
Two leading economists disagree about the flagging American Dream - prostoalex
https://www.economist.com/united-states/2020/05/14/two-leading-economists-disagree-about-the-flagging-american-dream
======
flohofwoe
Having seen the Iron Curtain from both sides (first from the East, and after
1990 from the West), I sometimes wonder whether the idea of the "American
Dream" was ever more than a Cold War propaganda weapon not aimed directly at
the US population, but at the people at the other side of the Curtain.

Was life in the US ever as great and shiny as depicted in the US TV series
like Magnum P.I., A-Team or the 6-Million Dollar Man that those of us with
access to Western TV gobbled up with awe and wonder, or was it always a naive
myth but the propaganda weapon worked so well that it still even now affects
the US population, when both old and young talk about how much better the 70's
have been compared to today?

(I guess the truth is - as always - somewhere in the middle)

~~~
rayiner
TV has always been propagandist insofar as it portrays the life of upper
middle class people. The father in Leave it to Beaver was a college graduate
at a time when when only 5% of his cohort graduated college. But to the extent
that big houses and lots of cars are the “American Dream” it’s real. Household
consumption spending per capita in the US is more than 7 times higher than in
Poland, and 90% higher than in France.

If you have not had the chance, go visit the rest of the country outside the
coasts (where people suffer under self-inflicted policy choices). Places where
college graduates struggle to afford a one bedroom apartment in a city where
human feces covers the streets isn’t a good proxy for what life in America is
really like. Try Kansas City, Des Moines, Houston, etc. The widespread
material prosperity is evident..

~~~
bhupy
I shared this chart with a friend of mine who lives in the Bay Area:
[https://www.hsh.com/finance/mortgage/salary-home-
buying-25-c...](https://www.hsh.com/finance/mortgage/salary-home-
buying-25-cities.html)

She was shocked that, in most of the US, the median home price is at or under
$300K.

------
ineedasername
It's no surprise that a couple of economists might disagree about it: The
definition of the American Dream isn't one upon which everyone would agree to
begin with. However, a common theme is something like social/economic mobility
without regard to circumstances of birth. And to that extent, it would be hard
to argue that the American Dream has been universally available to all
Americans at most points in our history.

~~~
sokoloff
I would argue that _perfect_ social/economic mobility is probably not only
unattainable but perhaps even undesirable. It should be high, such that gifted
children of any background can flourish, but should almost surely fall short
of whatever 100% “everyone draws straws” perfectly uncorrelated would be.

I believe that raising the next generation is our most solemn obligation as
parents. It seems overwhelmingly likely that this would confer some benefit to
the more well-to-do that cannot be entirely eliminated short of universal
boarding schools and even that might not be enough.

Why do children of professors grow up to be professors, doctors to doctors,
plumbers to plumbers, etc? I’m sure there’s some genetic component, but I
suspect the overwhelming influence is what they experienced and how they were
raised. When I was growing up, both my parents were teachers and at some young
age, I just assumed that literally _every adult_ was a teacher. It was the
only job I knew and saw daily.

I believe that having and even encouraging parents to strive, scrimp, save,
and sacrifice for their children is an overall positive force for society. My
parents benefited greatly from it, as did I, as will my kids. If you took the
actions required to make outcomes totally uncorrelated, I think you’d remove a
lot of this sacrifice and effort that society benefits from when parents raise
their kids to be “better off” than they were.

~~~
pessimizer
> society benefits from when parents raise their kids to be “better off” than
> they were.

Society doesn't benefit from this. Low-status jobs still have to be filled, at
least until technology eliminates them. Making sure that your kids aren't the
ones that do them isn't a benefit to anyone but you and your kids.

> I believe that having and even encouraging parents to strive, scrimp, save,
> and sacrifice for their children is an overall positive force for society.

