it's good to see a post from you. However, I'm going to challenge the Social Security bullet. This is the one area that the left has all wrong, IMHO. The system is unsustainable. Everyone knows that. A payroll pay-as-you-go DB plan is a disaster every time. Ask the airlines, the automakers, the states (PERS), and the Social Security Administration. You bemoan low incomes, but if the system is not overhauled, low-income workers will be forced to pay exceedingly harsh payroll taxes to support their parents (the booomers) who are just now starting to enter SS retirement age.
If we privatize SS, then workers will get far better retirements and Congress can NEVER take away the money the workers own. You don't own your social security. But you should. It's your money. You should own it. Your children shouldn't be paying for your retirement, you should.
If you're concerned about the stock market being too risky, then force people to invest in only bonds. I don't care. Bonds are going to get you 5-8% over time. The problem with the 401(k) system is not that people have choice of investments, it's that they can choose not to participate. If everyone was forced to save money for retirement and not allowed to withdraw those funds, everyone would have more than enough regardless of market ups and downs to have a decent retirement.
Now, I don't advocate forcing people to do anything. I'm a libertarian, but I'm also a realist. I know that retirement always sounds so far away and people in their forties don't even save for retirement, mostly because they believe the government won't let them fail. Take the 15% that goes to SS now and give people accounts that actually are theirs. Defined contribution. But don't let them take it out. How hard is that? What could go wrong? Politicians can't raise the age of retirement, change the monthly benefit, or steal from the system, because it's your pile of cash.
I understand your fears about bankruptcy, but if that's your fear, the horse your backing is far more likely to destroy the economy than mine.
I'll get into education later, but that, too, is a system that the left has all wrong. Higher ed is a joke these days, and K-12 is losing ground because the government micromanages to death our system and there is no real way out in the current system. We can do better, and it's not just more money. It's a system-wide change that DOES fit into an ownership society.
2:46 p.m.
Sep 5, '06
Don, I think you know that the current "crisis" of Social Security is an immediate byproduct of spending the money that was earmarked to handle exactly the problem you suggest for the future--not enough money to pay out the benefits. This problem was recognized and accounted for in 1983 by deliberately overcharging both employees and employers for FICA, in order to build a surplus for later.
Problem is, EVERY President since then has used the surplus to pay annual budget concerns. Bill Clinton was the only president in over 20 years to actually use the money for its generally intended purpose by applying it to the national debt, and he was only able to do it for his last 2 budgets. By FAR the worst actor on this issue is George Bush the younger. He has blown hundreds of billions of dollars in surplus FICA revenue on regular, annual budgets.
So this whole scam of "privatization" is just that--a way to hide the fact that the government has been stealing "our money" for decades, and needs to begin paying that back. (I disagree it's "your money" in any case; it was never intended to be a personal savings account. It was something you paid a defined amount into, and were promised a defined benefit back upon retirement or death/disability. There never was any sort of personal account where they kept your money. It's a closely accounted tax you'll eventually get a pretty nice rebate on, is all).
Here are three relatively easy steps to make the problem virtually disappear:
1) Raise the retirement ages for new enrollees (and perhaps the youngest current enrollees) to reflect the reality that people both work and live longer than they did 50 years ago.
2) Raise the exemption limit from its current position of (I think) $97K. FICA is currently one of the most regressive taxes we have, for precisely this reason.
3) Pledge to honor the FICA surplus dollars as earmarked for Social Security. It's a promise we owe it to ourselves and future generations to keep.
2:51 p.m.
Sep 5, '06
Gee, I'm so incredibly torn. Should I scold Jeff for his unwarranted and counterproductive attack on the wealthy, or correct Don Smith's absurd misstatements on the current condition of Social Security?
Well, OK, this post, I'll go after Don.
The Social Security system is not only sustainable, it's the only government program that hasn't been screwed over by Bush, and is still operating in the black. At present, it's taking in billions of dollars more than its paying out - intentionally, so as to get us over the boomer demographic bump - and this won't stop until at least the mid 2040s. Compare that to the medicaid disaster, Bush's gift to big-pharma, that was born sucking the budget dry. Or this privatzation of Social Security, which is nothing more than an ill concealed gift to Wall Street, and pretty quickly you understand why it's so important to defeat this "privitization" plan.
