World's first "mass class of worker capitalists" spread throughout U.S. society
Study finds public policy attitudes shifting: A convergence of Main Street and Wall Street

Almost half of all American households now own stock or mutual funds, a 126 percent increase over the past fifteen years, and this dramatic demographic change is causing a shift in public opinion away from government programs to investor-friendly policies, according to a study released today by the Cato Institute.

In "The Rise of Worker Capitalism," Richard Nadler writes that the nation's 76 million stockholders have "internalized their new role as capitalists" and that this change has fundamentally altered the relationship between labor and capital. As wage earners become owners of capital, they increasingly favor policies that reduce taxes on savings. Those "worker capitalists" are highly skeptical of government "investments," such as Social Security, Nadler notes. By a margin of more than two to one, workers as a whole said they would rather rely on work-based contribution plans than on Social Security for retirement income.

"This study has profound implications for today's policy makers," said Rep. Mark Sanford, one of the key members of Congress on Social Security reform. "It shows that as more and more people own stock and become investors, their attitudes towards public policy are changing: This new investor class has become more skeptical of government programs like Social Security, and they also favor lower capital gains taxes. Policy makers in Washington who oppose these policies ought to take a look at this study."

"This study has big implications for economic policy," said Lawrence Kudlow, chief economist at Schroder & Co., Inc. and chief economist for CNBC.com. "The growing class of shareholder and asset owners prefers market-based incentives for wealth creation, not expanded government entitlements. The Investor Class wants the tax-cut freedom of choice to spend, save and invest its own hard-earned money. Politicians take note: investors have become the invisible hand of American politics."

Stockholding has affected people's attitudes independent of race, age, sex, income level or marital status, the study found. "Capital ownership, once the signature of wealth, has become widely diffused," encompassing many groups that have historically not participated in these markets, Nadler writes.

"Portfolio ownership is associated with higher margins of support for a capital-gains tax cut among blacks and whites; among retirees, private-sector workers, and government employees; among men and women, both married and unmarried; and among Democrats and Republicans, rich and poor," according to the study.

Nadler notes that this increase in the shareholder class consigns Karl Marx's vision of a worker who lives in a cellar and whose only possessions are a cotton jacket and some copper coins to the "trash bin of history."

"Congress should enact policies that expand worker ownership and financial self-sufficiency"-that is expand IRAs and 401(k)s and institute individually owned Social Security accounts-which will achieve the goal of spreading wealth to even larger segments of the population, Nadler concludes.

"The Rise of Worker Capitalism"