The Ownership Society

Q. Many countries are trying to help every citizen become an investor. President Bush has called this "the ownership society." What can Judaism teach us about this idea?

A. The idea of an "ownership society" is hardly new. Encouraging each individual to acquire assets has many advantages:

1. EQUITY: There are always a large number of people in relatively low-wage jobs. Most of these people seem lots poorer than the people who own the businesses where they work. If the workers could also be owners, the pie would be divided more equitably.

2. CITIZENSHIP: A healthy citizenry is one which identifies with the nation and the community and seeks its welfare. When citizens have a significant stake in stability -- through ownership of homes and other assets -- they will take more interest in maintaining an orderly and stable economic and legal regime.

3. SAFETY NET: Even well-paid employees can sometimes lose their livelihood. Having a significant cushion of assets can serve as a private safety net to cushion the blow.

Socialism also preaches an "ownership society," but one based on collective ownership. According to this approach, the state owns lots of assets. This should enable it to provide equity by providing services to the poorest citizens from the return to assets; to build solidarity as citizens recognize that through their government they control productive assets, and enable the government to provide a safety net.

This sounds promising in theory, but experience with this system has not been encouraging, to say the least. Government-owned enterprises have a consistent tendency to lose rather than make money, so the whole scheme never really gets off the ground. Even when it does, instead of increasing equity and solidarity it tends to undermine them, as each individual or group competes to have the government give them a bigger piece of the pie.

Many market-oriented societies try to encourage asset ownership, for example by giving subsidies or tax breaks for mortgages to try and encourage home ownership. Singapore was a pioneer in this area with their Central Provident Fund (CPF) account. The CPF is a pension fund with a substantial required contribution, but at the same time it gives the worker much discretion in investment and in using the funds for vital needs including home ownership and "safety net" expenses. Over 90% of Singaporean households own their own homes. (In the United States the rate is 68%, in Israel just over 70%.) President Bush is trying to promote a similar initiative in the US.

I can't comment on the worthiness of any particular initiative in the current political debate, and I certainly don't want to take sides in American politics in this column. But I do perceive that the general idea of an "ownership society" is deeply rooted in Jewish and Biblical values, and that these can also give us valuable guidance in creating a balanced policy.

The main precedent we see for the "ownership society" in the Torah is the original division of the land to every citizen, and the requirement to maintain universal land ownership through the Jubilee.

The Jewish people who entered the Land of Israel over 3,000 years ago had no hereditary monarchy or nobles, and no feudal estates. After all, the entire people had been released from slavery only a generation earlier! Every household among the 12 tribes received an equivalent portion of the land. "To these the land will be divided for an inheritance according to the number of names. To the more numerous [tribes] give a larger inheritance and to the fewer give a smaller inheritance; each man according to his census will be given a portion" (Numbers 26:52-54). Our tradition teaches that the equality was not according to acreage, but rather was adjusted for value, so that each of the six hundred thousand households was approximately equally endowed.

However, as many countries which carry out "land reform" have discovered, an equitable one-time distribution can rapidly deteriorate into a situation of concentration of ownership as powerful landowners are able to pressure poor neighbors into selling their lots. Yet denying the right to sell is also detrimental to the poor; it prevents them from taking advantage of their assets in the most productive way. Someone who wants to be a trucker instead of a farmer would have no way of tapping the value of his land to buy a horse and wagon.

The Torah gives a unique solution to this problem. Sale of land is allowed, but it is temporary. All sales are valid until the Jubilee year; then all estates return to their original owners. "Sanctify the 50th year, and proclaim liberty throughout the land to all its inhabitants. It is a Jubilee to you; return each man to his possession and each man shall return to his family" (Leviticus 25:10).

Today, land is not the most important productive asset; it is only one among many productive business assets. The ethical message of the Jubilee would be realized today by policies creating a balance between providing a degree of asset ownership for each citizen and allowing citizens reasonable latitude to use these assets for their benefit without frittering them away. This is how I understand the objective of the "ownership society."