In his second inaugural address, President Bush offered a vision of an "ownership society"

In America's ideal of freedom, citizens find the dignity and security of economic independence... To give every American a stake in the promise and future of our country, we will... build an ownership society. We will widen the ownership of homes and businesses, retirement savings and health insurance - preparing our people for the challenges of life in a free society. By making every citizen an agent of his or her own destiny, we will give our fellow Americans greater freedom from want and fear, and make our society more prosperous and just and equal.

This wasn't a new idea for Bush, who spoke of an ownership society frequently during his presidency. Many critics suggested this concept was used as a rhetorical tool to tie together scantly related policies, or to euphemistically describe a harsh free market ideology. But when studied more deeply, it becomes clear that the ownership society represents a genuine and coherent set of ideas distinct from laissez-faire capitalism with its own historical and intellectual roots. After an eight-year experiment with an ownership agenda, though, it seems the conservative vision of an ownership society will never come to be.

Like their libertarian counterparts, conservative ownership advocates aim to reduce the overall size and scope of the government and emphasize the importance of individual responsibility. But while free-market supporters address this goal on the supply-side - pushing policies which will either directly reduce government spending or push politicians toward such actions - conservative ownership advocates focus on the demand-side, aiming to reduce the public's need and desire for government assistance. In fact, ownership advocates often support increasing the supply of government upfront, using activist public policies to expand asset-ownership.

Supporters of an ‘ownership society' envision a world in which the vast majority of Americans are able to provide for themselves through the accumulation of appreciating assets - especially real estate and private equities. By owning these assets, the argument goes, individuals will be able to take advantage of the high economic returns to capital and thus be more self-sufficient. Advocates also argue, as President Bush did, that "if you own something, you have a vital stake in the future of our country," and so expanded ownership strengthens citizenship and community involvement. Additionally, supporters of ownership see it as the truest path to freedom, putting individuals in charge of their own social and economic fates. And finally, conservatives believe broad ownership can strengthen their governing coalition by creating a new class of worker-capitalists who are less apt to support redistributive or regulatory government policies - especially those that might hurt asset values.

Ownership has long been a part of the nation's political economy. Such ownership has been a major component of this nation's private welfare state, 1 and its expansion has been pursued by liberals and conservatives alike (with the former supporting it as a supplement rather than replacement for existing welfare state programs). Bush's particular concept of an ownership society, though, is most closely related to Margaret Thatcher's ‘popular capitalism.' During her time as Prime Minister, Thatcher declared that "spreading the ownership of property more widely is central to this Government's philosophy," and passed measures to sell public housing (of which there was a considerable amount) to interested tenants and partially privatize the country's public pension program. This became a source of inspiration for America's conservative ownership agenda. 2

During his time in office, President Bush pursued a number of policies to increase property ownership - lower capital gains and dividend tax rates, health savings accounts, 529 college savings accounts, expansions of 401(k)s and IRAs, support for small businesses, etc. But in line with Margaret Thatcher's popular capitalism initiatives, the centerpiece of Bush's ownership agenda was housing and Social Security. His goal was to increas homeownership rates and partially privatize Social Security to offer all workers personal retirement accounts. While both initiatives entered the public agenda in the mid-1990s, they were pushed most vigorously during Bush's time in office; and ultimately, both failed under his watch.

The recent push to expand homeownership actually began with President Clinton's ‘National Homeownership Strategy' in 1995, after which the homeownership rate shot up 5 percentage points in the next decade (having remained stagnant for the three proceeding decades). Yet while new initiatives to promote homeownership began under President Clinton, the Bush administration pushed hard for using "the mighty muscle of the federal government...to encourage owning your own home." These measures included tax credits, down payment assistance, vouchers, financial education, regulatory reforms, and pressure on the private sector.

The Social Security privatization movement also became popular in the 1990s, when a number of bipartisan commissions, outside think tanks, and members of Congress began proposing that Social Security have a private accounts component. In running for President, George W. Bush advocated such accounts, and in the first State of the Union address of his second term, he argued that:

If you're a younger worker, I believe you should be able to set aside part of [your payroll tax] money in your own retirement account, so you can build a nest egg for your own future...Your money will grow, over time, at a greater rate than anything the current system can deliver... you'll be able to pass along the money that accumulates in your personal account... And best of all, the money in the account is yours, and the government can never take it away... It's time to [offer] security, and choice, and ownership to young Americans.

