Stock Ownership and Politics

February 23, 2000

Grover Norquist, with Americans for Tax Reform, recently made a telling point about stock ownership and politics. One of the biggest demographic changes in our society is the number of people who own stock. But until I heard him speak, I didn't realize the impact that was having on the political landscape.

Let's go back to 1965. At that time, only 10 percent of Americans owned shares of stock. So when a politician got up and talked about taxing the profits of companies or reigning in the economic activities of big corporations, most Americans could care less. Ninety percent could tell themselves, "It won't affect me."

Even when Ronald Reagan was elected president in 1980 that number was still only about 20 percent. So again, 80 percent of Americans would feel that any taxes or regulations on business wouldn't affect them--at least not directly.

Today, however, 48 percent of Americans own stock. This is changing the political landscape. Now when a politician stands up and talks about taxing or regulating business, it directly affects the voters. This new constituency is often called "the investor class." Frankly, they perceive the political world differently than those who do not own stock.

But something else is very interesting. Most people who own stock, actually own mutual funds. These spread the investment through the entire economy. If you just own one stock, you could still argue for protectionist legislation or allow politicians to tax and regulate certain segments of the economy without being affected. Effectively, mutual funds keep you honest. You have to be concerned about the entire economy.

Grover Norquist's analysis is on target. The rise of "the investor class" has changed American politics and will change it in the future. Frankly, I think we are better for it.

I'm Kerby Anderson of Probe Ministries, and that's my opinion.