I could go further into explaining why modern stocks are very much overrated (the risk-discount is nearly zero these days), but the explanation is pretty involved, so I won't. Suffice to say, that the only way a politician can "steal" from the present Social Security system is by lying through his teeth to pretend it's broken, and destroying it in the name of "privitization".
And that's exactly what Bush is trying to do.
Sep 5, '06
All social security needs is (a) a modest tax rate increase, and (b) a raise of the maximum social security taxable wages combined with indexing to the rate of inflation going forward.
If you want to make the rich even richer, privatize social security and require people to put their retirement money into the stock market. The market will zoom up very quickly in response to all the new money chasing a limited number of investments. The big and smart investors will pull out fairly quickly after the bubble begins and they will diversify into real estate or foreign investments. The middle and lower classes will hold onto their 401K stock portfolios and will get screwed once again as falling stock prices suck their retirement dreams down the drain.
Sep 5, '06
Well, Steve, you're certainly right about Bush's gift to big Pharma. That Medicare bill was horrible.
As for Social Security, talk of privatization started in the Clinton years. I don't think it's fair to simply dismiss privatization as a Bush Lie. It's true it wasn't intended as a savings account, but it also was never intended to provide a retirement for everyone. It was insurance for the poor. However, if everyone gets it, it's not insurance and will only work if it is indeed a savings account, like a life insurance policy.
I don't necessarily support Bush's preferred plan, either. I philisophically support the idea of owning that money, though. As I said, for all I care, don't even give people investment choices. Just give them a return on their investment. Or let people choose to have no choice or to try to manage it themselves, but don't let them take it out and mandate that they do have to contribute.
2040 may sound like a long time, but it's not. Boomers will still be collecting retirement. They'll be 85-95, and that is a scary big demographic.
Torrid, you're right. It was spending of the "trust fund" that has put us where we're at. But we ARE where we are. I'm not interested in why or who's to blame. And maybe it wasn't intended as a savings account, but the effect is a DB plan that's far more expensive than we can afford. I'm willing to means-test benefits, but so many people will just game the system, I'd rather set up a system that allows people to be productive if they want to be without gaming the system.
As for stealing SS, congress can do away with it, raise ages, lower benefits, or make any other change to its heart's content. That makes it vulnerable, and that is wrong. You both are philosophically opposed to SS being an owned asset. I am not. I believe that makes this debate one that will never end.
I trust that education is a philosophical divide you and I will not bridge. I believe that every child deserves the best education he or she can get, and that society has a hand in that. You believe that every child should get the same education and that society will dictate and pay for that. I don't judge the philosophy as wrong. I just think that in our day and age, children should go to any school that can teach them in the method they learn best. Can we get into that debate? I think we could all learn something from that one.
4:38 p.m.
Sep 5, '06
The theoretical vulnerability of Social Security is overwhelmingly implausible. It ain't called the "third rail" of American politics for nothin', Don. Besides, if it comes down to it, private "owned" accounts are just as vulnerable to government - in "theory". Congress has the power to nationalize anything they damned well please, and the only reason they don't is because it's an overwhelmingly unpopular idea.
Furthermore, if you make the SAME economic assumptions that Bush's minions did to make "private accounts" look good, then Social Security won't EVER go into the red. Not in 2040. Not 2070. Not ever. That's because private investment instruments have been dramatically oversold in the U.S.
How? Brokers use tables that start in the middle of the worst economic crisis America ever faced - the great Depression - then cherry pick the stocks of only those companies that prospered anyway. The result makes a very good sales pitch - "if you bought IBM in 1932 it would have made you a bundle!" - but a very poor investment strategy. Specifically, risk discounts that used to run up to 80%, have, in many cases in the modern oversold economy, dropped below zero. Some people are literally paying for the privilege of being able to lose value in their investment.