President Bush put considerable political capital into both of these ideas. In 2002 he launched "America's Homeownership Challenge to homebuilders, realtors, nonprofits, and government-sponsored enterprises that purchase the mortgages made by lenders" in order to "dismantle barriers to homeownership." In particular, the administration established the goal of fostering at least 5.5 million new minority homeowners, lifting the minority homeownership rate above 50%.

In 2005, after winning reelection, President Bush declared that he had "earned capital in the campaign, political capital, and now intend[ed] to spend it...[and] reforming Social Security [would] be a priority of [his] administration." This was followed by the launch of a massive effort to reform Social Security in which he and his surrogates toured the nation advocating for personal accounts.

Ultimately, both of these initiatives failed, although for different reasons.

Social Security privatization represented a political failure, demonstrating the limits of the ownership society's popularity. Despite early favorable polls, a massive publicity campaign, Republican majorities in both houses, considerable outside support, and strong ideological commitment to reform, President Bush was unable to convince the Congress or the people to support the creation of Social Security private accounts. The large benefit reductions or tax increases necessary to restore solvency to Social Security and finance the accounts themselves made reform inherently unpopular. Meanwhile, think tanks and interest groups on the left launched an aggressive counter campaign to stop partial-privatization, which they argued would infuse unnecessary riskiness into workers' retirement security, and ultimately "dismantle Social Security." All this, combined with poor political decisions and bad luck, led supporters of personal accounts to fall flat on their faces. Although some type of Social Security reform remains inevitable, Bush's failed effort has likely destroyed the chance of replacing part of the Social Security system with private accounts.

While Social Security failed politically, homeownership initiatives failed economically, demonstrating the real limits of ownership expansion. Increasing the homeownership rate required either making homes more affordable or raising real incomes for would-be homeowners. Yet with home values rising rapidly (as was desired) and real income stagnant, this meant reducing the price of or barriers to borrowing. Lending standards were therefore relaxed, as Fannie Mae, Freddie Mac, and private investment firms began investing in high-risk Mortgage Backed Securities. This new capital caused a large expansion of questionable loans, such as so-called sub-prime mortgages, many of which offered seemingly cheap loans to high risk borrowers who couldn't afford them over the long run. Ultimately, these mortgages collapsed under their own weight, bringing down global financial markets along with them. Incidents of foreclosure have skyrocketed, home values have plummeted, mortgage availability has disappeared for many Americans, and the prospect of an ever-expanding homeowning class seems to have become a thing of the past.

With the administration's two largest ownership initiatives in shambles, conservative ownership advocates appear to have lost. The disastrous political fallout from Bush's attempt at Social Security reform effectively erased private accounts from the debate, and the economic turmoil created from the housing crisis has made expanding homeownership both unpopular and economically untenable in the near future. Whether or not the idea of the ownership society had value, it has been tainted. And the government's participation in what is arguably the conceptual reverse of the ownership society - the $700 billion public purchase of private capital under the Troubled Asset Relief Program - will probably serve as the nail in the coffin.

Meanwhile, despite his support for several asset-promoting initiatives during the campaign, President Obama has been a critic of the ownership society. Alluding to the risk associated with Bush's concept of ownership, Obama has rhetorically suggested that an ownership society really means an "on your own society." "If you lose your job," Obama argued, "you're on your own. If you're a child in poverty, pull yourself up by your bootstraps, you're on your own. If you were lured in by deceptive mortgage practices, you're on your own."

Of course, the American concept of ownership is still very much alive, and will continue to play a major role in our lives and policies. But the Thatcherian idea that ownership could supplant much of the welfare state will play a diminished role in American political discourse. For the time being, popular capitalism is dead.

Notes:

1  For a discussion of the private welfare state, see Jacob Hacker, The Divided Welfare State: The Battle Over Public and Private Social Benefits in the United States. New York: Cambridge University Press, 2002.

2 For a more complete discussion of the intellectual roots of the ownership society, see Daniel Béland. What Ownership Society? Debating Housing and Social Security Reform in the United States, Hamilton, SEDAP Research Paper 150 (McMaster University), February 2006.