About two months ago I came across a journal of my grandfather Herman Lesseraux’s writings in a storage closet. Some of the entries in the journal dated back to the beginning of twentieth century (1912) when he and his family were on their way to the US from France. It was striking to see him describe what seemed to him to be a magical “land of endless possibilities” where one could go “from the gutter to High Street” if one worked hard enough. This was before the mass proliferation of radio and TV so he was getting these images of America from newspapers and from relatives who were reporting their findings back to the family after having made the journey themselves. It was both touching and fascinating to see the eagerness with which he wrote about his desire to get to the US. It was seeing these journals that spurred me to write this article.
In this article I will describe, in the most uncomplicated way possible, what the American Dream is, how it came to be and why it is now in a state of collapse. Spoiler Alert: This piece of writing will not end with a sum-up of how the American Dream is a falsehood. On the contrary, this article will instead affirm and outline the historical reality of what has come to be known as The American Dream.
The United States Is A Unique Country
The United States is a unique country. In fact it is the only country that can claim a rise in real wages for 150 years running. In every decade from the 1820s through to the 1970s, workers’ wages went up in the United States. That is quite a remarkable statistic! So remarkable, in fact, that it arguably legitimizes what many critics have dubbed the “fantasy” of what has come to be known as the American Dream.
In short, the American Dream is rooted in the belief that in the United States, if a person puts in the necessary effort, they will do better economically than their parents did. Despite the fact that a good deal of jingoism and magical thinking have evolved out of the American “rags to riches” myth, one cannot deny the fact that the myth itself is rooted in a well documented set of facts.
All throughout the 19th century and for most of the 20th century, people came to the US from Europe and from other continents around the world because they heard that you get paid higher wages here. Wave after wave of immigrants came to the US and reported back to their families and friends, “It’s true, you do get paid more here in the US! Not only that, the wages often tend to go up as the months and years go by!” As a result, immigrants came and kept coming to the US to partake in what came to be known as The American Dream. This scenario continued, basically unabated, for 150 years.
How Did The US Get So Special?
Why was this the case in the US? How did this unprecedented, seemingly magical prosperity occur for 150 years here? The answer to this question is actually not hard to pinpoint if you know how to look and what to look for.
In the early to mid 19th century, businesses started to be built and to branch out all across the North American landscape. The problem was that these businesses had nowhere near enough people to work for them. After all, the native population had been, to put it in the mildest terms, done away with.
Throughout the 19th century, due to the expansion of existing US businesses and the near constant birth of new ones, employERs were constantly looking to find new workers (employEEs). These employERs also had to find a way to keep the employEEs that were already working for them. In order to do this these employERs had to continually raise wages. This set of circumstances is what economists refer to as a “labor shortage”.(1) It should be mentioned that this was the case for white workers. During much of the 19th century black workers were acquired by a very different means. A means that did not involve wages at all. But that is a (worthy) topic for another article and not something we will delve into here.
There Is No Mystery
There is nothing inexplicable or mysterious about the American Dream. The reason for the increase in wages in the US in every decade from 1820s up until the 1970s was that the US was always in a labor shortage.
The American Dream was the product of a labor shortage, pure and simple. Which raises a second question: How come no one taught you and I about this simple, obvious and hugely pivotal fact when we were in grade school and/or high school? Another worthy topic for a different article, perhaps.
In The Late 1970s Something Changed
In the late 1970s wages stopped rising in the US. In fact, there has not been a rise in real wages in the US since 1978. What happened? What changed?
A few things changed. Firstly, the influx of computers into the workplace in the 1960s began making thousands of jobs obsolete. Secondly, adult American women began entering the workforce in droves at just about this same time. Suddenly it was not only men who were being hired for all kinds of jobs. In the 1960s and 70s, businesses were hiring women (who make up half the US population) as well as men. Couple these two major factors with an increasing movement of production and jobs overseas, and by the mid to late 1970s the United States no longer had a labor shortage. Instead, for the first time in 150 years, the US had what is known as a “labor surplus”, which is an excess of workers looking for work.
Why Did Wages Stop Rising? Where Did The Money Go?
