The American Dream is Dead, Long Live the American Dream!
Book Reviews: Requiem for the American Dream: The 10 Principles of Concentration of Wealth and Power, by Noam Chomsky, published by Seven Stories Press (March 2017); The Vanishing Middle Class: Prejudice and Power in a Dual Economy by Peter Temin, published by MIT Press (March 2017)
In a raft of bestselling books this year, our thinking elite has announced the demise of the middle class and the “American Dream”. At the heart of that “dream” is the idea that every generation, through hard work, would come out better off than the previous one. Of course, the 2008 Great Recession put a serious dent in the notion and Occupy Wall Street in 2011 pointed the finger at income inequality (it’s the One Percent!). In 2014, French economist Thomas Piketty’s magnum opus, Capital in the 21st Century, provided definitive scientific confirmation to every man’s perception that middle class income had been stagnant for decades, that the ultrarich was getting richer at the expense of everyone else.
Two important books from MIT luminaries addressing this issue came out in the same month (March 2017): Noam Chomsky’s Requiem for the American Dream and Peter Temin’s The Vanishing Middle Class. They both caused waves, loudly proclaiming that the American Dream is dead.
But can we really declare the American Dream dead? Both authors make suggestions though perhaps neither offer definitive solutions. That might require something more than a new set of policies and some people are beginning to talk about it. Recently New York Times journalist David Brooks suggested in an Op-Ed that “Trump is not just a parenthesis.” He is “the farcical culmination of a lot of dying old orders — demographic, political, even moral — and what comes after will be a reaction against rather than a continuing from.”
A lot of “dying orders” and one of them is the American Dream. It is essentially what kept the lights on in the “city on the hill”, the beacon that famously attracted the tired, poor and huddled masses to America – to paraphrase the American poet Emma Lazarus.
Requiem for the American Dream
At the outset, it is striking how different Noam Chomsky’s Requiem is from all the other books he has written. It is far more accessible than the academic fare he has accustomed us to. Chomsky has taught at MIT for fifty years and he is one of America’s foremost thinkers, the most famous voice of dissent on the left. He is also an innovative linguist, credited with revolutionizing the field and as a political philosopher, the author of several seminal books, notably 9/11: Was There an Alternative? considered the most influential post 9/11 book both at home and abroad.
The reason for Requiem’s greater accessibility probably derives from the fact that it is, bottom line, a movie tie-in. Based on the documentary of the same name released in April 2015, it encapsulates and builds on the main ideas presented in the film.
In the Video: Trailer for Requiem for the American Dream. Film is available on Netflix.
Chomsky himself acknowledges that what probably makes Requiem so easy-to-read is that it has benefited from the editing work of the filmmakers involved, Peter Hutchinson, Kelly Nyks and Jared P. Scott. In cutting the many hours of filmed discussions and interviews to reduce them to a one-hour-plus documentary, they have arrived at “10 principles of Concentration of Wealth and Power”, making Chomsky’s arguments more striking and easier to remember. And the book is whittled down to some 150 pages with plenty of graphics.