In this kind of market environment, it makes absolutely no sense to introduce needless risk into the US retirement system. By DEFINITION, not everyone can win in the Stock Market. For every person who gets above average gains, there must be someone who gets below average gains. In fact, using defined Social Security benefits as a baseline, the vast majority will lose money because of commissions and churn, and many will sink back into abject poverty.
p.s.: I'd love to talk education with you, but I've spent too much time away from work as it is.
4:42 p.m.
Sep 5, '06
Should I scold Jeff for his unwarranted and counterproductive attack on the wealthy...
It's true that the wealthy took some of my buckshot, but I was mainly aiming at the patrons of the wealthy who run our country. The overheated rhetoric was just added salt to flavor my stew.
Don, I'm with Torrid on this one. You don't steal from Al Gore's lockbox and then use your theft as justification to privatize SS and give your patrons a massive windfal. Okay, you try, but it's immoral and poor governance.
What I'm mainly for is a reconsideration of the way we spend our federal dollars. The Norquistas have had their day. They want to give kickbacks to the wealthy (the evil wealthy Steven wishes I would avoid targeting) while defunding various social and real safety nets. So, if one likes not having health care and enjoys watching a horse's ass like Brownie brag about how fabulous he looks while New Orleans sinks, the GOP is A-okay. But if these things seem like a funny way to spend our dollars (don't even get me started on how we've privatized the military so Halliburton can conduct our invasions), maybe its time to reconsider the GOP's ownership society.
(Don, I'm not suggesting you are in the Norquista camp. I'm on an extended, labor-day induced rant, and it's hard to stop.)
Sep 6, '06
I'll do a little class warfare since it seems to have slipped out of the discussion. There's been a 20 year slide in low-middle blue collar spending power, well it was a slide up until George II, then it was a plummet. There are enough reasons to go around for everybody, out-sourcing, in-sourcing (illegal hiring), slashed benefits, no inflation adjustments, low minimum wage, FICA cap level/vs income, slashed public programs, ad nauseum. Did anybody hear our Decider on LABOR DAY talk about a great economy and benefits of tax cuts. Well, Labor ain't having a great day or decade.
I don't care what income strata you live in, if you aren't in that low-mid blue collar vice you don't have a damn clue. I started beating nails in the early 70s, a decent carpenter could drive a beat up truck and his wife could have a well used car and stay home in their blue collar house and take care of their kids. Now days if she isn't working, they aren't gonna make it by and they're elegible for food stamps, etc. Residential construction used to be the gateway out of poverty, now it's poverty. Now I'm the boss and I'm not elegible for food stamps, but I ain't cuttin' a fat hog either, I'm sliding right along with my guys. You don't even want to know the kind of hours I work and I don't mean desk work.
Labor Day, my ass, it's turned into a middle class salary man's holiday, sweat, calluses, and skill used to get a little respect and some bucks, now it's just folks too stupid to get that higher eddykashun. Aw, I don't sound pissed-off, do I? If it doesn't sound like an attack on wealth, I must've miss-fired. Where the heck do you think wealth comes from - air??? It all comes down to somebody's back.
I'm not suggesting that beating nails is commensurate with running a 100K employee business, but WTF??
Sep 6, '06
It was insurance for the poor.
I think this is not true. Social security was meant as a secure baseline income for working people when they retired. People who have only their social security are almost by definition poor. But at least no one is demanding that they prove they are poor the way the poor schmos without social security do to get whatever welfare their local communities provide.
And that is really the alternative. We can force people to save, but we can't force them to save wisely. Social security provides a secure income that should allow people to take greater risks with their other investments. Without it, we will have people who come up short when they are too old to work but too young to die.
Sep 6, '06
Steven:
Assuming you're right about SS's long-term viability, you're point about stocks as a privatization vehicle don't square with our discussion. As I've said, I don't even favor putting SS money in the stock market because it would have a tsunamic effect. (Like that? I'm submitting it to Webster's)
Obviously, all that money chasing the limited pool of stocks is bad for business.
8:25 p.m.
Sep 6, '06