F.R. Duplantier reporting Behind The Headlines
Week of:
June 11, 2000
When the Workers Become Owners

F.R. Duplantier

by: F.R. Duplantier

More and more Americans are investing in the stock market, and that should have a positive effect on our national politics.

Fred Smith of the Competitive Enterprise Institute contends that "the answer to questions of poverty, scarcity, malnutrition, and other maladies that have plagued humanity for centuries" can be found in "the application of free markets and the general policies of freedom observed in the United States -- namely, respect for private property; observance of the rule of law; low rates of taxation; and a minimum of government regulations, which are just taxes on behavior anyway." In a recent issue of Update, the monthly newsletter of the Competitive Enterprise Institute, Smith acknowledges "periods in our history, including now, when Americans have been overtaxed and overregulated, and private property and the rule of law have been under assault," but he stresses that "the United States has been a relatively free nation, allowing each citizen the discretion to live his life the way he sees fit."

In an interview that appeared in the same issue of Update, Reader's Digest financial columnist James Glassman explores the implications of widespread stock ownership and concludes that "the emergence of the investor class is probably the most significant political event in the last 10 years and . . . will help shape politics for the next 20 years, maybe for the next half-century. It's enormously important," he asserts, "and very much unrecognized. If you talk to people in Washington, they don't quite get it," Glassman confides. "But, as more and more people own stocks, it changes their political perspective. It changes their attitude toward corporations, toward taxes, and . . . changes their attitudes toward lots of cultural things, and social things, as well."

Glassman examines "the political ramifications of broad stock ownership, of the power of the investor class. In 1997, the President did not stand in the way of a capital gains tax cut, nor in the way of the Roth IRA changes in individual retirement accounts," Glassman recalls, noting that "it becomes very difficult to argue that stock ownership is just for the rich, capital gains benefits are just for the rich, when half of Americans own stock."

Glassman argues that "tax and regulatory policies that seem beneficial to stock ownership are more likely with the advent of the investor class. And if we get any kind of privatized Social Security," he adds, "we could have 80 or 90 percent of Americans owning stock. At the margins, Americans will be much more likely to be in favor of policies that are beneficial to businesses, because they will own them."

Glassman contends that "the traditional friction between managers and workers . . . is breaking down." He predicts that American workers will "feel they have a much greater stake not just in the company for which they work . . . but in the economy as a whole. More and more people are not going to work for just one company," Glassman forecasts, "but will essentially sell their labor, their ideas, to more than one buyer. These things are going to change profoundly in the next 10 years, maybe even sooner than that."

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