Stock Nation

Sorry to rain on today's parade celebrating the longest economic expansion in the nation's history. But the United States most likely passed a milestone during the past year that has far more consequence: More than half of all Americans became owners of stock.

Until that historic moment, a country long tagged as capitalist really wasn't fully one (sorry, Karl Marx). Only now are capitalists in the majority, and any so-called worker alienation from the capitalist class doesn't make so much sense anymore.

Perhaps the crowning moment for this new worker-capitalist's paradise was the half-time show in Sunday's Super Bowl. It was sponsored by E*Trade, the nation's second-largest online stock-trading firm. Main Street met Wall Street.

That doesn't mean most Americans are Web-sodden day-traders. Contrariwise, many investors don't track their portfolios closely. In fact, if the Dow and economy head south, many nouveau investors might head for the exits.

Still, a mass culture of stock-ownership has been long in coming, so it's likely here to stay. Its roots go back to the Christiandom of about half-a-millennium ago that championed the individual, the rule of law, hard work, the march of progress and discovery, and the invention of corporations.

But the modern origins are more mundane, and driven by tax breaks: the individual retirement account (IRA) of the 1970s, followed by the 401(k) self-directed retirement plans that helped drive a rapid expansion of mutual funds more than $3 trillion. And lately, the growth of employee stock options has added to the trend.

In just about 15 years, the share of households holding stock has jumped from about 20 percent to the millennial milestone of more than 50 percent.

Is it just a coincidence that stock prices enjoyed a similiar rise?

While many investments are small (less than $25,000), they are coming from Americans of all income levels, and increasingly, the under 35-year-olds.

This democratization of capital will bring big social and political changes as people see more stake in the economy, including in such issues as the capital-gains tax and interest rates.

The old political see-saw of workers vs. capitalists may soon be spinning. More people will want investments - including that in education - to further boost the productivity rate.

Will voters become more conservative? There's been no stampede yet to support privatization of Social Security or big tax cuts. And Republican leaders may be torn over the fact that tax breaks account for many of the new and largely passive investors.

While this stock revolution helps drive the "new" economy, most people still work for a living and, hopefully, retain a compassion for the minority who can't save enough to invest.

Many nations, especially Japan and Europe, are watching to see if they should follow this bold American experiment in mass capitalism.

(c) Copyright 2000. The Christian Science Publishing Society

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