7/8/2013 4:45 PM ET|
Who killed the American dream?
One theory says the 1% deserve a bigger and bigger share of the pie -- and the average worker less and less -- because the rich are just exceptional. But that clashes with the reality of who the winners are.
Who killed the American dream?
Whatever happened to the promise that anyone could build a better life by honest labor? That my life would be better than my parents', and that my kids' lives would be better than mine?
That America is gone, now seen only in old Frank Capra movies late at night.
Today in America, the rich are pulling away from the rest of us, taking almost all of the gains for themselves, leaving the middle class scrambling just to stay where they are, and forcing the poor to survive on an increasingly frayed safety net.
A lot of attention has been given to the issue of the widening of inequality of opportunities and outcomes, in part because a chilling new book by New Yorker writer George Packer, "The Unwinding," which tells the horrifying story of how the dream was lost.
More recently, an academic debate in a forthcoming issue of the Journal of Economic Perspective has brought inequality back in the news, thanks to a bluntly argued (and titled) paper "Defending the One Percent" by Harvard economist Greg Mankiw (who is a former adviser to George W. Bush, John McCain and Mitt Romney).
In his paper, Mankiw explains why the top 1% are doing so well while the rest of us sprint hopelessly to catch up: The rich are simply better than us. They make more money because they contribute more to society than we do. They are smarter, have the skills that are in high demand, have better entrepreneurial instincts, and work harder. What's more, their kids inherit these traits genetically.
Not only are the rich better than us, the world is also increasingly becoming their kind of place. Technological changes over the past 30 years have made their advantages even more rewarding than before.
The top 1% really do earn their money, and any effort to reduce inequality would make us all poorer, Mankiw says. We'd have to do without the innovations of people like Steve Jobs, J.K. Rowling and Greg Mankiw.
Mankiw takes it as a given that compensation equals marginal product. The rich earn their money because someone pays it to them, and that someone must have a good reason to pay that much. The markets decide pay, that's just Econ 101, and on that topic.
Plenty of pundits have responded to Mankiw's thesis, but none more effectively than Josh Bivens and Larry Mishel of the Economic Policy Institute, who also contributed a paper to the special issue of the JEP.
It turns out that it's not so much what you know, as Mankiw argues, but how much power you have, especially the power to extract economic rents. Bivens and Mishel show that the increase in the incomes of the top 1% over the past 30 years owes more to successful rent-seeking than it does to efficient and competitive markets rewarding education and skills.
What do economists mean by "rents"? Simply put, it's the income that's received over and above what would be required to induce the person to supply their labor or capital.
For instance, Bevins and Mishel say, "it seems likely that many top-level professional athletes would continue to supply essentially the same amount of labor to their sport, even if their salary was reduced by some substantial fraction, because even the reduced salary would be much higher than their next-best options."
VIDEO ON MSN MONEY
It was suicide.
We ate our own young. More money if you can shoot a hoop rather than cure a disease
Entitlment for the lazy and ignorant.
Voters who know more about the Kardashian's then the Constitution
Elected Officials who are great dancer's but totally worthless Leaders .
Clinton signed NAFTA into law, gave China the "Most Favored Nation" trading partner status and removed the tariffs from their imports, repealed the parts of Glass-Steagull that prevented banks from gambling with depositors' money in the markets, created the sub-prime mortgage industry that imploded and took our economy with it and had as his Treasury Secretary a man named Robert Rupin...who created the economic policies in America that allowed our recession to happen and then went back to CitiGroup after his term and made hundreds of millions off the policies he enacted while bankrupting CitiGroup and needlng bailout. Clinton sold out the American middle class and our manufacturing base to the Chinese for campaign donations....
Bill Clinton did more to screw the American Dream than any other single living person...yet, mor0ns think he's one of the greatest presidents in contemporary history. Even his "legacy" of a balanced budget is a lie...he borrowed hundreds of millions of dollars from federal trust funds like Social Security and the Federal Employee Pension fund to "offset the deficit" which was never repaid and now contributes to our national debt.
Who ruined the American Dream? "We" did...because we are stup|d and can't get a grip on reality and instead let politicians and the media do our thinking for us.
The Egyptian people are overthrowing their elected leaders for not delivering on the promise of democracy while we sit back and fall further and further out of touch with our own birthright to democracy and a government that serves THE PEOPLE and not itself.
Our Founding Fathers had the cajones the Egyptians are showing now...we are merely a shadow of our former greatness.
So Bye Bye Miss American Pie , Drove my chevy to the levy but the levy was dry....
America was sold out , sad days indeed
This is nothing new.
The American dream is being outsourced to other countries where many workers have seen their wages go up almost 500% in the last decade, while wages have stagnated in the U.S.
Congress and even our Supreme Court are making laws and decisions that favor corporations over the individual worker, making it harder to achieve the American Dream. A good example is the inaction by Congress that resulted in a doubling of student loan interest rates, making education harder to afford for middle income people. Instead of being a government of the people, by the people, for the people, we are a government of the corporations, by the corporations, for the corporations.
Greed of those with power or with capital is killing the dream. Although I like the show “Shark Tank,” I really hate when the investors criticize someone with a good idea who wants to make their product in the U.S. The sharks want to make the most money possible, the biggest piece of the pie, insane amounts of money no one can spend in their lifetime. What happened to the days when someone with a good idea or product was happy with taking a smaller, but still big piece of the pie, so that other Americans could also get a piece of the pie in the form of good paying American jobs? Why is getting more money for one’s self more valued in our society than being responsible for helping others get it through work?
Finally, the greed of oil companies and speculators in the oil market who want a bigger piece of the pie for themselves are getting that by making the rest of us spending a larger chunk of our incomes for transportation and thus we have less disposable income to spend for vacations, products, education, food, health care, and other things. The wealthy can invest in oil stocks and laugh all the way to the bank, but the rest of us barely have money to fill up at the pump.
YOU ARE (the VOTER) responsible for swallowing every contrived piece of bull coming from every politician and business man's mouth.
Remember when everyone on the Right was saying that if businesses outsourced jobs it would create more jobs in their state, and each and every one of you voters ate it up and defended it.
WHO KILLED THE AMERICAN DREAM! YOU DID! YOU ARE RESPONSIBLE AND SHOULD NOT BE COMPLAINING FOR YOUR OWN ACTIONS!
The reason it's called the American "dream" is that you would have to be asleep to believe it.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The major averages posted solid gains ahead of tomorrow's policy directive from the Federal Open Market Committee. The S&P 500 rallied 0.8%, while the Russell 2000 (+0.3%) could not keep pace with the benchmark index.
Equity indices hovered near their flat lines during the first two hours of action, but surged in reaction to reports from the Wall Street Journal concerning tomorrow's FOMC statement. Specifically, Fed watcher Jon Hilsenrath indicated that the statement ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'