Bill Totten's Weblog

Tuesday, August 14, 2007

Born equal?

How the US is no longer a land where people of humble origin become film stars and presidents.

by Andrew Stephen

New Statesman (August 13 2007)

America, we're always being told on both sides of the Atlantic, is the ultimate classless society: "the richest, freest and happiest country in the world", in the words of that well-known American proletarian Rupert Murdoch. Yet, increasingly, reliable empirical studies - to say nothing of the evidence staring in the face of those of us who live here - show that this is simply untrue. The US is more stratified politically, economically and socially than ever before.

Take politics, for a start. The most powerful and important job in the world, the US presidency, has been in the hands of just two families - the Bushes and the Clintons - for eighteen years, and will remain so until 2009. Nor is it by any means inconceivable that these two dynasties could stay entrenched in the White House at least until, say, 2029. Is America developing its own aristocracies, which Thomas Jefferson warned was already happening, even in his day?

Should Hillary Clinton win the presidency in 2008 and then complete two terms - which, as things stand, she is more likely to do than any of the country's other 300 million or so citizens - she will be in office until 2017. The chances are that the nation would then be ready for a Republican in the White House. My prediction? Step forward Jeb Bush, governor of Florida until January and brother, of course, of Dubbya. He would still be just 63 for the 2016 presidential election and is by far the brightest of the four sons of George Bush I, who started the era of America's dynastic rule in 1989.

Yet even if Jeb decided to turn the job down for a couple of presidential terms after then, he would still be younger in 2024 than Ronald Reagan was when he successfully ran for his second term in 1984. Should he not wish to return to politics at all, his own smart and politically highly ambitious son George P Bush would doubtless be more than willing, at 48, to step in. By 2017, Chelsea Clinton would be eligible to run for the White House - and so, God help us, would the fun-loving princesses Jenna and Barbara Bush. Perhaps the only modern parallel of rule by political dynasty is that of India, which was governed by the same family for 37 of the first 42 years of its independence.

If all this sounds mere whimsy - as it may well turn out to be - the truth is that it masks far deeper problems of inequality. "The situation of a son [in the US] is more than ever likely to be dictated by his father's social position than by his own merits", says Professor Jacques Mistral, former senior fellow at Harvard's Kennedy School of Government, co-author of La preference americaine pour inegalite (2004 ) and economic adviser to successive French governments. The same message comes from Alice Rivlin, senior economic adviser to successive administrations and former vice-chair of the Federal Reserve, who says: "Income inequality [in the US] is widening quite rapidly. It does matter to people that there are such unequal chances to get ahead."

Most telling of all is a report quietly released last May by the programme policy and planning unit of the respected and non-partisan Pew Charitable Trusts. The first in a series of studies on American economic mobility, produced in collaboration with four think tanks and entitled Economic Mobility: Is the American Dream Alive and Well?, found that a man in his mid-thirties today is likely to be earning $30,010 annually - twelve per cent less than his father earned, adjusted in real terms, in 1974. In the same period, household incomes rose by just nine per cent - and then only because of the large-scale entry into the workforce of women during that period.

So, 231 years after thirteen colonies declared independence from a Britain ruled by hated aristocracies, is the US no longer the land of golden opportunity or the thriving role model for Gordon Brown's Britain so many in the UK believe it to be? Very roughly, the income of each new American generation had risen by 52 per cent since 1820, but the Pew findings "suggest the up-escalator that has historically ensured that each generation would do better than the last may not be working very well", as the authors conclude. Cal Jillson, a political scientist and author of Pursuing the American Dream (University Press of Kansas, 2004), says that because median family income has remained essentially flat since 1973, the very term American dream seems "illusory".

That iconic phrase was not actually coined until 1931 by the historian James Truslow Adams, but the unquestioned tenets contained within it have run through the American bloodstream throughout those 231 years. Few Americans or their British cheerleaders will want to believe it, but Pew found that economic mobility is three times greater in Denmark than it is in the US, 2.5 times higher in Canada, 1.5 times higher in Germany, and more in most other Scandinavian countries. Among the western countries the report studied, the UK had an economic mobility fractionally lower than that of the US - but made up for the difference in other ways. The poor are more likely to stay poor and the rich stay rich in the US, in fact, than in any other western country.

Financial aristocracy

So how did America find itself in this supposedly very un-American situation? In the case of the Bushes, successive generations stay privileged because of old family wealth and social connections. The Clintons represent the kind of self-perpetuating meritocracy of educated winners - those who, once they have gained their foothold, do not let go to make way for people with more merit - of which the late Michael Young tried to warn us nearly half a century ago in The Rise of the Meritocracy (Transaction Publishers, 1994). Chelsea Clinton, at 27, is already a Madison Avenue investor on a thumping six-figure salary and the potential to earn much more; the average earnings of the average hedge-fund manager who works alongside her are $363 million (and that's not a misprint).

