The American Dream

The United States has always been known as the land of opportunity, where if you make an effort, anything can be achieved. The land where all men are created equal and where men are endowed with certain unalienable rights like “Life, Liberty and the pursuit of Happiness”. It is then impossible not to link the United States to the potential of the individuals for material success and social mobility regardless of where they come from. This combination of freedom and equality has been one of the greatest American features underscored by external observers and constitutes the basis for what is known as the American Dream. The aim of this essay is to outline the contradictions of this idea. Firstly, the concept of the American Dream itself will be discussed. Additionally, it will be critiqued in two ways: on the one hand, it will be contested from a theoretical perspective; on the other hand, it will be questioned using facts that undermine the validity of the American Dream.

What is the American Dream?

William E. Hudson explains the American Dream as “a narrative about ordinary people striving for material success and social acceptance in a new kind of society where such striving is actually rewarded” (2012: 272). The American Dream is grounded in the existence of a political and merit-based system where social mobility is the result of individual effort. The expectations of prosperity and individual upward mobility fueled by the American Dream are projected to the future. What matters is not what you are now but what you can be if you seize the equal opportunities available to all. Thus, the American Dream is mainly underpinned by the equality of opportunity rather than by the equality of outcomes:  “The opportunity for a better life is far more important than having a society where everyone has economic equality” (Duncan; Goddard, 2012: 130).

The individual is the center of the idea of the American Dream. Unlike ancient societies, one’s social position depends on their effort and merit. The whole destiny, as Tocqueville indicated, is in their hands. The recognition of each individual’s dignity allows him or her to choose how to conduct his or her life. Liberty is then conceived based on a libertarian perspective, as freedom from external constraints, what Isaiah Berlin called negative liberty. This conception of the individual contained in the American Dream has been fundamental in the way democracy has been traced in the United States. As every individual holds natural rights, no one can be above the rest. Ordinary people have the capacity to govern themselves. Democracy is then the political system that best fits according to this conception of the individual as it “[…] can be seen as an extension of the equality of individual rights and as the necessary expression of the belief that all individuals possess an intrinsic worth and a right to share in their own government” (Foley: 152).  At the same time, this conception shapes a particular way of understanding democracy where political society is oriented to facilitate individuals to find their goals. The most important element of American democracy is the idea of tolerance, regarded as the right of individuals to decide how to live: “it is a democracy and you can do whatever you please” (Hudson: 110). This leads to the existence of a diversity of lifestyles and cultures.

The emphasis on the individual in the American Dream reflects the influence of the social contract theory drawn up by Locke and Montesquieu and refined by Thomas Jefferson in the Declaration of Independence. This relevance attributed to individuals was one of the most revolutionary principles enshrined in the new American political system. It endorsed the idea that legitimacy did not come from divine right, nor racial superiority, nor aristocratic blood, but from the contract established between sovereign citizens and the government. It was because men held several unalienable rights that sovereignty lay with the citizens. In Hannah Arendt’s opinion (2013), this revolutionary change implied the abandon of a metaphysical legitimation of power, which led to the need of bolstering the new secular legitimacy by several mythical narratives. It was required to articulate unifying elements around the new political system in order to guarantee stability and cohesion, as it would no longer be assured by transcendental ideas. The reverence for the Founding Fathers or for the Constitution are glaring examples of these secular narratives established to secure the unity of the nation. One could argue that the American dream has also been an enduring ideology in the United States that has contributed to maintaining the cohesion in the country. As Richard Hofstadter pointed out, “It has been our fate as a nation not to have ideologies but to be one”, (quoted in Lipset and Mark, 2000: 29).

The strength of the American Dream can be also explained by what has been labeled as the American exceptionalism. According to Lipset and Mark (2000), the United States has always been a uniquely different country characterized by social egalitarianism, high economic productivity, social mobility, weakness of the central state, earlier timing of electoral democracy, ethnic and racial diversity and, especially, by the lack of hierarchical institutions and traditions of feudal societies. Because of all these aspects, it has been easier to believe in individual upward mobility.

