Professor Keith Fitzgerald's address to the Democratic Club of Sarasota at the January 2004 luncheon entitled "The Ownership Society" wherein he shared his impression of the differences in worldview between the Bush Administration and the Democratic Party.

Joke: expert at risk assessment, specializing in reassessing risk assessments on the basis of new information, claims to associates that his calculations show that he can jump off the Empire State Building and survive.  They are skeptical.  He decides to prove them wrong.  He jumps.  As he falls and each floor goes by, he shouts up to his horrified colleagues—“so far so good, so far so good, so far so good….”

Can you see the obvious connection to President Bush’s economic policy… or obvious connection to President Bush’s economic or foreign policy?  As we contemplate the Bush Administrations economic and foreign policies, this joke takes on a special significance.  There is something a bit depressing about this—because my point is that the American Voter thinks very much like our plummeting expert.

The immediate term economic news is good, and it looks very much like by next summer that economic growth will be strong, the stock market will be appreciating in value, inflation will be in check, and despite a disappointing job outlook, ballooning trade deficits, and a weak dollar, most people will be feeling reasonably hopeful as they assess the incumbent president’s job performance.    But if we look slightly to the longer run, things are very scary.  We see raging budget deficits to match the long term trade deficits and job losses.  This will lead to inflationary pressures that may force the Federal Reserve to tighten monetary policy just when growth starts to sag.  Due to the wildly irresponsible tax cuts for the wealthiest members of our society and a demographic nightmare that means millions of us will be beginning to retire and draw on public insurance programs as tax revenues dry up, the longer term doesn’t look any brighter.  So far so good.

Similarly, in foreign policy, it looks very much like Bush’s expansionist policy may reach a point where it may plausibly look like the war in Iraq went fairly well.  Sometime this summer, there is a good chance that we will see an announcement of a breakthrough on a new constitution for Iraq and possibly some sort of scheduled elections.  We will be declaring victory just in time for our own elections.  The longer term picture for the US in the world is frightening…. So far so good.

I will say more later about the policies of the Bush Administration.  But what I would like to do first is place them in a larger context.  Like most of you, I have come to the conclusion that we are now being governed by the most radical government in most of our lifetimes, the most radical president since Franklin Roosevelt.  President Roosevelt and the Democrats brought about the New Deal.  The New Deal was more than a set of policies.  It was a redefinition of the nature of America citizenship and a redefinition of the meaning of the American experiment.  And President Bush and the Republican Party is again trying to redefine the meaning of American citizenship and the meaning of the American experiment.  I would like us to try fully appreciate the significance of this historic moment.  Because, while it probably has us all concerned that we can see how Bush may arrange things just so the real disastrous implications of his policies may be tempriarily masked just in time for the elections, we cannot allow ourselves to be discouraged or divided—because there is nothing less involved in the upcoming election than our children and grandchildren’s future—and the heart and soul of the our great nation.

George Bush is about to reveal in his State of the Union speech a vision of American dream.  This vision has been emerging as a theme of recent Bush Administration speeches.  It is called “the ownership society.”  The idea is that the Republican controlled government headed by the Bush Administration is reshaping the relationship between government and citizens.  This notion, the ownership society, is to be Bush’s signature concept, something like President Franklin Roosevelt’s New Deal, President Kennedy’s New Frontier, and President Johnson’s Great Society.  Of course, we are all jaded by the Karl Rove’s public relations machine, and so our first impulse is to suspect that this is just another instance of puffery.  But today, I am going to suggest that we take this particular idea seriously. 

The Bush Administration and the Republican Congress are indeed undertaking a transformation in the role of government and the meaning of citizenship every bit as radical as that which took place in the New Deal.  If we study it, we can see very well why it is a threat.  It also challenges those of us on the other side of the political spectrum to counter with our own vision of citizenship.  Do so today.

The idea that Bush is promoting with the term” ownership society goes something like this.  The idea is that everyone deserves a stake in this country.  So, we would like a housing policy that gives everyone a chance at home ownership, and education policy that “leaves no one behind” and so forth.  At first glance it’s nothing more than a slogan, a glib cover for a bunch of half baked policies, more aimed at providing favors for big campaign contributors than helping the putative beneficiaries.

But there is more to the idea of the ownership society—the image that it conveys and the relationship with the kinds of policies that Bush has enacted and proposes to do.

First, note that the idea of the ownership society suggests that citizenship is an economic relationship, not a political or a moral one.

