U.S. doesn't own American Dream anymore

Sam Becker | Cheat Sheet

Can you name America's biggest export? While many things probably spring to mind, the answer is something a bit more intangible — culture. Through movies, television shows, music, and all manner of products and services, the American way of life is packed up and shipped across the globe, helping align what we value most with what others around the world do as well.

In many ways, what we're showcasing is the concept of "the American Dream." It's a concept that doesn't have a strict definition, but is typically explained as the ability to improve one's standing in society through hard work and education, and ultimately share a piece of America's prosperity with a home, property, and other basic necessities. While the rest of the world becomes more familiar with the concept, a sad reality is settling in on the domestic front.

That is, the American Dream is now easier to attain for people who live outside of America than those who live in it. Or, another way to put it is that economic mobility has been stunted in the U.S. As far back as 2004 the progressive think tank The Century Foundation argued that "recent evidence shows that there is much less mobility in the United States than most people assume," and that "rags to rags and riches to riches are now the norm in this country to a greater degree than in many other developed nations."

It goes on to say: "Our current education system, anti-discrimination laws, and other public policy tools that aim to give the children of poor parents a fair shot at a high income are not getting the job done. We may all believe in the American Dream, but we have a lot of work to do if we are to make that dream a reality."

The evidence seems to side with The Century Foundation's argument.

Data crunched by Harvard researchers shows that economic mobility has been on the slide, albeit slightly. While that can be taken as relatively good news, considering that we're not seeing a drastic drop in the odds of making it to the upper or upper-middle class from the lower echelons, it's disheartening in the sense that the American Dream has become much more expensive, and therefore more out of reach.

One very closely linked aspect of stagnant economic mobility is growing economic inequality. In its 2012 Annual Report, the Federal Reserve Bank of Richmond cited declining rates of social mobility as a central driving force behind the growing equality gap, calling for changes to the structure of markets and policy, rather than a sweeping approach to hand out checks, for example.

"Inequality and immobility can be partially chalked up to market structure," the Richmond Fed says. "From a normative standpoint, there thus might be support for policy interventions that seek to equalize opportunities, rather than those that would equalize outcomes."

Meanwhile, in other countries, economic mobility is on the rise. According to a study from The Brookings Institution, nations including Canada, Denmark, Norway, and Spain have all been classified as "high-mobility countries," while the U.S. and U.K. have been relegated to "low-mobility" status. "The findings from cross-country research challenge the traditional view of the United States as a land with more mobility and opportunity than other countries," the study reads.

What this all tells us is that over the past few decades, America has lost its economic edge — that can-do attitude and thirst for climbing the social ladder has been suppressed, and it's been packaged up and shipped to other countries. When the American Dream is no longer a realistic goal for most of the American population, it's hard to really say that it remains the land of opportunity.

There are numerous reasons why this is the case, and they can be traced back to the decline of organized labor, stagnant wage growth, the rising cost of living and healthcare, and others. The truth is, if the American Dream is no longer realistic for Americans, then maybe we should call it something else. At least until we can get it off life support domestically.

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