Theoretical criticism to the American Dream

The latent individualism present in the American Dream can undermine social ties. Without the sense of civil obligations and interconnectedness, what Tocqueville called “Habits of the heart”, the American society is likely to become more vulnerable to despotism. As William E. Hudson points out, “Without concern for one another’s freedom, individuals would be unable to act together to protect anyone’s freedom” (2012:110). In recent years, the decline of political parties and labour unions, the weakness of religious ties and the increasing process of suburbanization constitute great examples of the consequences of radical individualism. This extreme individualism tends to forget that “all one’s freedoms depend on a structure of social institutions that provide the means to exercise it” (Hudson, 2012: 122). The American Dream enables the most affluent citizens to think that what they own is a natural consequence of their merit, that they owe nothing to others and that their accomplishments are their own. This explains, according to Christopher Lasch (1996), the rebellion of the elites, the phenomenon whereby the elites separate themselves of society.

Sandel (2011) argues that those liberal principles that inform the American Dream leave much to be desired in terms of justice. In his opinion, a fair society is not that one that respects the liberty of individuals to make individual choices about how to conduct their lives. This kind of society understands justice as tolerance for the diversity and is dissociated from any moral stance. On the contrary, Sandel advocates for a society where there is an open debate about every moral issue. A fair society is that one that cultivates civic virtues and that is concerned with common affairs. Rather than tolerance, it is more accurate to consider mutual respect. The individualism embraced by liberals also obviates the existence of solidarity obligations. These obligations are not based on choices made by individuals. They derive from moral responsibilities that we take for the community, for those with whom we share our lives.

The most revered critic of the meritocratic system that sustains the American Dream was John Rawls (2014). According to the American philosopher, equality of opportunity does not suffice in order to distribute money in a fair way. It is true that it neutralizes the unequal distribution of material resources from birth, but by basing the merit on the development of natural skills or on individual effort from an equal starting point, a meritocratic system still rewards elements that go beyond the capacity of decisions of the individual. No one is responsible for their natural skills nor their capacity of effort: these are arbitrary elements that individuals cannot choose. Moreover, a meritocratic system does not even pay attention to effort, it actually takes into account the results derived from effort. Finally, Rawls argues that the skills appreciated by a society change throughout history. If a society values some things more highly than others, this is not a merit of the person whose skills are more positively assessed.

Anthony B. Atkinson (2015) also objects the preeminence of equality of opportunity in a meritocratic system. In his opinion, equality of outcome is relevant too. In first place, “we cannot ignore those for whom the outcome is hardship -even if ex ante equality of opportunity were to exist” (2015:10). In second place, in some cases the equality of opportunity is competitive, which means that ex post unequal rewards exist (for example, a swimming competition). It is necessary then to determine what the winners get as a reward. Finally, Atkinson underscores the impact of inequality of outcome in future generations: “Inequality of outcome among today’s generation is the source of the unfair advantage received by the next generation. If we are concerned about equality of opportunity tomorrow, we need to be concerned about inequality of outcome today” (2015:11).

Factual criticism to the American Dream.

Race and gender

Despite the promotion of equality and freedom contained in the idea of the American Dream, the rights granted to citizens were conditioned by race, as well as by gender. It is well known that civil rights were not fully recognized to blacks in U.S. until the second half of the twentieth century and that women were not allowed to vote until 1920. However, in spite of all the claims against these episodes of the American history, gender and racial discrimination still persists nowadays.

