From Senator John Edward's "Two Americas" theme from 2004 to the Democratic Leadership Council's unveiling (by Senator Hillary Clinton) of its American Dream Initiative, the increasingly tenuous position of the average American faced with increasing housing, health care and education costs as Old Economy jobs disappear or get restructured and New Economy jobs prove unstable is becoming the dominant discourse amongst leaders of the Democratic Party. The Atlantic's Jack Beatty offered a similar observation in a short column, focusing on Jacob Hacker's recently released The Great Risk Shift.

In his new book, Jacob Hacker describes the rising financial insecurity faced by families as the economy has shifted from one defined by manufacturing/industrial jobs to one characterized by service/high tech jobs. This insecurity is exemplified by the income volatility numbers produced by the decades-long Panel Study of Income Dynamics (PSID). A key finding of the study (some of the numbers can be viewed here and here) cited by Hacker in the first chapter of his new book found that an average-sized family with an average income is two-and-a-half times more likely to experience an income drop of over 50% as an average person thirty years ago. Government policy, writes Hacker, has not adjusted to the heightened risk profile faced by average families.

As financial insecurity for individuals has risen, employers and politicians have sought to break down the collective risk pooling institutions of the past half-century in pursuit of an individual responsibility fetish. Seeking to remain competitive in a global economy and faced with rising health care costs, companies have sought to reduce health insurance coverage and shift costs to employees. Pension systems have shifted from defined benefit to defined contribution plans; the latter providing uncertain insurance for employee’s retirement years. These trends are largely a response to changing market conditions for American corporations, but government has failed to respond to this shift in risk to private individuals. President Bush’s advocacy of Health Savings Accounts (HSAs) and failed attempt at privatization of Social Security show that this risk shift is partly the result of the policymaking at the highest level. As Hacker writes, this shift in public rhetoric on the part of political leaders represents a shift “away from an all-in-the-same-boat philosophy of shared risk toward a go-it-alone vision of personal responsibility.”

Beatty is pessimistic that these trends provide any opening for Democrats seeking to campaign for change on an economic insecurity platform. The anxiety that accompanies heightened financial risk takes place in private, he believes, and the resultant fear can be stoked by demagogues in the service of other ends. He appears to believe that conservatives will be the ultimate beneficiaries of economic insecurity, for the fears of the middle class can be the basis for campaigns run on combating terrorism and reducing illegal immigration.

I don’t buy Beatty’s pessimism. Next week, we here at the Warren Reports will engage The Great Risk Shift and I will offer up my own thoughts on the potential for this phenomenon to serve as a foundation for changing the face of politics in the closing years of the decade.