Read an Excerpt
The Tyranny of Dead Ideas
Revolutionary Thinking for a New Age of Prosperity
By Matt Miller Henry Holt and Company
Copyright © 2009 Matt Miller
All rights reserved.
ISBN: 978-0-8050-9150-2
CHAPTER 1
THE KIDS WILL EARN MORE THAN WE DO
In which we learn that downward mobility for millions is a new fact of American life, forcing us to think in new ways about "progress" in order to thrive
The voters in the town hall meeting were so quiet you could almost hear them straining to listen. No public official, let alone a newly sworn-in president, had ever talked to them this way.
"Look," said the president, walking across the stage with a microphone in hand, "here's what no one wants to tell you. Structural changes in our economy, and new competition as countries like China and India rise abroad, mean that we're in a different world now. That pattern we once took for granted, in which our incomes basically kept rising across the board, turns out to be something we can't sustain. Many of you are earning less than your parents did, and the truth is, many of your children will earn less than you do." The president paused, watching as the words sank in. "Now, we can pretend this isn't the case. Most people in Washington think we're better off doing exactly that. But I don't think denial helps any of us. I know it won't help us come together to do the things we need to do as a nation to thrive even amid these new realities."
Don't worry, you didn't miss the news; the scene above never happened. No politician would say these things even if he believed them to be true, because they challenge a notion at the heart of the American dream: the idea that the kids will earn more than we do. This idea has been at the core of American experience for so long that it seems to us the natural order of things, a brand of progress to which we're practically entitled. Wave after wave of immigrants, after all, found the streets in America were paved with gold, at least over the long run. Their children found they could rise further in a vibrant economy. Little wonder that in time this expectation became embedded in the American mind. Assuring that our children rose above us became a defining feature of a family's success, and our chief measure of a satisfactory economy. Political leaders, who hold up a reliable mirror to the convictions of their followers, plainly believe we cherish this prospect, because it is central to how they talk about our lives. If someone even suggests that economic progress is eroding, they resist the possibility with a passion that suggests how deeply they feel we all need to believe in this idea. It's as if relinquishing the certitude that the kids will earn more than we do would be to give up something essential in the American spirit. "We won't be the first generation in American history to leave our children worse off," runs the familiar cry. We can redeem the promise of the American dream, we're told. We can hold on.
The problem, however, as new research shows, is that we've already crossed the Rubicon. As many as 100 million Americans now live in families that are earning less in real terms than their parents did at the same age. The rise of such developing economies as China and India means this earnings picture is only likely to get worse. One in three American jobs may be exposed before long to competition from workers overseas, putting an effective wage cap on large swaths of employment even if jobs don't actually move offshore. New research also shows that, contrary to popular myth, upward mobility — the ability to rise from the station into which you are born — is now lower in the United States than in many European countries. To be sure, for the immigrants who make up 12 percent of the population, it remains the case that America is the land of opportunity, where people who arrive with little but pluck and drive can rise. But the other 88 percent confront a striking new reality: ingrained assumptions about generational progress in America no longer hold, and before long may be at risk for nearly half the population.
"An important foundation of American life is mass upward mobility, in which each generation does better than the last, and people see gains in purchasing power throughout their career, and gains over what their parents earned at a similar age," says Frank Levy, an economist at the Massachusetts Institute of Technology who studies these trends. "If we've evolved to a situation where most productivity gains are going to the very top of the income distribution, and most people don't experience that mass upward mobility, then we're undermining an important feature of American life." (It's important to note that as long as the overall economy grows, so will income per person, meaning that Americans on average will earn more than the previous generation did. But the highest earners, who are reaping nearly all of the gains from growth in today's economy, will skew that average, meaning that for many middle-class and working-class Americans, the next generation will be earning less.)
People sense what's unfolding, even if it remains politically taboo to say it. A July 2007 survey by the Pew Global Attitudes Project found that 60 percent of Americans expect the next generation will be worse off than theirs, versus 31 percent who expect they will be better off. The persistence in our public life of a national selfimage at odds with these private anxieties inhibits virtually any serious discussion of what we might do about the situation.
Yet the truth is that these developments, while hardly what we would choose, are not something to fear, and will not prove asominous as many of us seem to imagine. Yes, they represent a jolt to our expectations and an unsettling break with our history. But if we approach the future with fresh eyes, the tests we now face will present an opportunity to fix serious flaws in our economy that have long been ignored because of our faith in the ever-rising tide. Seen in this light, our biggest problem isn't the economic change that is upon us, but the way that our outdated thinking prevents us from responding forcefully in this new situation to improve people's lives.
