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The engine of capitalism is struggling to create the abundance that was once taken for granted. The basic hope that parents have for their children – that their lives will be better than their own – is being lost. For many, life isn’t just not getting better. It’s getting worse.

A recent study showed that only about half of 30-year-old workers in America earn more than their parents did at the same age. Compare that to previous generations. In 1940, 92% of Americans in their 30s earned more than their parents did at the same age. That’s a vast drop.

Like many aspects of America’s declining economic fortunes, the drop in inter-generational gains has been concentrated in the country’s crumbling industrial core. But the overall dynamic holds true across all states. Slowing GDP growth and soaring income inequality ensures that the growth that does occur mostly lines the pockets of the already wealthy.



The impact on politics has been clear: a new spirit of populism and unrest. This was represented on the left by the Bernie Sanders movement and on the right by the candidacy, and presidency, of Donald Trump.

Elections are complex and there are no single causes for their outcomes, but it seems hard to dispute that Trump’s campaign slogan, “Make America great again”, was a better fit for the national mood than Hillary Clinton’s rejoinder, “America is already great”.



Of course, America cannot return to greatness because in its vicious inequality and bigotry, it has never been great. Trump’s shambling, unfocused, and frequently contradictory political message offers no path forward for those who have worked hard and have not been granted the abundance they were promised.

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We need to look to the future, not to the past. The message of the Sanders campaign was not new, but rather made an old case with new urgency: America must secure its future by transitioning away from the failing free market model and towards a new system of shared prosperity.

The exact dynamics of such a system will have to be hashed out. Nordic-style social democracies are an obvious model, and a system of market socialism an attractive goal. But one way or the other, we must admit to ourselves that the basic assumptions that this country operates under – the notion that to live in America is to enjoy the promise of a better life for the future – have come undone. We must remember that a better world is possible and work to build it.

For too long, we have been told that capitalism must persist because capitalism means economic growth and rising quality of life. This notion, that capitalism’s rising tide lifts all boats, lies at the center of arguments against socialism, not only from free market libertarians and Republicans but also from conventional liberals and Democrats.

These various groups differ in how they think capitalism should be best managed. They disagree about how much regulation is best and to what degree, if any, government should redistribute wealth. But the essential defense of capitalism has always been that it creates material wealth and spreads it widely, if unevenly, ensuring a higher quality of life for next generations. This is a position that is hard to defend these days.

The recent findings about earnings are not the results of a random, unrepresentative study. Rather, they confirm a broad range of research that has shown not just slowing growth but stalling growth for many. A recent paper by the Washington Center for Equitable Growth found that those on the bottom half of the income distribution today earn no more than they did 45 years ago.

One of the economists who worked on that paper was Thomas Piketty, the French scholar whose book Capital in the 21st Century became a popular sensation based on its powerful argument that capitalism’s natural tendency is to increase inequality, not shrink it. Flatlined real wages for middle-class workers has been the norm in American life for decades, while the costs of housing, education and medicine accelerate rapidly.

The notion that sons and daughters can expect to enjoy greater financial freedom than their parents did, simply by dint of living in the good old United States, is a fiction. The sooner we realize that, the better.

