Central Pension Fund

Beware of the Ownership Society

Some leading politicians have come up with a catchy new term to describe how retirement and health security will continue to be systematically stripped from working men and women in America. The new term is “Ownership Society.”

This term, coined by the far right wing, but increasingly being used by conservative politicians --- both Democrat and Republican --- is supposed to summon visions of a great new society where everyone will own their own health and retirement accounts, and make their own decisions about how to protect their health and retirement security. There won’t be health insurance, there will be private Health Savings Accounts (HSA); there won’t be defined benefit pension plans, there will be private 401(k) accounts. There won’t be a Social Security Trust Fund, there will be private Social Security accounts.

Looking first at health care in the new Ownership Society, healthy people will not have to be included in group insurance programs with unhealthy people. Instead they will be able to set up their own Health Savings Account into which they, and their employers, can contribute money. The money in these accounts would be tax-free and could be spent only for medical expenses. Workers would have “ownership” of these accounts and would decide when and how the money would be spent.

So what’s wrong with this? Two critical things. First, unless the employees are represented by a union, employers will unilaterally decide whether to set up an HSA plan, and unilaterally decide whether to make an employer contribution to the accounts. They could set up an HSA plan that merely permits workers to put their own money in the HSA --- a completely “do-it-yourself” medical plan. Second, these plans by definition would be completely ineffective in allocating available dollars to medical needs. Healthy people would have too much money in their accounts; sick people would have too little.

So if these HSAs put the burden on workers to pay for their own health care, and guarantee that the dollars contributed will be inefficiently applied to medical needs, why would anyone support them? Simple answer: HSAs shift the financial risk for health care from corporations to workers.

But if that simple answer is true, wouldn’t politicians vote in the interests of workers over corporations? Sadly, no. Our political system has clearly become one where money talks and everything else walks.

Which is also the reason that a couple of other components of the new “Ownership Society”, which serve the interests of corporate America at the expense of workers, are also being pushed by some politicians: 401(k) retirement accounts and privatized Social Security accounts. Like Health Savings Accounts, 401(k) accounts and privatized Social Security accounts shift the risk of retirement security from employers and the government to workers. And, as added sugar for big business, these accounts also enrich the investment houses of Wall Street, which siphon off investment management fees from every dollar contributed to such accounts.

Like Health Savings Accounts, 401(k) accounts and privatized Social Security accounts assure that retirement dollars are allocated in the most inefficient way possible: those with the most money get to stash more away in these tax-free accounts, and those with the least can save the least.

Before today’s politicians coined the term “Ownership Society” to describe this every-person-for-himself approach to the allocation of resources to address society’s most fundamental needs, there was another term used. That term was Social Darwinism. Darwinism is the theory of evolution of the species meaning “survival of the fittest.”

Social Darwinism, which the politicians are now calling the Ownership Society, means “survival of the richest.” Workers are well to beware of any politicians pedaling the Ownership Society.

September 30, 2004