The Myth of the American Dream

          The United States of America has long been characterized as the land of opportunity. It was founded upon principles recognizing the inherent worth of each individual as embodied in the lines of the Declaration of Independence stating that “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness”. It was for the ideals and principles underpinning the foundation of the United States of America that tens of thousands of courageous citizens sacrificed so much, including their lives, and the well-being of their families. The idea that if one worked hard and did the right thing, there was the reasonable possibility of creating better economic circumstances and a fulfilling life had made the United States of America an international star, holding out the achievement of the American Dream as a life aspiration. No doubt there are countless stories of many individuals and families who have, and are, realizing the fruits of these ideals. Unfortunately, as this is being written in late 2011, national polls show a growing number of dark clouds over Camelot. A recent PEW Charitable Trust poll[1] showed the largest number of Americans living in multi-generational households in modern history. This has been fueled by poor economic conditions that make living in a multi-generational household a financial lifeline. Other polls show the majority of Americans viewing their elected representatives in historically low esteem.

Some of the ideals represented by the United States of America as the land of opportunity seem to have been transformed into myths. The Brookings Institution is a nonprofit public policy organization based in Washington, DC. They have consistently ranked as the most influential, most quoted, and most trusted think tank. Their mission is to conduct high-quality, independent research and, based on that research, to provide innovative, practical recommendations that advance three broad goals:

·      Strengthen American democracy;
·      Foster the economic and social welfare, security and opportunity of all Americans and
·      Secure a more open, safe, prosperous and cooperative international system.
           Two of their Senior Fellows recently wrote an article[2] for the Washington Post in which they highlighted five myths about America. In their article they state that the idea that Americans enjoy more economic opportunity than people in other countries is contradicted by research showing that children born into a lower-income family in the Nordic countries and the United Kingdom have a greater chance than those in the United States of forming a higher income family when they are adults. They also note a myth that each generation does better than the past generation because men in their 30’s earn 12 percent less than the previous generation. If today’s families have a somewhat higher overall income than prior generations, it is because more family members are working to contribute to the overall income. While immigration and trade may serve as political straw men deserving of blame for the poverty and inequality in the United States, it appears that this too is a myth. The real culprit seems to be the increase in single-parent families that is driving the poverty rate. According to the article, the United States would have a poverty rate 30 percent lower than today if the same percent of single-parent households existed today as in 1970. Clearly, there are some significant blemishes on the American Dream causing a growing amount of social discontent.

       When considered along with a recent Associated Press Report that 1 in 2 Americans, a record number, is now classified as low-income[3], the general prevailing sentiment expressed by small business person Jonathon Smucker, participating is the Occupy Wall Street protest, is probably a fairly accurate representation of the feeling of many Americans when he said:
“Like a lot of Americans, I’m pretty ticked off. It’s not that there are rich people, it’s that the people with a lot of money over the past few decades have rigged the system so that there’s not a fair chance for anyone anymore.”[4]
      While the United States may be a glaring representation of the growing polarization between the have and the have-nots, a survey of world events suggests the increasing social and economic malaise is a global phenomenon.  Anyone interested in trying to plan their future must take notice of this state of affairs and ask themselves what might be responsible for this, as well as where this trajectory may be taking us?

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[1] Pew Charitable Trust, Fighting Poverty in a Bad Economy, Americans Move in with Relatives, Kochhar, Rakesh and Chon, D’Vera, October 3, 2011.

[2] Brookings, Five Myths About Our Land of Opportunity,

http://www.brookings.edu/opinions/2009/1101_opportunity_sawhill_haskins.aspx, Sawhill, Isabel, and Haskins, Ron.

[3] Census Shows 1 in 2 People Are Poor Or Low-Income, Associated Press, Yen, Hope, December 15, 2011.

[4] Pay Gap a $740Bn Threat to US Recovery, Financial Times, Harding, Robin, December 15, 2011.

Cronyism and Capitalism

Today I embark on a new project. I am beginning to write a new book investigating the impact of cronyism on capitalism. In part, I am going to take an experimental approach in posting on-going installments of this work. My hope is that my work will generate some interest in providing commentary and discussion that will affect the evolution of this book. Although I welcome constructive input and the sharing of ideas through discussion, realistically my expectations are that because of having received little commentary on past postings, this will be minimal. Nonetheless, I offer the following initial installment.


