The GOP and the Investor Class

While I'm on the subject of capital-gains tax cuts and political strategy, this seems like a good time to cite my friend Matt Continetti's 2005 profile of Eliot Spitzer, which included a prescient explanation of why a growing "investor class" doesn't guarantee a growing share of the vote for the GOP:

... while universal stock ownership may be desirable for other reasons--most economists believe that lower-income Americans would benefit from having at least some of their savings in stocks--it hardly guarantees political catnip for Republicans. For one thing, if 80 or 90 percent of Americans own stocks and bonds, "investors" will no longer be a class at all--unless it's the class of all voters, in both parties. Furthermore--and more immediately--there's a corollary to the investor-class thesis that favors Democrats. As more people enter the market, they may turn to politicians who offer protection from rapacious capitalists and irresponsible money managers. Burned by market downturns, they will want politicians to go after those who did them harm. And those politicians, in turn, will say they are "saving" markets in the process. Politicians like Eliot Spitzer.

Spitzer is gone, of course, and this isn't an exact summary of how the current financial crisis has played out for the GOP. (And as I've said before, I don't think that a straightforward focus on punishing the bad guys, as opposed to finding solutions, plays that well with voters caught up in an economic calamity.) But the broad point is timely, and true: When the stock market drops, the average middle-class investor may be more likely to look to the Democrats than to the Republicans for answers, and an ever-larger investor class may actually be more supportive of regulation - the better to minimize the short-run risks their portfolios and 401(k)s face, even at the expense of long-run gains - than a middle class that isn't heavily invested in the stock market.