What Propels The American Dream?

A national dream is about opportunities and the future. It’s part reality and part expectation. Since the United States is a relatively young country, the American Dream has a modern context rooted in the age of industrialization that began in seventeenth-century England. The American Dream is propelled by the following forces: a vast frontier the size of a continent with rich resources, liberal immigration policy attracting talents from all over the world, a stable and democratic government, a free and entrepreneurial spirit, a capitalist economic system, and a “melting pot” of thriving middle class unified by a single official language.

All the forces mentioned above must come together to make America a magnet for people seeking a better life. Lacking any single ingredient, the magnetic power will be diminished. For instance, Canada and Australia each possesses all the necessary ingredients except for a less liberal immigration policy, which has resulted in a national population and market smaller than the size of California. The European Union has created an even bigger market but its population does not resemble the American “melting pot”. Russia has the potential too but the Communist Party stands in the way.

Which ingredient is the most important? A thriving middle class is the one. This force cannot be taken for granted. The middle class is created by the capitalist industrial system but ironically, it will also be ruined if the capitalist system runs out of control. The American Dream is the dream of the middle class and the poor about how to achieve upward mobility. What if 1% of the middle class have become very rich? Their dream will selfishly turn to exploiting or suppressing the rest for fear of losing their existing privileges. This is seen in the rising American corporate power, money politics, and electoral corruption made legal in the form of campaign contributions. With all the money in their disposal, the top 1% need no further help except more tax cuts and less government regulation to give them a free hand. These are the two things they demand constantly in the name of job creation to fool and placate the rest.

The middle class in America has been under pressure since the 1970’s due to cost inflation on a broad front. It began with the explosion of oil prices. Housing prices then started to surge, followed by college tuition and health care costs. The loss of manufacturing jobs due to corporate outsourcing began in the 1980’s which has resulted in a weak job market and stagnant wages. The consequences are staggering. Today, over 40 million college students owe money to the banks in the form of student loans totaling over 1 trillion dollars. In addition, 42 million Americans cannot afford health insurance (50 million before Obamacare took effect in 2014). The American dream has always been about working hard, getting a college education, finding a good job, owning a car and a home, and taking care of the family. The dream is increasingly out of reach for many young Americans nowadays. For most families, the dream now requires two professional incomes instead of one.

While the middle class is suffering, the other ingredients are being hyped by politicians and their followers, especially about freedom and democracy. Despite all the laws guaranteeing freedom and equal opportunity, America is not as free as we want to think. Slavery was practiced for over a hundred years until the end of the Civil War. Besides, state-supported racial discrimination in the South existed until the mid-1960’s.

Nevertheless, the American Dream lives on. Why? The huge middle class is a stabilizing factor that more than compensates for all the imperfections of the system, because people can still reasonably expect a better tomorrow. It will be a different story if the middle class weakens and shrinks as it is happening now. The tendency is to blame foreign countries and immigrants for lost jobs, high costs and stagnant wages. This is the wrong prescription for society. Instead of finding scapegoats, America needs serious reforms in many areas such as education, banking, finance, health care and immigration. The aim is to create a more fair and equitable system where a vibrant middle class can flourish. The American Dream hinges on the strength of the middle class more than anything else.

On the other side of the Pacific, we see a new Chinese Dream emerging. Before 1949, China had nothing to boast for nearly two centuries of government decay, internal turmoil, European colonization and Japanese invasion. After the revolution, the Communist Party was pre-occupied with internal power struggles for three decades. In the early 1980’s, a new direction was finally set to adopt capitalistic production and open up the country to the outside world.

Nowadays, China has developed into a free-wheeling capitalistic industrial society paradoxically ruled by the Communist Party. Despite all the corruption, pollution and other problems, a huge vibrant middle class has been created numbering 500 million. Recently, the Chinese economy has decelerated from three decades of double-digit growth to an enviable 7% (double that of the US). The fear that the slower Chinese economy will lead to a global recession has triggered a big sell off in the stock markets worldwide. This testifies to the weight of the Chinese middle-class consumers.

How long can China sustain its middle class? If it is big enough, the middle class can feed on itself unless something drastic happens. The conditions in China are vastly different from America. Chinese citizens now enjoy almost full economic freedom except that they may not criticize their government and leaders. China does not attract immigrants because they already have 1.3 billion mouths to feed. On the other hand, China does have a new frontier which means more than geography. Unlike the coastal regions, the hinterland is less developed especially the far west. Its middle class is only 30 years young and growing. Urbanization has reached 50% with plenty of room to grow given higher productivity in agriculture and more food imports. Besides acquiring higher technology in manufacturing, the economy is diversifying to the service sector that includes education, health care, pollution control, insurance and finance.

While America’s problem is the weakening of its middle class due to inequity of the system, China’s challenge is how to lift its poor masses into the new middle class. When that happens, another new frontier will be created, which is political reform. The Chinese middle class will not stop at a higher standard of living. They will demand more political freedom and democracy. This is the biggest contradiction that the Communist Party has to deal with.

The Chinese case demonstrates that although the American Dream is unique and exceptional, it is by no means an American monopoly. Any country can create its own dream for its own people in a uniquely different context. The most important policy is to create and sustain a vibrant middle class. Basically, it means improving the livelihood, expectation and confidence of the majority of its citizens, not to enrich the top 1% because they don’t need any help. .

This entry was posted in 21st Century, Economics/Politics, Game Changer, Inspiration. Bookmark the permalink.

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