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October 12, 2010

Discussion: “The Killing and Reviving of the American Dream”

According to a Library of Congress essay, the term “the American Dream” was first used by James Truslow Adams in his 1931 book entitled The Epic of America. In it Adams writes that the American Dream is “that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement. . . . It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.”

Fast-forward almost 80 years for Llewellyn H. Rockwell, Jr.’s October 11, 2010 article entitled “The Killing and Reviving of the American Dream.” Here Rockwell highlights many of the social trends brought about by the current economic downturn and their troubling impact on the American way of life. He notes that “Economics isn’t just about trade statistics, retail sales or GDP. It is the very pith of life.”

So what are the numbers telling us about our country and the American Dream? What has changed significantly over just a few years? Using Census data Rockwell points out the following changes have occurred:

  • Reduced mobility — fewer people are moving
  • Delayed marriage
  • More people are working from home
  • More people are going back to school or extending school
  • There is a “Boomerang Generation” of young people moving back with their parents
  • High youth unemployment is producing a “Sloth Generation”

Regarding the “Sloth Generation,” Rockwell notes that while many of these young people “have never held a job in their lives” he says that is not their fault “for the most part.” Instead, Rockwell lays the blame on government policies: “The economic crisis, child labor laws, socialized educational costs, minimum wages, and a government-imposed culture of prolonged adolescence have combined to deny opportunity to an entire generation.”

Given these trends, Rockwell suggests it is easy to see “how American living standards have been hammered.” He warns that the American Dream is disappearing:

We are witnessing the fall of the American dream, which has always been about having hope in the future. People do not have that hope as they once did. This is a striking fact of our times, one made even more devastating as we look at the economic fundamentals such as the unpayable public debt and the out-of-control spending in Washington and the states that continues to consume vast amounts of private capital.

Rockwell digs deeper and points out that these American Dream-killing trends actually go back several decades to what he calls “the turning point” — the “severing of the dollar’s last link to gold in 1971.” Rockwell argues it was that move that set the United States on the unsustainable path wherein we find ourselves today:

This is the event that set up the explosion of government growth, of credit addiction across the population, of massive malinvestment in housing and many other sectors, of the gutting of American savings, and, most seriously, of the loss of freedom to the national security state.

The consequences of these changes are very serious Rockwell continues:

Long term, our living standards have been eroded in fundamental ways that have a profound cultural effect. The American family once lived well on one income. Now, two incomes is the expected reality. That shift took place following the great inflation of the late 1970s. Many people saw this as the great news that the workplace was being opened up to women. More likely it was not a sign of liberation, but of a dramatic demographic adjustment required to maintain high living standards. And the state didn’t mind: it added millions to the tax rolls. One wonders if “liberation” is really the right word to use for this change.

Such adjustments are ongoing. The hidden tax of inflation combined with the growing regulation of labor markets, makes maintaining the illusion of high living standards ever more difficult. This explains Generation Boomerang, the delay in entering the workforce, the delay of marriage, unemployment among the young, the dashed dreams after graduation, and the advent of the phenomenon of the lifetime student. These fundamental indicators are not reflected in the GDP data, which count government spending as economic growth, and credit-fueled consumption as evidence of rising living standards.

After pointing out these symptoms of underlying problems, Rockwell lays the blame for them squarely on what he calls the “growth of the leviathan state.” It is the massive expansion in government power and reach that is strangling the American Dream:

In every case, we can easily trace these trends to economic realities, which in turn are profoundly affected by government policy trends and monetary policy in particular. Monetary policy is truly the hidden hand behind the strangulation of the American dream. It is the secret force at work that erodes our living standards, funds the growth of the leviathan state, and makes every sector of economic life dependent on rising debt.

But there are other factors at work here too. Antitrust law hobbles business as never before. Taxes drain productivity from corporations, small businesses, and households. Protectionism keeps the best products at the best prices out of the hands of consumers. Edicts issued by a thousand bureaucracies keep American enterprise constantly guessing about the legal climate. Patent mania has created a minefield for innovation in every sector from medicine to software. Imperial wars have drained away capital and labor resources from the private sector.

The leviathan state is the great enemy of American prosperity, the monster that devours wealth. Every bit of economic growth that we experience is due not to the presence of this leviathan, but to the ingenuity of American enterprise in getting around the barriers.

Understanding that last sentence is key to our economic success. But how do American entrepreneurs get around these barriers? Rockwell continues:

To understand how this works, imagine the US economy as a car on a racetrack. Private enterprise, in addition to building the car, provides the fuel, maintenance, and technical innovations that make it run. The government, meanwhile, is in charge of the track, and it puts tacks on the road, increases the sharpness of the turns, and adds speed bumps, as it burns with envy.

In order to keep the car travelling forward at a fast rate, private enterprise has to innovate constantly, adding horsepower, tack-proof tires, and drivers that are ever more skilled. Private enterprise can never rest in its efforts to overcome the ever-intensifying demands on the car and driver. All the while the Federal Reserve stands by to tempt the car’s crew with engine-destroying fuel available at zero price.

Rockwell concludes that the “sad reality” is that there is no “easy way for freedom to triumph today.” Ultimately, “all forms of government intervention, domestic and international” will have to be ended. Rockwell argues that corporate socialism (and all bailouts), the “gargantuan military industrial complex,” and the systems that provide “social security and medical benefits” will have to stop. Rockwell writes:

These three systems of socialism are a main cause of the American bankruptcy. They are absolutely unsustainable. A consistent application of the principle of liberty must take aim at these programs, across the board, with no exceptions.

Rockwell concludes that the resurgence of interest in classic free market economic books “by dead people like Bastiat, Mises, and Hayek” are changing people’s minds. This interest is important since ideas are the “most potent weapon in the struggle between freedom and power.” Since a government’s power “always depends on at least the tacit consent of the governed,” such a renewed interest in free markets, liberty, and limited government is shifting the balance of power to the people and away from big government. Rockwell leaves with a final encouraging thought:

Changing minds can bring a long-lasting victory for freedom, for ourselves and our descendants. Even in the midst of the biggest economic disaster in 70 years, we’ve never had more opportunities to enlighten not only this country but the entire world. It all depends on the actions and choices we make today.

Let us take heart. Let us enlighten ourselves with a thorough understanding of our Constitution, our history, and a consistent view of liberty. Let us share this truth with others. And together, if we follow through, we can rebuild our country and revive the American Dream.

Image credit: federico stevani

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