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The New American Dream

Rick Santorum, former Republican senator from Pennsylvania and current contender for the Republican presidential nomination, recently said, “[S]tudies have been done that show that in Western Europe, people at the lower parts of the income scale actually have a better mobility going up the ladder now than in America.” Columnist David Frum echoed this sentiment, quipping [1], “The American dream is still alive. It’s just more likely to come true in Denmark than in the U.S.A.” From economists to politicians to citizens occupying public parks across America, a debate is raging. Is the American dream still attainable?

Long hailed as the land of opportunity, America takes pride in its heritage—and the heritage of its immigrant forefathers. Men and women from all parts of the world came to America and wove their story into the fabric of American culture. On their backs, America became the place where—if you worked hard enough—you could better yourself. More importantly, America became the place where you could guarantee your children a better life. Men risked everything, sold their possessions, and arrived on our shores penniless. Their children and grandchildren are now business owners, politicians, doctors, lawyers—you name it.

So What’s the Problem?

According to several studies published in recent years, America’s relative income mobility has slowed. As a result, in most studies of comparable nations, America lags behind all but Britain in income mobility [2] or intergenerational income elasticity [3]. More simply put, according to researchers, American children are more likely to remain in their parents’ economic bracket than children in the other countries studied. For example, their research shows that 42 percent of Americans born into a family in the bottom income quintile will remain there during their lifetime. Contrast this with only 25 percent in Denmark and 30 percent in Britain [4].

This trend in downward relative economic mobility has been noted by researchers since the 1970s. (The period from World War II to the 1970s marked the height of America’s relative income mobility.) However, with the recent economic worries, housing market bust, and unemployment crisis, the topic is no longer relegated to academics or policy wonks. We’ve seen Occupy Wall Street spring up and spawn similar groups across the country. Politicians on both sides of the aisle bemoan the plight of the middle class and poor. Passionate debates rage about the cost of entitlements and our social safety nets. These issues are all affected by the larger issue of intergenerational income mobility.

The Occupy Wall Street movement asks why it feels like those at the top are holding us down when we’re supposed to be able to pull ourselves up. Politicians wonder aloud why the wealth and income gap between the rich and the middle class is expanding. The whole country seems divided on who is responsible to ensure the poor’s wellbeing. This, of course, begs the question: is there any income mobility for the poor? It seems like the burden of caring for them increases with each generation, where, as they rose in the financial ranks, you would expect it to decrease.

Solutions from the Left Side—Solutions from the Right Side

Left-leaning politicians and activists seize upon these numbers as irrefutable evidence that government intervention is demanded. The American dream, they argue, is a right. It’s the birthright of every man, woman, or child who calls this land home. To them, it is unconscionable that four in ten children will not rise above their parents’ class. To rectify this travesty, they propose government intervention to level the playing field.

Buttressed by good-sounding intentions, liberals propose to solve the income mobility problem primarily through government intervention funded by increased taxes on the rich. They’ve yet to propose a direct transfer of funds from the rich to the poor, so they disguise the transfer. They talk about creating high paying jobs by subsidizing green energy. They promote a Big Labor agenda under a similar guise. We keep hearing about stimulus to fund “shovel-ready jobs.” They aim to reduce life’s burdens through safety nets and entitlements.

Right-leaning politicians approach the problem differently. They hear the Political Left’s proposals and see a different, more sinister agenda. Economics professor Walter E. Williams contends [5] that:

Demagogues duping Americans about stagnant and declining income give politicians justification to raise taxes and place regulatory obstacles in the path of risk-taking, productivity, and hard work that will impede the enviable income mobility that has become a part of American tradition. Raising taxes on capital formation reduces the rate of capital formation. Raising taxes on income reduces incentives to work. Unfortunately, because so many Americans buy into the politics of envy, politicians have a leg up in enacting measures that cripple economic growth.

Many conservative thinkers and writers also argue that relative income mobility is an ineffective and inaccurate metric [6]. Relative income mobility doesn’t take into account the impact of the massive immigration America sees on an annual basis. Immigrants typically start out at the very bottom of the income scale, so without accounting for them and their effect on the bottom-end of the income scale, it creates the false impression that incomes at the lower ends are stagnant. In reality, however, using a metric called Absolute Income Mobility, they argue that virtually every American earns more and does better than their parents.

With their fundamental belief in the American dream intact, right-leaning politicians pay homage to smaller, less intrusive government. The idea, they say, is for Washington to get out of the way and allow the people of the country to pursue their betterment unencumbered by excessive meddling. They tend to support lower taxes, fewer regulations, and curtailing the behemoth entitlements that they blame for dragging America’s economy down.

The Slow Creep of Tyranny

As the debate rages around us, it’s important to remember that while we can’t escape Washington’s influence, waiting for them to solve problems for us is not the American way. Government is not the guarantor of the American dream. To fully understand our current condition, we must start here. Since the Great Depression, the government has been working overtime to create dependency. They told successive generations that the government is responsible for their retirement, their medicine, their income if they happen to be unemployed, their health care, and their housing situation. We see government’s hand in telling us what to eat, what to think, what to say, and how to feel. The natural inclination of power is to seek more power. Even a government founded with such noble intentions as ours is not immune to these perils. Out of the hardships of a previous generation rose the well-intentioned travesties of this generation.

As families, we can’t participate in this cycle of dependence. So, what do we do? How do we protect our families against the persistent creep of dependence-causing tyranny? What are the values we must pass on to ensure that the American dream survives for us and for future generations?

The Time For Heroism Is Upon Us. [7]

The American Dream the American Way

Dick Armey authored a study for the Joint Economic Committee in 1992 entitled “Income Mobility and Economic Opportunity [8].” His conclusion sums it up perfectly: “The empirical data support the view of the market economy as a dynamic and open society which provides opportunity to those who participate.” In other words, to ensure our children and grandchildren have the same limitless access to the American dream that we were blessed with will require constant vigilance on our part.

First, we must participate. We cannot sit on the sidelines bemoaning the death of the America that was. We must be enthusiastically and actively involved in honoring those who came before us—and becoming worthy of the honor of those who follow.

Second, we must resist. There is a vocal minority that wants to rewrite history and redefine the American experience. It is imperative that through education and experience, we demonstrate their foolishness. Reject the retelling of our history. Demonstrate America’s goodness by modeling its traditional values. America is only a beacon when her people shine the light of God—fear and freedom.

Third, we must train. We have to be louder in our children’s ears than the voices of teachers, politicians, and entertainers. Drill these lessons into them. Live them out. Use them as your guide in affirmation and discipline. Create scenarios to practice them and master their application. When it’s time to release our children to live their own lives, we can have confidence that these values will hold.

Living lives of integrity, hard work, responsibility, and courage—that’s what living the American dream is all about. Passing that dream down to our children and our children’s children is the culmination of that dream. The American dream isn’t dead. When we hear others tell us it’s dead—or only available to a select few—we should encourage them and explain to them the values that made the American dream the magnet for the world’s tired, poor, huddled masses. Let’s know and love the history—how America embraced hard-working immigrants with a dream and turned them into the most successful nation on earth. The American dream is still alive and well.

©2012 Off the Grid News