Ok, so what does all of this have to do with the end of rising wages? Well, since employERs no longer needed to pay their workers higher wages to keep them due to there being an excess of workers available, they simply stopped raising wages. Again, no mystery here. As any business school in America will tell you, “If you don’t have to pay your workers higher wages, DON’T DO IT!”
But there’s more to the story. At the same time that employERs stopped raising their employEEs wages, a new phenomenon began. Suddenly in the 1980s and 90s, CEO’s (employERs) salaries began rising at previously inconceivable rates. In fact, the average CEO salary rose an astounding 940% since workers’ wages stopped rising in 1978.(2) Whether Democrats or Republicans were in office during this period had little to no effect on the rate of this completely unprecedented shift in wealth concentration.
There’s even more to the story. In the decades that followed the 1970s, workers (employEEs) have been working more hours and producing more goods and services for their employERs than ever before in US history. Yet for their efforts these workers, these employEEs, have received no increase in their real wages over the last 40 years.
How Could This Be The Case?!
How could this be the case?! How could all these employEEs be producing more and more for their employERs and not be getting paid for what they’ve produced? How are the employERs getting away with taking all of the profits for themselves and giving none to their workers?
The most prominent explanation put forth in the 1980s and 90s as the reason for the huge change in these CEO’s fortunes claimed that it was their “entrepreneurial genius” that had produced the shift. Suddenly people like Lee Iacocca and Jack Welch were being touted as the new guru-like “celebrity businessmen” who via a special kind of brilliance had earned the right to increase their salaries by 10 times the amount that they were making in the 1970s, all the while keeping their workers’ wage rates flat. (3)
Of course these explanations were all rooted in nonsense. The only reason these CEOs have been able to give themselves absurdly massive raises while not compensating their workers is because for the last forty years there has been a labor surplus in the US. In the brutal, dehumanized form of economics that has been practiced since the early 1980s the “production of labor” (how much stuff an employEE produces for an employER per hour) has been systematically not taken into account. Instead all that is focused on is the “profit margin”, which, in today’s economic landscape has little or nothing to do with the well being of employEEs and everything to do with a small, elite group employERs turning their multi-million dollar fortunes into multi-billion dollar fortunes.
The Removal Of All Limits On Banks And Huge Corporations (De-Democratization)
Add to all of this a massive reduction in restrictions on mega-corporate dominance in the areas of media, trade and banking over the last 30 years, along with a calculated attack on and weakening of labor unions over the past four decades. The result has been an alteration of the structure of US power and a formalization of what was once, at least to a degree, a real democratic system. Forty years of corporate deregulation (the removal of almost all limits on banks and mega-corporations) has allowed a handful of super-wealthy corporate employERs to gain pretty much total control of what were formerly public institutions and channels of information. This has been the unspoken yet also unhidden, open agenda of the last half-century of corporately led “neoliberalism”: https://www.pressenza.com/2020/12/the-fall-of-the-liberal-left-the-rise-of-neoliberalism-and-the-resulting-confusion-that-has-ensued/
These unleashed corporate conglomerates, with the help of a “Privatization Is Good/Government Is Bad“ media meme blitz in the 1980s and 90s, made it their priority to crush all existing forms of workers’ union solidarity and to chip away at long fought for workers’ rights and benefits. By duplicitously turning the US populace against the concept of government, these huge private corporations were able to essentially privatize and take over government itself. This has been the billionaire class’s two-pronged attack: A) Demonize the state and turn people against the idea of government. B) Take over the government via deregulation and the removal of all restrictions on the limits of corporate power.
The result of this removal of restrictions on the super-wealthy over the last 35 to 40 years is that they now own and control the content of pretty much all major media as well as having control of politics via lobbying and massive campaign donations.