From media coverage, it appears that the frequency of new instances of financial indiscretions has been increasing. Additionally, the current global financial turmoil in Europe, a present, and globally in general, calls into question whether there is a systemic issue of commonality from which this state of affairs has emerged. If so, there are a number of ensuing questions whose answers would inform anyone interested in making more effective decisions with regard to the future of themselves, and their families. Note that while the intent of policy-makers, economists, and other social engineering types might be to find solutions for these problems, the intent of this work is not to solve to world’s problems, but rather to illuminate what may actually be going on in the hope that any insight which might be offered will serve as a support to the individual empowerment of the decision making which is more relevant to our lives on a personal scale. In the view of this writer, the magnitude of the issues emerging at a macro scale, and represented through the multiplicity of media coverage sources, and with often wide divergence of expert opinion, serve more to obscure and confuse the importance and relevance of these themes on a personal scale. Even in those instances where opinion appears to be rather uniform, a critical view of the consolidation of control of media sources, whether that is by government or business interests, suggest that the individual seeking more solid guidance as to more effective decision making for the present and future seek an independent, well reasoned, narrative which weaves many of the seemingly disparate global issues into a focused, comprehensible view which has bearing and relevance to our individual lives.

The intent of this work is to examine a theme which appears at the heart of many of the current issues being faced by the global financial system and economy. With capitalism serving as the setting for the current global crises, a common thread seems to be the distortion of effective and efficient use of economic resources through favoritism toward interested parties having access to controlling policy makers. As a consequence, the fundamental principal of access to opportunity via a level playing field is corrupted into a continuing consolidation of wealth and power to those established players with access to the levers of power. Notwithstanding examples of individuals and businesses that have successfully negotiated their own form of success, when viewed system wide, many of the global social disturbances represent some form of example. In the United States we have the Occupy movement, whose general identification differentiates the 99% from the more privileged 1%, or the of the Arab Spring in the Middle East initially precipitated by Mohamed Bouazizi, a Tunisian street vendor who set himself on fire December 17, 2010, as a protest of the confiscation of his wares and the harassment and humiliation that he reported was inflicted on him by a municipal official and her aides, or the large demonstrations in Russia against what are perceived to be unfair elections results in favor of Vladimir Putin’s entrenched power regime.

The idea of favoritism reaches its corrupting embodiment in the concept of crony capitalism. Investopedia, an online reference defines crony capitalism as follows:

A description of capitalist society as being based on the close relationships between businessmen and the state. Instead of success being determined by a free market and the rule of law, the success of a business is dependent on the favoritism that is shown to it by the ruling government in the form of tax breaks, government grants and other incentives.

http://www.investopedia.com/terms/c/cronycapitalism.asp#ixzz1gMQ9GiF7

The Investopedia discussion goes on to describe the difference in viewpoint between those of a capitalist persuasion, and those of a socialist persuasion:

Both socialists and capitalists have been at odds with each other over assigning blame to the opposite group for the rise of crony capitalism. Socialists believe that crony capitalism is the inevitable result of pure capitalism. This belief is supported by their claims that people in power, whether business or government, look to stay in power and the only way to do this is to create networks between government and business that support each other.
On the other hand, capitalists believe that crony capitalism arises from the need of socialist governments to control the state. This requires businesses to operate closely with the government to achieve the greatest success.

For the purpose at hand, the relevant focus appears to be cronyism more than the purported economic operating system chosen. As good arguments can be made for the corrupting effects of cronyism, whether they are grounded in a capitalist, socialist, monarchy, or whatever other economic-social system, we will primarily concern ourselves with examining the effects of cronyism, and its corrosive and destabilizing effects regardless of what system it is based within.

The approach of this work will be to examine specific examples economic malfeasance and crises with an eye toward highlighting potential roots in cronyism. More generally, we will be looking for system wide implications derived from these events, and more specifically, the background question we intend to illuminate is whether or not the individual is facing a “stacked deck” in the outcome of potential decisions they need to be making. If so, are there potential strategic course of action we can elect as individuals if we know we are in a game with a “stacked deck”?

The approach of this work will be to examine specific examples economic malfeasance and crises with an eye toward highlighting potential roots in cronyism. More generally, we will be looking for system wide implications derived from these events, and more specifically, the background question we intend to illuminate is whether or not the individual is facing a “stacked deck” in the outcome of potential decisions they need to be making. If so, are there potential strategic courses of action we can elect as individuals if we know we are in a game with a “stacked deck”?