No one takes pleasure in the prospect that many Americans will face harder times as the country adjusts to the rise of new economic powers and sweeping new technologies. But to move forward we must first face facts. Liberating ourselves from the Dead Idea that the kids are sure to earn more than we do will force us to reexamine a fundamental question that almost never gets explicitly discussed: What is the role of the individual, and what should be the role of the broader community, in assuring opportunity and security in a wealthy nation like the United States? As events force us to consider fresh answers to this question, the result will be a good life, and in some ways a better life, even for Americans who face wage strains. When the dust clears, moreover, America will not have lost its native optimism. It will have gained the sturdier brand of hope that comes from dealing squarely with unpleasant realities rather than wishing them away.
THE BIG BANG
Why do Americans think a better standard of living for their children is a national birthright? Because this remarkable pattern has largely been our experience since the nation's earliest days. From the start, this striking record represented a sharp break with previous economic history, and with the humbler expectations people once held. A quick (and selective) trot through a few key episodes of America's economic journey helps make clear why the assumption that the kids will earn more than we do has deep roots in the American mind.
In the beginning, or at least going pretty far back, the idea of economic progress was meaningless, because there was none. "From the earliest times of which we have record," wrote John Maynard Keynes in 1930, "back, say, to two thousand years before Christ, down to the beginning of the eighteenth century, there was no very great change in the standard of life of the average man living in the civilized centers of the earth." Some periods were a little better, some a bit worse, but overall there were no important movements in average incomes over some forty centuries. Keynes ascribed this general stasis to "the remarkable absence of technical improvements" and "the failure of capital to accumulate" for growth-fueling investment. It's a stunning thought. Older Americans today can recall youths spent without commercial air travel, indoor plumbing, television, polio vaccines, long distance phone service, and countless other life-improving inventions. The idea that 150 generations once passed without a meaningful rise in living standards seems hard to fathom. But thus it was.
Then, in the late eighteenth and early nineteenth century, two powerful sets of forces converged to create a uniquely American creed of economic progress and generational betterment. Think of it as a sociological "Big Bang," with two critical ingredients: the founding of the United States itself, and the advent of the Industrial Revolution.
Take America first. The new republic's official policy of classlessness and ethic of equal opportunity made it unique in history. To be sure, from our vantage point today, many groups were excluded from this vision, including, most shamefully, African-Americans. But it's hard to overstate the breakthrough represented by America's foundational commitment to the idea that "all men are created equal," with an inalienable right to "life, liberty and the pursuit of happiness." Alexis de Tocqueville, though cognizant of variations in wealth and status in the young republic, found it telling in the 1830s that America didn't require its lowly born to acknowledge their inferiority or to bow to superiors. Tocqueville also caught the economic mood when he wrote that ordinary Americans seemed to shine with "the charm of anticipated success."
In short, America was about upward mobility, the chance to rise from the station into which you were born to whatever heights your talents and efforts might let you attain. This helps explain why America came to lead the world in mass education not long after its founding. American mores also reflected this zest for improvement. Hard work and economic ambition were seen as proper pursuits for a moral person, not frowned upon as vulgar or wicked, the opinion of European aristocrats and clergy. This judgment was echoed in the sociologist Max Weber's seminal account of how "the Protestant ethic" helped fuel the rise of American capitalism. The spirit was exemplified by Benjamin Franklin, the self-made publisher, politician, scientist, and diplomat, whose homey sermons on work, frugality, and thrift in Poor Richard's Almanac were wildly popular. But the most sublime and enduring emblem of America's ethos of advancement was our sixteenth president, Abraham Lincoln.
IT'S THE ECONOMY, ABE
Lincoln forever seared the idea of economic progress into our national psyche. That a self-taught rail-splitter born in a log cabin could rise to the White House proved something marvelous about America, as Lincoln himself knew. "Nowhere in the world is presented a government of so much liberty and equality," he told soldiers on their way home to Ohio in 1864. "To the humblest and poorest among us are held out the highest privileges and positions. The present moment finds me at the White House, yet there is as good a chance for your children as there was for my father's."
"Twenty-five years ago I was a hired laborer," Lincoln told a group on another occasion. "The hired laborer of yesterday labors on his own account today, and will hire others to labor for him tomorrow. Advancement — improvement in condition — is the order of things in a society of equals."
