The Decline of the American Dream
Is the American Dream over? The hope that, in the United States — more than anywhere else on earth — a nobody can dream of achieving great wealth through his own hard work: Is it no longer anything but a fantasy? This harsh appraisal, an almost shameful condemnation of the world’s largest economy, was recently made by none other than the American president, Barack Obama, and his administration. The president’s annual economic report, submitted to Congress in mid-February, included a graph that they called the “Great Gatsby Curve.” This graph, named after the F. Scott Fitzgerald novel that depicted the bourgeois vanity of 1920s America, represents the degree of income inequality on its horizontal axis, while its vertical axis represents the difference of income between generations, a barometer of social mobility.
What does this curve tell us? However you look at it, the United States is in an unenviable position. Inequalities of wealth are coupled with social immobility that you would have thought was limited to old Europe. The America of Paris Hilton ranks well behind the Scandinavian nations, but it is also behind France, New Zealand, Japan and the United Kingdom.
The excess and imbalance of wealth on the other side of the Atlantic has already been outlined in the works of French economist and historian Thomas Piketty. But ask an American about it and he will reply that “the wealthy are wealthy because they deserve to be.” That the quasi-communist idea of taking from the rich to give to the poor is not a fair reward for talent. Shouldn’t an American be able to reach the top of the heap through his own hard work and tenacity? “No pain, no gain,” we hear. The “Great Gatsby Curve” provides a scathing rebuttal to this idea and posits that in the U.S., like in so many other places in the world, this “deserved wealth” is often inherited.
Partly at fault is the American educational system, previously considered the best “social equalizer.” A recent study conducted in Michigan, and cited by The New York Times, reveals that the performance gap between affluent and underprivileged students has surged more than 50 percent since the 1980s. Now wealth, rather than race, has the greatest impact on performance at school.
What next? The American worker’s hopes of prosperity are being diminished, too. The economic crisis and elevated unemployment rate, which tend to reduce salaries, do not explain everything. On page 65 of the same report, the “other most commented upon” graph is represented: a curve demonstrating that, since the 2000s, an American citizen’s work is being remunerated less and less, even as businesses reap more and more benefits. Consequently, at 13 percent of gross domestic product, the profits of American companies are at a historic high, observes Evariste Lefeuvre of Natixis in New York.
The economic report, submitted during an electoral year, leaves nothing to chance. In its assertions of social inequality, the document supports the Democratic Party’s defense of a more equal distribution of funds, even if doing so verges on populism.
After proposing the “Buffett Rule”(a tax plan named after the American billionaire Warren Buffett, which calls for more taxation on the super-rich), the President launched, on Feb. 22, an attack on exorbitant commercial profits — an audacious and risky move in a country where freedom of private enterprise is sacred. So as not to cause alarm, the idea, taken at face value, is to reduce the tax rate on corporate profits from 35 to 28 percent. But this is at face value only because the provision also aims to reduce the majority of tax loopholes used by multinational corporations. The stillborn project has no chance of being adopted by the Senate or House of Representatives, in which Republicans hold a majority. Nevertheless, it emphasizes the fact that American companies almost never pay their full tax rate. Is the project enough to stoke new resentment? A few days after Obama’s proposal, USA Today, a daily newspaper, ran a headline on the explosion of extreme poverty in the United States, indicating that the number of families living on less than two dollars a day has more than doubled in the past 15 years, increasing from 636,000 in 1996 to 1.5 million in 2011.
But the strongest argument in Barack Obama’s favor is, perhaps, to be found in his rival, Republican presidential candidate Mitt Romney. Former head of the private equity firm Bain Capital, the man embodies American fiscal injustice. His small fortune, accumulated through his investment fund, is taxed at a rate of 15 percent, like all capital gains. The candidate is among a group of businessmen whose incomes are taxed at a rate lower than that of their secretaries, since wages and salaries are taxed between 10 and 35 percent.
