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Thursday, October 07, 2004

Republican Social Engineering

Last week Atrios posted some thoughts about how the tax system encourages people to hold their wealth in extremely illiquid assets.
...The tax system encourages people to hold their money in real estate through the home mortgage interest deduction (and other various programs which encourage people to buy). It also encourages people to save in various investment accounts which can't be tapped without serious penalty until retirement (or, for a couple of other purposes)....The net effect of all of this is, among other things, that even people with relatively decent incomes and who are actually managing to accumulate some wealth, still feel they are living "paycheck to paycheck" (once they've sent their mortgage payment and thrown a few bucks into their retirement account) because most of that wealth can't be converted into cash as needed.
I've long thought that the point of encouraging homeownership is to make people more conservative. The canonical example being that homeowners band together to keep out undesirables -- Blacks, the poor, and so on -- who might lower their property values. Renters don't do this kind of thing. But overall, my thoughts are pretty half-baked.

Conservatives, however, have been doing some deep thinking about how to keep Republicans in power through social engineering. George Will wrote yesterday,
Bush's "ownership society" is another step in the plan to reduce the supply of government by reducing the demand for it...Hence Bush's menu of incentives for private retirement, health, education and savings accounts.

Conservatives hope such measures will encourage aptitudes that will make the welfare state compatible with traditional American individualism and self-reliance. And conservatives hope such aptitudes will result in Republican attitudes, especially among the elderly and other people with portfolios of equities.

Will praises a recent exposition of conservatives' long-run plan to "reduce the demand" for government and create a more Republican electorate by Jonathan Rauch (National Journal, July 26, 2003). I've only skimmed it, but I was struck by this quote from Republican activist and bane of the Greatest Generation, Grover Norquist:
"Twenty years from now...who's demanding extra government if I have a 401(k) medical savings account, I've pre-saved for my old age, I have control over where I send my kids to school? Investing in smaller demand for state power down the road is a rational position."
Uh, maybe the demand for more government will come from people whose investments didn't pan out and face spending their retirement in poverty? So, I'm not sure if Norquist's schemes will pay off, but I am sure that it's important to understand them.


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