A new American dream for a new American century. By Zachary Karabell. Reuters, July 26, 2013.
Karabell:
In a
major speech this week on the economy, President Obama emphasized that while
the United States has recovered substantial ground since the crisis of
2008-2009, wide swaths of the middle class still confront a challenging
environment. Above all, the past years have eroded the 20th century dream of
hard work translating into a better life.
As Obama explained, it used to be that “a growing middle class was the engine of
our prosperity. Whether you owned a company, or swept its floors, or worked
anywhere in between, this country offered you a basic bargain — a sense that
your hard work would be rewarded with fair wages and decent benefits, the
chance to buy a home, to save for retirement, and most of all, a chance to hand
down a better life for your kids. But over time, that engine began to stall.”
What we are left with today is increased inequality, in wages and in
opportunity.
The
assumption is that this is unequivocally a bad thing. There have been countless
stories about the “death of the American dream,” and Detroit’s bankruptcy last week was taken as one more proof. Yet lately the unquestioned assumption of a
better future based on hard work has not served America well. If anything,
today’s version of that dream has been the source of complacency rather than
strength, and its passing may be necessary in order to pave the way for a
constructive future.
But you
wouldn’t know that from the president’s speech and from continued news stories
and academic studies. The inequalities of opportunity were underscored by a
recent study that was brought to national attention by the New York Times this week that showed wide variations in income
mobility depending on what part of the United States you live in. Those who
live in metropolitan areas, as well as those with more higher education and
wealthier parents, have significantly more upward mobility than many in rural
areas.
The
wage stagnation for tens of millions of working Americans over the past decades
combined with the financial crisis has been painful and even calamitous for
millions. In truth, however, the middle class security that has now disappeared
only existed for a very brief period after World War Two, when the United
States accounted for half of global industrial output and achieved a level of
relative prosperity and growth that was substantially higher than in any other
country. Before the Great Depression and World War Two, there was no assumption
in the 17th, 18th or 19th centuries that the future would be inherently better
for one’s children.
As for
income inequality, that is hardly a new issue. The presence of inequality in
the past did not impede economic growth. After the American Revolution, income
inequality began rising sharply along with economic growth. And it continued to
rise well into the early 20th century, when more people became rich and even
more people became mired in a level of poverty that does not exist today.
Inequality then wasn’t a barrier to mobility. If anything, it might have been a
spur. Seeing how the Robber Barons of the Gilded Age lived provoked both the
reforms of the Progressive Era and the ambitions of millions of immigrants and
citizens who wanted a better life and saw that one was possible.
Before
the mid-20th century, the American dream was that if you worked hard you had
the potential to craft a good life. You could be free from repressive
government, and you could be able to watch your children do better via
education and their own hard work. That potential was absent in other
societies, and its presence — along with tens of millions of acres of unclaimed
land — was what drew so many millions of immigrants.
In
short, the equation of American economic success until the mid-20th century was
not that if you worked hard you would
have a stable material life. It was that if you worked hard, you could create such a life. The difference
is not semantic; it is fundamental, and for Obama and many, many others, it has
become blurred. The equation articulated by Obama and likely shared by a
significant majority of Americans is that if you work hard, you should receive
economic security and see the same for your children. The flip side of that
theory is that if you don’t gain economic security, something is wrong with the
system, and government has a responsibility to provide when that system fails.
The
belief that something is a given simply by birthright is never a formula for
long-term strength. Yet at some point in the last half of the 20th century, the
American dream morphed from the promise that you could realize a comfortable
life, to a promise that being American meant you would and should realize that.
Hence the feeling, held by so many, that promises have been betrayed and the
system is broken.
In
truth, the passing of that false certainty is a positive. Urgency and
uncertainty are not negatives, at least not inherently. They can provide the
necessary fuel for ambition and for creativity and work. Urgency and
uncertainty were the norm in the late 19th century and look what those produced
in America: the very power and prosperity that catapulted the country to the
center of the globe.
The
United States, like many affluent nations, has reached a juncture where the
model that succeeded is not likely to be the model that will succeed going
forward. 19th century agricultural societies gave way to 20th century
industrial ones, and 20th century industrial ones are giving way to 21st
century service and idea economies. None of that happened without significant
pain and disruption. Nor is our transition today without substantial pain for
many.
Government
can and should be active in providing basic security for those disrupted by
these changes. But the contract that has now been broken did not actually serve
America well. It served the post-war generation and their children, but it does
not serve a United States now embedded in a world where other societies are
providing the same potential that the United States did two centuries ago when
that was extremely rare.
What’s
needed is a sense the United States is a place where dreams can be made
manifest, not that it is a place where everyone will be safe and secure.
America remains a place where hard work and ambition and creativity can
translate into a good life. It is not a place where hard work and ambition are
guaranteed to yield results. And if we want a vibrant, pulsing society in the
21st century, the passing of that version of the American dream is not
something to be mourned. We’ve reached the end of complacency, and not a moment
too soon.
