Opinion Editorial | |
| Monday, November 8, 1999 | |
The Political Consequences of Stock Ownership |
Among Conservative British Prime Minister Margaret Thatcher's most important political accomplishments was the sale of Britain's public housing to its tenants. There, unlike the U.S., public housing has always been much more common, mostly occupied by the middle class. In 1980, about one-third of all Britain's housing was owned by the state.
State ownership of housing gave the government enormous power over the lives of ordinary people and was a key to the long success of the leftist Labor Party. Thatcher reasoned, correctly, that getting housing out of the government's hands was essential if she were to be successful in instituting free market reforms.
Labor was confident that housing could never be privatized; tenants would be too afraid of having the state replaced by private landlords who would jack-up their rent. But Thatcher did an end-run by selling the housing directly to the tenants. Not only was this action wildly popular, but it created a profound change in political attitudes.
Once workers became homeowners, they ceased being wards of the state. Suddenly, they became very concerned about property taxes and government policies that affected property values. As a consequence, millions of voters who had pulled the Labor lever all their lives now found themselves newly sympathetic to the Conservative Party's message. In time, even the Labor Party was forced to move well to the right of its previous hard-core socialist position.
Something like this is now happening in America. Unlike in Britain, however, it is not the result of housing privatization, but growing stock ownership. According to a new study by the Securities Industry Association and the Investment Company Institute, 49.2 percent of U.S. households now own stock, up from only 19 percent in 1983. A just-released Gallup Poll puts the number even higher at 60 percent -- 65 percent among those with middle incomes.
A key reason for growth in equity ownership has been the wide spread of defined-contribution pension plans such as 401(k)s. Under such plans, workers invest for their own retirement, rather than receiving a fixed monthly pension from their employer as is the case under defined-benefit plans.
This growth in stock ownership may already be affecting political attitudes. According to Rasmussen Research, those who own at least $5,000 of stock are more likely to vote Republican than Democrat. Even among core Democratic constituencies, the percentage of those voting Republican jumps once they gain a modest amount of stock ownership. For example, the percentage of blacks identifying themselves as Republican rises from 6 percent among those with no stock to 21 percent among stock owners (see figure).
Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, November 8, 1999.
For ICI/SIA study
http://www.ici.org/pdf/rpt_equity_owners.pdf
For Gallup Poll
http://www.gallup.com/poll/releases/pr991029b.asp
The National Center for Policy Analysis is a public policy research
institute founded in 1983 and internationally known for its studies on public policy issues.
The NCPA is headquartered in Dallas, Texas, with an office in Washington, D.C.
Julie Hillrichs, Dallas, TX 972-386-6272 Sean Tuffnell, Dallas, TX 972-386-6272 Joan Kirby, Washington, DC 202-220-3082 Internet: http://www.ncpa.org Home | Support Us | All Issues | Social Security Debate Central | Contact Us |
