On February 21, 2003, President Bush gave a speech in Kennesaw, Georgia. There he first talked about America becoming an “ownership society”. In those heady days of neo-conservatism, an ownership society meant power was going to trickle down to the masses. We would be in charge (own) our health care and drive down medical costs through the magic elixir of medical savings accounts. We would have more ownership over our children’s education by using government furnished vouchers to send them to the local charter or private schools, rather than the nearby public school. Moreover, we would “fix” the social security problem by empowering each citizen to own his or her retirement. We would do this by allowing them to invest at least a portion of their social security withholdings into the stock market. Over forty or so years in the workplace, the value of those assets would compound and compound. Thanks to the magic of our free market we would all retire, if not exactly millionaires, then comfortably indeed. You can easily see how much better life would be if we could just become owners of these things instead of, well, renters!
Good news Americans! We have indeed become the ownership society! Today, more and more of us cannot afford health insurance, so we now get to pay for all of our medical expenses out of pocket! This gives us a feeling of ownership over our health care we never had before in those horrid insured days. Now we have plenty of incentive to shop around although, admittedly it may be hard to drive a bargain with an emergency room physician at 2 AM, particularly when you are profusely bleeding or are unconscious. Many of us are choosing to own the problem of our health care by not seeking medical help at all. We hope that we can find relief in over the counter medicines or $4 generic prescriptions at Wal-Mart. For those of us who used to have health insurance, how can we claim that we are not owners? In the past, you were at the whim of your health insurance companies, who stipulated what they would cover in their expensive, take it or leave it contracts. Now you are unencumbered, free of the HMO and PPO bureaucracy to make your own informed health care choices and to shop around. Perhaps my family doctor will reduce my rate if I threaten to buy an over the counter medication instead.
Those school vouchers sound pretty good too. They do have a few minor drawbacks. First, your voucher probably will not be made up with additional revenue to finance our local public schools, but that’s their tough luck. That’s what they get for providing mediocre education. Second, it is likely that whatever voucher you receive will not cover the full cost of your children’s tuition. Maybe some cheap local charter school will not ask you for additional tuition yet will magically provide high academic standards. Anyhow, it looks like vouchers may involve significant extra out of pocket tuition expenses. When you write those tuition checks instead of putting the money away for junior’s college education, you should feel a sense of ownership. Perhaps you can get stock in the local charter school, and use your shares to vote for principals that you like.
And as for financing our retirements with gains from the stock market, good news there too! You may be asking, “Mark, haven’t you read the papers? The stock market is in the toilet because of the sub-prime housing mess! How could there possibly be any good news?” Well, you see it is good news because, citizens, now we are all going to be owners, whether we like it or not! As usual, our fine financial leadership leapt into action. After finally determining that our financial system had a severe case of constipation (due to consuming too much sub-prime mortgage backed securities of uncertain worth), the Secretary of the Treasury, working with the Chairman of the Federal Reserve and the president of the Federal Reserve Bank of New York, decided that a pricey dose of Ex-Lax was in order for Wall Street. Apparently, the U.S. Treasury underwriting Fannie Mae and Freddie Mac was not enough. The government, already the insurer of last resort for floods, will now own eighty percent of the mega-insurance underwriting company AIG in exchange for providing it with a huge line of credit in order to ensure it stays solvent. In addition, our administration is readying to ask Congress to spend up to seven hundred billion dollars to buy these sub-prime and other securities that Wall Street cannot unload. We are told that this will solve Wall Street’s constipation problem for good since those Fannie and Freddie bail out suppositories did not do the trick. The good news, citizen, is that the federal government will now own all these properties, which means you are entitled to your share! No wonder the stock market finally roared back at the end of the week. Those traders were positively euphoric. You would be too if you went to Las Vegas and lost everything you own in the casinos, including your house and cars, only to find that your older brother, in his largess, was going to cover your reckless losses. In fact, you would probably head right back into the casinos to see if you could work some more of this magic.
So we the taxpayers are the winners here, see? Wall Street gets to go back to its business and we the taxpayers get to own all these properties, many of which are spanking new! I know I want my property. I know that soon the government will own all sorts of properties across the country. I want my sub-prime house! I was thinking about requesting my free house in Flagstaff, Arizona as a possible retirement house. That way I could sell my current house and keep the proceeds. Sweet!
There is the little problem that the government is not planning to raise my taxes to purchase all these sub-prime mortgage backed securities. Raising taxes of course is evil, even when completely necessary, which means that we will petition our creditors, most of who are foreign, to lend us seven hundred billion dollars so we can in turn buy these mortgage backed securities whose value no one can actually assess. I suspect our creditors will be accommodating because they have no idea what their investments in these sub-prime securities are actually worth either. Yet, they have an idea that the U.S. Treasury will still be in business in ten or fifty years when their U.S. Treasury bonds come due, with interest, of course.
So maybe I will not get my free house as I hoped. Maybe instead it will be our foreign creditors since technically it appears that they own the country, not me. My job as taxpayer is apparently mainly to cough up the interest on our federal debt.
Hmm. So perhaps I was premature to suggest that the Bush Administration succeeded in making us all homeowners, even those of us who rent. On the surface though it looks like, sure enough, neo-conservative principles have worked! We now have that ownership society they promised us! Who says we have a miserable failure as a president? He delivered on his ownership society in just five years!
And yet, this new ownership society just doesn’t quite look and behave the way we expected. It is like buying a Rolex watch only to find out it is a cheap rip off.
Well I am sure that by doing more of the same and electing John McCain and Sarah “I can dress a moose” Palin as our next president and vice president, during the next four years we can become even more of an ownership society. It’s funny though. This ownership society sure looks like an ower-ship society to me. From the greatly deflated value of my stock portfolio, it looks like I am already paying the price for other’s incompetence and malfeasance.