Poverty rate for blacks is three times that of whites. Unemployment rate for black double that of white. Black male workers make on average 74% for every dollar that white males earns, whereas black female workers make on average 69%. From the more than 2.3 million people in jail in U.S. in 2012, 39% were black, 33% white and 23% Hispanic. In 2011, 3% of black American males were in prison, for 1.2% of Hispanic males and 0.5% of white males. The medium household income of black families in 2011 was 58% of that of whites. The decline of worth in black families between 2005 and 2009 was the triple of that of white. Finally, the life expectancy for blacks in 2009 was 74.3 years, while it was 78.6 years for whites (Stiglitz: 2015). In respect of women, a glass ceiling for social mobility still exists. Women made on average 77% for every dollar made by men in 2012. The likelihood to live in poverty doubled that of males. Finally, they are much less visible at the highest levels of labor life (Duncan and Goddard: 2012).

Inequality of opportunity

The American Dream makes the assumption that social classes do not exist in the United States, that there are not significant economic gaps in society. However, in recent decades, this assumption has been refuted by reality. It was the incredibly wealthy Warren Buffet who claimed that “There’s been class warfare for the last 20 years, and my class has won”. It could be argued that the American Dream worked out between 1945 and 1970s. As William E. Hudson (2012) points out, the longest expansion of economic prosperity in the Uniteds States took place in the postwar years. During this period real median family income doubled, the income share of the top 5% declined 3%, the families earning less than 10.000 dollars per year moved from 97% in 1947 to 39% in 1973 and productivity raised 3.3% a year. Many scholars agree that incomes of the poorest Americans grew faster than those of the richest in what is known as the Golden Age of Capitalism.

Nevertheless, this egalitarian era was wiped out in the early 1970s by what Atkinson has labeled as the Inequality Turn. From then on, socioeconomic inequalities have been steadily growing. The wealthiest top 10% Americans share of national income has markedly returned to that of one century ago (Figure 1). More particularly, the top 1% share in total income in 2012 was twice that of 1979 (Figure 2). This top 1% earns nearly 1/5 of total gross income. Inequalities also exist among the richest. The top 1% receives 50% of total incomes shared by top 10%. At the same time, the top 0.01% earns 1/5 of the incomes earned by top 1%, this means that 1/10000 of the population receives 1/25 of the total income. As Piketty and Saez underline, “primary income concentration is currently higher than it has ever been in U.S. history” (2014:839). This income concentration differs from the European one. In Europe, top decile income share is now 35%, far of what it was one century ago (45-50%). Regarding the wealth inequality, the 10% wealthiest Americans owns 70% of total U.S. wealth (Figure 3). Despite this vast wealth inequality, in Pikkety’s opinion (2014), inequality in U.S. is more based on the increase of top labor incomes than upon the dramatic concentration of wealth in a few hands.

This substantial increase of the economic power of the wealthiest Americans in recent decades is inextricably connected to the parallel expansion of poverty. As Atkinson indicates, “What happens at the top of the distribution affects those of the bottom” (2015: 35). That explains why higher poverty tends to get together with higher top shares (Figure 4). In 2010, 46.2 million people were listed as poor, which represented 15% of the population (HHS, 2012). The massive concentration of wealth and income also curbs social mobility, as there is a relationship between inequality and mobility. Bartels has underscored that economic mobility in the U.S. is lower than in Canada, Finland, Sweden, Norway and Germany. According to Brookings Institution, from those born in the bottom 20%, only 58% of them move out of that category, while only 6 percent of children born to parents with family income at the very bottom move to the very top. Another indicator of the decline of inequality of opportunity in the U.S. is the dramatic increase (27%) of tuition fees in public universities during the Great Recession (Stiglitz, 2015: 191).

