Sunday, August 7, 2011

American Middle-Class Dream

by Richard Crews
Michael Moore paints a poignant picture "of a time [only a couple of decades ago] when working people could raise a family and send the kids to college on just one parent's income (and college in states like California and New York was almost free). Anyone who wanted a decent paying job could get one. People only worked five days a week, eight hours a day, got the whole weekend off, and had a paid vacation every summer. Many jobs were union jobs, from baggers at the grocery store to the guy painting your house, and this meant that no matter how 'lowly' your job was you had guarantees of a pension, occasional raises, health insurance, and someone to stick up for you if you were unfairly treated."

When you live in a dream like that, you take it for granted--you think it is "natural." Even though history tells us people didn't always live that way and the daily news shows us that many people don't. You would be tempted to say "still don't"--adding the "still" to convey that this is clearly the way of the future. Having found it, we are surely not going to let it get away from us.

But it has gotten away from us. Why? Where did it go? Can we ever get it back?

The American middle-class dream was a product of President Franklin D. Roosevelt's "New Deal" fortified by the enormous burst of economic productivity occasioned by World War II.

To quote from Wikipedia: "The New Deal was a series of economic programs implemented in the United States between 1933 and 1936. They were passed by the U.S. Congress during the first term of President Franklin D. Roosevelt. The programs were responses to the Great Depression, and focused on what historians call the '3 Rs': Relief, Recovery, and Reform. That is, Relief for the unemployed and poor; Recovery of the economy to normal levels; and Reform of the financial system to prevent a repeat depression...."

"Historians distinguish a 'First New Deal' (1933) and a 'Second New Deal' (1934–36).... The 'First New Deal' (1933) dealt with diverse groups, from banking and railroads to industry and farming, all of which demanded help for economic recovery. The 'Second New Deal' in 1934-36 included the Wagner Act to promote labor unions, the Works Progress Administration (WPA) relief program, the Social Security Act, and new programs to aid tenant farmers and migrant workers. The final major items of New Deal legislation were the creation of the United States Housing Authority and Farm Security Administration, both in 1937, then the Fair Labor Standards Act of 1938, which set maximum hours and minimum wages for most categories of workers, and the Agricultural Adjustment Act of 1938."

The New Deal was the source of the American middle-class dream. It was strengthened by the surge of industrial activity of the Second World War, and then after the end of the war by the G.I. Bill which provided college or vocational education for returning World War II veterans as well as one year of unemployment compensation. The G.I. Bill also provided loans for returning veterans to start businesses and to buy homes with low-interest, zero-down-payment home loans. This enabled millions of American families to move out of urban apartments and into suburban homes. Prior to the war the suburbs tended to be the homes of the wealthy.

These were the sources of the American middle-class dream. Where did it go?

For the past few decades, a distorted income tax system (described by one commentator as "14,000 pages of institutionalized corruption") coupled with heavy money influences through campaign donations and Washington lobbying have led to gross distortions of income and wealth distribution in the U.S. The wealthiest few percent of the U.S. population now own the vast majority of the wealth of the country; the CEOs of large corporations make hundreds of times the income of lowly "line workers" in their industries yet, as Warren Buffet has pointed out, pay much lower percentage taxes on their incomes than "ordinary" people.

Meanwhile the surging advances of information technology and the ecological demands for green energy have made a lot of 20th-century jobs obsolete. Losing ones job these days commonly means retraining for a different, more modern one.

Health-care costs have also contributed to the demise of the American middle-class dream. These costs have escalated because of the socio-cultural myth that everyone "deserves" million-dollar health care with the use of the latest expensive tests. And the use of these tests has multiplied through "defensive" medical practices as doctors try to assure they will not stumble into exorbitant "malpractice" liabilities; as a result doctors pay tens-of-thousands of dollars a year in malpractice insurance to avoid predatory lawsuits, costs which are, of course, passed on to their patients. The pharmaceutical industry and health-insurance companies have also contributed to exploding health-care costs.

The American Dream was built out of response to the Great Depression. But we have forgotten the lessons of history. The American Dream has been attacked and eroded in recent decades. In truth, as a result, it may be dead. We shall see.