The “ten principles” are tactical tools used by the ultrarich to consolidate their power. Think of them as necessary steps in a concerted and highly effective strategy aimed at changing the economic and social environment of America:
- “Reduce democracy”: The burst of 1960s civil rights activism scared the conservatives who attributed it to “too much” democracy; as Chomsky notes, this recalls the schism in the Founding Fathers’ days between “the aristocrats” (Jefferson’s term for the “privileged people who will make the decisions and do the right thing”) and the democrats, i.e. everybody else; the “schism runs right through American history to the present moment”, feeding on the fear that “the poor would get together and take away the property of the rich”; this is a fear that goes back to ancient Greece and Aristotle who was the first to observe it; Aristotle’s solution was to reduce inequality (and create a form of welfare state) – Madison concurred but his solution was to reduce democracy, that is, “organize the system so that power would be in the hands of the wealthy” – precisely what the conservatives are doing today;
- “Shape Ideology”: As Reagan famously said, “government is the problem, not the solution”; there has been “an enormous, concentrated, coordinated business offensive beginning in the ‘70s to try to beat back egalitarian efforts that went right through the Nixon years”; the goal is small government, less democracy; the 1971 Powell Memorandum stating “that the most persecuted class in the United States is the capitalist class” was the starting point of the conservative backlash, and it inspired business to use its resources to beat back democracy, for example, promoting charter schools, “a very thinly disguised effort to destroy the public school system”;
- Redesign the Economy: The “masters of mankind” (a phrase Chomsky borrows to great effect from Adam Smith’s famous Wealth of Nations, highlighting the masters’ “vile maxim”: “all for ourselves and nothing for other people”), have made a concerted effort to “shift the economy in two crucial aspects”: One, to “increase the role of financial institutions: banks, investment firms, insurance companies and so on” and set them free through deregulation; two, “hollow out the productive capacity of the country, by shifting production to places where there’s cheaper labor, no health and safety standards, no environmental conditions etc. – Northern Mexico, China, Vietnam and so on”, a.k.a. offshoring: “These two processes, financialization and offshoring are part of what leads to the vicious cycle of concentration of wealth and concentration of power”;
- Shift the Burden: Reduce taxes on business and wealthy individuals (though economists have found no evidence that it will increase investments and jobs); but this is essential for the “plutonomy” (those who “have substantial wealth” and are “the main drivers of the economy”) while the “precariat” or precarious proletariat, “get by somehow if they can”;
- Attack Solidarity: “From the point of view of the masters, you’re supposed to care about yourself, not about other people”; to achieve this you have to kill sympathy, the normal emotion of caring about others (ironically, a fundamental human trait for Adam Smith); for example, attack Social Security with a “lot of talk about the crisis of Social Security, which is non-existent. It’s in quite good shape – about as good as it’s ever been” though there is potential for a crisis “a couple of decades from now”; “there’s an easy way to fix it” but there’s no debate on it, “the masters don’t want it”; same strategy for public education; for example, now, in more than half the states, most of the funding for state colleges comes from tuition, not the state: “That’s a radical change, and that’s a terrible burden on students”, notes Chomsky, unless they come from wealthy families;
- Run the Regulators: Since the 1970s, lobbying has grown enormously “as the business world moved sharply to try and control legislation”; referring to the 2008 Great Recession, Chomsky grimly notes that the “people picked to fix the crisis were those who created it” and they are “now more powerful than before”; incidentally, that is exactly what Trump is doing when he nominates people intent on undermining the agencies they are heading (EPA, Education Department etc.);
- Engineer Elections: This has been achieved with the Supreme Court 2010 Citizens United decision giving corporations the status of personhood and equating money with speech;
- Keep the Rabble in Line: Organized labor is “the one barrier to this vicious cycle which leads to corporate tyranny” and is why corporate power is out to weaken labor unions; “anti-union sentiment is so strong in the United States” that among the core principles in the UN’s International Labor Organization, the right to free association and hence to unionize, including the right to strike, has never been ratified by the US – leaving the US “alone among major societies in that respect” and in company of countries like Myanmar, Brunei, Marshall Islands, Palau, and Tuvalu;
- Manufacture Consent: with the “rise of the PR industry”, advertising provides no information but promotes irrational choices; it turns everyone into obsessive consumers (“fabricating consumers” as Veblen said) and undermines elections, “selling candidates”; the propaganda turns people against their own interests by turning them against those behind them on the income scale – Reagan called those surviving on food stamps “welfare queens” and the Federal Government is seen as the culprit;
- Marginalize the Population: the point is to “atomize” people, preventing them from joining together and expressing their will – public power in the US is corporate power, and on the climate change issue and the Paris Climate Accord, as a result of Republican objections, we have, Chomsky writes, “an astonishing spectacle. The leader in upholding the hopes for decent survival is China! And the leading wrecker, in virtual isolation, [is] ‘the leader of the Free World’” – i.e. Donald Trump. And “we are heading toward environmental disaster, and not just heading toward it, but rushing toward it.”
