Is the American dream dead?

A Harvard professor says the gap between the rich and poor is growing and it's becoming harder to climb out of poverty.

By Kim Peterson Jun 26, 2013 4:32PM
Image: Man holding empty wallet ©, Image Source, Getty ImagesHarvard professor Niall Ferguson laments the end of the American dream over at The Daily Beast.

He gives two reasons the country has changed. First, the U.S. has become more unequal over the years. But even more disturbing, he writes, is the decline in social mobility.

These trends stab at the heart of one of the tenets of the Republican Party: the idea that anyone can be a success and climb out of poverty. In America's past, that was certainly possible. But has that changed?

Here's how Ferguson makes his case:
  • In the U.S., the wealthiest 1% of people own 35% of the total net worth of the country and 42% of the financial wealth. Only Switzerland has the same level of economic inequality, out of all developed economies.
  • The Federal Reserve's monetary policy has only made the rich richer. Not much of an economic recovery.
  • About 42% of American men born into poverty stay there as adults, higher than the 30% in Britain and the 28% in Finland.
  • An American has a 1-in-13 chance of going from poverty to the top fifth of the income ladder. "Indeed, the amazing thing about the most recent research on social mobility is that the United Kingdom -- which used to have the most rigid class structure in the developed world -- now risks losing that title to the United States," Ferguson writes.
  • Welfare creates a poverty trap in which a single mom in Pennsylvania, for example, is better off in a part-time job paying $29,000 -- and receiving $28,000 in various benefits -- than in a full-time job that pays $69,000 and requires tax payments of nearly $12,000.
  • American high schools are a joke. About 75% of Americans ages 17 to 24 aren't qualified to join the military because they are physically unfit, have criminal records or aren't educated enough, Ferguson writes. About 40% of students at four-year colleges take remedial classes because their high school education was so poor.

More on moneyNOW

Jun 26, 2013 6:49PM
The problem is twofold: favorable tax policies for the rich, and the poor making stupid decisions. The tax thing is difficult to change, since Congress is bought and paid for.

Ever notice how many "poor" people drive gas guzzling SUVs/trucks and have iPhones? Payday loans. Renting furniture. Financing vehicle purchases at the dealer. Go to the gas station, take $20 out of the ATM (and pay $3 in fees) to buy an extra large diabetes drink and get some smokes. Party!

Yep, most poor people are either stupid or they just don't give a damn.
Jun 27, 2013 7:43AM
The American Dream isn't dead, it's just been redefined.  Instead of placing priorities on real home ownership, building a successful career and/or business, lifetime marriage and family commitment and saving for retirement, the new dream is having the latest cell phone/tablet/computer/TV, keeping up with a million different reality shows and facebook friends, doing as little as possible and still stay employed, and letting someone else raise your kids.
Jun 27, 2013 2:30AM

Why do so many people believe the present day paradigm that:


1) Inflation and high debt are good things?


2) Spending is what drives the economy, not saving?


3) Weak currency is good and strong currency is bad because exports are important?


ALL OF THESE IDEAS ARE UPSIDE-DOWN!  The widespread belief that these ideas are right are the consequence of our being governed by LIES!  Both parties have been doing this to us for years.


Inflation is what makes the super-rich more rich at the expense of everyone else.  Prof Niall Ferguson and writer Kim Peterson see the symptoms, but they don't recognize the root cause.  In Ferguson's case, this is disappointing since he is a professor.


The Fed needs to stop inflating the dollar.  When the currency is stronger, life is easier for regular people.  The premise that mild deflation is harmful to the economy is a DIRTY LIE that serves the purpose of protecting the super-rich.  When the cost of business keeps going up, employees are either laid off or paid less.  During mild deflation, it becomes easier to start a new business.  Moreover, advantage of economy of scale that the big dogs enjoy when overhead is high is diminished when overhead is low.  In the theoretical case of zero overhead, the mom-and-pop store is on equal footing with Wal Mart.  Deflation forces the big dogs to face many smaller competitors.  If they don't pay their employees enough or if they try to gouge the public, the smaller competitors step in.


Having less government debt is also important because in order for a business to succeed without political favor, it needs access to capital in the traditional manner.  This means having people save and having the bank loan out their savings to the entrepreneur.  When the government borrows most of the available credit funds, entrepreneurs cannot get capital.


Meanwhile, the super-rich bankers borrow from the Federal Reserve Bank at 0% and fatten up on everything from surging stock prices to Treasury bond interest to surging home prices.  Did you know that hedge funds have been buying up many of the older homes in order to resell them quickly at a profit?  Clearly, the so-called economic recovery is just having the super-rich get richer at our expense.


