Can the American Dream Be Continued? – II

The U.S. has long been known as a country where if you work and study hard, then you, or at least your children, will be able to get a good education, a good job, and live a reasonably comfortable life.  This is known as the American Dream.  Every year especially after the end of WWII, thousands and thousands of people from all over the world have immigrated to this country (most legally, and some illegally) to seek and often achieve the American Dream.  There are of course many reasons, e.g., the American democratic form of government and the American pioneering and entrepreneur spirit, for making the American Dream possible.  In a January 2010 article “Can the American Dream Be Continued?“, we discussed an often-overlooked significant contributing factor to the American Dream, i.e., the unique geographical and natural environment in which the U.S. grew during the first 200+ years of its existence.  In this article, we revisit this issue and elaborate on the implications of not properly taken into account this contributing factor to the American Dream.

Review of the Unique U.S. Environment:  The U.S. is really unique in terms of geographic or natural opportunities during most of its existence.  It offered a vast country with a very small native population.  It offered good natural resources and vast land ideal for agriculture and cattle ranging.  Thus, there was always room to expand and enough resources to share, instead of being a zero-sum situation where one could gain only at the expense of someone else.  The country actually welcomed more new comers to help develop the vast land.  It was partially due to immigration to the U.S. of so many of the best and brightest from other countries that propelled the U.S. economic engine to become the richest and most powerful country in the world.

The U.S. is bordered by the Atlantic Ocean on the East and the Pacific Ocean on the West, providing natural barriers from foreign aggressors.  It is bordered on the north and the south by two relatively new countries also with a vast land of their own and a small native population.  Until WWII, the U.S. was able to live relatively peacefully without worrying too much about the threat of foreign invasion.  Thus, it could focus its resources and energy internally to develop the country.

Furthermore, the U.S. suffered relatively minor damages from WWII.  That and the above advantages enabled it to develop into the richest and most powerful country in the world after WWII.  Then for another 30-50 years before several other countries (e.g., first Germany and Japan, and then Korea, India and China) developed into credible economic competitors, the U.S. was able to reap great economic advantages all over the world.

This is not to deny that other factors (e.g., its democratic system of government, the American pioneering and entrepreneur spirit) were also significant contributors to the success of the U.S. during the first two hundred years of its existence.  The point we want to make is that there was almost an ideal geographical and natural environment for the U.S. during most of its existence that greatly helped it to develop into the richest and most powerful country in the world and created the foundation for the American Dream.

Continuing Expanding Economy and Zero Sum Economy:  When a country has vast land and natural resources to share, adding more people does not create a problem, because there is plenty to share.  Not only that it does not introduce a problem, it actually helps the country to grow, because the U.S. can use the additional manpower and intelligence to cultivate the land, work in the factories, create new initiatives, etc.  In its first 200 years of existence, the U.S. was basically living in a continuing expanding economy, and therefore could absorb and welcome lots of immigrants, especially when among the immigrants were the best and brightest from all over the world.  However, starting near the end of the 20th century when the U.S. no longer has an almost unlimited amount of land and natural resources to share, it gradually changes from a “continuing expanding economy” to an almost “zero sum economy,” when giving more to one person may require a reduction for another person unless you can grow the size of the pie.  When you couple this change with the emergence of credible economic competitors from several other countries around the world, it leads to the question of whether the American Dream can be continued.  In order for the American Dream to continue, we must grow the size of the pie.

How Can We Continue to Make the Pie Larger?  Human beings have both a positive side and a negative side. [1]  The positive side takes more into consideration what is good for the larger community, and the negative side takes more into consideration what is good for me (or me and my family).  The political and social culture of a country can encourage or inhibit more on the positive side or the negative side.  In a continuing expanding economy, not cultivating the positive side of human behavior does not necessarily stop the country from meeting the needs of the majority of its people, because there are always room to expand and enough resources to share.  However, in a zero sum economy, without expanding the size of the pie, it will be difficult to satisfy the needs of a continuously growing population.  In order to grow the size of the pie, the people must work together for the good of the whole.  Therefore, the country must cultivate and encourage actions and policies that can foster people showing more the positive side.  Whether the American Dream can continue will depend on how the American society responds to this challenge.

