James S. Albus
The Democratic party is searching for ideas. Polls show that most people want the country move in a significantly different direction from the one President Bush has set. But Democrats seem unable to decide what that direction is, or how to solve the problems that concern the voters, such as solvency of Social Security and Medicare, anxiety about jobs and incomes, and the cost of health care. (David Broder, Washington Post Editorial Page, July 10, 2005)
What the Democrats should do is take a page from Bill Clinton’s playbook. Pick a Republican idea, make it your own, and run with it.
The Republican idea of an “ownership society” is a great idea with lots of political appeal, especially among the young. Everyone wants to be rich. Everyone would like to have a livable income from dividends on wealth producing property – e.g., dividends from stocks, bonds, interest, rent, and capital appreciation. What is not to like?
Of course, if the idea of an ownership society is but a ruse to obscure an attack on Social Security, then it should be opposed. But, if Democrats made it their own, and proposed to make everyone an owner of wealth producing capital, while preserving Social Security as we know it, they could turn the game around. They would have a winning strategy.
The Democrats should develop a plan to give all Americans an ownership share of the profits from wealth producing industries. Let the government finance investment in profit making enterprises, and pay dividends directly to the people.
One way this could be done would be to invest public money in profitable wealth producing industries through a National Mutual Fund that would manage the investments and distribute profits as dividends paid directly to the public. Such a mutual fund would operate as a quasi-governmental independent for-profit entity.
There are sound economic reasons to suggest that the rate of economic growth could be dramatically increased by increasing the rate of investment in sectors such as manufacturing, construction, transportation, agriculture, health care, mining, drilling, and environmental restoration. Studies show that private investors provide only about half what should be invested into the productive sector to maximize economic benefit to the society as a whole. A National Mutual Fund could provide the means to achieve this increase. Financing could be accomplished in many ways. One is to sell Government Bonds. Another is to levy a savings tax. A third is to simply issued credit or print money.
The benefits of a savings tax would be that it would prevent inflation and create personal wealth in private accounts. If the savings tax were properly indexed to inflation, it would provide a much more effective means of stabilizing prices than is currently available, and hence, a much higher rate of economic growth than what is currently considered possible could be sustained without inflation.
There are many issues to be debated, and many different approaches that should be evaluated. But the bottom line is clear. As Rep. Barny Frank suggested in a March 4 speech on the economy, the problem Democrats are facing is a “private economy geared to producing wealth, not jobs.” This is a trend that will continue for the foreseeable future. Globalization of the labor force and advanced automation technology will conspire to drive down the value of human labor in this country for many years to come.
The only real solution to this problem is to transform workers into owners. Bring ownership of wealth production to the masses. Put a substantial investment portfolio in every household!
Future success of the Democratic Party does not lie in resisting technology or recoiling from the decline of work as a means of livelihood. Success lies in bringing economic ownership to the working class. Embrace the ownership society as the goal of the Democratic Party. Make every American financially independent.
"Everyone a Capitalist"
July 25, 2005