Thursday, April 27, 2006

Death of the American Dream, Long Live the Dream

(x-listed a dKos.)

A few months ago I wrote about a Honduran woman I met trying to cross the border. In Mexico, she had fallen off a train, had her leg crushed and been thrown in the bushes to die. She was found, given medical care and a prosthesis, then shipped back to Honduras where the local company manager said she was too "f**ked up" to get a job. Her alcoholic step-father said about the same. So here she was in Tijuana telling me she was going to try to cross again and make her way to Boston. She was young, tough, seemed smart, but--I couldn't help thinking--also a little delusional. Eventually it occured to me (this was at the time of the mine tragedies earlier this year) that most Americans harbor similar illusions about America, particularly about class mobility here. Today a new Reuter's story explains this:"America may still think of itself as the land of opportunity, but the chances of living a rags-to-riches life are a lot lower than elsewhere in the world, according to a new study published on Wednesday".

There is both hope and sadness in the fact that people, like hard-working fifth-generation miners, still cling to the American Dream, believing that sucess is unrelated to social connections, that hard work and grit alone will move you ahead. The hope, in my opinion, is not just American, but human. It's the belief, perhaps faith, that things can get better. The sadness is the empty promise our economy holds out to most of those who have the dream. And the hollowness of the Horatio Alger ideal has become especially true under the the Bush Administration, where the dream has descended to the point of cynical propaganda:
The likelihood that a child born into a poor family will make it into the top five percent is just one percent, according to "Understanding Mobility in America", a study by economist Tom Hertz from American University.

By contrast, a child born rich had a 22 percent chance of being rich as an adult, he said.

"In other words, the chances of getting rich are about 20 times higher if you are born rich than if you are born in a low-income family," he told an audience at the Center for American Progress, a liberal think-tank sponsoring the work.

He also found the United States had one of the lowest levels of inter-generational mobility in the wealthy world, on a par with Britain but way behind most of Europe.[Reuters]

While all of this will sound like America bashing. That is not my intent. I have travelled a lot and there are many things I love about my country, and, yes, the American psyche. But a true accounting of the economic reality is necessary if we are to move ourselves and others forward and out from under the economic lies of trickle-down and finance-for-finance's-sake markets. (Indeed, the Financial Times has yet another article on the dangerous levels pure finance has reached (it's behind the firewall). Meanwhile, over at European Tribune, the inimitable Jérôme à Paris has posted this graph on income inequality:

No wonder the wealthiest aristocrats in America are seeking to end the estate tax.

Democrats for too long have shied away from discussing economic difference. Democrats have been losing a lot of elections too. An honest discussion of the economy is a vital step, not only in confronting the prejudices of our own economy, but in sponsoring a more democratic political sphere.

Multi-Millionaires and billionaires band together to form lobbying to repeal the estate tax. Millionaires and Billionaires stay at the same hotels, play golf at the same country clubs, sit on each other's corporate boards. Yet these same people fight unionization and local coalitions. Millionaires pay for representation in congress, but they do not want to let people leave work to vote.

James Galbraith, in this month's Mother Jones says, in his own words, that what passes for modern economics is a broken theory. He goes on to note how, in theory and practice, current economics fails us:

In a predatory economy, the rules imagined by the law and economics crowd don't apply. There's no market discipline. Predators compete not by following the rules but by breaking them. They take the business-school view of law: Rules are not designed to guide behavior but laid down to define the limits of unpunished conduct. Once one gets close to the line, stepping over it is easy. A predatory economy is criminogenic: It fosters and rewards criminal behavior.

Why don't markets provide the discipline? Why don't "reputation effects" secure good behavior? Economists have been slow to answer these questions, but now we have a full-blown theory in a book by my colleague William K. Black, The Best Way to Rob a Bank Is to Own One. Black was the lawyer/whistle-blower in the Savings and Loan and Keating Five scandals; he later took a degree in criminology. His theory of "control fraud" addresses the situation in which the leader of an organization uses his company as a "weapon" of fraud and a "shield" against prosecution--a situation with which law and economics cannot cope[ ]

In other words, Galbraith's words, America has become a predator state, not only to Iraq or Central America, but to its own citizens.

My American dream is to see more Americans coming together to fight (like they do a dKos) for their rights and for a fairer economy. It is to see a real discussion of our real economy and all of its many, many shortcomings. Indeed, what is far more inspiring than simple faith in some abstract "American Dream" that does not hold up to scrutiny is actually looking at all the crap that goes on, from Enron to Katrina to Iraq, and saying you've had enough of it and that you are going to fight. Luckily, a few "heterodox"(unorthodox) or "post-autistic" economists are looking at their own field with skepticism too.

I don't know where we'll be 10 years from now, and I'm a realist about how long it will take to repair the damage (social and economic) of the past, but I do have one hope: the American Dream is dead, long live the American dream (you know, the democratic, egalitarian one).