US NEWS & WORLD REPORT 09/26/12
By Michael Shank
David Francis is right to question “Is the American Dream Dead?” (09/25/12). By all accounts, it is. The question, then, is how to revive it.
According to this month’s Census Bureau report, America witnessed a 1.5 percent decline in the real median household income between 2010 and 2011, which was the second consecutive annual drop. This trend doesn’t help America’s income inequality rates, the highest since the early 1900s and the highest among our rich nation cohorts in the OECD.
Add to this decline in the American Dream a U.S. poverty rate that is at unprecedented levels, with over 15 percent of the population, or 46 million, living in poverty. Another nearly 100 million Americans are living in low-income.
Big business should worry about these rates, as this is half of America that cannot spend at desired rates. If the poor among us could build the American dream, they would, and they’d require businesses help to get there. At present, however, the American Dream remains out of reach for many, and so too the dream-building business.
Fixing this requires work on several fronts, including much-needed minimum wage increases, improvements in collective bargaining rights, and Make-it-in-America incentives. A good job and a fair wage is what Americans deserve. This is not unreasonable, no matter how much big business likes to balk and squawk at it. Remember that America’s minimum wage is lower now, adjusted for inflation, than it was in the late 1960s, and that we are witnessing a decrease in household incomes.
Other ways to offset inequality: fairer taxes on dividends and capital gains, which, at present, are taxed at percentages far below wage-based income. Any critics who claim taxes on investment income hurts economic growth are wrong. President Ronald Reagan raised taxes on investment income and the economy did very well, while President George W. Bush’s capital gains cuts did not lead to a strong economy.
Going forward, alleviating poverty must be a part of any effort to revive the American Dream, and that must include minimum wage increases, labor protections, tax reform and even housing assistance, among myriad other poverty alleviation practices. As long as America remains poor and grossly unequal, the economy will remain sluggish and lackluster. Fix the former if you want to fix the latter.
Adjunct Professor at George Mason University’s School for Conflict Analysis and Resolution
Senior Fellow at the French American Global Forum