“The sense of ownership is the key ingredient of success.”
Haresh Sippy, Indian Entrepreneur
Last weekend The Sunday Times featured an article on the generational wealth divide, an issue to which we have drawn attention on many occasions over the past six years. It included the quote, ‘I earn far more than my mum did, but I can't afford property’; and it drew attention to the fact that most millennials do not reach that milestone of home ownership until they’re 36 years old.
Property values have soared over the past 15-20 years of rock-bottom interest rates; they may be settling back now, but very reluctantly. The ‘baby boomers’ and, to some extent, Generation X (born between 1965 and 1979) have indeed been a blessed generation from that respect.
However, there is also a changing appreciation of what ownership means. We are increasingly supplied with services by subscription, which do not endow ownership. The tech revolution has been largely responsible for this: for example, the old days of owning one's music library in the form of CDs and vinyl are almost gone, and we are reliant on the ongoing operation of streaming services and their terms and conditions for access.
Those who experience real ownership know that it encourages a sense of real responsibility: witness the care given to homes owned in contrast to homes rented, for example. There is a real psychology of ownership which merits careful study.
Looking back at ownership over the past 2-3 centuries, we can see how the experience has changed significantly. In the late 18th/ early 19th century it was reserved for the aristocrats who left their stately homes for posterity. During the industrial revolution a new wave of entrepreneurship gave many others the opportunity to share in the experience, again leaving their fine buildings, bridges and engineering accomplishments for future generations to enjoy. There was little ‘discounting the future’ among them.
Moving into the 20th century, the first half which was pitted with violence, there was a major change away from these long-term endeavours at the individual level: the baby-boomer generation and their parents breathed a huge sigh of relief when the conflict was over, and the banks and building societies lost no time in showing them how to build home membership on the basis of an increasing proportion of debt. But these were assets for individual lives, not designed for posterity — as a result, the discount rate applied to the future, as described by Lord Stern in 2006, has risen significantly during the second half of the 20th century and the first two decades of the 21st century.
As we have said on several occasions, care for the environment and for achieving a more egalitarian form of capitalism relies critically on reducing that discount rate; but that itself relies on building a sense of responsibility which naturally accompanies ownership — and this is in a sorry state at present.
These are all good reasons why we need a thorough study of the psychology of ownership, and I'm grateful to one of my Cambridge colleagues for drawing my attention to one such piece of work from the Saïd Business School in Oxford, ‘Psychological Ownership: Effects and Applications’. It focuses principally on business and employee participation, but many of its observations can be translated into a more general overview of the attitudinal transformation brought about by ownership.
As we commented on 17 April, this is a critical part of ensuring the effectiveness of the ‘Stock for Data’ proposition, which aims to bring a real sense of individual ownership and participation to a very large proportion of the global population by rewarding the provision and subsequent harvesting of data and creativity imported by the tech giants with the issue of their equity stock.
Individual ownership is, of course, at the heart of this proposition and any others which seek to deepen that sense of responsibility to which we referred earlier. Ownership assumed by intermediaries, whether via ‘dictatorship of the proletariat’, by ‘nanny state’ governments or by financial institutions, really don't cut the mustard. Likewise, the concept of mutuality practised by building societies and, it has to be said, concepts such as the John Lewis model of employee participation, only go a small part of the way to achieving a real sense of ownership and responsibility.
But finally, as our ancestors in the 19th century realised, ownership is itself framed within the human life cycle. They understood the power of inheritance, and it is high time that we rebuild that appreciation on an inter-generational rebalancing basis, using it as a tool to spread wealth as the generations move forward.
This means that the stewardship aspect of ownership needs to be recognised. The Parable of The Talents is often cited as an example of active, responsible stewardship: I would say it also has a great deal to teach us about the importance of risk-taking, about which we commented on 30th May following Andrew Griffiths proposal for a debate on the subject. I'm still waiting for his response to those comments but, in the meantime, perhaps he should include the need for a study into the social merits of widespread individual ownership.
Gavin Oldham OBE
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