Which brings us to America's financial aristocracy, increasingly zooming ahead of the merely extremely wealthy (like those hedge-fund managers). This year, Forbes magazine listed 946 dollar billionaires in the world, 44 per cent of whom are Americans. Even America's mega-rich, such as Warren Buffett (worth a cool $52 billion but still behind Bill Gates, Forbes tells us), George Soros (a mere $8.5 billion) and Ted Turner (certainly rich enough to give away a billion to the UN), have warned of the dangers of this trend. Jefferson himself said that financial aristocracies were "more dangerous than standing armies".

Yet corporate profits and salaries for chief executives continue to soar (the average big-time CEO takes home $11 million a year these days) while the likes of General Motors, Ford, Chrysler and Intel are laying off thousands. Pew reports that, between 1978 and 2005, the pay of chief executive officers multiplied 35-fold - with the result that, in the 21st century, American CEOs take home roughly 262 times more than the workers. Between 1979 and 2004, the real after-tax income of the poorest fifth of Americans rose by nine per cent, the richest fifth by 69 per cent, and that of the top hundredth by 176 per cent.

Thus, the statistics of inequality proliferate. Even King George Bush II grudgingly acknowledged America's increasing economic inequities back in January. "The fact is that income inequality is real", he told a Wall Street audience. "It's been rising for more than 25 years". But, with characteristic self-justifying, feel-good logic, he went on, "The reason is clear: we have an economy that increasingly rewards education and skills because of that education".

The evidence is that this is merely yet another platitudinous whopper from the lips of George W Bush. International comparisons consistently show that the United States lags badly behind other western countries in maths, reading and science education - however much Gordon Brown may worship American institutions such as Harvard. In the words of Mistral, "the rate of university attendance by students from low-income families remains low and does not correct the inequalities of the initial situation". Just the fees for one year's education at an Ivy League college amount to at least $45,000, more than the average American worker earns in a year.

This year has also been the toughest year for college applications in American history: less than ten per cent of the qualified students who apply to the likes of Yale, Princeton or Harvard actually win places at them. Yet nothing - other than exceptional ability at sport - gives a student applying to college or university in the US a leg-up more than if his or her parents attended the same college.

Pessimistic youth

Indeed, an expert in the field tells me that such a parental background gives a thirty per cent advantage to applicants. The term used in the educational field - that the parents provide a "legacy" to their children - is telling in itself. Contrary to widespread belief in the US and in the UK, too, this is not primarily because alumni donate money. My friend says that financial contributions are irrelevant unless they are huge - even $10 million to Harvard, say, is a drop in the bucket if you remember that its endowment amounted to $29.2 billion last year - and "really, it's just tradition for tradition's sake".

These societal trends - combined with the effects of globalisation, the outsourcing of American jobs to low-paying countries, the increased use of technology that replaces people, and more immigration of less highly educated workers - mean that, overall, educational standards in the US workforce are likely to deteriorate even further by 2030. This, in fact, was predicted in a report by Northeastern University in Boston that was released in February this year.

"We have the possibility of transforming the American dream into the American tragedy", says Irwin Kirsch, co-author of that study and senior research director of the Educational Testing Service. These fears are not just triumphalist pessimism from a few disenchanted academics, or from me: a Bloomberg / Los Angeles Times poll found that nearly three-quarters of Americans now believe that inequality in their country is a very important issue. Even more recently, a CBS survey of seventeen- to 29- year-olds found that only a quarter of them expected to be better off than their parents. Forty-eight per cent predicted that they would be worse off.

So could America's equivalent of England's 15th-century Wars of the Roses - between the Clintons and Bushes rather than Lancastrians and Yorkists - be emblematic of seismic trends that are threatening America's very foundations? The Pew report (and there will be even more interesting ones to come) concludes that "the desire to achieve beyond one's parents' economic status or ensure a child's greater success in life has inspired generations of Americans to study hard, work industriously, save carefully, and connect to a set of larger social ideals", but that the concept of the dream is now "showing signs of wear". This, the authors conclude, "is not the America heralded in lore and experienced in reality by millions of our predecessors".

Quite. It is also what I have been saying and writing for decades; an outsider living long-term in America sees the country differently from Americans or shorter-term visitors and foreign residents. Maybe we'll have to wait for President Jenna Bush, taking a leaf out of the book of her legendary father, to do something about it.

Bill Totten


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