Preston Clive
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Preston Clive in Preston Clive - THE IRRITATED AMERICAN, Wielding The Digital Hatchet,

Charting The Crumble of the Legit American Dream

"...and for those reasons, I'm OUT (of the True American Dream)." (Pic: wickedfire)

It is alleged, when an entrepreneur on Shark Tank gets a deal--and further so when that deal leads to an abundance of riches--that "The American Dream is alive and well!" The billionaire sharks feel wonderful about themselves for spreading the goodies they so lustily cherish to others .  .  . wealth by association .  .  .  not by giving up any of their own wealth, but by taking a piece of what was small and belonged to someone else, then making the whole thing larger as a result, and taking a big chunk. It's an arrangement that suits the lucky, struggling entrepreneur quite well. Scrub Daddy, Grace & Lace, Bubbas Boneless Baby Backs (or whatever they're called), etc.

Mega-riches of an entrepreneur is not truly the American dream. There is only so much money in the world, and there are just shy of 320 million Americans. They all can't be millionaires or billionaires. 

The American Dream was as follows: that the poor and downtrodden could escape classist countries, economically depressed countries, countries wracked by famine, depression, filled with rag-pickers, spoiled food peddlers, etc--that these and more could come here and find work, dignified work at a dignified wage. That if they kept their eye on the prize and a close watch on the rules of the game, they could, through perseverance and wherewithal, eventually own a little piece of heaven.  .  .  a small house, maybe a car, a little fence, a backyard garden where momma and grandma could grow vegetables as they did in the old country. That they could own a piece of property, work their way up the ladder and maybe become a manager, keep the family together under one roof and tuck each other in at night without fear of religious persecution, with wholesome, inexpensive food in abundance, access to medical care, and the ability to put a little bit of money aside bit by bit so that their children could become something even more sophisticated. Immigrant dreams of children becoming senators, a governor, well educated, a real white collar American, etc.

I was pointed by a zerohedge article (about the top 1% and their aversion to the gold standard) to another article on NPR about the fluxing of wages, and thus the rise and fall of US Inequality, in a set of graphs they published. The thesis of the article lays out quite clearly in hard factual data something that I've been talking about and writing about for a good while now. 

What the article lays out is the deterioration of the availability of the common American Dream to everyman; to the common laborer, to the average worker--college degree or no college degree. This was the very nature of the American Dream. Those who are well educated and degreed have historically--as a group--had little fear of not acquiring the basics of a dignified family life (although in a rough economy that fear was certainly rife in the college-educated; unprecedented was the stampede between 2008-2011 of college educated individuals towards blue collar state and municipal jobs, like subway motorman, conductor, bus driver, as well as teaching jobs and managerial jobs with city and state agencies; the tenure, the unionization, and the benefits just made them extremely attractive versus the dice rolling of white collar work in the open, corporate sector where companies come and go with the wind).

The article charts two phases in American life--two courses that wages took, over the 20th Century. The first phase is labeled the Great Compression, essentially covers the period between 1930 and 1970, where the bottom 90% of the nation saw their wages rise while the top 1% of the nation saw their wages remain essentially immobile. As NPR states, 

  A combination of high marginal tax rates (around 80 percent) for the wealthy, and social norms, may have kept a lid on wages at the top, according to the economists who gathered the data we used to make the graphs.


The Income Graph from the NPR article (NPR.com)

The upswing in wages is primarily explained by a general boom in American life following the WW2 years, where the age of the American factory and its unionized worker reached a sort of golden age. I've mentioned my own father in articles before: valedictorian of Cardinal Hayes here in NY, he was destined for full scholarship in a top college; then he met my mother and my oldest brother was made manifest--thus he wound up getting married, working in the technical blue collar realm of his father--the elevator business. College was put aside. Married in the late 1950's, their last son born in the late 60's, my father purchased his first house--with four boys, a stay at home mom, and two cars in the garage and a motorcycle--in upstate NY in 1973, his second one in 1976 in a--still--very nice neighborhood in the outer boroughs of NYC. That is completely impossible nowadays. There is no way a mid level elevator mechanic with no real savings at the time of his marriage could purchase a house in NYC on his income alone 10-12 years later, while maintaining two cars, a motorcycle, four boys, and a stay at home wife. 

That was the American Dream. My father had it. 

The article goes on to illustrate how, following the year 1970, the unions were weakened, and corporate management and the top 1% saw their salaries begin to escalate dramatically. The article wraps, following the quote above about the boom in factory workers and their wages:

In the last 35 years, the reverse occurred. Top marginal tax rates fell sharply. Incomes rose for those in the top 1 percent, largely driven by rapidly rising pay for top executives.

At the same time, a combination of global competition, automation, and declining union membership, among other factors, led to stagnant wages for most workers.

In theory, it should be possible for incomes to rise for everyone at the same time — for the gains of economic growth to be broadly distributed year after year. But the takeaway from these graphs is that since World War II, that's never really happened in the U.S.

The death knell of the American union heard it's opening round of bells at the start of the Reagan era, when anti-union sentiment began to gain momentum straight from the witnessing of the commander in chief slamming the Air Traffic Controllers during the 1981 PATCO (Professional Air Traffic Controllers Organization) work stoppage and permanently replacing over 11,000 striking workers. With that single stroke (ironically PATCO had supported the Reagan candidacy versus Jimmy Carter) attitudes in the corporate boardroom when discussing or negotiating with labor unions had turned a corner.

Strangling the unions into virtual submission was the outsourcing of manufacturing jobs to Mexico, to China, to any number of less expensive labor markets--the Roger & Me era of miserable, out of work laborers.

One can see the past couple of years on the graph constitute nothing but a further divergence of wealth: top 1% ascending, bottom 90% descending in wage earning.  

When the evidence produced by the defense that the American Dream is alive and well is an episode of Shark Tank .  .  .  they have lost the case completely instantly. That is not America.  

For further reading, a source Berkeley paper here.

Preston Clive

2/20/2015***