A Good Reason to Favor the "Ownership Society"

Gregory Scoblete, writing at Tech Central Station, calls it the "Market State". Whatever you choose to call it, here's what it's all about, according to Scoblete:

Bush's domestic agenda, allowing younger workers to direct the investment (of their own money) in Social Security, of portable pensions to follow a mobile work force, and reforming a cumbersome tax code, is specifically aimed at devolving responsibility for individual welfare from the State to the individual. He touts it as an "ownership society" but it could just as easily be called an "opportunity society" -- under Bush's vision, the government promises that all citizens will have the opportunity to advance themselves, regardless of station. That is a distinctly different promise than the traditional Nation State compact that guarantees your welfare by redirecting wealth from one population segment to another.

Even the President's proposed spending initiatives -- increased money to education, to child heath care, and to junior colleges -- had one consistent, Market State theme: the State is responsible for laying the foundation for your well-being but ultimate success is up to you.

The unspoken corollary -- intolerable to Democrats -- is that if you fail, the State will have a very limited capacity to help you. Indeed, critics of Bush will decry this as a move designed to ultimately gut the welfare state. And they will be correct -- it is. And it is vital.

Why is it vital? The answer is simple: It reduces (if it doesn't eliminate) a phenomenon known to economists as "moral hazard". Put simply, if you are sheltered from the consequences of your actions because you know that others will make you whole, you tend to take risks that you wouldn't normally take. That is, you make bad decisions.

People who have to live with the consequences of their decisions tend to act prudently. They may still make mistakes (who doesn't?), but they will learn from them and go on to do better the next time.

That's not universally true, of course. There are addictive personalities. Some people can't quit gambling, others can't quit drinking, and still others can't quit taking debilitating drugs. But that's not most people.

Most people -- if left to their own devices -- can and will manage their lives quite well, thank you. They will, for example, save for their retirement and do a better job of it than the nanny state, which doesn't save at all -- it merely runs a giant Ponzi scheme whose collapse is written in the actuarial tables.