Yes, that is true. Assuming 125 million households in America, if National Income (sum of income from wages and capital) increased on average $1,
- the top 1% would see a $21.66 rise in income,
- the next 9% would get a $3.12 rise in purchasing power
- the middle 40% of Americans would only receive a $0.84 increase
- and the remaining 50%, again 50% would get a measly $0.33 bump in purchasing power.
To me that says the AMERICAN DREAM IS DEAD, how about you?
The American dream was always a fiction, a story told to people to keep them from seeking a system that would actually cater to their needs, the equivalent of a man confronted by a crowd of the starving telling them that all is well because if they manage to scrounge every penny they can possibly find throughout their lives they can use it to buy a lottery ticket and then there is a one in several million chance that they might win.
Having said that the steady decline in the average wage for non union workers and the host of policies favoring the rich that have been implemented since the mid 80s have certainly made the odds even longer.
I’m sorry but I have to agree with you. The American Dream is dead for the average person. There will always be a few who invent something new or improve on something to the point it goes viral. These chosen few people will be living the good life or even making it to the top 1%, while the rest of the people stumble along. College graduates, unless they are in the field of medicine or work in the top field of politics, will never get their student loans paid off. I heard one woman describe hers as “this car payment in the form of a student loan.” I heard on TV that the housing market is blaming some of its lack of sales on graduates paying off enormous student loans and they can’t afford to buy homes.
My parents generation, the so-called “Greatest Generation” had it all. My generation and the Boomers had it pretty good, but the USA started going downhill from there. With the savings and loan debacle in the 80s and the steady march of jobs overseas in the 90s, opportunity no longer knocked, it fled. The old custom of getting involved in a war to boost the economy now has the opposite effect. The veterans with their broken bodies and broken minds are becoming a medical drain on our economy.
Now we are being held hostage to thousands of children being sent illegally across our borders because their parents won’t clean up their own countries. Too large a percentage of aliens who are here legally (and illegally) are living in squalor and shipping their money back home to their countries instead of spending it here. I’m not sure these people deserve the “measly $0.33 bump in purchasing power” you mention when they are shipping much of it out of the country. They are weighting down our healthcare system, so our $0.84% rise is going to pay for their healthcare and increases in our own.
I hear economists say that things are getting better. I don’t know if it is typical, but in my own state whenever a new manufacturing company comes in, it is nearly 100% foreign owned. The foreign-owned corporation gets big tax breaks to locate here. Meanwhile, enterprising locals are putting in small businesses like antique shops and restaurants that are failing at high rate.
Thomas Piketty's new book, Capital in the 21st Century has been an eye-opener in a new way of looking at inequality. I am about to come out with my first hub based on it even though I am only on page 300 of 600+.
The numbers I offered is based on the current distribution of wage and capital income weighted by the % of income from each source.
When I get to my other computer, I will show what the distribution might have been like in the 1960s-1970s
BTW, according to Piketty, while you are right, many foreign entities own American companies, the reverse is also true. He found that the net is close to zero as is net foreign ownership of our debt. By and large, virtually all of our enormous debt is owned by ... Americans.
Are you speaking of the companies the US has moved overseas or do you mean that Americans are buying into foreign companies, or both? My son lost his job with Sabre, a company that programmed computers for American Airlines in the early 2000s. It moved to India. BTW, I understand from the news that there is a big recall going on now for Chinese-made Fords. (Not that it hasn't also happened to my American-made Toyota.)
No, just American companies buying overseas companies.
It wasn't easy finding a current article on job outsourcing but finally did where DOL is projecting major increase in outsourcing. So long as conservatives keep blocking laws to disincentivize companies from doing so, it will continue.
I calculated the inequality using numbers representing the 1960-1970 timeframe. That theoretical dollar gets split thusly:
- Top 1%: $ 14.56
- Next 9%: $ 2.79
- Middle 40%: $ 1.02
- Lower 50%: $ 0.39 (still pathetic, part of the reason being is no income from capital investment)
Gets a bit tinfoil-hat (if ya know what I'm sayin') near the end, but this is relevant:
The American dream is alive and well for me. There are still opportunities here.
I am glad to hear that, there aren't a whole lot like us (yeah, me too).
I've had a good career, which I am nearing the end, and I will have a good retirement. I think a big concern is for the younger people just coming out of college. However, my niece is graduating this month with a PhD in physical therapy, and she already has a job waiting for her. I think a lot depends on the field you choose. I also think whether "you are living the American Dream" depends on your definition of the American Dream. Some people's expectations are higher than others. I will have a good retirement because, during middle age, I switched careers to a government job within my field and lived within my means.
The American Dream, as espoused by the Right, and even in my conception, is that anyone, regardless of the economic status of their parents when they were born, has a reasonably good chance, through hard work and talent, to rise a few deciles above where they started in their 20s. So, to put numbers to it, if you start in the lowest 10% of the income stratum, you would have a pretty good chance of working your way to say the 40%. Or, if you started in the 40%, because of your family position, you could get to the 80th decile. And if you started in the 50th decile; you have a reasonable shot at making it to the top 10%.
What I am saying is for the average Joe in America, that is no longer a reasonable aspiration and the data backs me up on that. Is there upward mobility, yes, some, but not very much anymore. The data shows that, for the most part, where you start economically is where you end up, and worse, where your parents start, is where you end up. Sad, but true, on average.
I think many Americans are overly disillusioned and lack a context of what is realistic to expect. I have lived in four different countries and came to the US by choice. No country is a Utopia and every country should strive to improve. But seriously, Americans have less to complain about than most.
