“The American Dream is that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement … a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.”
- Author and historian James Truslow Adams in “The Epic of America,” 1931.
Of all the traditions, ideals, and ethos that have been cultivated during the history of this still very young country, perhaps none is as compelling as the concept of the “American Dream,” arguably an extension of The Declaration of Independence. Initially coined by author and historian James Truslow Adams, this notion is in itself a relatively new theory that gained momentum in the post World War II era ala the GI Bill, and other master strokes initiated by the United States government to ignite a phenomenal period of economic growth that saw the emergence of a ‘Golden Age of Capitalism’ that allowed an unprecedented proportion of their population to become bona fide members of the Middle Class (not to mention helping the transformation of Europe and Japan out of the rubble of World War II).
But even before a title was conceived, the allure of American possibility beckoned vast hordes of immigrants to come to our shores. Through the early 20th century, Eastern Europeans followed in the footsteps of their brethren from western locales such as Ireland, France and Germany, not just for economic opportunity but to escape religious or political persecution.
A funny thing happened on the way to the millennium
This wellspring of prosperity continued into the 1970s and the now overlooked recession of 1973-75, which was caused, arguably by 1) by an oil embargo initiated by the Organization of Petroleum Exporting Countries (OPEC) flexing their economic muscle (leading to a rise in gas siphoning thefts throughout South Los Angeles, as many old head locals can attest): 2) the (Richard) Nixon administration’s tampering with the international currency exchange; and 3) the 1973-74 stock market crash.
In all, several recessions have transpired since the end of World War II, although not at the magnitude of the Great Depression of the 1930s (or, for that matter, the downturn we had or are currently experiencing). Each was precipitated by a multitude of factors, perhaps overwhelmingly because the economy (like the weather) is a cyclic entity, ever changing and impacted by myriad influences. Here, we will try to analyze the factors that have led us to our current state of affairs.
In a nutshell, toward the end of the 20th century, salaries and wages have stagnated, while simultaneously costs of both health care and housing rose, putting the squeeze on everyone, except the fortunate few at the very top, the “one percent” who benefit from hefty salaries (corporate executives) and capitol gains (real estate tycoons, stock holders, on so on).
Economist Sarah Bohn of the California Public Policy Institute devotes her research to a number of different facets of society’s production, distribution, and consumption of goods and services, including income inequality and overall poverty.
California is not a unique or isolated fixture in this current economic downturn; i.e., the same factors that inform unemployment here may be found across the country.
From coast to coast, Americans have experienced “… the economic shift in jobs and labor market opportunities that has increased opportunities for high-skill workers, and reduced them for lower-or-middle skill workers,” observes Bohn.
The technology boom fed into this as it rendered obsolete mundane tasks whose redundancy made them especially vulnerable to that modern scourge of the work force: automation. This allowed employers the luxury to terminate their minions tasked with the execution of “… routine tasks and expanded the productivity of workers with the skills to use the new technology,” said Bohn.
This, in turn, gives credence to observers who maintain that trends contribute to the concentration of wealth to an increasingly smaller hierarchy, as Bohn attests:
“The rise in incomes at the very top (the “1 percent” that people talk about) is related to this trend as well, but is also driven by skyrocketing pay for executives, high returns for capital-holders, and the like,” said Bohn.
Be that as it may, Los Angeles is not nearly as hard hit as other parts of the country, or even other cities in California, as apparent by the bankruptcy of Detroit, Mich., and Stockton and Vallejo in the Golden State.
Kevin Klowden of the Milken Institute offers an explanation.
“It’s the diversity of the economy, primarily,” he says.
As managing director of the institute’s California Center, Klowden is an economist who specializes in regional financial markets and how they are affected by technology, trade, and public policy.
“Stockton and Vallejo are manufacturing/ agricultural towns whose primary industries had been in decline. They (typically) relied on the housing boom and positioning themselves as extended suburbs of San Francisco/San Jose to thrive,” he believes.
“But when the housing and construction markets collapsed, they didn’t have diverse enough economies,” he explains.
“The fact that both cities went bankrupt due to pension and other obligations only made things worse, because it’s hard to attract jobs to cities without sufficient city services. Detroit had been losing people for decades, and its labor rates (wages) were terribly uncompetitive, making it hard to lure new manufacturing jobs,” said Klowden.
Housing Crisis Capital of America?
Another simplified explanation being tossed around is the cut back or complete elimination of low-skilled but decent paying jobs, coupled with a near simultaneous increase in property values and rental rates. In essence, more and more people who once enjoyed the luxury of full-time, high-paying employment must now make do with part time, low-paying jobs. Locally, researchers at the University of Southern California have determined that housing as a whole in the five separate counties that make up Southern California-Los Angeles, Orange, Riverside, San Diego, and San Bernardino, has depleted to a paltry 3.3 percent vacancy rate. The housing shortage gets progressively worse as one approaches the epicenter of urban sprawl, Downtown Los Angeles proper, where a housing boom and concentration of media tech industries (whose highly skilled employees can conceivably afford the rising costs of living in this fashionable Mecca) have driven rentals skyward.