This passion for individual advancement shaped Lincoln's approach to the slavery question in ways that we tend to forget. As he maneuvered in pursuit of the presidency in the late 1850s, Lincoln focused not so much on the morality of slavery (though he believed it wrong), but on the fate of Northern white laborers if slavery was extended to new states. After all, Lincoln argued repeatedly, how could men settling in these places ever improve their lives (and wages) if they had to compete with slaves who earned nothing? For the sake of the white working man's prospects, he concluded, the line on slavery's extension had to be drawn. This shrewd framing of the issue, which aligned the average man's economic interests with the moral fervor of abolitionists whose goals far outran public opinion, helped catapult Lincoln to the White House.
The historian Richard Hofstadter reminds us that by articulating the stakes this way, Lincoln made the Civil War not about slavery per se but about defending popular government as "a system of social life that gives the common man a chance." Lincoln
spoke for those millions of Americans who had begun their lives as hired workers — as farm hands, clerks, teachers, mechanics, flatboat men, and rail splitters — and had passed into the ranks of landed farmers, prosperous grocers, lawyers, mechanics, physicians, and politicians. Theirs were the traditional ideals of the Protestant ethic: hard work, frugality, temperance, and a pinch of ability applied long and hard enough would lift a man into the propertied or professional class and give him independence and respect if not wealth and prestige.
For Lincoln, Hofstadter concludes, "the vital test of a democracy was economic — its ability to provide opportunities for social ascent to those born in its lower ranks."
The historian Jim Cullen adds that for Lincoln, "the true end was the American dream" — not abolition, and not the union of the states. Lincoln saw the Civil War preserving "a place where upward mobility would thrive without hypocrisy or the challenge of alternative ideologies that would subvert it." If Ben Franklin was an Old Testament prophet of the dream of upward mobility, Cullen concludes, "Lincoln was its Jesus Christ."
ONWARD AND UPWARD
Yet when it came to the advancement of society as a whole, all the individual opportunity in the world might have meant little had America's early years not also coincided with the kickoff of the Industrial Revolution. This made the idea of economic progress something that applied on a grand scale to entire nations, not just to particular people with moxie and drive. Thanks to a mysterious alchemy of cultural readiness, engineering creativity, and legal protections (such as patents), advances that altered entire industries began to appear in an extraordinary burst around this time. Inventions from the spinning wheel to the steam engine spurred startling leaps of productivity in textiles, mining, chemicals, machine tools, coal, iron, and more.
The unfolding industrial ascent was matched by a new way of thinking about history's trajectory. Until this time, history had generally been regarded as cyclical, a series of situations that repeated themselves endlessly. The Bible spoke of periods of war and periods of peace, and of good harvests and bad harvests, with no notion of "progress." Empires and civilizations rose and fell: think Persia, and Greece, and Rome. The rise of science, and science's capacity to bear fruit for industry, changed this outlook. The idea of economic progress came straight out of the Enlightenment, when "useful knowledge" — what we call science and technology today — showed itself to be the wellspring of sustainable advances in human society.
Keynes's endless night of stagnation was over. Beginning around 1820, the amount of income the U.S. economy produced per person — per capita GDP — began to take off. It has grown ever since at an average of more than 50 percent every twenty-five years.
The experience of "more" led ordinary Americans to expect more. Karl Marx wasn't happy about this. An avid America-watcher, Marx noted that economic growth and the open frontier produced high rates of social mobility, something that Europe, with its feudal past and more rigid classes, didn't enjoy. He worried that this might stave off the socialist revolution he sought. "Though classes, indeed, already exist," Marx wrote anxiously of the United States in the 1850s, "they have not yet become fixed, but continually change and interchange their elements in a constant state of flux." His colleague Friedrich Engels observed in the 1880s that America seemed to be a nation "without a permanent and hereditary proletariat."
But if the workingman's plate was full enough to keep socialism at bay, and immigrants found opportunities to build a better life for their families, there were setbacks and pockets of suffering. Horace Greeley's famous injunction "Go west, young man" was originally a bit of career advice after the Panic of 1837, a financial meltdown that battered the nation. Between the Civil War and World War I, there were at least five significant panics or depressions — in 1873, 1884, 1890, 1893, and 1907. The depression that began in 1893 was particularly severe. Fully 18 percent of the working-age population was jobless; by 1895, the incomes of a large proportion of the population had fallen to the levels first reached in 1880.
(Continues...)
Excerpted from The Tyranny of Dead Ideas by Matt Miller. Copyright © 2009 Matt Miller. Excerpted by permission of Henry Holt and Company.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.