In order for politically UNFAVORED businesses to obtain capital, INTEREST RATES must be balanced -- high enough to attract savers, but still low enough for borrowers. The fact that the U.S. government cannot withstand high interest because the National Debt is almost $17 trillion causes the Federal Reserve Bank to try to keep interest rates down.


Thus, the politically unfavored do not get their much-needed capital. Inflation keeps going up, but the government uses the Consumer Price Index to LIE TO US that there IS NO INFLATION, while claiming that prosperity is back. 


Meanwhile, people like you and me continue to struggle with no hope of the situation getting any better.  Government officials are too busy patting themselves on the back over how they've already fixed the economy!

Jun 26, 2013 5:53PM
The last paragraph says it all; our whole Country, in the vastly overblown liberal quest to make everything "equal", has lowered standards to the lowest common denominator (and it gets worse every time an 'Obamabite' opens his mouth.
Jun 27, 2013 7:53AM

Since the start of our nation government has gotten more and more involved with the everyday lives of American's.  Today many American's rely on the government to provide them a home, food, cell phone, and well...everything it takes to live in America.  We have less and less American's paying into the system and more and more American's taking out.  All this was done by our government with the intent on making the average American's lives better.  Well it hasn't worked...  We now have 11 million American's receiving SS Disability because it's easier to play computer games and watch TV at home then it is to getting a job. 


Unfortunately our governments desire to take care of people in "need" has created a lot of people that "need" to be taken care of.

Jun 26, 2013 5:05PM
Socialism breeds lazy, Lazy breeds Communism, Communism breeds the economic collapse of society.    Government cannot dictate prices or supply.    Let the Free Market work.  It will in spite of all government efforts to change that.  

Jun 27, 2013 7:53AM

There was a time that people helped people because it was the right thing to do. There was a time when people saw a need and worked in the community to provide for the need. There was a time when family helped family and generations lived together to help provide for each other. There was a time when if a person had a problem they solved it themselves or asked for help from family and friends. There was a time when people had respect for each other. There was a time when religion was an important part of our lives. There was a time when it was okay to believe in God and let everyone know it. There was a time when religious organizations were free to help those in need and provide services to all without interference. There was a time when neighbor helped neighbor and new each other’s names. There was a time when black and white people came together in their communities for the good of all. There was a time when black and white children played and sang together.


Now people help people just for there own self-esteem and public image. Now when people see a need they wait for someone else to fix it or run to the government. Now we regard family as a burden and would consider living together a hardship, so we run to the government. Now if we have a problem we run to government and expect them so make it all better. Now it’s everyone for themselves and everything you do is wrong and the government can do it better. Now religion is something to be hidden, only whispered about and we run to the government to protect us from another’s beliefs. Now if a religious organization tries to help they have to give up their own customs and identity so no one they are helping gets offended, and the people run to the government to complain if they see a symbol. Now we try to be as far away from our neighbor as possible, and we don’t even know our neighbors name as we expect them to give up there rights and we run to the government to force our neighbor to do what we want so we are not offended. Now blacks and whites do not trust each other and the government does nothing but make exceptions, excuses, and points out all our differences instead of our common rights.

Jun 27, 2013 10:50AM
The prime reason that some people do so much better than your average bloke is because they live their lives in tune with the old adages...As you sow, so shall you reap...A calm sea never made a skillful mariner...Into every garden a little rain must fall...As the twig is bent, so the tree grows. Most young people today lay back and tweet, text, play mindless video games, exchange repetitive, banal messages on Facebook, etc. They learn nothing substantial, are never tested by significant challenges. They have no real fund of information, no method of inquiry, no marketable skills. They are totally dependent on others and the government. Since they can vote, they are catered to. Education and the acquiring of skill pave the only road to upper class status.
Jun 27, 2013 8:08AM
A pendulum swings both ways. The farther we divide, the more likely something adverse can get into the middle and compromise both. A reminder that every unsavory label for the poorest, can and does describe the richest as well.
Jun 27, 2013 11:19AM

Ferguson made two points that say a lot about why someone born into poverty stays poor.


1.  Welfare creates a permanent underclass. 


In many cases it's simply more profitable to stay on welfare than to get a real job. In addition to restricting welfare to those who cannot work, we need to go after the fathers of children whose mothers are receiving welfare.  With DNA testing, it shouldn't be all that hard to identify who fathered these children and make them pay their share.


2.  Education in many poor areas is a joke.


It's nearly impossible to break out of poverty without attaining a decent education or job skills.  This is probably the toughest nut to crack, because so many parents (usually single moms) in these areas don't have the skills to pass on to their children, so the cycle continues from one generation to the next.


There are no easy fixes.  Our politicians need to address this issue openly and honestly, without retreating to the usual Republican and Democratic talking points.  We all know what doesn't work, so it's time to try another approach.