Photo Credit: Pexels
The book goes over the same ground as the film, but in far greater detail. What it loses in emotional power compared to the film, it gains in precision of depth and information: It goes deeper, that’s the difference between the image and the written word. Each “principle” is illustrated with references to historical facts and key articles that provide the relevant information, enough to leave the reader with an indelible impression of how the system “works” – how it is biased in favor of the wealthy. How it is corrosive on democracy.
For example, an article by Lee Drutman, published in the New America Weekly (April 20, 2015) reports “How Corporate Lobbyists Conquered American Democracy”. It starts off noting that “something is out of balance in Washington”, pointing to the stunning statistic that corporations “now spend about $2.6 billion a year” on lobbying, which is “more than the $2 billion we spend to fund the House and Senate” – and this gap, first noted in the early 2000s, has been widening since.
One must go back to the Gilded Age to find business in a similar position. It amounts to one of the “most important transformations in American politics over the last 40 years.”
Something to ponder over. Clearly, the objective of this book (as was that of the documentary) is to better inform citizens. Make data available to everyone. In the hope that with knowledge, things will change. That our world can be saved from extinction.
In the Video: Chomsky Interview 30 July on Democracy Now
The Vanishing Middle Class: Prejudice and Power in a Dual Economy
This is a brilliant essay, short (166 pages) and highly readable, from one of today’s best economists. It follows on the heels of classic studies on the same issue that earned their authors the Nobel Prize, Lewis in 1954, Kuznets in 1955, Solow in 1956. And it makes an unexpected, innovative use of the Lewis model of a dual economy that is normally used to explain the economic challenges faced by developing countries – not a developed, advanced economy like that of the United States.
What Peter Temin does in this book is make the Lewis model’s explanatory power work for America, forcefully highlighting what is wrong with both American democracy and the American economy.
In short, he takes Piketty’s famous disquisition on wealth and income inequality in the 21st century one step further and applies it to the American situation today – in the age of Trump.
He argues convincingly that America is turning into a divided country where the people at the top don’t relate to the rest and don’t even care. On one side, the top twenty percent with a college education who work in the “FTE sector”, the acronym stands for finance, technology and electronics. Think Silicon Valley and Wall Street.
On the other side, everyone else, huddled together in increasing poverty in the low wage sector, burdened with debt, struggling to pay their home mortgage, running from one temporary job to the next and suffering from poor health and a shortened life span. Higher education is the way out but it is increasingly out of reach – public schools are defunded, university fees are rising, student debt is crushing. For the majority, there is no future. The middle class is hollowing out, the American Dream is dead. The richest country in the world is regressing, with an economic and political structure more like a developing country (remember the Lewis model).
Temin sees two forces at work that are tearing American society apart: class and race, or as he calls it, “class segregation” and “racecraft”.
“Class segregation” describes how the top twenty percent lives in gated communities or their equivalent, send their children to exclusive schools and universities and establish networks – building up their “social capital” – that outsiders cannot penetrate.
“Racecraft” refers to the many (and sometimes subtle) ways African Americans and other “brown” people are kept out. This is peculiar to America and has deep roots in its slavery past. A century and a half after the Civil War, it still determines who can “make it” and who can’t. And who gets killed. The tragic events in Ferguson are proof, if any were needed.
Temin uses the “Investment Theory of Politics” to wrap up his argument: The twenty percent “invests” in policies that sustain and protect them – and here he rejoins Chomsky’s “ten principles”.
The business power grab was long in the making, and for Temin like Chomsky, it began with the Powell memo and it closely correlates with the rise of income inequality in America as Thomas Piketty has demonstrated. Johnson’s War on Poverty was replaced by Nixon’s War on Drugs that, not incidentally, marked the start in the rising trend in mass incarceration.
As a result, the United States is fast becoming a plutocracy in the hands of the FTE sector. The lights of the “city on the hill” are going out. A frightening vision.
A true vision? It has made many people uncomfortable, and some have angrily slammed the book. Tim Worstall wrote in Forbes magazine that this book made “absurdly overblown claims about American poverty and the disappearance of the middle class.”
