A new study reveals the “ownership society” of conservative dreams for the fraud it is; do-it-yourself financing doesn’t work when the upper class owns 80% of the nation’s stock.

WASHINGTON — The “ownership society” looks like this: The owners are doing quite well, thank you.

Wealth — the value of assets such as houses, stocks and cash that an individual holds, after debts are subtracted — has become more concentrated over the past four decades, and more intensely so since 1998. Middle-income families who, in contemporary political mythology, are socking away money in mutual funds and soon will see their net worth rise with their stocks are, in truth, holding a steadily shrinking proportion of the nation’s wealth.

For all the popular fascination with Wall Street greed and glory, investment wealth is still a distant dream on Main Street: In 2004, more than half of all U.S. households held no stock at all. That includes stocks held indirectly in mutual funds and in 401(k) retirement accounts. And almost two out of three households that did own stock held portfolios valued at less than $5,000.

Meanwhile, households with incomes in the top 10% owned close to 80% of all stock. The net worth of the wealthiest Americans has climbed consistently since 1962, when the top holders of wealth held 125 times what the median household did. By 2004 the best-off had wealth amounting to 190 times that of a typical household.

“The fallacy that all or even most American households are greatly invested in the stock market — either directly or indirectly through pension plans — is exposed,” says the liberal-leaning Economic Policy Institute in its annual study, “The State of Working America.”

The study, published every Labor Day, hasn’t been released in its entirety. The book’s chapter on wealth was released in advance. The analysis is based on Federal Reserve and other government data.

The excerpt’s value is not in telling us what we already know: that wages are stagnant or shrinking; that the fruits of American workers’ increased productivity have fed corporate profits, to an extent unprecedented in the post-World War II era; that even as wages fall and benefits such as guaranteed pensions are discarded as an extravagant “legacy” cost that drags down profits, corporate chieftains reward themselves with eye-popping pay packages and retirement benefits.

This concentrated look at concentrated wealth shows that the “ownership society” of conservative dreams is a silly slogan. It shouldn’t entice a credulous media into pretending that do-it-yourself schemes for financing such basics as retirement are workable. “It’s going to be much tougher for middle-class families and certainly poor families to do this kind of thing,” says Edward N. Wolff, a New York University economics professor who parsed the numbers. “They don’t have too much wealth outside their home.”

The selling of the so-called “ownership society” has been the political conservatives’ answer to all that ails middle-class America. Lost your health insurance? No matter. If you “own” your own health savings account, you’ll control what you spend on medical care — and get to keep whatever’s left over at year’s end. Company cut out your pension? Retirement riches can be yours with a 401(k) savings account, or an alphabet soup of other tax-preferred retirement accounts.

Who needs company benefits — or more to the point, government programs — when you can have a savings account and a tax break to shelter the profits? Right-leaning think tanks and the politicians in league with them convinced themselves that mutual-fund mania had such a hold on the American imagination that average people were ready to give up the guarantee of Social Security benefits for glowing stock market returns. The public recoiled: It’s awfully hard to imagine living off stock market returns when you don’t own any stock.

You can round up the usual suspects to explain the scary level of inequality that’s a hallmark of our new gilded age. Blame the long-term decline of manufacturing and unions, a global labor market that depresses wages, and technological advances that drive up economic growth but drive down the pay of those who are displaced.

What’s obvious is that government shouldn’t make things worse by, say, enacting tax cuts on investment income — a hallmark of the Bush administration’s tax policy. And it shouldn’t keep trying to hoodwink people into believing that what’s good for the “investor class” is good for the middle class. They aren’t the same. And their bank statements prove it.

Marie Cocco’s e-mail address is mariecocco(at symbol)washpost.com.

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