Jun 27, 2013 2:41AM



I overlooked the one bulleted statement where Ferguson criticizes the monetary policy of the Fed.


Unfortunately, I cannot edit or even delete my original message.  However, I stand behind the main content, which is that mild deflation, far less government spending and balanced interest rates would make life better for ordinary Americans.


We also need to go back to producing goods that regular people want.  Lower overhead cost from deflation would help make this possible.


The dollar should be A LOT MORE VALUABLE than it is, right now.

Jun 27, 2013 11:43AM
So,  the book "The Rise and Fall of the American Empire" (I'm not aware of an actual book with this title) continues to be written as we speak.  The divide between the "goldilocks" crowd and the "apocalypse is near" folks widens.  The MSN shills here and other ideologically correct numskulls continue to take (often imaginary data) and write these articles and reports as if a real "recovery" was imminent.  literally one day the consumer is on fire and buying everything in sight and the next day we see MSN reporting that consumer spending was down 0.9%, then home builders are sipping champagne because of the "reported" home sales/new home starts, YES- when the real data comes out its revealed that the bulk of real estate purchases are by foreign investors and flippers here in the U.S., Joe & Jane working stiffs are not buying alot of homes. Etc. Etc. Wall Street, the "IlluminatI" all drenched in Bernanke Bucks grasp at straws.  9 people got jobs in Indiana and 75 people bought low end homes in Vermont, according to MSN shill its "strong economic data". Please.
Jun 27, 2013 12:31PM
If you can't feed em, don't breed em!
Jun 27, 2013 11:57AM
It's not dead for the wealthy. It's getting quite sketchy for what's left of the middle. Education is the key to everything, and it's been going downhill for decades.
Jun 26, 2013 6:11PM
When the free market is allowed to run free with no government intervention large monopolies grow much larger with acquisitions and larger market share. Their enormous profits can then be used to buy politicians and policy, fund think tanks and economists to arrive at conclusions of benefit, outsource to low wage countries, stockpile capital tax free in the Caymens or elsewhere and use a variety of methods to break down labor and unions so America can be turned into a country of part time temps with no benefits. Don't believe the B.S coming from shill economists, America being a democracy is obligated  to take care of the middle class by providing a civilization were decent paying jobs are available and healthcare is affordable and available. American citizens who work deserve some of the proceeds of their increased productivity and their companies success. Some may say hey this is communism, my reply to that is they sure came to Wall Streets rescue in 2009 Does that make our guru bankers commys?
Jun 27, 2013 12:32PM

There was a continent to plunder before WWII. That continent provided the essence of the "American Dream" until the end of WWII.


The denouement of that war, in which the U.S. stood astride a crippled world of smoking ruins, provided the "American Dream" that most folks are thinking of. This war's advantage and abundance (especially for us, 1945-1950) gave birth to an increasingly leveraged consumer society that reached its inflection point - its tipping point, if you will - during (and as a result of) Reagan's second administration.


The trend since that time has been ineluctably downward. And with the continent all plundered, and that WWII seed corn all eaten, the trend line for the ride will continue negatively.

Jun 27, 2013 11:12AM

American high schools are a joke. About 75% of Americans age 17-24 aren't qualified to join the military because they are physically unfit, or have criminal records, or aren't educated enough, Ferguson writes.


Then why aren't there any Army recruiters in rich, white neighborhoods?  LOL!

Jun 27, 2013 8:27AM
Socialism for the already wealthy breeds lazy and incompetent CEOs. Lazy breeds markets decisions by those incompetent CEOs which eventually, always causes economies to collapse. Witness the global problem of Trillions in Scam Derivatives and their role in causing the Great Recession and the continued response by the Global FEDS to solve it.

The Government has always dictated prices and supply via instructions from their Corporate Masters. Free Markets will never work as long as there is a Corporate Master and a Government Puppet. Fact is, we have already reached the point of no Return. The already wealthy have robbed us in plain sight yet the vast majority don't have the stones to do anything about it. Yet.

Jun 27, 2013 7:50AM
It would not be dying if our government wasn't allowing so many things to walk into this country and steal it from us. They are invaders and should be shot on site. This is war.
Jun 27, 2013 2:02PM
LOL I never seen a part time jobs income at 30k a yr ???? THAT'S A LIE... But look who is ranting about it ? Harvard professor Niall Ferguson the end of the American dream over at The Daily Beast. <<< Like he knows ? LMFAO Its rel simple people , as unions declined in the USA so did the standard of living in the USA ! Facts are facts .. < Good paying union jobs made this country in income and the standard of living And like Henry Ford when he gave the 5$ day he made consumers ! But then that's the economy we have here is a 2/3rds consumer economy in the USA dummies ... DUH.... Don't need to be a Harvard grad to see that ! LOL Facts are facts ..
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