In reading an article on Yahoo I stumbled onto the question of “Do you believe the American Dream is still within reach?” It said that new numbers from the Congressional Budget Office show that the top 1% of Americans has doubled its share of the nation’s income over the last 30 years while income for the bottom 80% has dropped. The article wanted to know if the widening gap between rich and poor affected you? As I started to write my answer the words kept flowing. I guess the outrage I had kept inside over the state of the world and the frustration as to why it can’t be fixed started to bubble to the surface and I realized I needed a forum that allowed me to vent my rage in more than a few sentences. Therefore what you have is the ramblings and thoughts of the average 40 year old middle class man who struggles daily with trying to keep his family firmly in the middle class and hopefully not go completely crazy in the process.
Here is my answer:
Unfortunately the notion that most people equate with the American Dream is dead. If you look at one of the most prosperous times in our country, the 1950’s, and compare it with today you will see why. As the gap between rich and poor has become more pronounced you are seeing the inability of the middle class to live as they did in the 50’s heyday. No longer available is the ability to get a decent job working 40-45 hours per week that pays a decent wage while also providing some stability and an upwardly mobile environment. The new normal for us in the middle class is an epic struggle that pits family vs. money. In many high cost parts of the country, a dual income is a must and 40-45 hours per week is considered a “lite” week. With this heavy burden it is the kids who pay the biggest price. Forced to shuttle between school, after care, summer camp and so forth in order to facilitate their parents working, they increasingly are losing the aspects of childhood that matter most. The ability to have fun, play in an unstructured environment and time to develop their likes and dislikes. Instead they are taught that life is all about being on a schedule and they are influenced by the level of stress their parents must endure to provide them with the basics. Not only the basics to survive (food, shelter, security, etc…) but the basics that have come to define a middle class life. A yearly vacation (if they are lucky) good schools, ability to interact with their friends and neighbors, play sports and most important, to spend time with their parents and siblings.
Why has this come to pass? In my opinion as the rise of global corporations has continued to dominate our economy at the expense of the small entrepreneur, you have large multinational companies who are more beholden to stock holders than the communities they serve. This creates very little incentive for these companies to take an active role in the community considering they are operating in markets all over the world. Therefore you have a corporation that wouldn’t hesitate to lay off significant amounts of personnel if it increases their Earnings Per Share (EPS). However in many cases if management were able to take a micro approach they might realize that the extra penny or two profit they squeeze out could be counter productive in the long run by reducing the purchasing power of the communities where they sell their products into in the first place. But at the same time, who could blame them? If they don’t consistently deliver results that Wall Street analysts demand they put their own jobs in jeopardy. This also explains why in this period of persistently high unemployment you have companies unwillingly and unable to take risks out of fear of upsetting their stockholders. Gone is the adage of sometimes you need to take one step back to take three steps forward. If management were able to think more locally versus globally you would see companies increasing their labor force as opposed to hiring part time or as needed employees. By talking this route they do save on labor costs but they produce a population unable or unwillingly to spend more freely due to their lack of financial security. This of course explains why the savings rate has steadily increased among the population. It’s a catch-22 that isn’t easily resolved without effective leadership. Leadership willing to make hard choices to improve the situation; for example if we don’t lower health care costs we curtail small and mid size companies from expanding their labor force.
In the 50’s, communities approached their well being together as one unit, however that can do American spirit is stifled and is evolving into an every man for them self attitude. It explains what you see on both the left and the right. For example on the left you have labor unions looking to squeeze every possible concession out of their companies regardless of the bottom line or how it compares to the private sector; pensions that are unsustainable, healthcare that is above the norm and security that removes the incentive to work hard for the good of the entire organization (how hard would you work if you knew its nearly impossible to be fired or that you are going to make the same pay as the next guy, regardless of performance). However on the right you see greed gone wild. The right would have you believe that taxes for the rich should be lower because that would spur them to spend more and improve the overall economy. However, how many multi millionaires decide to put off major purchases because they are paying higher taxes? The rich spend because they can not because of their tax return. Plus there has to be a sense of shared responsibility. Many of the rich got that way because of the policies of the past. Their parents were able to start businesses that grew because the communities in which they thrived supported their business and bought their products. Plus their parent’s success enabled them to have a healthy upbringing and a top notch education. All of which contributed to their current success. It’s in all of our interests to decrease the divide. If there are less poor people then there is less government intervention needed, thus less taxes. If there is a thriving middle class who are willingly to spend there is less need to constantly search overseas for new markets. When the middle class is spending, who benefits; the rich thru increased profits from the companies they own either directly or indirectly thru the stock market.