Outside of Europe and English speaking countries, there is no doubt about the truth of your statement. But America, and Britain is not too far behind, as major problems developing with the inequity in the distribution of wages and income from capital. In America, right now, 50% of wage earns get only 25 cents of each dollar in wages paid (before taxes)! There is just something wrong with that picture, to me at least. Another 40% get to split 40 cents, while the top 10% distribute the remaining 35 cents amongst themselves. That was in 2010, and it has only gotten worse since then. Keep in mind, we are only talking about income from wages. It gets much, much worse when income from capital is added in. (You get numbers like 5 cents, 25 cents, and 70 cents, respectively.)
If we talk about Scandinavian income from wages, then that breaks down to a more egalitarian 30 cents, 45 cents, and 25 cents, respectively. Europe is in between those two sets.
One could actually go from rags-to-riches in America once upon a time, but only on the frontiers. Once America stopped expanding, then, except for the period between 1913 - 1950, when income from capital collapsed and wages on upper income were frozen (save for the Gilded Age) upward mobility in the general population slowed down; it has been getting slower ever since.
Glad to see somebody say it. With all the doomsday talk about our country and our economy you would think we have one foot in the grave already.
Thanks for the lift.
Rags to riches was never all that common it is just a mythology the industry barons promote like 'anyone can be President'--it never was actually true in the past any more than now. Break through entrepreneurs are notable aberrations in a system biased towards families with money and power passing it to their offspring. I am two generations from abject poverty and that makes me, even as a member of the middle class, an outlier.
The wealth divide is an issue but actually access to education, racial disparity, and violent crime situations are the best they have ever been in the last 100 years (there was a major analysis of this in Time a year ago). The US situation is highly comparable to the rest of the developed world overall. I just do not see why 'the dream is dead'. The dream is no more alive or dead than it ever has been. In fact your chances of getting ahead if female or a racial minority are considerably improved.
I think people who say the past was a golden age have airbrushed out the crap that happened when much of downtown New York was a garbage-filled ghetto and the federal government mandated neighborhoods as black or white. Some things have got worse, others have got better. And I don;t think handing everyone the dream of becoming the 1% was ever the answer, giving everyone access to healthcare and education is the answer. And in many ways we are getting closer to that then ever before.
I have a personal preference for tax-and-spend socialism, but that is not the American system and never will be. The answer in the US is to make the US system work. And that is never going to mean running it like the Netherlands.
For the most part, I probably agree with you and yes, the rags-to-riches is a euphemism but encompasses the idea of being able to substantially improve ones economic status. Right now though, America is slipping behind Europe and Canada.
The only times the American Dream was a real possibility, as best I can tell, were the two or three periods of the great immigrations and the short period from 1945 to maybe 1986, or thereabouts, and mainly for men. During that period, there was actual economic mobility observed between generations (late 60s to 2000 maybe for women, would be my guess). I benefited from that period. At all other times you stayed in the economic class into which your were born, for the most part.
I don't think the move from the farm to cities during the industrial revolution qualifies, if anything, that was a step backwards. In fact. the whole industrial revolution was an unmitigated disaster in terms of improving one's economic status for the vast majority of Americans caught up in it.
The American Dream is FAR from dead. There is plenty of opportunity out there. People have to adopt a proactive mindset and psychology. If they want to achieve and succeed, they CAN. Planning, organizing, and strategizing to meet one's goals is the key and is never out of style.
One has to develop a relevant and marketable brand in order to success in postmodern America. America in the 21st century is dependent upon technical and computer savvy. Those who are technically, computer, and mathematically savvy are the ones who are more likely to succeed and to be highly affluent. Those in relevant fields and areas will have NO problem in achieving the American Dream.
Also education will be a HUGE factor in terms as to who will succeed. A Bachelor's Degree will no longer cut it. In order to achieve that American Dream, one must at least have a Master's Degree, even a Ph.D Degree in a highly specialized area. Those who have degrees in Liberal Arts and the Humanities will have a difficult time obtaining careers unless they are highly innovative and savvy. Those with Liberal Arts and Humanities degrees will become part of the new poor unfortunately.
Perfect demonstration of the exact opposite of what you are arguing.
A PHD in Mathematics is 10 to 12 years full time study (and I do mean full time as in no time to do anything else), now how are people expected to pay for that (that is up to half a million in student debt and finding loans for PHD's is incredibly rare as they are so expensive) not to mention just living expenses, if you don't have rich parents to pay your expenses (food, accommodation, text books, transport etc.) you will need to work part time and study part time so that means now you are looking at 20 to 24 years of education assuming you can somehow find and keep a part time job that whole time.
By the way by statutory limit on the interest on your loan is 40 000 a year by the end.
In the long-run, GW, education and technology are key in fighting the natural tendency toward economic inequality. But in the end, if the government doesn't take positive in those arenas as well as appropriate progressive tax policies and regulation to counter the natural anti-competitive advantage of the rich and powerful, then we end up where the only thing gets you into the top rung is inheritance or marrying into it.
This was the case world-wide, except for the American frontier, until WW I; I am finishing a hub on it now. Except for the very rare individual, you simply couldn't work your way to the top and there was no real middle class then. Income comes from two sources, wages and capital. Wage inequality has remained structurally intact forever although it varied in magnitude. Capital ownership, and the income from it, dominated until WW I and was 90% or more owned by the top 10%, which is why the regular Joe was unable to climb out of his hole (women didn't work then). Between WW I, the Great Depression, and WW II capital inequality collapsed, the structure changed.dramatically. But since 1980, it has been making a major comeback, mainly in America.
If not checked, inheritance, or marrying into wealth, may again be your only way of obtaining it. Now, where is my martini?
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