How the American dream was lost
Ours Was the Shining Future: The Story of the American DreamBy David Leonhardt. Random House. 2023. 528 pages. As we enter into a presidential election year in the United States, we will soon be hearing more about the fierce political divisions there and the social and economic factors behind them. With this in mind, David Leonhardt of The New York Times has set out to diagnose the central economic problems, while also encouraging his counterparts on the political Left to broaden their appeal. Ours Was the Shining Future: The Story of the American Dream, published in October, is the fruit of his labour. The writer of his paper’s flagship The Morning newsletter has produced an absorbing, readable and in many ways persuasive account of the long decline of the "American Dream". Surveying the evidence of sluggish growth in incomes, deteriorations in various measures of public health and stagnating life expectancy, Leonhardt labels recent decades as the "Great American Stagnation". The promise of upward social mobility lay at the heart of America’s self-understanding, and this was not a fictional notion. It was instead the norm. Leonhardt points to analysis by the Harvard economist Raj Chetty which showed that 92 percent of children born in 1940 grew up to have higher household incomes than their parents. In subsequent decades, it became far less likely that children would surpass their parents on the economic ladder. In fact, Professor Chetty states that about half of the babies born in 1980 will attain this feat, thereby meaning that “achieving the American dream is a 50-50 proposition.” Leonhardt notes additional evidence showing that the typical American family in 2019 had a net worth lower than the typical family in 2001, before describing the range of ways in which life appears to have gotten worse. “The number of children living with only one parent or with neither has doubled since the 1970s. The obesity rate has nearly tripled. The number of Americans who have spent time behind bars at some point has risen five-fold. Measures of childhood mental health have deteriorated,” he writes. Social institutions The book’s nostalgic title is no accident. As the author makes clear, things were not always like this. Colonial America was strikingly less unequal in economic terms than most countries in western Europe, with their systems of inherited wealth and hereditary title. As the author recounts, the extraordinary levels of income inequality which developed during the ‘Gilded Age’ in the late 19th and early 20th centuries eventually led to a decisive reversal in US economic policy: with President Franklin Roosevelt’s administration increasing regulations, strengthening labour unions and intervening more in critical sectors of the economy. While Leonhardt is clearly a supporter of the Democratic Party, he goes to considerable lengths to highlight the achievements of the moderate Republican administrations of the mid-20th century, in particular that of President Dwight Eisenhower which prioritised infrastructural improvements and greatly increased federal spending on research and development — thus laying the groundwork for future innovation by private sector companies. Unions are a core focus here. Leonhardt maintains that the rise of the labour movement from the Depression era onwards helped usher in the period of widespread affluence which followed, just as he believes that declining union membership is central to the poor wage growth of recent decades. Government policy certainly played a role in making union membership more common — more than 30 percent of American workers were union members by the mid-40s, up from just over 10 percent a decade prior to that. Frustratingly though, the author does little to connect these shifts to the broader trends of decreased institutional involvement (be that in unions, churches, membership associations or so forth) in the last half-century. For a book that assails economic individualism while also taking occasional aim at social individualism, this is certainly a weakness. Movers and shakers Leonhardt is on steadier ground in identifying a greater sense of social responsibility among mid-20th century business leaders, who were far less likely to seek disproportionately high salaries. The author’s profiles of particularly important figures throughout his narrative constitute a powerful part of this book’s appeal. One particularly effective description is that of the businessman turned politician George Romney, who turned down enormous performance-related bonuses while serving as a very successful chief executive of American Motors Corporation. Even in good times, Romney did not wish to violate the salary cap which he had helped put in place. Leonhardt draws a sharp contrast between George and his son Mitt, who decades later would earn vastly more money running a private equity firm. The comparison between Romney Senior and Junior highlights the rapid growth in executive pay in recent decades in an era of declining median family incomes, not to mention the transformation of an economy centred around making things to one centred around making money.
