Has the American Dream Faded Away?

The belief in an America in which social equality is alive and well and human dignity applies to all, independent of income or ethnic origin, is fading ever further into the distance.

When President Obama got the news that the Navy SEALs had killed Osama bin Laden, America’s world was momentarily back to normal. The death of the spiritual head of the al-Qaida terror network brought the nation together again. At least for a good two weeks.

But America has returned to a harsh reality. The United States has been unable to print new money or take on any new loans since May 16. Should Congress fail to raise the debt ceiling above the current limit of $14.924 trillion, the country will be unable to service its domestic and foreign debt. The president and the head of the Federal Reserve have already warned of a looming new recession and financial crisis. Is the United States in the same boat with Greece, Ireland and Portugal? Hard to believe.

The growing chasm between rich and poor

There are rumblings in America. Unlike the other economic crises since World War II, the 2008 crisis has been unaffected by any monetary or other incentives. Eighteen months after the onset of the crisis, the Wall Street Journal reported a 5.2 percent increase in productivity while workers’ income rose only 0.3 percent. This means that only six percent of the productivity gains were passed on to the labor force.

The remaining 94 percent, with a book value of $2 trillion, was divided up between business owners, management and stockholders, as well as put into large-scale stock buy-back actions.

The balance in the labor market is also anything but pleasant. Of the 40 percent of higher-paying positions that were cut, only 14 percent have since been refilled.

The picture for the lower income segment is even worse. At the outbreak of the crisis, 23 percent of positions in that segment were frozen; 18 months later, however, these make up 40 percent of all newly created jobs. Most of those have been in the retail and sales fields, as well as in the food industry. These are areas where the average wage is below $10 per hour.

The ever-widening income gap and an unemployment rate approaching 30 percent for young people threaten not only the economic livelihood of millions of people; they also call into question one of the basic assumptions of the American people, namely that regardless of the economic ups and downs the next generation will have it better than the current one, thus ensuring the continuation of the American dream.

A private sector free of labor unions

How did such a dramatic shift and powerful opposition to balanced economic, labor and social policies come about? Certainly the fact that the entire private sector is virtually union-free has contributed in great measure to today’s labor market situation. Only seven percent of American workers and salaried employees in the private sector are currently members of a union.

For the benefit of shareholders

In this environment, the maxim formulated by legendary former General Electric CEO Jack Welch can be fully developed. That maxim holds that management’s highest responsibility is the well-being of the company’s shareholders. It still remains to be seen which philosophical values will eventually win out in the end.

Both conservative Republicans and Democrats have never really embraced the social contracts put forth by Franklin D. Roosevelt and Lyndon B. Johnson. To them, collective social responsibility for the weak and the poor is tantamount to the un-American, socialistic machinations of some misguided government bureau. Neither can they come to terms with the usefulness or necessity of tax increases. Meanwhile, it is clear that neither the mountain of debt nor the budget deficit can be solved with spending cuts alone. In principle, a majority of Americans are not opposed tax increases.

As long as the public sees that the wealthy pay their share and contribute to things of overall benefit to society such as education, healthcare, a consolidation of social security benefits and deficit reduction, Washington can expect broad public support for tax increases.

When Obama the campaigner talked about America’s future, it struck a chord throughout the nation. But the belief in an America in which social equality is alive and well and human dignity applies to all, independent of income or ethnic origin, is fading ever further into the distance.

The struggle for the nation’s heritage

In America in 2011, there exists an ongoing class struggle just below the general public’s perception level, a struggle over existential survival and the national heritage. When and how this struggle will play out is a matter of speculation at present.

The bureaucrats in the United States have repeatedly failed to integrate the constantly changing political, economic and social conditions for everyone into their American Dream. When smoke arose not far from the White House during the 1968 riots in Washington and eventually spread across the nation, the African-Americans were the ones who had reached the limits of their tolerance for inequality.

It’s different today. Today, the majority of the disaffected are white Americans who are beginning to reject the spreading inequality. They, too, have the potential to become violent. In the wake of the 2008 financial crisis, the new target of the discontent was clearly the wealthy in their mansions. That does not bode well.

What America needs more than anything right now is to comprehensively debate a new and more balanced social contract. The gradually approaching presidential campaign season could provide the best opportunity for such a discussion.

Whether the candidates will use that opportunity remains to be seen over the next few months.