August 14, 2015
Everyone Is An Investor: An Interview with Dalton Conley
Breakthrough Senior Fellow Dalton Conley is Professor of the Social Sciences and Chair of Sociology at New York University. His research focuses on the determinants of economic opportunity within and across generations. In this vein, he studies sibling differences in socioeconomic success; racial inequalities; the salience of physical appearance to economic status; the measurement of class; and how health and biology affect (and are affected by) social position.
In your recent op-ed in the Times you talked about the need for an "investor society." What does that mean, and what would an investor society look like?
In the industrial society model, job growth is what drives the economy, and consumption is what drives job growth. Most politicians are obsessed with jobs as the main avenue to economic security -- the idea that we need to create more and more jobs, and find people to fill those jobs.
But in our post-industrial society, we should be thinking about ourselves as an investor class, as global capital managers. Society as a whole could control a certain amount of wealth that allows us to grow our economy and achieve individual security that's independent of the vagaries of a fluid job market.
What's wrong with an economy that's based on jobs?
It's not environmentally sustainable. The job growth model requires a growing consumption base, and this doesn't help us preserve our natural resources.
Advancements in technology are helping to make us more productive than our grandparents' -- or oven our parents' -- generations could ever have imagined. What do we do about technology rendering many of our jobs obsolete?
In the current model, you have to create many new jobs just to keep stable. If everyone were an investor, those increased productivity gains could instead be distributed in the form of dividends. When productivity went up, we could actually work less, and take more time off when our kids were born, or our parents were ailing.
What about people's fears of wealth moving overseas? How does a globalized investor society create wealth and security?
In a post-industrial economy where wages are lower elsewhere, keeping manufacturing jobs here is fighting a losing battle. If we focused on providing economic security, by helping average Americans become investors, it would create a whole different socioeconomic policy. Thinking about it this way would turn globalization to our advantage.
Are any other countries following this model already?
Kuwait started out as an extraction economy based almost totally on money coming in from oil and gas. They had enormous oil and gas riches, but they were smart enough to diversify. The country is essentially a giant mutual fund -- it owns businesses all over the world, and pays citizens a dividend. America is rich enough to follow that model as well.
Could we do something like this with clean energy investment rather than oil? How would we avoid big societal disagreements over which technologies to invest in?
There are two levels to the investor society. The first is individual accounts, and the second is the collective level, where we see that clearly there's a public need for investment in new infrastructure, things like parks, bridges and railways, and clean energy technology. The investment doesn't have to be just pork directed from Washington. There could be priorities set and money provided that's matched by private sector industry investors.
For example, imagine that for individual investment accounts there could be an extra government match-up when you invest in a clean energy mutual fund. The government doesn't have to step in and control where we're putting our investment; let America's citizens decide where to direct those funds.
The idea of giving every baby born in America a few thousand dollars -- "baby bonds" -- that would accrue interest and could be spent when he or she turns 18 on education, starting a business, or buying a home, has been kicked around since George McGovern ran for office in 1968. Why hasn't it gone anywhere politically?
It's an idea that should appeal to both sides of the aisle -- to core Republican values, and to Democratic values of sharing the fruits of American prosperity. But it has been consistently introduced to congress with bipartisan support and failed to go anywhere. It really baffles me how we can cut a huge stimulus package that just cuts checks to people but not something that shores up personal savings.
You pitched the idea of an "ownership society" to the Clinton White House in 1999 -- what was their reaction?
A lot of nodding and polite "good ideas," but nothing came of it, ironically, until Bush took office. But his ownership society didn't look at all like what I had envisioned.
How did they alter your idea?
The Republicans co-opted my phrase "ownership society." Bush's plan creates incentives for people who are already investing to invest more -- it would be a windfall for them to further enhance their investment. For the people who are at the bottom, there is a possibility of enormous response to change. But that wasn't part of the Bush plan.
We have the highest inequality of wealth of any industrialized country. The Republicans don't want to acknowledge that there are consequences to having uneven shares of pie.
But judging by Clinton's actions, it sounds like the Democrats aren't doing much better.
The vast majority of politicians on either side just don't get it. Republicans aren't concerned enough with distribution of rewards and Democrats are almost too concerned with it -- they ignore broad benefits because it also helps people at the top. Investing and wealth are dirty words for liberals. They're backing off from free trade and playing isolationist. I don't think that's a solution. Preserving existing jobs and selling some idealized notion of the past will not bring long-term economic security; what will bring it is embracing change and preparing American to live in a more fluid society.
Did you see the New York Times op-ed from a few weeks ago, "You Are What You Spend," about how economic well-being should be measured more by what you spend than what you save?
There are two sides to economic wellbeing; one is spending power and the other is security, which comes from wealth and assets. You don't pay for your kids' college education by scraping by and keeping your consumption level up. You don't start a business on consumption, you don't take control on own destiny on consumption -- you do it on assets. They're both important, but just paying attention to consumption is short sighted.h