How Is the American Society Responding to this Challenge?  Although facing this great challenge of the need to increase the size of the pie, the culture and policies adopted by the American society in the last decade have continued as before. They continue to encourage and reward those who exhibit more of the negative side. We illustrate with a few examples. [2]

  • Collapse of the Financial Market: The event that has captured the public and media’s attention in 2008 was the near-collapse of the financial market (occurring first in the U.S. and rapidly spreading to the whole world).  This collapse was due to many banks and mortgage companies and various insurance companies investing in high risk mortgage loans and investments derived from these risky mortgage loans.  During the several previous years of booming housing market when house prices kept going up and people kept buying houses with loans they really couldn’t afford, these companies made billions and billions of profits.  It was not that the people who were reaping these huge profits did not realize that these loans and derivative investments were intrinsically risky and the boom was built on a house of cards that sooner or later would collapse.  They didn’t care, because their motive was to make as much money as possible for themselves and their companies.  The fact that what they were doing could lead to financial disasters for the country and the world is a problem to be worried about later and more importantly is someone else’s problem.
  • Greedy Aftermath Following the Burst of the Financial Bubble:  To keep the financial meltdown from spreading, the U.S. government offered bail outs to many companies.  Companies like Goldman Sachs and JP Morgan Chase who had record earnings in 2009 at first accepted the bailout money from the federal government, and then repay the bailout money ahead of schedule when they realized that their plan to give record bonuses in 2009 would result in federal financial scrutiny if they still have the bailout money.  [2]  Again, their motive was to make as much money as possible for themselves, independent of whether their actions were for the good of the country.
  • Recently Passed Tax Law:  The recently passed tax law including tax reduction at the top obviously benefited the very rich, and would increase the disparity between the rich and the poor.  Furthermore, it would significantly increase the federal deficit, leaving this critically serious problem for future generations to face.  The fact that it benefits the rich even if it is not good for the country in the long run did not bother the rich and the people in power.
  • Inaction in Congress:  How many times have we observed in Congress that votes were cast basically along party lines.  To vote along the party line and to retain the support of that party’s leaders and funders were more important than to vote for what is in the best interest of the American people.
  • Essentially No Action from the Republican Party in Investigating Russian Interference in the 2016 Presidential Election:  Republicans as a whole basically have dragged their feet in investigating what should be a most important meddling by a foreign power in the internal affairs of the U.S.  Just imagine what would be their attitude and actions if the Russian meddling was to favor the Democratic Party.  If our objective is for the good of the American people, then our decisions should not be almost purely partisan.
  • Greed and Self-Centric Motive in Labor Unions:  Labor unions definitely serve a useful purpose.  Without labor unions, profits earned from the labor of the employees will not be nearly as well distributed, resulting in a small and very rich owner/manager class and a large and very poor worker class.  However, with the increasing power and influence of labor unions, labor unions often continue to demand higher salaries and better benefits which sometimes can no longer be sustained from a business point of view, especially when their government or corporation is getting closer and closer to insolvency.  Past examples are the airline and auto industries.  State governments and local school districts have been facing tremendous budgetary shortfalls and higher taxes, yet teacher unions continue to oppose strongly any significant sharing of the health insurance premium even though most other types of workers today contribute a non-negligible share of their health insurance premiums.
  • Entitlement Attitude Toward Government Subsidy:  Government subsidy is often needed for the poor and the underprivileged.  However, one should do his/her upmost to rid of the need for the subsidy, and should not adopt the attitude of entitlement to the subsidy.  One should work hard to be self-dependent and should not continue to take the government subsidy.
  • Gun Control:  It has become crystal clear that the lack of control on sales and registration of guns and assault weapons poses serious dangers to our children in schools.  Yet because of the powerful lobbying influence of the National Rifle Association (NRA), meaningful gun control legislation has repeatedly failed to pass in Congress.  Apparently what fills the pockets of guns and ammunition makers and dealers and their lobbying contributions are more important to American law makers than the safety of our school children and the American public at large.  We hope that the recent protest movement led by the surviving students of the Marjory Stoneman Douglas High School in Parkland, Florida that has spread across the whole country can finally break this long-standing roadblock.  This protest movement and the resultant nationwide brush-fire it has ignited gives us a glimmer of hope that the traditional way of doing business in the American society could be altered to give us the potential of continuing the American Dream.

