Food for Thought
From "Reinventing the American Dream," by Christopher Jencks, in the Chronicle Review, 17 October 2008, B6-B8.
"...[One] version of the American Dream emphasizes talent and effort. It favors freedom and opposes government regulation. And it belongs to the Republican Party.
"Democrats have another version of the American Dream: Everyone who works hard and behaves responsibly can achieve a decent standard of living. ... still, more and more people achieved this dream between 1945 and 1970, so the Democratic version of the American Dream had broader appeal than the Republican version, in which a smaller number of people could get much richer.
"Since the early 1970s, however, all that has changed.
"The American economy has been under siege. Real per-capita disposable income has continued to grow, but the average annual increase has fallen, from 2.7 percent between 1947 and 1973 to 1.8 percent between 1973 and 2005. ....
"What transformed the political landscape was not the slowdown in growth, but the distributional change that accompanied it. From 1947 to 1973, the purchasing power of those in the bottom 95 percent of the income distribution rose at the same rate as per capita disposable income, about 2.7 percent a year. Among the families in the top 5 percent, the growth rate was 2.2 percent. From 1973 to 2006, however, the average annual increase in the purchasing power of the bottom 95 percent was only .6 percent. The top five percent, in contrast, managed to maintain annual growth of 2.0 percent, which was almost the same as what they enjoyed before 1973.
"That's a lot of numbers, but what my students at the Kennedy School call the "take-away" is pretty simple: After 1973, when economic growth slowed, America had a choice. We could have tried to share the pain equally by maintaining the social contract under which living standards had risen at roughly the same rate among families at all levels. Or we could have treated the slowdown in growth as evidence that the Democratic version of the American Dream didn't work, and that we should try the Republican version, in which we all look out for ourselves, some people get rich, and most get left behind.
"We chose the Republican option."
The author continues by pointing out that members of both parties supported the switch, largely because of emphasis on "skill-biased technological change" as the basis of economic inequality. He argues that it was at base a correct claim, but that more analysis was needed to keep the basic charge (we need more skilled workers) from being misleading. He points to the stagnation of workers' education since 1973 and the growth of available unskilled labor, both of which put a squeeze on available jobs for the average worker. As a country we neither encouraged education or unionization, nor protected these people's incomes.
Increasing worker education is a form of regulating the economy, Jencks admits, which is something many people are reluctant to do because they argue that it keeps job growth slow and costs high. Jencks points to governmental growth statistics which show the annual growth is only 1/10 a point higher than in countries which do regulate the economy as Germany, France, and other countries do. However, regulation has come to be seen as synonymous with "poorly thought out rules" which achieve the opposite effect of their goals.
Neither dream, Jencks concludes, can be maintained. We could have made a go of the Democratic dream, but no longer. "They both focus heavily on income and material consumption. The idea that we can keep raising our material standard of living without making most of the planet too hot for human habitation is, I think, mistaken. Even the idea that we have 20 or 30 years to make the necessary adjustments appears wrongheaded.
"So I'm afraid reinventing the American Dream really means trying to wean ourselves from the illusion that we all need and deserve more stuff. If we are to survive, we need a different definition of progress. That definition will need to focus on human needs like physical health, material security, individual freedom, and time to play with our children and smell the roses.
"I'm not saying that material goods are unimportant. People need food to sustain them, a home in which they can afford to live until they die, and medical advice when they are sick. But I'm not sure people my age (71) need a million dollar machine to keep us alive another year or two. And I am quite sure that most of us could live without 85 percent of the stuff we buy in places other than grocery stores and gas stations.
"An American Dream that doesn't destroy the planet will have to involve a more-equal distribution of basic material goods. It will also have to involve more emphasis on the quality of the services we consume than on the quality of our possessions. Perhaps most important, it will have to involve more emphasis on what we can do for others and less emphasis on what we can get for ourselves.
"There's just one small problem. I have no idea how to get from here to there. That makes me a pessimist."
"...[One] version of the American Dream emphasizes talent and effort. It favors freedom and opposes government regulation. And it belongs to the Republican Party.
"Democrats have another version of the American Dream: Everyone who works hard and behaves responsibly can achieve a decent standard of living. ... still, more and more people achieved this dream between 1945 and 1970, so the Democratic version of the American Dream had broader appeal than the Republican version, in which a smaller number of people could get much richer.
"Since the early 1970s, however, all that has changed.
"The American economy has been under siege. Real per-capita disposable income has continued to grow, but the average annual increase has fallen, from 2.7 percent between 1947 and 1973 to 1.8 percent between 1973 and 2005. ....
"What transformed the political landscape was not the slowdown in growth, but the distributional change that accompanied it. From 1947 to 1973, the purchasing power of those in the bottom 95 percent of the income distribution rose at the same rate as per capita disposable income, about 2.7 percent a year. Among the families in the top 5 percent, the growth rate was 2.2 percent. From 1973 to 2006, however, the average annual increase in the purchasing power of the bottom 95 percent was only .6 percent. The top five percent, in contrast, managed to maintain annual growth of 2.0 percent, which was almost the same as what they enjoyed before 1973.
"That's a lot of numbers, but what my students at the Kennedy School call the "take-away" is pretty simple: After 1973, when economic growth slowed, America had a choice. We could have tried to share the pain equally by maintaining the social contract under which living standards had risen at roughly the same rate among families at all levels. Or we could have treated the slowdown in growth as evidence that the Democratic version of the American Dream didn't work, and that we should try the Republican version, in which we all look out for ourselves, some people get rich, and most get left behind.
"We chose the Republican option."
The author continues by pointing out that members of both parties supported the switch, largely because of emphasis on "skill-biased technological change" as the basis of economic inequality. He argues that it was at base a correct claim, but that more analysis was needed to keep the basic charge (we need more skilled workers) from being misleading. He points to the stagnation of workers' education since 1973 and the growth of available unskilled labor, both of which put a squeeze on available jobs for the average worker. As a country we neither encouraged education or unionization, nor protected these people's incomes.
Increasing worker education is a form of regulating the economy, Jencks admits, which is something many people are reluctant to do because they argue that it keeps job growth slow and costs high. Jencks points to governmental growth statistics which show the annual growth is only 1/10 a point higher than in countries which do regulate the economy as Germany, France, and other countries do. However, regulation has come to be seen as synonymous with "poorly thought out rules" which achieve the opposite effect of their goals.
Neither dream, Jencks concludes, can be maintained. We could have made a go of the Democratic dream, but no longer. "They both focus heavily on income and material consumption. The idea that we can keep raising our material standard of living without making most of the planet too hot for human habitation is, I think, mistaken. Even the idea that we have 20 or 30 years to make the necessary adjustments appears wrongheaded.
"So I'm afraid reinventing the American Dream really means trying to wean ourselves from the illusion that we all need and deserve more stuff. If we are to survive, we need a different definition of progress. That definition will need to focus on human needs like physical health, material security, individual freedom, and time to play with our children and smell the roses.
"I'm not saying that material goods are unimportant. People need food to sustain them, a home in which they can afford to live until they die, and medical advice when they are sick. But I'm not sure people my age (71) need a million dollar machine to keep us alive another year or two. And I am quite sure that most of us could live without 85 percent of the stuff we buy in places other than grocery stores and gas stations.
"An American Dream that doesn't destroy the planet will have to involve a more-equal distribution of basic material goods. It will also have to involve more emphasis on the quality of the services we consume than on the quality of our possessions. Perhaps most important, it will have to involve more emphasis on what we can do for others and less emphasis on what we can get for ourselves.
"There's just one small problem. I have no idea how to get from here to there. That makes me a pessimist."