Just months after the Occupy Wall Street protests, which opposed the 1 percent who continue to enrich themselves at the expense of the other 99 percent, the debate that Barack Obama is attempting to open might have a whiff of class warfare. Is this inconsistent with American culture? A New York Times/CBS News poll, published in October 2011, underscored the fact that 66 percent of Americans believe that income and wealth should be “distributed more evenly” in the United States.
What does this curve tell us? However you look at it, the United States is in an unenviable position. Inequalities of wealth are coupled with social immobility that you would have thought was limited to old Europe. The America of Paris Hilton ranks well behind the Scandinavian nations, but it is also behind France, New Zealand, Japan and the United Kingdom.
The excess and imbalance of wealth on the other side of the Atlantic has already been outlined in the works of French economist and historian Thomas Piketty. But ask an American about it and he will reply that “the wealthy are wealthy because they deserve to be.” That the quasi-communist idea of taking from the rich to give to the poor is not a fair reward for talent. Shouldn’t an American be able to reach the top of the heap through his own hard work and tenacity? “No pain, no gain,” we hear. The “Great Gatsby Curve” provides a scathing rebuttal to this idea and posits that in the U.S., like in so many other places in the world, this “deserved wealth” is often inherited.
Partly at fault is the American educational system, previously considered the best “social equalizer.” A recent study conducted in Michigan, and cited by The New York Times, reveals that the performance gap between affluent and underprivileged students has surged more than 50 percent since the 1980s. Now wealth, rather than race, has the greatest impact on performance at school.
What next? The American worker’s hopes of prosperity are being diminished, too. The economic crisis and elevated unemployment rate, which tend to reduce salaries, do not explain everything. On page 65 of the same report, the “other most commented upon” graph is represented: a curve demonstrating that, since the 2000s, an American citizen’s work is being remunerated less and less, even as businesses reap more and more benefits. Consequently, at 13 percent of gross domestic product, the profits of American companies are at a historic high, observes Evariste Lefeuvre of Natixis in New York.
The economic report, submitted during an electoral year, leaves nothing to chance. In its assertions of social inequality, the document supports the Democratic Party’s defense of a more equal distribution of funds, even if doing so verges on populism.
After proposing the “Buffett Rule”(a tax plan named after the American billionaire Warren Buffett, which calls for more taxation on the super-rich), the President launched, on Feb. 22, an attack on exorbitant commercial profits — an audacious and risky move in a country where freedom of private enterprise is sacred. So as not to cause alarm, the idea, taken at face value, is to reduce the tax rate on corporate profits from 35 to 28 percent. But this is at face value only because the provision also aims to reduce the majority of tax loopholes used by multinational corporations. The stillborn project has no chance of being adopted by the Senate or House of Representatives, in which Republicans hold a majority. Nevertheless, it emphasizes the fact that American companies almost never pay their full tax rate. Is the project enough to stoke new resentment? A few days after Obama’s proposal, USA Today, a daily newspaper, ran a headline on the explosion of extreme poverty in the United States, indicating that the number of families living on less than two dollars a day has more than doubled in the past 15 years, increasing from 636,000 in 1996 to 1.5 million in 2011.
But the strongest argument in Barack Obama’s favor is, perhaps, to be found in his rival, Republican presidential candidate Mitt Romney. Former head of the private equity firm Bain Capital, the man embodies American fiscal injustice. His small fortune, accumulated through his investment fund, is taxed at a rate of 15 percent, like all capital gains. The candidate is among a group of businessmen whose incomes are taxed at a rate lower than that of their secretaries, since wages and salaries are taxed between 10 and 35 percent.
Just months after the Occupy Wall Street protests, which opposed the 1 percent who continue to enrich themselves at the expense of the other 99 percent, the debate that Barack Obama is attempting to open might have a whiff of class warfare. Is this inconsistent with American culture? A New York Times/CBS News poll, published in October 2011, underscored the fact that 66 percent of Americans believe that income and wealth should be “distributed more evenly” in the United States.
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