The new millennium has not been kind to American confidence. With each passing year, more Americans have lost faith in the future. Save for a brief debt- and housing-fueled rise in confidence between 2004 and 2006, increasing numbers of Americans believe that the American Dream is an illusion. Whether defined as the promise of a better future or as the endless opportunity to work hard and get ahead, fewer people than ever believe that the United States embodies that hope.
Depending on which poll, attitudes appear to be split about 50-50, with just fewer than half saying they think the dream is dead and a bit more saying it is alive and well. But the message from the commentariat and the political class, as well as the views of the future emanating from Wall Street, are far more negative. This past week alone, in the runup to July 4th, Nobel Prize–winning economist Joseph Stiglitz penned a piece in the Financial Times announcing that the American Dream has been fatally eroded by rising inequality of both wealth and opportunity in America, while Time ran a more nuanced piece questioning whether the dream is dead or just severely dented.
“The U.S. worked hard to create the American dream of opportunity,” Stiglitz wrote, “but today, that dream is a myth.”
Yet, reports of the death of America as a land of potential and possibility are premature. Unquestionably, the belief that the future would by default be better than the present has eroded, yet that particular belief only took hold recently in American history. It is a product of the baby-boomer ethos, and if a sense of inevitability has dissipated, good riddance. The belief that you are great, rich, and powerful as a nation, and that such bounties follow as certainly as day follows night, is not a recipe for greatness, wealth, or true power. It is a recipe for arrogant complacency and, ultimately, decline. The dream was potent in the 19th and early 20th centuries because it was wedded to immensely hard work as well as consistent uncertainty, and it entailed confronting fears and crises, and engaging in a competitive, chaotic, and complicated world.
And the waning of the dream isn’t so simple. Tens of millions of working men and women have not seen their lives and economic opportunities thrive in the past three decades, and in recent years, the decline of family wealth in the form of reduced housing prices (more than $4 trillion of housing erased from household net worth in the past five years) and deflated retirement plans has been an added burden. Yet, while more people are skeptical than was the case in the 20th century, many still do see the United States as a society that offers pathways for individuals to realize their dreams and ambitions.
If you scan through articles and speeches on the American Dream over the past five years, the fact that perhaps half the population has not lost faith is rarely emphasized. “Faith in the American Dream sinking” is a typical headline; “Americans still believe that U.S. is land of opportunity” is not. In part, this just proves the media cliché “if it bleeds, it leads.” Bad news is perceived as a better driver of attention than positive.
The political cycle makes it worse. The Republicans have a vested interest in characterizing the economy as weak to add fuel to the contention that President Obama and the congressional Democrats have made things worse over the past four years. The Tea Party rails that excessive levels of debt are destroying the country and its future. And economists and assorted cognoscenti warn of a new financial meltdown stemming from Europe and a system so burdened by debt that years of lean lie ahead. No wonder collective confidence is suffering.
To be fair, at some point in the past decades, a gap opened between what the American economy was organically generating and what a majority of Americans needed and desired. Overall economic growth is barely managing 2 percent a year after a rate that often was double that in the later part of the 20th century. And as Stiglitz and others note, the fissure between the wealthy and the rest has become a chasm, while incomes for tens of millions of wage earners have flatlined and jobs for men in heavy industry have evaporated in the face of globalization and technology.
A key issue is the mismatch between expectations and what this economic system is delivering. The tapestry is intricate. For many, income is insufficient for basic needs. But for most, income is insufficient to meet inflated expectations. Both dilemmas erode confidence in the dream of the future, but they aren’t the same issue.
Yet as Daniel Gross points out in his new book, Better, Faster, Stronger, there is ample evidence that structurally, the plaints of Stiglitz et al. are overstated. The United States has multiple advantages: overall output is $15 trillion and still increasing; the labor market is fluid (and if you think that’s not an advantage, just ask Spain, Italy, and France about the challenges of a labor market where hiring and firing are immensely bureaucratic). There is a favorable demographic curve and a superior higher-education system, albeit with excessive levels of student debt. There is the dollar as a global currency, which for now and the foreseeable future keeps money plentiful and interest rates low—and that is a significant advantage for starting a business. And finally, there is a culture emerging in 20-somethings of self-reliance (judging from surveys and polls), which is in contrast to baby-boomer attitudes that material prosperity is a birthright secured by government guarantees.
The belief that a better future is ineluctably linked to one’s own efforts was the cornerstone of the American Dream in the first place. The belief that the dream is a birthright has been part of its undoing. No one, no government, no repeated societal mantra, can guarantee a better future. Resting on such guarantees is the first step to undermining them. Unequivocally, government plays a key role in providing a safety net, as the New Deal taught us. But safety nets are necessary minimums; the American Dream was to aspire for maximums and work to attain them. And in that regard, the United States retains a wealth of possibility.
Finally, today’s dream unfolds in a context of a world where the American Dream may no longer be unique. Billions of citizens of the world are emerging into the middle class and reaching for their own dreams, and doing so more rapidly than at any point in human existence. That may make the United States less distinct, but so what? The dream should never be understood as “you can thrive here and only here.” It should be an invocation of possibility, which remains in evidence in the creativity of American technology, and not a chest-thumping declaration of specialness.
This July 4th, let’s remember that the American Dream, defined not as home ownership, not as global power, not as certain success or wealth, but instead as a social compact that allows most citizens and most immigrants most of the time to identify their own dreams and ambitions and then pursue them—that dream remains as true today as it has ever been. There have been periods of massive inequality in the past, the late 19th century especially, and that dream (though not yet named) thrived. There have been worse economic crises, in the Great Depression, and that dream thrived. There are no guarantees and no certainty about the future, but the possibility—that remains as bright and shining as ever.