Contrast this to the notions of citizenship that dominated in our country.  Some of these were offensive and destructive.  Citizenship was a matter of belonging to the right groups—white, male, wealthy.  But on a better note, citizenship was a matter of moral commitment to a set of ideals, not just to liberty but also to democracy, not only to freedom but also to duty.  It took us a long time in our history for the Liberal notion of citizenship as a moral commitment to a shared community to triumph over the contradiction to such an ideal contained in slavery, race and sex discrimination, and so forth.  And the project of liberalizing citizenship has never been completed since we are still a country that is afflicted by racism.

But if we think about the principles of the New Deal, we see the principle of a liberal citizenship.  Take Social Security—we all make a pledge, a social contract to each other, through a democratic choice to provide security to each other.  We make this pledge on the provision that we are all willing to contribute through our hard work to funding this shared burden because citizenship’s entitlements are premised on each of us making our fair contribution.  When the Kennedy and  Johnson Administrations succeeded in passing the Voting Rights and Civil Rights Act, it became clear that at least in principle this liberal form of citizenship was based on a principle of equality.

Now, lets contrast that to the image of the ownership society.  First, lets remark that when we look at the Republicans’ policies, they don’t really mean by owners the low income folks that might get guaranteed loans under the Martinez-Harris housing bill.

They mean the owners of the mortgage industry.

The owners they refer to are not those who own a stake in Medicare and Social Security—they mean the owners of the pharmaceutical, insurance and securities industries who their proposals seek to benefit.

And their notion of citizenship isn’t premised on a principle of equality because the share that citizens hold in our nation is proportionate to the political clout that comes with being incredibly wealthy.  In the Republican’s ownership society, one is a citizen relative to the extent that one owns wealth.

Now, to elaborate this theme and relate it to the policies of the Bush Administration, I would like to introduce one abstract concept—it comes from economics—and in fact has been, in addition to an important analytic tool for academics, a sledge hammer for conservative economists to slam regulation.  But a good idea can always outrun the ideological uses to which it is initially used.  The concept  I refer to is rent-seeking.

Adam Smith on income—it comes from capital, labor and rent.  Capital investment creates new wealth, as does labor’s contribution to it.  Rent typically simply gains income by virtue of position.

The concept of rent seeking.  This as a conservative stick to whack many aspects of the growth of the state from the Progressive Era forward.

The basic idea is that rent-seeking is when a  property owner the expenditure of resources to gain from government a privilege that will entitle a person or firm to long-term, secure income.  Specifically,

Making money open rent is fine—the problem is using government power to protect privilege.  Rent seeking stifles innovation and provides insurance for those who have the most.  It protects firms from the competition of the market by guaranteeing a profit.  One example is when the firms being regulated use campaign contributions and information to get regulations that serve as barriers to competition form new firms.

And, conservatives had a good point to make about a lot of public policy in the regulatory state during the New Deal era. 

But in Bush’s ownership society, rent seeking has become the main driving principle of public policy and public life.

Medicare bill.

Energy Bill.

Harris’ and Martinez’ housing bill.

Inheritance tax, income tax.

Copyright laws.

Bush’s new immigration law.

Ownership society kills meritocracy, upward mobility, and innovation.  It subverts the justification of capitalism—because it means firms won’t really have to compete and create new goods and services to garner a secure share of the economic pie.  Their share will become a property right. It is about locking in privilege for those who can afford to pay the right price at the right time.

Why Republican’s cannot be trusted to do Social Security reform.

Increasing economic inequality and the globalization mean that meaningful citizenship is something which Bush and the Republicans are shrinking to a smaller and smaller number.  There used to be a gentle and defensible nationalism to economic policy—we are all citizens and we are all in this together.  But to the Bush Administration, workers are just workers and it really makes no difference if they are American or Chinese.

Relate to immigration proposal.

Who gets to play rent seeking in the ownership society?  Campaign contributions.

Even affects out foreign policy:

            Sense of ownership, privilege

            Halliburton.

What does this have to do with citizenship?

An economic caste system.  Only “owners” count as true citizens.

Contrast this to the idea of the “citizens soldier” concept that governed for so long.  Lots of reasons to end draft and go to volunteer military.  But the volunteer military serves perfectly to ownership society because soldiers are employees.  Theme here is displacement of all risk to those who are in the lower castes of society, those who simply didn’t get in on the ground floor and fix their position.

As Democrats, we belong to a party that defines citizenship in different terms.

Citizenship as a trusts among equals.  Rights and privileges, but also duties and responsibilities.  Also, America as a work in progress, an experiment that we are collectively perusing.  This is a vision not of a perfect society, but striving for greatness.  This is a vision worth fighting for.

Now—briefly back to upcoming election.  Temptation if we get discouraged is to hope for catastrophe.  And our habits are to revert to circular firing squads.

But the stakes are too high—we are not fighting this election for any stakes lower than the heart and soul of the American experiment.  We must stay united and keep our eyes on the prize.  And we must win.