The rise of these large multinational companies also explains the widening gap between rich and poor. The rich are better positioned to take advantage of the record profits public companies are making through vehicles such as hedge funds, sophisticated tax planning and other means not available to the average middle class person. Meanwhile the middle class struggles with stagnant wages, job insecurity and rising costs for basic goods and services. These factors account for the reason why for the first time in generations our children’s standard of living will be lower than their parent’s.
Sadly, their are no easy answers as globalization is here to stay and the average working mans influence on corporations to act as good citizens is much less. However there are options. Our government could finally enact legislation that actually benefits the constituents it serves. The first step would be to ban all soft money political contributions and work to eliminate the lobbying efforts of special interests. With a system so flawed, it becomes impossible for our elected officials to govern effectively and with the people in mind. They are forced to placate special interests because they fear going against them will incur the wrath of a massive campaign to oust them come next election. Our Founding Fathers did not have Political Action Committees and nationwide TV spots in mind when designing our political system. The world is constantly changing and we ought to change with it while keeping the principals of what founded this country alive and embedded in all of our policies. Also governing cannot only be about single topics and extreme pragmatic thinking. Governing needs to come from the center and not be rooted in political ideology rather a sense that we are all in this together. Healthy debate and different opinions are what makes this county great however we have moved from that environment to one where a small fringe of extremism, from both the left and the right, dominate our country’s politics and shape the debates by narrowly focusing on smaller issues with an uncompromising attitude. While abortion, or gay marriage or tax fairness are vitally important issues; are they really worth throwing the whole system into gridlock and solely focusing on at the expense of all else?
Simply put, ban soft money and limit the effects of special interest. That should help make politicians accountable to their constituents and not large national groups with specific agendas. Maybe then you will see true governing from the center with a spirit of compromise. A great example would be to incorporate the opinions of both sides in the current tax debate. We could impose a minimum AMT type tax which would help to flatten out the tax system and broaden the base. If the right is concerned that forty something percent of taxpayers don’t pay taxes then impose a minimum of say $100 per year, payable in quarterly installments. If the left is concerned about high earners paying a smaller percentage of their income in taxes because of various loopholes and how certain earnings are taxed (think hedge fund managers) then impose a minimum percentage for them. Rather than attempting a massive tax overhaul you could impose these AMT’s and have people pay the higher of the tax between their regular rates versus the AMT. This was the spirit of the original AMT that unfortunately was never properly indexed. Without having specific numbers, would that not accomplish the goals of both sides of the aisle while broadening the tax base, increasing our revenue and helping our overall economy? Granted it doesn’t tackle the expense problem but having something in place to help the overall situation while we tackle the next issue is important for us all. There doesn’t need to be such a massive overhaul to our way of life at a time our country could ill afford the shock to the system. Rather if our elected officials took common sense approaches and implemented them in smaller increments we would eliminate the horrific gridlock that personifies modern day Washington and actually make a difference. When a small business owner is struggling and looking for ways to improve his bottom line he doesn’t decide to take a wrecking ball to his business, rather he identifies and implements small periodic changes at the most opportune times and over time reaps the benefits of these improvements. Unfortunately our political system doesn’t reward our politicians for smart choices that yield results over time. Rather there is a “what have you done for me lately” approach that tells them if they don’t accomplish or talk about accomplishing grand plans that only appeal to a small few, than that small few will embark on a campaign to drive them from office and replace them with the next guy they think will blindly follow their ideals. For example no congressman should have to sign a no tax pledge because they fear if they don’t then special interest organizations will work against them to have them replaced. At the same time it can’t be taboo to discuss curtailing or improving the efficiency of our large entitlement programs (Social Security and Medicare). The few should not influence the policies of the entire nation.
Bringing this back to the main question of “Is the American Dream Dead?” I guess the answer is yes the dream as we’ve come to know it is dead, but only for now. Our country is filled with massively talented individuals who have the ability to create a society that can once again lead in these vastly different times in an interconnected world. We will always be the leaders in innovation and if we are not sidetracked by greed and uncompromising ideology then we can work together to enact policies that are effective for the county as a whole. We are all in this together. There would be no rich if the masses didn’t purchase their products. And while capitalism and free markets are and always will be the hallmarks of our society, there has to be some sort of governance that influences the winds of change and keeps our country on the right course. Many espouse to a smaller government when in reality we need a smarter government with capable elected officials. One that is capable of listening to the will of the people while using their advanced knowledge and expertise to take that will and formulate policies and explain those policies to the masses. We all rely on experts, doctors, mechanics and so forth. Our elected officials need to be experts as well. We tell them what’s wrong, they use their knowledge to craft a solution and then they explain it to us so we can make the final decision. That will never happen as long as extreme ideology and partisan politics dominate the day.
Real change is needed…..will any of our elected officials have the courage to actually say how they feel and fight for what they believe? One day I hope my children will lead that charge before they enter the vicious cycle that has unfortunately captured their Dad who at this point isn’t sure if he’ll ever get out.