Thinking Citizen Blog — The American Dream (Part III)
Thinking Citizen Blog — Tuesday is Economics, Finance, and Business Day
Today’s topic — The American Dream (Part Three) — Premises Drive Conclusions
Dead or alive? Whether the dream is dead alive is driven by your premises. Defin the American dream, as some economists do, as the random reassignment of every child born in each generation into one of five income quintiles, well reality falls short. With this premise, the dream is dead and the “narrative” a lie. But this never was the American dream. And this understanding does not remotely comport with how people today think of it either. Part One in this series went into this in some detail. Today, three more observations. Experts — please chime in. Correct, elaborate, elucidate.
MAKING MORE MONEY THAN YOUR PARENTS — really?
1. This chart is the go-to chart of the “American dream is dead” crowd.
2. But look closely — is that really what it says? Notice the starting and ending points.
3. Making more than your parents is easy if they grew up in the Great Depression. It’s a lot harder if they grew up in the roaring 1960s or 1980s or 1990s.
NB: is the American dream making more than your parents? Or is it really having a decent shot at a decent life if you work as hard as you can and have a little bit of luck? Is 50% of children making more than their parents really an abysmally low number? Is 90% of children making more than their parents a realistic objective? Is it in any sense “normal”?
THE LAW OF DIMINISHING RETURNS AND THE ISSUE OF INCENTIVES
1. As standards of living rise, the returns to higher monetary incomes diminish in value.
2. The higher the quality of life without working your hardest, the less your incentive you have to work your hardest.
3. The more you would rather spend your time and energy living as full and balanced a life as possible.
NB: Remember the dream of John Adams:
“I must study politics and war, that our sons may have liberty to study mathematics and philosophy. Our sons ought to study mathematics and philosophy, geography, natural history, naval architecture, navigation, commerce and agriculture in order to give their children a right to study painting, poetry, music, architecture, statuary, tapestry and porcelain.”
THE “DREAM IS DEAD” NARRATIVE IS TOXIC AND DIS-EMPOWERING
1. Any teacher and parent knows that telling a child they can’t do something is the most dis-empowering, abusive thing you can do.
2. Calling the statement “the American dream is alive” a “micro-aggression” is comparably harmful.
3. It’s time for exposing the “American dream is dead” narrative for what it is. Fake news.
NB: This is not to say there is not “systemic” racism, sexism, class bias. But perspective is everything. From a historian’s perspective, the level of each is the lowest by far in history. From a humanist’s perspective, I believe strongly that “gratitude is not only the first of the virtues but the parent of all the others.”
Final word: Premises matter. Spin matters. Perspective matters.
YOUR TURN — Please share:
a.) the coolest thing you learned this week related to business, economics, finance.
b.) the coolest thing you learned in your life related to business, economics, finance.
c.) anything at all related to business, economics, finance.
d.) anything at all