America's Vanishing Dream

If you're under 30, it doesn't matter whether you were born into a rich family or a poor family, the odds are that you won't earn more than your parents did.
A new study shows that, for American youth, the future is one of lowered expectations.

It is the first study to offer hard evidence of a trend that dominated the presidential election and helped fuel the election of Donald Trump: The American dream is more elusive than ever.

Incomes are stagnating for people of all stripes, not just the poor. In fact, researchers found that upper middle-class Americans saw their chances of earning more than their parents decline the most of any group born from 1940 to 1980.

...the decline in mobility has persisted, unrelenting, through the 1960s, 1970s and 1980s.

“This isn’t just a Depression effect; this is something that transcends that,” said David Grusky, a sociologist at Stanford who co-wrote the paper.

Part of the reason for the stagnation is that the country’s economy isn’t expanding as fast as it once was. U.S. gross domestic product often grew at more than 5% in the postwar years, and hit 7.3% in 1984. Growth hasn’t reached 5% annually since then; it was 2.6% last year.

Slower national growth, clearly, means there’s less new wealth to divide among the people who live and work here. 

The biggest problem is, you guessed it, "manufactured" inequality.

What’s really driving the problem is income inequality, the study found. In the past, new income was spread more evenly across the economic ladder than it is today, when a disproportionate share of the country’s gains are going to the very richest Americans.

Inflation-adjusted wages have only inched up for most workers since the 1980s. But the country’s highest earners have seen their pay balloon by 35%, according to a 2015 report by President Obama's Council of Economic Advisers.

On average, about 80% of people in their early 30s would earn more than their parents today if income growth were distributed as evenly as it was in 1940. Making growth more equal would help middle-class people the most. But it would also deeply affect wealthy Americans.

People whose parents are among the top earners in this country would see their likelihood of making that much money increase by more 30 percentage points, if growth were more balanced.

Let's get back to the "manufactured" inequality reference. If inequality is the engine driving our children's stunted future we need to understand not only what inequality is but where it comes from.

Here's a hint. This society-wrecking inequality is coming from those very same people we keep electing to our Parliament and our legislatures. Once again, I urge you to read Joseph Stiglitz' "The Price of Inequality." Learn what a malignant force this is and how it's self-inflicted, a legislated outcome. You'll learn that very little inequality is either merit- or market-based.  It results, directly and indirectly, from government policy - tax exemptions and deferrals; grants, subsidies and even the transfer of government property, resources, to narrow interests at well below market values if not entirely free. Through these myriad channels wealth "trickles up" to those who are able to control the paths through which they receive remuneration. In this way, wealth has been sucked out of the working classes, blue and white collar, to the rentier class.

Here's an example. Canadian governments acknowledge subsidies to the fossil energy industry of between just three to four billion dollars annually. The International Monetary Fund however puts the value of those subsidies, direct and indirect, at more than 34-billion dollars a year.  It notes that,  globally, energy industry subsidies in 2015 totalled a staggering 5.3 trillion US dollars representing no less than 6.5 per cent of global GDP. That's just the subsidies lavished on the energy giants, the most profitable industry on Earth. There's only one entity that can flow that mountain of money to that bloated industry - governments.

If the fossil energy giants have that tight a grip on the world's political caste, what do you think our chances are of decarbonizing our economies and our societies to fight climate change? You guessed it.

This is like getting kicked in the teeth, over and over again. So why do we tolerate it from our political apparatus and the people we elect to look after our best interests? One reason is that we just don't think about it. Out of sight, out of mind. It's not on their agenda because it's not on ours. When it comes to us, the voting public, the only things they're especially concerned about is the things they know we won't tolerate.

Or else we can sit back muttering and just let our predicament worsen. They're not coming to the rescue, not unless you force their hand.