What can be observed in the last decades is the elimination of any remnant of the American Dream. The great divide between the richest and the poorest has nothing to do to a meritocratic system. It is, on the contrary, the result of a set of political decisions addressed to reinforce the wealthiest classes. Merit has played no role in this game. Inequality has been, according to Stiglitz (2012), a political option embraced by former U.S. administrations. The greatest manifestation of this assertion were the top tax rate cuts implemented by Bush administration. Since the 1980s, top tax rates in U.S. are lower than in continental Europe (Figure 5). The current marginal rate (36%) is much lower than the 91% in 1960. These cuts have directly contributed to a higher top incomes share. The unconditional bank bailouts, the reduction of the capital gain tax, as well as the Glass-Steagall Act are other clear examples of political decisions that have shaped the current uneven society. This social gap can be also explained by several structural factors such as the changing nature of work, the loss of industrial jobs to countries with cheaper labor cost, the growing number of single economic families and an increasing emphasis on a well-educated workforce (Duncan and Goddard, 2012).

Finally, this economic inequality is usually translated into political inequality. As Bartels (2008) has highlighted, there is a statistical relationship between views of affluent citizens and public policy. By converting the economic power into political power one of the most important democratic criteria such as the responsiveness of the government to the preferences of the citizens has ceased to exist.

Conclusion

The American Dream is based on a meritocratic system that cannot justify the distribution of wealth in terms of justice. At the same time, the resultant inequalities of outcomes undermine social ties and hinder the existence of equality of opportunity for future generations. The American Dream is above all a myth that has been fundamental in keeping the American society united, but does not as such exist in reality. There is a discrepancy between the ideal and the reality of equality. Even when accepting the validity of the American Dream’s meritocratic system, it is evident that there has existed an unfair disparity between skills and economic rewards in recent decades. The rich have increased their share of the wealth while the poor have become poorer largely due to a set of political decisions oriented to favour the most affluent classes. In fact, those responsible for technological and scientific development have received far less than “those responsible for the financial innovations that brought our global economy to the brink of ruin” (Stiglitz, 2015:110).  This widening divide between the rich and the poor is damaging equality, suggesting that American Dream has begun to disappear in recent decades. What’s more, democracy has become endangered, as public policy becomes increasingly responsive to the interests of the wealthy at the expense of the vast part of the population.

Annex

Figure 1.

Piketty and Saez (2014)

Figure 2

Atkinson (2015)

Figure 3

Piketty and Saez (2014)

Figure 4

Atkinson (2015)

Figure 5

Piketty and Saez (2014)

                                                                                                                          

Bibliography

Arendt, H. (2013), Sobre la revolución, Madrid: Alianza Editorial.

Atkinson, A.B. (2015), Inequality, Cambridge: Harvard University Press.

Bartels, L. M. (2008), Unequal democracy, Woodstock, Pinceton University Press.

Brookings Institution (2007). “Economic mobility of families across generations”.

Duncan, R; Goddard, J. (2013), Contemporary America, Basingstoke: Palgrave Macmillan.

Foley, M. (1991), American political ideas, Manchester: Manchester University Press.

HHS. Department of Health and Human Services (2012). “The 2011 HHS Poverty Guidelines”.

Hudson, W. E. (2012), American Democracy in peril, Washington: CQ Press.

Kolchin, P. (1995), American slavery, New York: Penguin Books.

Lasch, C. (1996), The Revolt of the Elites and the Betrayal of Democracy, New York: W. W. Norton & Company

Lipset, S.M.; Marks, G. (2000), It didn’t happen here, New York: Norton.

Mckay, D. (2013), American Politics and Society, Chichester: Wiley-Blackwell.

Piketty, T. (2014), Capital I the Twenty-First Century, Cambridge: Harvard University Press.

Piketty, T.; Saez, E. :  Inequality in the long run , Science, vol.344, no.6186, 2014, p.838-844.

Rawls, J. (2014), Teoría de la justicia, Ciudad de México: Fondo de Cultura Económica.

Sandel, M.J. (2011), Justicia, Barcelona: Debate.

Stiglitz, J.E. (2012), El precio de la desigualdad, Madrid: Taurus.

Stiglitz, J.E. (2015), La gran brecha, Madrid: Taurus.

Willie, I. G. (1966), The self-made man in America, New York: The Free Press.