Thursday, Oct 20, 2011, 12:07 PM

OWS and the Demise of the American Dream

The Occupy Wall Street protest that began in Zuccotti Park in New York City has now spread to hundreds of communities around America. Although the aims of the protesters are a little vague, and the sustainability of the movement unknown, one thing seems clear: A lot of people are angry about the state of our nation and especially the state of our politics.OWS Protests.jpg

The protesters are unhappy about the inequality of wealth, the influence of money in politics, and the fact that those responsible for the financial crisis have paid no price for the damage they inflicted on others. It would be easy to dismiss the protests as the rantings of a very small and disaffected minority. But a Time magazine survey shows that a majority of the public has a favorable impression of the movement.

More fundamentally, the Occupy Wall Street movement suggests that American attitudes are changing. It is not as if people’s objective circumstances have suddenly deteriorated. After all, the inequality of incomes is not new. It has been increasing since the 1970s. Nor is the stagnation of middle-class incomes new. Middle-class incomes grew at a tepid pace between the late 1970s and the beginning of this decade, and what growth there was only came about because more women went to work. These incomes have subsequently been flat or declining. Both of the last two economic downturns were followed by jobless recoveries and even the most recent financial crisis and the deep recession that followed in its wake is now almost four years old.

Attitudes undoubtedly shift with a lag. But what’s emerging in the wake of all this bad economic news, I think, is the idea that America is no longer an opportunity society. As someone who has studied poverty, inequality, and social mobility for many years, I have always been fascinated by the apparent tolerance in the United States for a huge gap between rich and poor. Survey data from a few years ago show that this tolerance has been due to the American public’s strong belief that you can be poor today but rich tomorrow, that your children will do better than you, and that anyone who works hard and has a certain amount of talent can make it in America. These attitudes have contrasted sharply with those in Europe where the public has been much less optimistic about the role of individual effort and more willing to turn to government to help the less fortunate.

Now it seems many Americans have decided that playing by the rules doesn’t work. More and more they are coming to believe that the system is rigged against them, the deck stacked in favor of Wall Street and against Main Street.

Whatever their attitudes, the new reality is that they may be right—not just about income inequality and the role of money in politics but also about the extent of opportunity in America. It is narrower than most people assume. A child born into an advantaged family in the United States (one from the top fifth of the income distribution) has twice the chance of achieving the American Dream (a middle class income or better) than a child from the bottom fifth.

Are people’s chances of climbing the ladder becoming more difficult? No one can say for sure. But a lot of evidence points in that direction. Interesting research done by Bhashkar Mazumder, a staffer at the Chicago Fed, finds that family background is becoming a stronger influence on where children end up in adult life. In short, class matters. So perhaps Mitt Romney is right when he calls the protests “class warfare.” They reflect not so much an envy of those who have made it on their own, but rather a resentment that the deck is stacked against those who don’t have the right cards to begin with. It is not the outcomes they complain about but the fact that the game itself is not fair.

Photo Credit: david_shankbone

 

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Prince:

anon-your argument doesn't make a great deal of sense. it doesn't matetr if we discuss AGI or GI. what matetrs is what percentage of tax collected comes from the top 1% or 10% or whatever. we know the amount of tax dollars collected and from how many people. what the income was is not really relevant in terms of laying out who is paying for the US government.you can make a case that the percentages of income tax are not as bad as they look due to deductions, but that has little relevance to who is doing the paying, it's just a measure of burden. with 50% of Americans essentially paying no net income tax, is it any surprise that we are seeing more and more big government spending supported? why not vote for benefits you get that you know you will never pay for.worth considering is this:the top 1% of taxpayers pay 40% of taxes. wealth has never been more mobile than it is now. squeeze this group too hard, and they will leave. if 10% of them leave/stop being economically active, that's a 4% structural deficit.the US needs to find ways to attract and retain the wealthy, ambitious, and successful. we've done a great job of it for a long time. the best and brightest came here because it was the best place in the world to get rich.we are in real danger of losing that. we are certainly no longer the best place to BE rich. being rich in the EU will result in much lower taxes for you if you have the sense to keep your investments offshore. the US is a massive tax haven for wealthy Europeans, but our own citizens are taxed on global income. like it or no, we're going to have to face up to the fact that people and wealth are going to be much more mobile and nations will compete for them just as firms compete for top talent. wishing it weren't so will not make the headhunters stop calling.i've been looking into this a bit, and you'd be astounded at the number of great deals you can get on citizenship (and tax treatment) if you are willing to make direct investments in local businesses.

Sep 22, 2013, 10:40 PM

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