Assessment:  One may say that all the things and behaviors just discussed are not necessarily new; they more or less have always been occurring.  Yes, but when they were occurring in a continuing growing economy, the impact is nowhere as bad, because there was room to expand and there were enough resources to share with the middle and lower classes.  However, after 200+ years, the advantages of the intrinsic U.S. environment have been mostly spent.  Unless we emphasize how to work together synergistically to grow the pie, we end up in a zero sum economy, when greed and self-centric behavior will lead to a growing gap between the rich and the poor, and policies such as a rapidly growing federal deficit or voting purely by party affiliation which in the short term may benefit certain people, but in the long term will be disastrous for the country as a whole.

As stated earlier, this is not to deny that other factors (e.g., the American democratic system of government and the American pioneering and entrepreneur spirit) were also significant contributors to the success of the U.S. during the first two hundred years of its existence.  Furthermore, we do not mean to imply that more greed and more self-centered motive are found in the U.S. than in other countries.  As a matter of fact, we believe that there are more similarities than differences among people from various countries.  Every human being has a positive side and a negative side.  In a continuing expanding economy, the adverse consequences of exhibiting more of the negative side are no where as severe as in a zero sum economy.  The U.S. and most of the world are now in a zero sum economy.  Whoever can exhibit more of the positive side will create a larger pie and come out first in the competition.  If the U.S. comes out first, then the American Dream can be continued.

Summary:  For over 200+ years, the U.S. offered the American Dream, i.e., if you are willing to study hard and work hard, then you will have a good future:  A good education, a good job, and a good life, if not for yourself, then for your children.  Millions of people from all over the world have immigrated to the U.S. to seek and then fulfilled the American Dream.  This American Dream is real, but can it continue into the future?  We discuss that a significant contributing factor to the success of the American Dream is the unique geographical and natural environment enjoyed by the U.S. for 200+ years of its existence, when it was mostly a continuing expanding economy.  However, after 200+ years and with emerging economic competitors, the U.S. has been transitioning to a zero sum economy.  In order for the American Dream to continue, we can no longer do business as in the past, because we must make the pie larger, and we must build up the culture and adopt policies that encourage people to cultivate their positive side.  Only by working synergistically, can we grow the pie and benefit all the people.  Whether the American Dream can be continued will depend on whether the American society is willing to make the change from doing business as usual to doing business while keeping in mind the interest of the whole society.  Events in the last decade or two do not give us a positive outlook, but we see a glimmer of hope from the recent youth-led protest movement on gun control following the mass murder in a Florida high school.

Similarly, the discussion can also be carried over into international relations.  In order for the U.S. to win friends around the world, our foreign policies must be based on win-win situations.


[1] This is not necessarily inconsistent with the Christian belief that all people are sinners, because different standards are involved.

[2] More examples and information were provided in “Can the American Dream Be Continued?

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One Response to “Can the American Dream Be Continued? – II”

  1. James Liu says:

    Don,

    Enjoy reading your insights. Opportunity, Timing, and Open/Equal Access are also the contributors to the American Dream. If the ‘resource’ controller sets up a protection ‘firewall’ to restrict the access to the reward-promising education system, the jobs, and opportunities to gain, then these filtered-out people won’t have a chance to achieve their dreams. Lots of examples mentioned in the history book. The classes/ranks of people in both Eastern and Western worlds, farmers, workers, scholars, and governors. The rulers understand the power of knowledge. They can restrict the people what to learn.
    However, in the other end, the supply-and-demand model in a free enterprise community, needs for having knowledge workers to make business grow and profit indeed encourage these workers to make their American Dream. Not really a zero-sum model what you have discussed. The in-progress IT revolution today needs lots of IT professionals, software engineers, innovators due to the demand in communities (markets), the business side asks for the mass supply of these knowledge workers. Apparently, it becomes another wave of American Dreams for these selected people. But not for all, people without the knowledge are left out. Sad. / James

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