Who Stole the American Dream? Part I
I was a long time over my reading of Hedrick Smith. Who Stole the American Dream? was hardly (as you might guess from the title) either cheerful or relaxing or dreamy story to get lost in. Instead, in an effort to resist underlining a clean hardcover (albeit used) book, I kept adding Post-It notes to the edges of the pages, until the fore-edges bristled like a hedgehog’s back.
Smith locates the beginning of the current mess we’re in—mess, as in Congressional gridlock; general incivility; job loss and declining real incomes; widespread financial insecurity; increasing social and economic inequality; a widening gap between super-wealthy and poor; and eroding civic trust—in 1978, which he calls “the pivotal year.” It was in 1978 that, as he puts it,
...the corporate political machine went on the offensive and achieved a legislative agenda that would have profound and far-reaching impact. ... Virtually every economic bill that passed in 1978 had a political tilt in favor of business and the wealthy, often at the expense of the middle class... [my emphasis added].
Jimmy Carter, one of my personal heroes, was president in 1978, but even liberal Democrats jumped on the deregulation bandwagon, and there was no way Congress was going to pass Carter’s tax bill, closing corporate loopholes, ending tax breaks for the rich, and giving breaks to families with low incomes. Smith calls the reception to Carter’s bill a “successful mutiny” and a clear signal to business that they could get whatever they wanted.
The corner had been turned.
We’ve all heard, far too many times, the phrase vicious circle. In Smith’s fourth chapter, “Middle-Class Prosperity,” he discusses the concept of a virtuous circle:
Good, steady pay, and job security, they say, are the drivers of strong consumer demand, and strong demand stimulates economic growth. Business is moved to expand production and invest in new plants. Each expansion generates a new round of consumer demand. The virtuous circle keeps on generating growth, unless someone breaks the chain reaction.
Think of trust between people, how trust is built, and what happens when trust is broken. We anticipate future events in light of our experience. Put simply, a vicious circle is a negative feedback loop, a downward spiral, while a virtuous circle, the positive movement, spirals upward.
As Smith sees it, postwar prosperity in the 1950s, 1960s, and 1970s went hand in hand with power shared between American companies and the labor force. What those horrible, very, very unfair taxes on the wealthy? Weren’t they a counter-force holding everything back?
Contrary to claims of anti-tax conservatives today that high taxes are a drag on the economy, the long postwar period from the mid-1940s to the mid-1970s was an era of strong, steady economic growth—much better growth that the past decade with its low tax rates. However plausible it sounds that high taxes on corporations and wealthy individuals cause them to invest less and take fewer risks, several decades of solid growth in the postwar period offer incontrovertible evidence to the contrary.
Not everyone was prosperous in the postwar decades, but the bottom and top of the income scale were closer together than they had ever been before or have been since.
Why did we turn the corner and go in the direction of increased inequality? Why did Congress decide to give tax breaks to the wealthy and deregulate banking and other key businesses? What is the source of today’s relentless push to “privatization” of essential services—education, prisons, even the military? Can business “do it better” and save money for all of us? Is this all for our own good? If so, why does it feel so bad?
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|No Post-It notes!|
After finishing this book (which took me quite a while, as adrenaline surges mandated frequent breaks), I turned to a very modern novel, The Rosie Project, by Graeme Simsion. It was like a little vacation, reading light fiction on the porch for a couple of evenings, but I have not done telling you about the Hedrick Smith book. Be forewarned: There will be more coming about that!
P.S. 7/14 Next installment up now here.
P.S. 7/14 Next installment up now here.