Der Spiegel on "A Superpower in Decline"

Sometimes the most clear-eyed analysis of the United States comes from outside the country, and this may be especially true in these times when so many Americans are frightened and angry about the way things are going. Germany's weekly newsmagazine Der Spiegel has published a long and thoughtful piece about the United States, entitled "A Superpower in Decline: Is the American Dream Over?" which reflects and updates many of the themes I raised in The End of the American Century.

For those who would dismiss Spiegel's analysis as biased, left-wing, or "socialist," I should point out that the magazine is generally considered to have a conservative (and capitalist!) slant. It is enlightening, and a little sobering, to read an intelligent analysis of our problems from outside the cauldron of contemporary U.S. politics.

Below are a few excerpts from the Spiegel article, though I would encourage everyone to read the whole thing.

• America has long been a country of limitless possibility. But the dream has now become a nightmare for many. The US is now realizing just how fragile its success has become -- and how bitter its reality. Should the superpower not find a way out of crisis, it could spell trouble ahead for the global economy.

• Americans have lived beyond their means for decades. It was a culture long defined by a mantra of entitlement, one that promised opportunities for all while ignoring the risks.

• The country is reacting strangely irrationally to the loss of its importance -- it is a reaction characterized primarily by rage. Significant portions of America simply want to return to a supposedly idyllic past.

• The rich keep getting richer, with the top 0.1 percent of income earners making more money than the 120 million people at the bottom of the income scale.

• Since the beginning of the millennium, no new jobs are being created on balance, because the US economy has undergone structural change. Companies are dominated by investors interested only in the kinds of quick and large profits that can be achieved by reducing the workforce.

• In 1978, the average income for men in the United States was $45,879. In 2007, it was $45,113, adjusted for inflation.

• How strong is the cement holding together a society that manically declares any social thinking to be socialist?

• The United States of 2010 is a country that has become paralyzed and inhibited by allowing itself to be distracted by things that are, in reality, not a threat: homosexuality, Mexicans, Democratic Majority Leader Nancy Pelosi, health care reform and Obama.

Immobility Furthering Decline

Caleb Hamman

chamman@butler.edu

In a time of financial turmoil and drastic inequality, one would hope the American Dream to be functioning well. This notion, that hard work will bring success to anyone in the United States, has always been central to America’s ideological fabric. Despite such tradition, recent research suggests a need to reevaluate the accuracy of the American Dream.

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Ongoing work at the Economic Mobility Project (EMP) has been attempting to do just that. A nonpartisan effort funded by the Pew Charitable Trusts, EMP has been conducting the most detailed research of U.S. economic mobility to date. Its findings, thoroughly concerning, strongly reinforce the arguments of The End of the American Century.

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Using longitudinal income data, EMP researchers find the United States to be a more class stratified society than commonly believed. Despite the popularity of “rags to riches” notions, the EMP finds that, on average, children born into the poorest fifth of households have only a 6 percent chance of making it to the top income quintile. Conversely, 42 percent will remain in the poorest group. More than six in ten of these impoverished children never become even middleclass.

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Similar mobility barriers exist at the top. While 39 percent of children born into the richest income quintile will remain there, only 9 percent will fall to the bottom. EMP finds remnants of mobility remains in the middleclass, although even these children are more likely to fall into poverty than they are to rise to wealth.

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The project’s findings are particularly disturbing in the areas of gender and race. Women, already suffering multifaceted disparity with men, are also less mobile than their male counterparts. Compared to these, it is considerably harder for women born into poor families to become wealthy. Similarly, it is also easier for wealthy women to become poor.

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The racial contrast is even starker. Black children are half as likely as their white counterparts to move from extreme poverty to extreme wealth. Simultaneously, black children born into the bottom income bracket are almost twice as likely as white children to remain there. Incredibly, EMP finds that nearly three in four middleclass black children will fall into poverty—a condition tremendously difficult for them to escape.

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As such findings suggest, the American Dream is not as dynamic as many believe it to be. In fact, U.S. mobility levels are actually lower than those of many developed countries. As the EMP reports, the two major international comparisons to date have placed U.S. mobility levels either last or second-to-last among nations analyzed (which have included mostly Western Europe and Scandinavia). As EMP’s authors put, “the view that America is ‘the land of opportunity’ doesn’t entirely square with the facts.”

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In light of the numerous economic, political, and social issues contributing to U.S. decline, the discovery of immobility is particularly troubling. As Americans become more economically and politically unequal, the stakes of socioeconomic outcomes continue to rise. That these outcomes are out of the hands of many is more than a contributor to The End of the American Century—it is an issue of fundamental fairness and a contradiction of one of America’s most cherished ideals.

Bartels Finds Declining Equality and Influence

Caleb Hamman

chamman@butler.edu

Economic and political inequality are among the most significant aspects of U.S. decline. Both topics are the focus of the most recent work of Princeton Political Scientist Larry Bartels, Unequal Democracy: The Political Economy of the New Gilded Age. In his book, Bartels sets out to analyze the political causes and consequences of economic inequality, arguing that these are both substantial and urgently relevant to alleviating injustice.

