Toward an 'Ownership Society'

What about those unable to manage Bush's programs?

Liberty abroad, liberty at home. In a segue as smooth as a Texas drawl, President Bush used the end of his inaugural address about freedom around the world to preview Wednesday night's State of the Union speech, in which he'll highlight what additional freedoms can do for Americans.

These would be, for instance, the freedom of young people to start personal Social Security accounts, like 401(k)s; of anyone to own a business with fewer regulations, lawsuits, and taxes; and of individuals to have tax-sheltered health savings accounts to spend on medical care.

In the president's eyes, these changes help create an "ownership society," in which citizens are agents of their own destiny, as he puts it, and therefore "free from want and fear" as they are given incentives to save more.

Just like the inaugural address, the ownership vision has broad appeal - until it gets down to the details. It's difficult to object to an American ideal as fundamental as individual responsibility. But because not everyone is in a position or able to jump on the self-empowerment train, the president can expect plenty of pushback as he tries to convince Congress, and the nation, of the rightness of this prism for his domestic agenda.

Bush is swimming with the tide of history, however, as it sweeps the nation toward more individual responsibility. Today, more than 50 percent of US households own stocks and bonds, often through mutual funds. Nearly 70 percent own their own home. And the trend is onward and upward for the number of women and minority business owners. [Editor's note: The original version incorrectly stated the percentage of home ownership.]

Historic march toward ownership

Technological and legislative advances (the Civil Rights Act, to name a big one) have allowed people a certain independence from government, institutions, and experts. Most workers now have multiple jobs and careers over their lifetime, and want to take their benefits with them as they change jobs. In just the last decade, the Internet has loosened the apron strings even more. Through the Web and software, Americans act as their own travel agents, bankers, tax consultants, educators, yellow pages, and postal service. All these changes have raised productivity and boosted overall economic growth.

This do-it-yourself mentality has deep historic roots, embedded in a seemingly endless supply of land to be tilled or grazed. But the Industrial Revolution, urbanization, and the Great Depression brought government much more deeply into citizens' lives - as a business regulator, infrastructure builder, and provider of a basic safety net.

Bush is by no means the first president to invoke the pioneer spirit, as he did at his second inauguration. Bill Clinton also emphasized individual responsibility through his "third-way" politics in which government helps individuals do more for themselves. It was his administration, for instance, that reformed welfare and reduced the number of Americans on its rolls. Ronald Reagan, too, railed against "big government."

At the same time, these trends run counter to a continuing need to run society in a collective way, starting with assisting the disadvantaged. As both a "compassionate conservative" and a promoter of "liberty" and "ownership," Bush must resolve this tension between the empowerment of individuals and the need to continue to care for those who fall behind.

Personal Social Security accounts

Nowhere is that tension more evident than in his plan to allow young people to set up personal retirement accounts as an alternative to Social Security. Questions remain unanswered about his still-unveiled plan:

What if many of these personal accounts fail, and today's young people are left indigent in old age? What about people with little financial literacy who can't even pick from a simple set of mutual funds? Will government curb excessive commission fees imposed by private pension funds?

Resolving those types of questions will be necessary before Congress can seriously consider his plan. Government doesn't so much empower people as it guides them to tools of empowerment, such as tapping into today's sophisticated financial markets. But for those who can't be directed that way, an alternative is necessary. Mr. Bush, apparently, is considering how he can provide for this alternative, and that's a healthy sign of flexibility.

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