Wednesday, January 11, 2012

Upward Mobility Down and Inequality Up: How the American Dream Has Become A Fairy Tale

The 'American Dream' has been a fairy tale for many in this country for years now. Pundits and researchers are finally catching up and are discovering what people toward the bottom of the socio-economic ladder have known for years. Barbara Ehrenreich has been sounding the alarm for at least a decade now.

NPR's 'On Point' covered the issue of falling upward mobility and rising inequality this week. Europe and Canada now have better upward mobility than the United States. Scandinavian Countries in particular were found to have much better upward mobility. How is this possible with the huge social safety net programs in Europe? American (Conservative) economic philosophy tells us that the cost of social safety nets, healthcare, and labor regulations would create such a drag on economies that no jobs would be created, slow growth would be endemic and nations would be full of poor people. But what Scandinavian economies have shown is that you can have meaningful and responsible social safety nets, strong healthcare programs, labor protections while maintaining healthy growth and a solid standard of living for citizens across the board. In fact, the labor rights and good healthcare allow for greater mobility and more balanced economies. When people are confident that they will have a job, they are more willing to go out and spend money. When people are more secure about their health (knowing that they don't have to choose between food and medicine and won't go bankrupt just because they get sick), they are more comfortable with spending money and even making big ticket investments in their future. On the contrary, when people are job and food insecure, as many are in the United States right now, they are more likely to hold on to their money, not knowing if tomorrow will be the rainy day when they will need it. Conservative economic theorists don't get it. The bubble that they live in doesn't allow them to grasp this simple concept.

This is also an issue about national priorities. European Countries have made a fundamental decision to make education, investing in infrastructure, and investing in human capital (their people) a high least higher than what we see in the U.S. In Europe, there is not the same drive to be global cop and thus defense spending is not such a huge chunk of budgets overseas. Europeans care less about maintaining some sort of global empire. They even get to slack on their own defense. Canada and Europe have little incentive to maintain robust defense budgets, since the U.S. has everything covered. It all comes down to priorities. Until the U.S. makes a fundamental change on the question of what its priorities will be in the future, then no one should expect any change in economic disparities.

How bad is the inequality in the U.S.? The following map, based on the Gini Coefficient, shows that the U.S. is out of step with most of the developed world. When it comes to economic disparities, the U.S. looks more like some of the world's poorer countries.

Whether you make it in the U.S. (reach the middle class or higher....or whether you are able to do better than your parents) increasingly depends more on who you know, or who your parents know...and what socio-economic class you were born into rather than any variable that you control.... (like working hard, obtaining education, etc.). A college education no longer guarantees a pathway to the middle class and the "American Dream".

I have written about my own realization that the American Dream was more of a myth than anything that could actually be achieved. See my latest  piece on the subject, How Do You Maintain Your Manhood and Dignity While Living Underemployed? (See the full commentary here). More and More data has surfaced lately, letting me know that this issue is not just my imagination. This is nothing new for the working class, and those who have graduated from college in the past few years who are struggling to find meaningful work. I have been a canary in the coal mine. I have watched my American Dream fade over the past decade or so. As I mentioned, not only have I not done better than my father... I have actually done worse. Just as an example... this past year, I lost my health coverage. The new company that I was absorbed into after a management shakeup doesn't offer any real coverage. For the first time in my life, I don't have health coverage. For 37 years, I had health coverage. Hard to wrap my head around to this day. Even when I was in poverty in my early childhood living with my biological mother in St. one of the worst ghettos in America, I still had health coverage (through State and via military). It's amazing that i'm doing worse now. 2011 was one of the worst years of my life. 2012 won't be much better.

There will be no relief for the U.S. anytime soon. None of the Republican Presidential candidates will seriously address the issue. In fact, they want to make it easier for the top 10% of earners to make even more money, while maintaining a system of high job insecurity. They want to go back to Bush era policies that allowed corporations to ignore regulations, ignore workers and rake in billions. Leading economists called the 2000's (the Bush era) "the lost decade". This is what the GOP wants to go back to. In this tax averse culture (an atmosphere created by Republicans), there will not be enough revenue for human needs, or to get the deficit and debt under control. How Republicans have won this national argument (at least so far) is truly amazing to me. Americans actually agree with Progressives when this issue is broken down into practical pieces that voters can understand (when they can get a sense of how policies will affect them), yet we lose the national argument. This is largely due to the lack of Progressive leadership...lack of a message, and a lack of media savvy in my opinion. There is no reason why Progressives should lose the argument on these fundamental issues. This years general election will come down to these kinds of core questions... basically it will come down to who we are as a nation. It is strange that with all of the indignation aimed at Wall Street, Americans are considering literally putting Wall Street (Mitt Romney) into the White House as a solution to the Country's problems. It makes no sense to me... but a lot of things don't make sense to me about this Country.

Not only have the Republican candidates avoided addressing this issue with any real solutions, they have engaged in not so subtle racist attacks to gin up support from their base. I am frustrated beyond words when Santorum and Gingrich... two rich, privileged white men who have no idea what real work is all about, suggest that Blacks just want to lay around and collect food stamps. The suggestion (in their mind) is that lazy filthy blacks don't want to work. The message that they want to send to their base is that lazy Blacks are stealing tax dollars...and they (along with their Black President) are responsible for decent hardworking white people not having a job. They used to call this dog whistling.... code that only white racist constituents in red and purple states could a dog whistle that is barely audible to the human ear. But it's safe to say that members of the Republican field have thrown their dog whistles away. They are trying to out scream one another with their racist comments...and this is just the beginning of the Republican Primary. I was expecting the blatant racism in the general election... not this early.

President Obama? I'm not convinced that this is a top priority for him either. However, at least he has pushed initiatives that are helpful to working people, such as college tax credits, programs for reducing the impact of student loans, and healthcare reform (although flawed). At least I get the sense that this President won't exacerbate the mobility and inequality problem by stacking the deck completely against workers. But I have to admit that my vote (if I vote) will be against the Republican try to prevent someone worse from taking the White House, as opposed to a vote FOR Obama. Although my vote in Missouri will likely not make a difference.... being that this State is fairly anti-Obama. This is what I hate about a system of 51 separate opposed to a true national election. This is one of the primary reasons why I don't see the American system of voting as a truly fair and Democratic one.

Is the American Dream still alive for you? I think the answer to that question has a lot to do with what socio-economic position you were in before the economy (an already sluggish economy) got worse in 2007-2008. The answer also has a lot to do with what kind of family you were born into, etc. When you have resources... and you can network...or you have family that can network for you... it is easier to get through an economic crisis.

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