alive and well?

I ask my students about the American dream a lot, but rarely get a comprehensive answer. So, since we are on the subject, let’s talk about the American Dream.

I hear often many contend that American Dream is still alive and well, all we need to do is just to work hard. Also, some argue that the American Dream is different for anyone, but this is an incorrect assumption to begin with. If the American Dream was different for everyone, we would not have the term and, most likely, kept referring to it to simply as “my dream” or “his dream” and “my lil’ sister’s dream”. But no, we have a term that unites the entire nation, which means there is a value that is unique to the population of this country and is more or less the same for all individuals. It is a cultural stepping stone that makes America one of the most (if not THE most) popular countries in the world for people to come to in search of better life. I am surprised that most people won’t even take a minute to Google it in case the term is unfamiliar or shaky, such a sign of complacency and complete indifference to their own country.

In short, the American Dream lays in the value of equality and freedom, reflected in the Declaration of Independence: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.” For the most part, it is interpreted as an opportunity for achieving a better, more stable and secure life [as well as a better standard of living] that can be enjoyed [as opposed to seeing it fly by].

The term itself is coined by the American historian James Truslow Adams. In his book “Epic of America” (1931) he says this: “The American Dream is that dream of a land in which life should be better and richer and fuller for every man, with opportunity for each according to ability or achievement. It is a difficult dream for the European upper classes to interpret adequately, and too many of us ourselves have grown weary and mistrustful of it. It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position” (p.214-215)

The Economic Mobility Report by Pew Charitable Trusts points out that, despite the wide-spread belief of Americans that hard work pays off, social mobility in this country has been stalling for decades. One’s social standing (social class) has been mainly conditioned by one’s birth, rather than by one’s efforts. Men in their thirties are doing worse than their dads when they were that age. People work harder (productivity increase), while pay for the efforts is disproportionately lower. The increase in household finance is due to women joining the workforce, not due to increase in actual wage. Finally, compared to other industrialized nations, the US has the least rate of relative social mobility. The UK has the lowest rate, which can be explained: historically, the UK had an extremely rigid class system – the feudal understanding of social standings (think estates, think aristocracy) has hundreds of years in tradition. The tradition, which many of the British settlers were trying to escape and make meaningful systematic changes. Given the current rates, the changes were not successful.

Now, allow me to say a couple of words about the idea of American meritocracy: work hard – reap high rewards. Historically, this ideology applied to only one hearth subculture that arrived to America from the British Isles – the Puritans. To those of you familiar with extreme Calvinism practiced by these settlers, this should be no news: Puritans believed that the economic and social system must be pure (hence, the name), which means that all signs of God must be transparent and undistorted by human touch. According to their beliefs, work was the only God-pleasing way of living, so the value of hard work was praised and instilled since birth. The other equally strong belief was that God recognizes hard work by gracing such individuals with generous rewards. These rewards should have been saved and preserved: Puritans lived severely below their means, saving every penny, for accumulation of wealth was a sign of God’s recognition and grace.

This system was not taken lightly and Puritans went long distance to uphold its clarity: bribery, cheating, backstabbing and other behaviors of this nature were strictly prohibited and violently punished. Puritans, being excellent financiers, considered it an honor to give loans to those attempting to start their own business and, indeed, loaned money. However, profiteering on the loan percentage was forbidden as well, all loan percentages were set at low rates, manageable to the debtors. As a result, during the pre-industrial times Puritans had the best desired meritocracy you can find. Too bad their society was extremely homogenized, so cases of rags to riches were rare: as the migration of Puritans started in the first third of the 17th century, candidates for the big move were diligently screened. The move was expensive and only those with a stable trade and good finances were considered. For more details, I suggest you read the “Puritan Ethics” by Max Weber and “Albion’s Seed” by David Hackett Fischer, a tremendously interesting study of the American folkways.

With the social transformation that took place during the industrial transition - growth in diversity, rise in urban populations, mass production and factory work as well as establishing of wages, increased contact between North and South (that had completely opposite value of work and wealth) didn’t help upholding meritocracy either. Additionally, the creation of wages kicked started the core capitalist idea of time=money, which blended nicely with the core Puritan value of economic advancement. As a result, we achieved an ideology that has little to do with the reality of work/compensation as well as with equal opportunity for all.

Let’s do a short review of equal opportunity since a lot rests on the ideological stereotype that the playing field is leveled. It is not my goal to cram an entire sociology curriculum in one page, but just a few core facts won't hurt:

Overall poverty rates: in this country, the populations that are most affected by poverty, are minorities. While about 10% of Whites were consistently in poverty (by 2006), the number is likely to grow due to recession, about 25% of African Americans and Hispanics (each) are in poverty at the same time.

Education (that some of refer to as the cure for all and the direct path to social/economic advancement): while 93.5% of Whites graduated high school in 2008, only 87.7% of African Americans and 65% of Hispanics did. In regard to higher ed, 35.5% of Whites received a Bachelor’s degree in that same year, while only 19.5 and 11.6% of African-Americans and Hispanics did, respectively. (source: Center for Educational Statistics). Some reasons for this discrepancy: impoverished schools in the minority districts, less access to educational resources (books, qualified teachers that are retained by school), and as a result – lack of adequate schooling and scores that allow to graduate, let alone – go to college. College tuition is a separate story altogether as extreme poverty leads to destroyed credit, hence, hinders loan opportunities.

Even for those minorities who pull through and receive their degrees, the earning gap among those with terminal (Doctorate) and professional (JD, MD) degrees is about 30K a year, whites in the lead. The gap is about 10K a year for lesser degrees. Source: US Census.

Additionally, let’s face it, in addition to being race/ethnicity divided, we are a gender divided country as well. According to the Bureau of Labor Statistics, there is about 20K earnings gap between men and women with PhDs, this gap widens as the amount of education received decreases.

Social class-wise, the earnings gap is insurmountable: we are looking at an average difference of 140K a year between the top fifth and the bottom fifth of society (US Census). This is a gap that cannot be bridged, no matter how hard the person at the bottom works (unless, of course, they win a lottery, which, in itself, has nothing to do with working hard and making good choices, etc).

Finally, the gap between CEOs and their workers is so incredibly high that even with application of all their might and diligence, an average worker has no means of climbing that top: by 2007, an average ratio of CEO to their worker pay was 344. Yes, five years ago, an average CEO made 344 times the salary of their average employee. This ratio was 100 in 1997 and 71 in 1989. The same ratio is about 21:1 in Europe. This in conjunction with 86% of the entire American wealth being owned by the top 20% leaves absolutely no hope to an average citizen (Source: Wolff, E. N. (2009). Recent trends in household wealth in the U.S., update to 2007: Rising debt and the middle class squeeze. Working Paper in progress. Annandale-on-Hudson, NY: The Levy Economics Institute of Bard College).

So, let us try again and work with facts, rather than blind ideological assumptions.