This is less a thing that doctors have to do than a thing that plumbers have
to do.

~~~
zozbot234
Low-status jobs are low-status _because_ they don't really need to be filled,
at least not at the current margin. Seeking a "high-status" job, for oneself
or one's kids, is by and large a socially-beneficial activity.

------
paulus_magnus2
There is a conflict of interests:

\-- as a society we should strive for what Warren buffet calls "lottery of
birth" [1]. Egalitarian society will better maximize utility of it's gifted
population.

\-- as individuals we try to game the system in order to give our children &
filmy, friends a lag up. So we want meritocracy and egalitarianism from
everyone while practicing nepotism for our close ones.

[1] [https://www.getrichslowly.org/warren-buffett-on-the-
lottery-...](https://www.getrichslowly.org/warren-buffett-on-the-lottery-of-
birth/)

------
spiralganglion
What does it mean for an economist to be "leading"? How is that assessment
made. On what basis / criteria?

~~~
pzone
How is a leading academic of any kind determined? Perhaps surveys among other
economists, or peer evaluations? For a more concrete metric, paper citations
within the past 10 years?

~~~
friendlybus
Among the scientists it's easier to make a clear cut statements about impact.

------
AndrewKemendo
"The reason they call it the American Dream is because you have to be asleep
to believe it." \- George Carlin

Social Mobility, aka "The American Dream" has been flat since the decoupling
of productivity and Labor in 1971. [1] [2]

[1][https://www.pewtrusts.org/~/media/legacy/uploadedfiles/wwwpe...](https://www.pewtrusts.org/~/media/legacy/uploadedfiles/wwwpewtrustsorg/reports/economic_mobility/PursuingAmericanDreampdf.pdf)

[2][https://www.bostonfed.org/publications/research-
department-w...](https://www.bostonfed.org/publications/research-department-
working-paper/2011/trends-in-us-family-income-mobility-1969-2006.aspx)

~~~
sokoloff
From the first link, there are two critically important, overwhelmingly
positive notes IMO:

■ Eighty-four percent of Americans have higher family incomes than their
parents had at the same age, and across all levels of the income distribution,
this generation is doing better than the one that came before it.

■ Ninety-three percent of Americans whose parents were in the bottom fifth of
the income ladder and 88 percent of those whose parents were in the middle
quintile exceed their parents’ family income as adults.

Not only are the vast majority of people doing better than their parents, this
effect is even stronger at the bottom of the distribution. That seems pretty
damn good to me.

End notes in the study confirm sensible treatment of the comparisons: Measures
of family income are adjusted for family size and inflation. Measures of
earnings are adjusted for inflation. Measures of wealth are adjusted for
inflation and age.

~~~
vkou
The average family has more workers, doing more work hours in it now than it
did a generation ago.

I'd hope the average income is higher.

Also, how many years of the average family income does it take to buy a small
family home these days? How many years of income did it take a generation ago?

The median US family income in 2019 was $75,500. The median US single-family
home price in 2019 was $327,000. [1]

The median US family income in 1990 was ~30,000. The median single-family home
price in 1990 was $79,100. [2]

Somehow, I look at these numbers, and can't interpret them as being 'good
news'.

[1]
[https://fred.stlouisfed.org/release/tables?eid=206085&rid=97](https://fred.stlouisfed.org/release/tables?eid=206085&rid=97)

[2]
[https://www.census.gov/hhes/www/housing/census/historic/valu...](https://www.census.gov/hhes/www/housing/census/historic/values.html)

~~~
mrep
As long as you avoid the west coast, you should be fine as inflation adjusted
price per square foot hasn't really changed [0].

[0]: [https://www.supermoney.com/inflation-adjusted-home-
prices/](https://www.supermoney.com/inflation-adjusted-home-prices/)

~~~
mywittyname
But houses across the board are much larger than before. I live in a mostly
1950s era neighborhood and the houses are tiny by America standards. Almost
all of them are <1,000 sq ft, two bedroom with a one-car driveway and no
garage.

A modern house in much of middle America is going to be at least 2,000 sq ft,
but 3,500 is certainly common, as the average size currently stands at around
2,800.

~~~
vkou
> But houses across the board are much larger than before.

The problem, of course, is that in any given neighbourhood, the price of a
smaller home is nearly the same as that of a larger one.