Naturally, Bartels begins by assessing the extent to which economic inequality exists in the United States. After detailed review of current literature and government data, Bartels offers findings very much in line with those of The End of the American Century, essentially that “current levels of inequality rival those of the Roaring Twenties,” making it fitting to speak of a “New Gilded Age” or a “retrogression of historic scope.” As Mason points out, this sort of inequality can lead to monstrous disparities, such as CEOs making more than 500 times their average employee, and has effectively caused the United States to become more unequal than “any advanced industrialized country.”

Like The End of the American Century, Bartels finds that current inequality is not a recent phenomenon, but has been growing sharply since the 1970s. Although this observation is generally accepted, Bartels then goes on to make a less mainstream claim—that increasing economic inequality is a largely a result of public policy. While Bartels readily concedes that economic factors like globalization and technology have contributed to inequality, he staunchly refuses to attribute the entire dynamic to arcane “market forces” or inculpable “economic realities.” Rather, a significant role is played by political intervention, an idea Mason also highlights by discussing issues like the “elimination of the federal welfare system” and the “stagnation of the minimum wage.”

Bartels goes one step further. He argues that U.S. economic inequality is “profoundly shaped by partisan politics”—specifically that “middleclass and poor families” have “fared much worse under Republican presidents than they have under Democratic presidents.” This is not necessarily a novel notion, but rarely has it been supported by such detailed analysis. Using exclusively Census Bureau data and controlling for non-partisan variables such as international crisis, Bartels conclusively demonstrates that the incomes of most have grown at substantially higher rates under Democratic presidents than under their Republican counterparts.

After illustrating his findings with three chapter-length case studies, Bartels turns to his second major point—the political consequences of inequality. Here, his research is particularly disturbing. In calculating the recent responsiveness of U.S. Senators to their constituents, Bartels finds that:

Senators’ roll call votes were quite responsive to the ideological views of their middle- and  high-income constituents. In contrast, the views of low-income constituents had no discernible impact on the voting behavior of the senators…the statistical results are quite consistent in suggesting that the opinions of constituents in the bottom third of the income distribution were utterly irrelevant.

Examining the potential causes of this mass political exclusion, Bartels finds that “biases” in “senators’ responsiveness to rich and poor constituents are not primarily due to differences between rich and poor constituents in turnout, political knowledge, or contacting.” Rather, “the data are consistent with the hypothesis that senators represented their campaign contributors to the exclusion of other constituents.” As Mason puts it, “When people do not…contribute to political campaigns, they are less likely to be listened to by legislators or policymakers, and their interests are less likely to be taken into account in the political process.”

In analyzing the totality of his findings, Bartels delivers a particularly sobering assessment:

In Aristotle’s terms, our political system seems to be functioning not as a 'democracy,' but as an 'oligarchy.' If we insist on flattering ourselves by referring to is as a democracy, we should be clear that is a starkly unequal democracy.

Despite such foreboding, Bartels attempts to end with a more hopeful thought: Since inequality has been largely been brought about by conscious political action, there seems to be potential for prescriptive change. As Bartels puts it, “We can make these choices.” But as Mason points out, we are quickly running out of time.

Facing Reality

Rosa Brooks, columnist for the Los Angeles Times, sees the U.S. economy in the same situation as The Titanic bearing down on the iceberg (Obama's, and Our, Iceberg). She faults both McCain and Obama for underestimating the seriousness of the economic situation and the long term prospects for recovery from the crisis. Addressing the October 7 debate, she writes:

And when asked by Brokaw if the economy will get "much worse before it gets better," Obama's response was quick: "No. I'm confident about the American economy."

Really? I'm not.

The main problem, as I see it, is the inability or refusal of our political leaders to recognize what all this means for the United States and for its citizens. We have reached the end of a long period of prosperity--but it was a prosperity built on debt. The current crisis signals the end of the line. As Rosa Brooks astutely points out, nobody "yet" knows how to solve these problems. But the first step in solving a problem is recognizing it. Only then can we begin to fix it.

(Thanks to Vivian Deno for sending this column to me).

Is the bartender finally presenting us the bill?

Washington Post columnist Eugene Robinson has a column today in the Indianapolis Star entitled "A Rude awakening from the American dream." He, like most of us, is bewildered by the economic upheavals and wonders if this means that the U.S. will become poorer and if the "next generation of Americans [will] lead lives of less affluence and comfort."

"I want to know if this is some kind of financial reckoning for the way we've been living so far beyond our means. Is the bartender finally presenting us the bill for our tab?"

He worries, as we all do, that this economic crisis "may be more than just an episode."

"I'm worried that what's at stake is not just a few years of lost economic growth, but our traditional notion of the American dream."

He wants straight talk from Obama and McCain.

"Don't give me empty words about American exceptionalism. Tell me in plain language what our new place is in the world and how we're going to give our children the good life that we've enjoyed."

I second all of these sentiments by Mr. Robinson, but I fear the answers are not what he would like to hear. We do need straight talk and truthtelling from our leaders, but it will mean facing up to the reality that the U.S. place in the world will be diminished, and our children will not have the affluence that we have enjoyed--mostly on borrowed money. But a good life can be built on other things than consumerism and instant gratification.