The American Dream basically depend on the myth that as a
nation we are moving together toward greater prosperity, greater equality,
which any hard worker can achieve without any discrimination. Minorities are
attracted to the American Dream to benefit in their lives. Because they
strongly believed that any hard working American can achieve the American Dream
without racial discrimination. Economist Paul Krugman concluded that the
American Dream was now simply dead and the American economy didn’t provide any
incentives and encouragements for upward mobility. Krugman explained, “The myth
of income mobility has always exceeded the reality: As a general rule, once
they've reached their 30s, people don't move up and down the income ladder very
much.” Alan Krueger, chairman of the president’s Council of Economic Advisers,
showed that highly unequal countries have low mobility; the more unequal a
society is, the greater the extent to which an individual’s economic status is
determined by his or her parents’ status. According to Krueger projections, the
America will have even less mobility in the year 2035. He predicted that children,
who will be born to lower economic segment, would stick to the same group in
their life.
The Occupy Wall Street movement’s “WE ARE THE 99%” slogan perfectly
matched with the ground realties of the economic inequalities in the US
During the post Second World War period, 1945 to 1973, the
US achieved its greatest economic success. During this time period, median
family income doubled and the poorest American’s national income share
increased by 0.7 percent and the income of the wealthiest 5% decreased by
nearly 3 percent. During this economic boom, productivity grew by 3.3 percent
annually, inflation-adjusted wages increased by 2.5 to 3 percent per year and
real wages grew by 75 percent. During this period American workers worked few
hours per year compared to European countries.
The four decades that followed recorded the worst economic
inequality in the US history. While the wealthiest five percent of Americans
doubled their income between 1979 to 2009, the poorest 20 percent saw their
income drastically decline. In 2003 two French economists Thomas Piketty and
Emmanuel Saez disclosed, the top one percent of super-rich Americans grabbed nearly
25 percent share of national income in 2007, compared to 10 percent in 1980.
They also revealed that even among the richest 10 percent of Americans, top one
percent accounted for half of their group’s income. The US economy recorded the
worst annual rate of productivity average less than half a percent during 1973
to 1988. During the last four decades, productivity stagnated and wage growth
deteriorated for low income workers. From 1979 to 2001 the poorest 10 percent
of workers’ wages declined by four cents per hour and ten top 10 percent of
wage earners increased their earning more than 23 percent. However during this
period CEO- to- worker compensation skyrocketed.
In year 2000, CEO earned 310 times the pay of an average
worker. Hudson argued that rising income inequalities during last four decades
were related to productivity stagnation and the decline in wage growth. During
the last four decades, low income and middle class workers’ earnings reduced
significantly. In these circumstances female partners were forced to join the
work force to meet their family needs and one partner had to do more than one
job. Even with this kind of hard work and sacrifices, they could not get into
the success ladder.
Beside the unequal income distribution, inequality in wealth
also rapidly increased, during the last few decades. The New York Times
columnist Nicholas D Kristof disclosed in his article “America’s Primal Scream”
that, the top one percent of super-rich Americans had a net worth of 225 times
the worth of median households and this was a record wealth inequality in US
history
Compared to European countries, the US recorded worst wealth
inequality, where top one percent of super-rich acquired 40 percent of the
country’s total wealth. In recent years, rich got richer and poor got poorer,
and the recent economic recessions also hit bad on low-income groups. In 2010,
46.2 million Americans were recorded as poor and this was a 52-year record
high. Hudson described impact of unequal income distribution. He writes as “the
rich families wealth have significant advantage over poor, when their children
try to climb the social ladder and existing grave wealth disparity in the
society, has shattered the American Dream”.
David I Levine, a Berkeley economist and mobility researcher
indicated that income inequality is greater in the US compared to European
countries and there is a wider disparity between rich and poor parents who can
invest in their children. A recent study found that children’s economic
backgrounds are a major factor on their school performances in the US rather
than in Denmark, the Netherlands or France. He further describes unequal income
distribution crisis in the US, “Being born in the elite in the U.S gives you a
constellation of privileges that very few people in the world have ever
experienced and being born poor in the U.S gives you disadvantages unlike
anything in Western Europe and Japan and Canada”.
If we consider minority groups in the US, during the last
four decades, racial income and wealth inequality also have significantly
increased. According to the US Census Bureau, in 2009 median Black family
income was recorded as 57 percent of median white family income and Hispanic
Americans earned 64 percent of median white family income. Today, minorities
like Blacks and Hispanics are more than four times likely to be poor as whites.
During the 1960s it was widely assumed that ending the discrimination would
improve the economic as well as legal status of minority groups. Over the
course of the 1960s and 1970s substantial numbers of black families moved into
the middle class, and even into the upper middle class; the percentage of black
households in the top 20 percent of the income distribution nearly doubled. Around
1980 the relative economic position of blacks in America stopped improving
because income disparities in the United States began to widen dramatically,
turning America into a society more unequal than at any time since the 1920s.
Nobel prize-winning economist Paul Krugman described adversely affecting black
economic progress in two ways: “First, because many blacks were still on the
lower rungs, they were left behind as income at the top of the ladder soared
while income near the bottom stagnated and second, as the rungs moved farther
apart, the ladder became harder to climb”. As a minority, Black families have
faced the upward mobility hurdle.
During the pre-1973 period, America was the world’s largest
manufacturer and the world’s number one economic powerhouse. This global
position has been increasingly changing during the last four decades. China,
Japan, South Korea, India and other new manufacturing powers have posed
competition on the US. As a result US manufactures started the
“deindustrialization” process, which led to the closing of thousands of US
plants and moving the production to countries with a lower labour cost. From
1973 to 1986, 1.7 million US manufacturing jobs were lost to
“deindustrialization”. Globalization and technological innovations also
pressured the US manufactures to downsize their plants, outsource services and
to lay off thousands of US workers. In addition “skill-based technical change”,
which demanded new technical skills for manufacturing sectors, also caused job
losses and led to higher economic inequalities in the US society. But the US is
not only the country faced this “deindustrialization” challenge. While European
governments took drastically bold decision to protect their work force but the
US right wing policy makers encouraged the job killer “deindustrialization”
process without concerning their workforce.
Princeton political scientist Larry Bartels, who authored
Unequal Democracy, pointed out, economic inequality grew more rapidly during
Republican controlled White Houses because of their pro-business public
policies. Bartels further argued that the introduction of business influenced
public policies of right-wing political groups, which helped create rapid
inequalities in 1970’s. The policy makers encouraged deindustrialization,
downsizing and other economic restructuring tools without being concerned about
the impact on workers’ wages; they supported anti-union policies, which
destroyed worker rights and economic justice. They have been campaigning for
“reducing the size of government” policy for the last four decades and tax cuts
for rich people. These policies threaten the social safety net and dismantle
the institutions, supporting low-income people. Hudson argued that the US
education system failed to invest in new technological changes. In spite of
investing in public education, they drastically cut funds for public education
and raised college tuition during the past few decades. This policy had the
dramatic impact on minorities and low-income groups where they lost equal
opportunity to climb up the social economic ladder. The author argues that a
policy of progressive taxation needs to be implemented to reduce inequality in
the US society. But the right wing government’s policies gave tax cuts to the
wealthiest Americans and put more tax burden on the middle class and low-income
groups. Past Republican governments reduced tax rates both on corporate profits
and on unearned income such as dividends and capital gains, so that those with
large accumulated or inherited wealth could more easily accumulate even more.
The Bush expansion from 2002 to 2007, 65 percent of economic gains went to the
richest one percent.
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