Also, over the last 43 years the super-wealthy have reduced the percentage of taxes they pay by a jaw-dropping 47%. In fact as of 2019, America’s 400 richest families pay a lower tax rate than the middle class.(4)
We are now at a point where it is pretty much impossible to deny that our major institutions, all major news media, the banking system and our political system, have been taken over and bent to the will and whims of an elite mega-wealthy class. For four decades now this absurdly wealthy, unchecked, unhinged elite class, who hold memberships and make huge donations to both the Democrat and Republican parties, have recklessly usurped land, resources and power at the expense of human life all over the planet. Pulitzer Prize winning journalist Chris Hedges has referred to this takeover as the triumph of “Corporate Totalitarianism”.
Our Desperate Response To The Crisis
Unfortunately, we’ve been trying to solve this collective structural problem as isolated individuals who have been trained to believe that it is our fault, that it is solely our lack of personal savvy and hard work that has caused things to work out the way they have for us. In order to stave off our appointment with what we perceive as our individual failure, we have been relying almost entirely on the use of credit to keep ourselves afloat over the last four decades.
The result has been a building up of an almost inconceivable level of individual and collective debt. A debt that is owed to the very super-wealthy elite group of people who put in motion the forces that generated this crisis in the first place.
All of this has led to myriad forms of social-economic crisis and to deep confusion, frustration and desperation among a massive (and growing) portion of the US population. The lack of a clear explanation of what has happened over the past forty years has generated fear and a rise of new irrational regressive nationalist currents of thought. Millions of people who are justifiably distrusting of both major political parties and the bought-off faux-moderate mainstream news media have turned to these currents of thought as references and as action fronts. Generally speaking, these movements revolve around a wish to return to an American way of living that is simply impossible to go back to precisely for the reasons stated in this article.
The Cost Of All Of This To Our Well Being
The costs of all of this to our health and to our mental and emotional well being have been staggering. To give an example, one in every six people in the US now takes a psychiatric drug.(5) The asphyxiation caused by privatization and the economic gutting of the middle class by the billionaire class has amounted to what has basically been a four decade long pillaging of the many by the few. The diminution of the value of human life and the deification of profit (for the very few) at all costs has made life unbearable and in many cases unlivable for millions of Americans.
And as the COVID-19 pandemic has made clear, there is no let-up to this ongoing monstrosity in sight. Over the last 12 months, at the same time that millions of Americans have lost their jobs, their homes and their savings, the 660 existing US billionaires made a collective profit of over 3.9 TRILLION dollars.(6)
“There is a crime here that goes beyond denunciation. There is a sorrow here that weeping cannot symbolize. There is a failure here that topples all our success.” – John Steinbeck (From “The Grapes Of Wrath”)
What Comes Next? What Is On The Horizon?
Indeed, what comes next? I’m asking you unrhetorically, dear reader. I don’t have a clear answer to the question myself. This is not the America, nor is it the world, that our grandparents and our parents grew up in. All indications are that the story we’ve been telling ourselves for centuries no longer jibes with the reality we live in. To attempt to go back to a way of thinking and living that has passed, to regress, as anyone knows who has studied a bit of history (or a bit of biology), is a species ending proposition.
We are dealing, this time, not with a provincial problem but instead with a global human crisis that involves everyone, everywhere on the planet. This is a first in human history. We cannot go back to the 1950s or to the 1990s or to any previous era.
What new horizon, what new images can we begin to project together? What actual (new) steps forward can we begin to take? These are the questions I will be devoting the rest of my articles to in 2021. Stay tuned.
- Richard Wolff, “The Myth Of American Exceptionalism Implodes”, January 18, 2011, The Guardian, pp.2
- Lawrence Mishel and Julia Wolfe, “CEO Compensation Has Grown 940% Since 1978”, August 14, 2019, Economic Policy Institute, , pp.1
- Barrons, “What Barrons Said About Chrysler Chairman Lee Iacocca In 1985”, July 5, 2019, Barrons.com, pp.1
- Aimee, Pichee, “America’s 400 Richest Families Now Pay A Lower Tax Rate Than The Middle Class”, CBSNEWS.com, October 17, 2019, pp.1
- Sara G. Miller, “1 In 6 Americans Takes A Psychiatric Drug”, December 13, 2016, Scientific American, pp.1\
- Juliana Kaplan, “Billionaires Made 3.9 Trillion During The Pandemic”, January 16, 2021, Business Insider, pp.1
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