The American Dream

May 31, 2007
Posted by Jay Livingston

Social stratification has two important dimensions: inequality and mobility. How wide are the gaps between people in the society, and how easy is it to move up the economic ladder?

It’s clear that the gap between rich and poor has been growing. So has the gap between the rich and the middle. Those at the top of the income distribution have been getting a larger and larger slice of the total pie. In the last 30 years, average real income has risen moderately, but incomes for the top 1% have nearly tripled. The typical CEO in 1978 got about 40 times what the average worker earned. Today, he makes 260 times as much. European countries have a seen a similar trend, though it is far more muted. Among the OECD countries, when it comes to inequality, we’re number one.

But even if inequality is greater in the US than in other industrialized countries, America is still the land of opportunity, the country where people are freest and most able to work their way up the ladder of success, right?

Certainly this is what Americans believe. Isabel Sawhill and John Morton have just published a short, non-technical, and very understandable report: “Economic Mobility: Is the American Dream Alive and Well?”

The dream is certainly alive, as this chart from the report shows.

In comparisons with people in other countries, Americans are the least troubled by economic inequality in their society. They are also most likely to believe in the idea of economic mobility — to think that economic success should and does depend on individual effort rather than social forces, and that the government should not try to reduce inequality. It’s the belief expressed succinctly in a bumper sticker, “I fight poverty, I work.”

But is the American dream reflected in reality? Or is George Carlin right when he says, “The reason they call it the American dream is that you have to be asleep to believe in it”?

Sawhill and Morton looked at “intergenerational mobility”— the income of thirtysomethings today compared with their parents’ income at a similar age. Of the countries they measured, the US comes out at the low end.

Germany has 1.5 times as much mobility as the US, and Denmark has three times as much. Only Great Britain has less mobility than does the US.

It looks as though the American Dream is alive and well . . . and living in Denmark.


SARA said...

These are different times we live in.

'Yesteryear' people possessing strong work ethics could successfully climb the economic ladder ie. immigrant success stories, in particular Hungarian born Frank Stronach, founder/CEO of Magna Int. who recently was in the run to buy Chrysler..he started a machine shop in his garage).

"Of the countries they measured, the US comes out at the low end"

I would assume that the higher US population numbers were factored in determining these statistics,
but I believe most countries share these same issues and it's all on a scale.

I believe there are three components involved here:

High cost of education deters many, but we're still seeing an influx of degrees making for greater competition.

Takes money to buy the new "toys", money to take the courses on how work those toys...sadly it's the poor that are left behind.
So yes,we're seeing an ever increasing gap in equality making them less likely to be able to climb that econmonic ladder.

"In comparisons with people in other countries, Americans are the least troubled by economic inequality in their society."

Sadly, it's an egotistical hedonistic world!

Brad Wright said...

Can we somehow take credit for other country's living the American dream? Maybe get royalties?