One popular perception, which has fueled the political debate in California and eastward, is the specter of a foreign work force invading American soil to compete for what jobs there are. Bohn acknowledges this, but maintains it is at a far lower rate than alarmists with a biased agenda to present would have you believe.
“Most immigrants to California are low skilled, and so we have a larger share of families with lower incomes compared to other states,” she says.
Going on, she finds “… very little evidence in the research that immigrants coming to California have changed the labor market opportunities of U.S.-born workers.”
In short, the projection of illegal aliens as foreign interlopers hell-bent on sabotaging the job prospects of a home-grown job force is misleading, and perhaps even fabricated to at least some degree. All in all however, these newcomers do make an already cut-throat job market for those at the bottom half of the class structure even more competitive.
“Immigrants tend to compete with other immigrants for jobs (particularly because they are, on average, limited in English ability),” Bohn says, “… or they come to fill jobs for which there are no U.S. born workers willing or available to work (for example, in agriculture or in some high-tech jobs).”
As an interesting aside, this last statement paraphrases an older observation made by former Mexico President Vicente Fox during the (George W.) Bush administration that illegal immigrants had a “…willingness and ability to work at doing jobs that not even Blacks want to do in the United States,” a statement that generated a fair amount of controversy in 2005.
The legacy of stagnated income impacts generations, as middle class families, stymied by paychecks that don’t keep pace with the cost of living, often resort to the trap of augmenting their incomes with the dubious safety net debt, manifested in the form of easy- to-qualify for credit card applications, plunging them into a quagmire of ever mounting debt, and the residual penalties of accumulated interest rates. Even if they do not fall into this trap, stagnated wages will almost certainly inhibit the ability to save, which in turn is the traditional avenue towards accumulating wealth–and more importantly–providing stability for the family unit.
This formula for poverty translates into other indirect social problems. The financially strapped are more likely to ignore health issues, and the familiar emotional maladies of substance abuse, depression, and criminality. This-in turn-results in the erosion of society as a whole.
Weighing in on this situation, Klowden agrees:
“As healthcare, education and housing all massively increase in price; the amount of debt faced by the middle class keeps increasing.”
Twisted Democracy?
All this has climaxed into a curious form of egalitarianism, or equality for the vast majority regardless of race or creed. In turn it feeds into wide spread proclamations among literary and other circles heralding the death of the middle class.
We thus are presented with the fanciful possibility of two separate classes in the future: A tiny elite of the grotesquely wealthy and the vast majority of impoverished wretches.
A more direct result is the polarization of otherwise complacent groups who politicize their dissatisfaction. Manifestations of this include grass roots movements like the “99 percenters” or various factions of the Occupy Movement, a modern incarnation of the “Rainbow Coalition” (which segued into “Rainbow/Push”) popularized by the Rev. Jesse L. Jackson in the 1980s.
Even this leaves out the response of the “radical fringe,” always a presence on the American political landscape.
Regardless of race, more and more of the American population is being cut off from the traditional gateway to “the good life,” which may explain the rise of right wing militias, White Nationalist organizations, and so on. This mirrors the prominence of the Klu Klux Klan during another hardscrabble period in the history of the United States, The Great Depression of 1929 through 1939. In times of economic woe, extremist groups enjoy immense popularity.
As much as the idea is promoted of “American exceptionalism,” the notion that the U.S. is unique or more virtuous compared to other nations, the trend of material inequality transcends geographic boundaries. The French economists Emmanuel Saez (University of California at Berkeley) and Gabriel Zucman (London School of Economics) have compiled a body of work (based on statistics from the IRS) that concentrates on the distribution of wealth in the U.S. over the last century, but other researchers have amassed evidence that this growing gap between “the haves and the have not’s” is a global phenomenon.
Oxfam, the international alliance devoted to the eradication of injustice and poverty, has published reports (Google “Even it up: Time to end extreme inequality”) documenting the shifting concentration of wealth among the very rich. The world’s 85 top billionaires increased their individual worth by more than $500 million a day during the period between 2013 and 2014 (these fortunate folks possess as much wealth as the bottom half of the world’s population, or an estimated 3.5 billion out of a total 7 billion, with 1 billion living on a paltry $1.25 per day).
This trend has even been documented in Sweden, a paragon of socialist egalitarianism. An article in “The Economist” magazine (“Sweden/The new model: A Bit More Unequal, A Lot More Efficient,” dated Oct. 13, 2014) proclaimed “The most equal country in the world is becoming less so.”
Still, this casts a dark shadow over the prestige of the Red, White and Blue, a nation built upon the ideal of equality and opportunity for all. In due course, as suggested by another French economist, Thomas Piketty of the Paris School of Economics, the U.S. may well finally be reduced to an oligarchy of the sort that compelled our founding fathers to flee from Europe centuries ago.
Finally, it might be argued that tangible manifestations present themselves in the media on a regular basis. The events unfolding in Baltimore as this paper went to press might be construed as an indirect expression of public rage against grinding inequality, on top of the overt acting out against tangible abuse of authority.