Overblown claims? Student debt is increasing, not decreasing. Women and black graduate students are systematically held back, they cannot find jobs in the FTE sector and end up taking lower-paying jobs in education and government. An inordinate proportion of black are incarcerated; indeed, mass incarceration keeps rising and President Trump is not likely to reverse the trend.
One could multiply the examples and they all point to the same conclusion: Poverty is rising, the middle class is at risk of extinction. This, as pointed out by Lynn Parramore in her excellent analysis of Temin’s book, could lead to a very dangerous situation. “Without a robust middle class,” she writes, “America is not only reverting to developing-country status, it is increasingly ripe for serious social turmoil that has not been seen in generations.”
Reviving the American Dream: What it Takes
Both Chomsky and Temin call for political solutions.
What Democrat Bernie Sanders was proposing in his 2016 campaign – and is still proposing today – has Chomsky’s full support. And, writes Chomsky, his “political revolution” would “not have greatly surprised Dwight Eisenhower” because, back in the 1950s, it would have looked “pretty mainstream”. Eisenhower, a Republican general and World War II hero?
This is a stunning measure of how far to the right the American political spectrum has shifted. “Well,” says Chomsky, “it’s up to us to shift it back.”
That won’t be easy, considering that Republicans “have moved so far toward dedication to the wealthy and the corporate sector that they cannot hope to get votes on their actual programs”. Instead, they have turned to mobilizing “sectors of the population that have always been there but not as an organized” political coalition, the “evangelicals, nativists, racists and victims of globalization”. I am sure everyone will recognize Trump’s base.
In the book, Chomsky does not have a chapter developing a workable strategy (except to mention Bernie Sanders). He does note how effective the Tea Party has been in shaping politics and that those “interested in an independent progressive party just haven’t done that.” They’ve been lured into thinking it’s enough to participate in the “electoral extravaganza” every so often while they’d need to work at it “constantly”. He is right of course, and the most recent news about how the Democrats are now trying to pull themselves together and prepare for 2018 and beyond are not very encouraging.
There is a lot of enthusiasm but relatively little funding, compared to the vast sums the Koch brothers can muster. The question is: if the Democrats don’t have a breakthrough in 2018, will they have the stamina to keep at it?
Temin, in contrast, suggests some actionable measures:
- restore and expand education, shifting resources from policies like mass incarceration to improving the human and social capital of all Americans;
- upgrade infrastructure;
- forgive mortgage and educational debt in the low-wage sector;
- stop the trend towards “small government” and prevent private entities from taking over government functions in education and public health; in short focus on government services for the whole American population;
- consider taxing not only the income of the rich, but also their capital.
This is very much in line with Bernie Sanders (though Sanders calls for more). If nothing is done, Temin warns, the cost will be unbearable and even the twenty percent will suffer. “We have a structure that predetermines winners and losers” he reminds us. As a result, a lot of talented people are left out:
“We are not getting the benefits of all the people who could contribute to the growth of the economy, to advances in medicine or science which could improve the quality of life for everyone — including some of the rich people.”
How politically feasible are Temin’s solutions? Under a Trump administration, not at all. Might the next man in the White House bring Bernie Sanders’ agenda forward? Maybe.
Perhaps we need not wait for a change in Washington to rethink the American Dream and set different goals. For example, another vision comes from a popular 2016 TED talk by journalist Courtney E. Martin. She mentions her experience in co-housing and sees “community living” as a possible life-changing solution, a “new American Dream”.
Likewise, Grace Kim, an architect, touts co-housing in her own TED talk as “a way of living where people choose to share space with their neighbors, get to know them, and look after them.”
So far, these are only glimmers of change, nothing like a full-fledged cultural revolution. But that such ideas should emerge at all, suggests that what America needs is change on two levels: political and cultural. And perhaps, as David Brooks suggests, a moral shift as well. A tall order, but necessary.
EDITOR’S NOTE: THE OPINIONS EXPRESSED HERE BY IMPAKTER.COM COLUMNISTS ARE THEIR OWN, NOT THOSE OF IMPAKTER.COM. FEATURED PHOTO CREDIT: PEXELS