Feb. 28 (Bloomberg) -- U.S. conservatives continue a healthy debate over how they can reconnect with voters and channel their ideals and goals into policies relevant for the 21st century. But a specter haunts these conversations -- a ghost called the ownership society.
This ghost subtly frames and guides all current approaches to conservative thinking, though its influence isn’t clearly articulated or noticed anymore. This is a problem, because until the conservative movement reflects and deals with its ideal of an ownership society, it is unlikely to advance.
The ownership society mantra of the President George W. Bush years is usually treated as a punch line, associated with Republican cheerleading of high homeownership numbers during the bubble or the push to privatize Social Security in 2005 that failed before it even got started. But the ownership society was the articulation of a deep part of conservative philosophy, built through articles and speeches, and laid out in Bush’s 2005 inaugural speech and State of the Union.
The ownership society rested on two claims. The first, most important part was that the government should shift the risks we face onto individuals and families. Not only is this the best way to deal with risks, but doing so is an essential part of freedom. The second part was to devolve organizations and responsibilities from the federal government to states and communities. As Bush said in his second inaugural address, these two actions together would make “every citizen an agent of his or her own destiny” while also giving “every American a stake in the promise and future of our country.”
Even though Bush and his agenda have disappeared from the main stage, the ownership society never went away and still influences conservative policy. Representative Paul Ryan’s plan is to turn everything that isn’t nailed to the floor into block grants. Yuval Levin of National Affairs argues that families (“which after all are not liberal institutions”) are the best agents of cost controls in health care. To the extent they exist, Republican approaches to health reform seek to reduce the share of medical-cost risk that is socialized.
While the numerous individualized programs and government activism of Bush-era “compassionate conservatism” seem to contrast with the “47 percent” meme of the Tea Party versus the looters, these are just two sides of the same coin. Or, perhaps, the good cop and bad cop of the ownership society. The good cop offers you a range of tax-free personal accounts to try and help you mitigate risk while he transforms public programs into private ones; the bad cop tries to stigmatize and dismantle what remains of government assistance.
That the ownership idea has survived as a driver of conservative policy making is important, because the vision of an ownership society hasn’t survived the current downturn well. The crown jewel of block-granted policy, welfare reform, has collapsed under the recent economic crisis as increasing numbers of Americans have been left without paying jobs or a welfare check. State budgets crumbled under the bursting of the housing bubble, leaving states unable to absorb responsibilities from the federal government. Imagine how states would have handled revenue declines in 2009 if their share of responsibility for Medicaid had been even greater.
Meanwhile, if it wasn’t for the automatic stabilizers and emergency stimulus that boosted national income as the economy went into a downturn, the recession would have been far more vicious. As unemployment doubled across most occupations, industries and demographic groups, it required a collective government response to combat the recession. Only the federal government is in a good position to provide such stabilization, because states must approximately balance their budgets each year.
Rising income inequality and a succession of slow recoveries from recessions have made the masses more vulnerable than before to economic downturns and less able to shoulder risks devolved from the federal government. What Americans need today is less individual ownership of risk, not more.
President Barack Obama has set about adapting to these changes: putting the responsibility for health care under the role of the government; expanding the framework of financial regulation to include a shadow-banking sector not previously covered; and seeking to expand family opportunities through a mix of redistribution (higher taxes for the rich to fund expansive preschool) and what experts call pre-distribution (a higher minimum wage, a stronger National Labor Relations Board).
Obama’s second inaugural speech could be seen as a direct response to the one from eight years before, where Bush argued for the individualized ownership of risk. As Obama argued, “The commitments we make to each other -- through Medicare, and Medicaid, and Social Security -- these things do not sap our initiative; they strengthen us. They do not make us a nation of takers; they free us to take the risks that make this country great.” The government’s absorbing of the risks of health-care costs and retirement are the preconditions of real freedom.
Though political fortunes come and go, the desirability of privatized risk is unlikely to change in the near future. Regular voters don’t see themselves facing the risk of, say, being unable to afford major surgery as a precondition for real freedom, wisdom and virtue. They see a role for the government in protecting us from the risk of medical insolvency through regulation, subsidies and mandates. And even after the economy recovers, stagnant wages and lower returns to labor could be a new normal, meaning that insurance against life’s misfortunes will be even more important.
Conservative reformers haven’t adequately addressed the question of what risks should be shared broadly across the public and how the government should structure how to share those risks through law and markets. Most conservative plans try to push costs and risk back onto families, regardless of whether they are prepared to handle them. And such reforms aren’t likely to be compelling in the current and future economic environments.
(Mike Konczal is a fellow at the Roosevelt Institute. His blog, Rortybomb, was named by Time magazine as one of the 25 best financial blogs. E-mail him and follow him on Twitter. The opinions expressed are his own.)
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