Futures Market
How the American dream disappeared, and how to get it back.
By Ezra Klein
Thursday December 21, 2006
It’s not supposed to be this way. You got good grades. You went to college. When you were young, you parted your hair right in the middle and, for one embarrassing year, even sang in choir. Choir! And yet, that American Dream you always heard about, that cool condo in a cultural epicenter outfitted with artifacts of your affluence is nowhere to be found. Instead, you’re toiling away at some entry-level job, you live in an under-heated walk-in closet that Craigslist promised was a “centrally located, spacious urban oasis,” you don’t have health care, and you’re not even dreaming of a 401(k).
A past generation of over-educated, underpaid, somewhat dramatic twenty-somethings might have called this situation “Kafka-esque.” (Then they would have smoked a cigarette, readjusted their beret, and flounced off.) If you’re one of these entry-level laborers, you will, much more accurately, call it “Hacker-esque.” Because you, my friend, are part of what Jacob Hacker, a political scientist at Yale, has chronicled in his bombshell book The Great Risk Shift.
The Great Risk Shift is the slow erosion of America’s social compact. The archetypal post-World War II arrangement envisioned a lifetime job at a behemoth corporation that would pay enough to buy a home and support a family, offer health coverage and retirement security. It was, in essence a social democracy unto itself. That accord has broken down in the last 30 years. As Hacker ably documents, the economic security once offered by the private sector has steadily eroded. More Americans than ever before now face insecure retirements, unexpected income shocks, abrupt disruptions in insurance coverage, job termination, wage decline, and a host of other unpleasant surprises. America has not become a poor land, but it has become a more financially uncertain and insecure one.
Conservatives claim this is merely the market using its infinite, merciless wisdom to weed out those who haven’t adapted to the new knowledge/information economy (2.0!). Education and retraining, they promise, will exempt you from such unpleasantness. And so it is all the more galling that education has proven so minimally helpful in recent years.
Let there be no doubt: It is far better to have graduated college in this economy than to have nothing more than a high school diploma. But for the many students who have accepted the premise of college as a conveyor belt to success, the rewards have come with a lien. “Between 1977 and 2003,” Hacker writes, “as the number of students enrolled in college rose by 44 percent, the cash value of student loans rose by 833 percent. In the 10 years between 1993 and 2003, the percentage of students graduating from four-year public colleges with loan debt increased from 25 percent to 58 percent. For those graduating from four-year private colleges, the proportion with debt rose from 40 percent to 70 percent. College students now graduate with roughly $20,000 in debt on average, graduate students with roughly twice that, and professional students with roughly five times that.”
Worse, since 2000, college graduates have seen their incomes decline. If education only serves to slow your economic descent, is the “college equals affluence” deal truly the successor to the old social contract? It would seem not.
Conservatives would like to sidestep this conversation, placing the onus almost entirely on the individual. That way, the economic struggles and insecurities illuminated by Hacker’s data become morality tales, instances of sin and virtue where the good are enriched and the wicked, or at least the short-sighted, are penalized. Such a story justifies our current economy quite neatly: As the richest 10 percent, 5 percent, 1 percent, and 0.1 percent continue to amass ever more remarkable amounts of wealth, their best hope of protecting their riches lies in recasting them as payouts for economic virtue.
Hacker, however, is skeptical of how such evasiveness will play in the Heartland. “[A]s enduring the faith in rugged individualism was, and continues to be, Americas [have] also come to accept and expect a substantial role for government and corporations in shielding workers from the major economics risks they faced.” The right can spin inequality and insecurity by calling it an ownership society, but America isn’t buying.
Indeed, the great contribution of Hacker’s book is to explain why that is. In an economy where the aggregate growth numbers are robust and the median household is relatively well-off, many have puzzled over the lukewarm ratings voters offer the economy. His book is a welcome corrective to such head-scratching, a clear and concise explanation for why economic anxiety remains such an enduring feature of American life. And it offers a way forward, whereby government would assume some of the risk corporations have shed, thus freeing individuals to pursue their lives with more confidence and security. It can do that, Hacker suggests, through universal health care, robust wage insurance, universal 401(k)s, and a variety of other social democratic means. Hacker’s vision may not move you out of your walk-up in Queens or make your internship pay in cash rather than contacts, but it assures you that, while you make the sacrifices necessary for your American Dream, a frown from Lady Luck will not mark your end. Risk, in other words, must shift back, onto society as a whole.
Ezra Klein is the writing fellow at The American Prospect. His blog is at www.EzraKlein.com.
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nice post. couldn’t agree more
— kevco0509 - Jan 4, 05:26 PM - #I’m a conservative that reads this site (and agree with almost none of it, But that’s not why I am writing).
I am writing because I’ve noticed an interesting trend. Those people that consider themselves ‘liberal’ often are the ones who make issue about that lack of affordable housing or student loan payments, I know conservatives and none make the same complaints. I was thinking about why this is, and realized that many it is an issue of location.
If you overlay the map of the last election and a map of cost-of-living you get a very high correlation.
In other words, many areas of the country that are politically left-leaning are also very expensive areas to live.
Compare this with a city like Houston, where the median home price is in the low $100s and also right leaning.
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