Is the American Dream actually about inequality?

The American Dream is a complex phenomenon. I think that it is a great dream in many respects and perhaps can be boiled down to, "everyone deserves a good life." However, there is also a dark underbelly to our concept of the American Dream. This dark underbelly is composed of both the mental models held at large in our society concerning the American Dream and the actual structure of our economic system.

Lets start with a discussion of the structure of our system. In one of Norm's posts yesterday he talked about the role our financial sector is supposed to play; that of allocating capital to its most productive uses. So, this sector of our economic system is really supposed to act more as a secondary level sector. What I mean by that is its role is secondary to, or to facilitate the activity of, the productive parts of the economy. However, Norm notes that, "financial assets grew from 81% to 137% of GDP between 1990 and 2005." This is indicative of a financial sector which has started to use its wealth and power to generate its own product, more wealth and power, instead of facilitate the growth of industries which produce real goods and services that people need. If the products produced by financiers, banks, and Wall Street are equal to 137% the value of GDP (which is supposed to measure the market value of all real goods and services), then this sector is using wealth to produce wealth for the wealthy. We are all currently experiencing the results of this development in our economic system as we struggle through what is being called The Great Recession which was caused by the highly risky activities of the financial sector. The events which led up to the Great Recession can be most aptly described by what a former BGI student called, a "profit tornado." 

This leads me to point out that our economic system has acted as a "profit tornado" multiple times in our country's history, the most memorable of which is during the lead up to the Great Depression. In another post by Mark Thoma in which he explores a 1998 article by Brad DeLong called, "The Robber Barons, " the need for billionaires in our society as wealth and job creators is called into question. DeLong's key point is that between 1930 and 1980 the post Great Depression policies made the excessive accumulation of wealth in America much harder and slowed down the rapid casino entrepreneurship of the Wall Street financial sector. Yet during this time our country also experienced very healthy economic growth and the largest expansion of the middle class in our history. So, Norm's post which led me to Thoma's article asks an important question, "how much do we need billionaires?

This is all to say that our economic system is or has been capable of increasing access to the American Dream without creating vast inequality of wealth and power and without drastic boom-bust cycles which funnel wealth to the top and then shut down the economy afterwards. I will explain how this connects to the dark underbelly of the American dream in my discussion of mental models below.

The second piece of the dark underbelly of the American Dream is our mental models which support it, or support this system in the pursuit of it. Two recent reactions to the Great Recession illustrate this underbelly: the tea party or libertarian reaction which blames "big government" for all of our problems, and the assertion that those running the financial sector were just "too greedy." In the last several years the anti-government sentiment has been growing and tangible in American politics. The people who hold this mental model saw and felt the 2008 crash and subsequent recession just like everyone else, but somehow see the federal government as the only ones to blame. Government overspending and over-regulation and corruption are the culprits in the biggest profit tornado in the last 100 years. This is a very narrow view however, as the very powerful forces which engineered the boom were multinational corporations and wealthy financiers in the private sector which can be identified as "the government" only in so far as they lobbied the government to de-regulate the financial sector or rode the revolving door between government regulatory bodies and financial sector corporations to achieve the level of non-oversight needed to put the real economy in such risk for their own profits.

The other reaction to the crash is the assertion that it happened because there were so many greedy people running the financial sector. This mental model seems to be held by a very large part of the American population. The issue with this mental model is that it takes the system we currently have as normal. In other words, the public outrage over greedy corporate executives or financiers is an isolated view of the world, not a systems view. The Great Recession and the Great Depression did not happen because of a few greedy people that should have just not been so greedy. They happened because large amounts of concentrated wealth (which equals power in our society and in our political system) in the hands of a very small group of people, the Rober Barons, allowed for our system to slowly and repetitively be shaped by that group in a way that works for those interests over and against the interests of the common good or the American public (where real wealth is actually created). This is a classic system trap called "success to the successors" in which those with the most power are awarded the means to win more power and so on.

So, what am I talking about in this inordinately long blog post? I am asserting that perhaps its actually our mental models about the American Dream which prevent us all from achieving it. Perhaps we blame the government for our suffering even though we know its our economic system and the very wealthy interests which caused it because we cannot stomach a system that doesn't allow for people to get as drastically wealthy as those at the top. We say that the problem is with CEO and corporate greed instead of with the system which allows for such inequality and unaccountable investing with other people's money. Is the American Dream actually about a world of inequality? We all seem to blind ourselves to the real, systemic and structural problems of our country because part of the American Dream is a constant if sub-conscious drive to become fabulously wealthy ourselves. We do not indite the system because it is our hope for a life of excessive wealth. Our mental models deep down believe the "anyone can make it" myth. So, we refuse to engage in systems thinking to identify and critique (and hopefully work towards changing) the system and instead focus on individual parts and events. We are willing to sacrifice a life of shared abundance and harmony for  the dark underbelly of the American Dream which necessitates inequality.