Essays,  Politics-Government

Recasting the American Dream

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A great nation . . . is saved . . . by speaking, writing, voting reasonably; by smiting corruption swiftly; by good temper between parties; by the people knowing true men when they see them, and preferring them as leaders to rabid partisans and empty quacks.”

– William James

Are we going in the right direction as a country? Do we have effective leaders? Are our goals, our American Dream, achievable? If not, what should they be?

I Leadership.  II Hope.   III Crisis.   IV Accountability.   V Health and Welfare.   VI Lassitude.   VII Recasting the Dream.

Leadership

U. S. politicians of all persuasions are naturally corrupted by their desire for a career in politics, that is to stay in power and accumulate wealth, and they are often unwilling to make the hard decisions that will change our current direction. They are corrupted by the fundraising process: They must raise enough money to fund brutal election campaigns, and to do so they accept contributions from self-interested parties, and if they don’t reciprocate, they fear losing that source of funding.

But it is very important to remember that they are elected by us, and we the people routinely punish politicians who want to increase taxes, reduce government entitlements, and other responsible behaviors to reign in uncontrolled spending, for example. We want the impossible:  More services, lower  taxes, and a balanced budget! If our politicians take concrete steps to accomplish that, we vote them out of office, or even worse, we vote in politicians who tell us we can have it both ways. We often vote our prejudices and our tribal loyalties and for what we perceive is best for us rather than voting our consciences or voting for what we perceive is better for the community or nation, or the world at large, all of which we are a part. We have proven to be easy to manipulate; demagogues have always been a feature in the American political landscape, and they seem to be everywhere today, using fear as a bludgeon to shape people’s voting. We thereby all share in some form of political corruption.

The reality of politics in the U. S., and we are not much different than other representative democracies, is that we stumble along with a quasi-corrupted system towards the next precipice precisely because too many of our political leaders operate at the lowest common denominator, fear, fear of losing their power, instilling fear in others in order to scare them into following them, and even those who don’t must please the voters to remain in office; we the voters have unrealistic expectations, and often reject the best solutions for ourselves and our nation. That is a bleak viewpoint of the U. S., and the situation is indeed bleak regarding political leadership, right down to the grass roots.

Hope

There is always hope.  I find it inspiring to consider several things.  The only alternatives to the chaos of competing interests that is representative democracy are all worse. The cost of clear, incisive leadership is to concentrate power in the hands of the few, and that inevitably leads to more and worse inequities than our current system produces. Second, as crazy as our political landscape is, it seems to me that there are very few countries you can point to that are less crazy. The third is that the U. S. also has a history of building effective institutions and laws that have provided real progress for its citizens, who in the main are far better off than were the average citizen in 1791.

We learned from some of our mistakes in the Great Depression, for example, with the establishment of the FDIC, so that when a bank fails today, it actually doesn’t fail! In 1933 when a bank failed, anybody who had money deposited in it lost all of it – today, they only have to change the name of the bank on their checks, and lose nothing, due to what amounts to bank failure insurance. Another way of saying this is that the U. S. has a history of facing large problems, and ultimately working itself out of them. There is much more protection for the worker today than there was 100 years ago, much of it coming from government regulation. Monopolies are much more difficult to form due to massive and global government regulation. There are many more social programs today than 100 years ago: Social Security, Medicare, and Medicaid, to name the largest. Real strides have been made in civil rights.

The political corruption inherent in our system does not grind it to a halt, in other words; many good and effective things have been accomplished on behalf of the American people by their governmental institutions, even if slowly and in fits and starts; this fact is often obscured by the usual focus on the worst aspects of our system, the political posturing performed by various groups, and by the frustration of watching an inefficient system flounder when there are immediate and compelling problems to be solved.

Crisis

Oregon Scribbler.  Click image to enlarge.

 

Our worst problem  today?  Outsized expectations. During and after World War II, the U. S. rebounded from the Great Depression and grew in affluence, and world influence and power, and we grew in both areas for many years, rising to the top of the world; we got used to it. Even though we have been on a steady decline in terms of affluence for many years (since the 1970’s our manufacturing base has steadily declined, for example), we continued to grow in world influence. Our political influence in the world is still very strong, but is clearly declining, and there is no reason to believe it won’t continue to.

The typical American has not yet gotten used to the idea that we have been spending way beyond our means since the early 1980’s to prop up a world that is not the same as when we started. Over the past 35 years, we have significantly reduced taxation on the rich, and the result is: The average wage is lower in constant dollars today than it was in 1980, the rich are richer and the poor poorer; trickle-down economics, the economic solution proffered by the rich for the poor in exchange for lowered taxes, is exactly that, a trickle, and provides insufficient power to drive the economic engine. The national debt is far bigger; its growth took off sharply under the Reagan and Bush (both) administrations, and continues out of control today under Obama (click on the chart above for details). Individual indebtedness is off the charts, on average. We face severe global economic competition that offers few easy solutions.

We have spent way beyond our means, individually and collectively, for far too long; the interest payments on our national debt today are approaching a half a trillion dollars a year, and climbing. Morning in America has produced a huge hangover: The Morning After in America. We are not who we once were, and there are no immediate prospects to put us back where we once were. A reality check for Americans is long past due.

Our current economic crisis. It is still a crisis, and there have been no heroes; nearly everybody had a hand in it. The Republicans pushed hard for less regulation of the economy, with sometimes disastrous results (savings and loan collapses during the Reagan administration, anyone?), and the Democrats supported that same push in the financial sector, with the removal of the Glass-Steagall limits on bank investment activity under Clinton. The Democrats pushed for more home ownership by way of loose federal loan programs, which the Republicans complained about but supported anyway, because they both recognized that a large portion of our economic growth was now dependent on the home construction industry. Banks now free of the Glass- Steagall regulations, put in place after the Great Depression and which severely limited bank’s ability to put depositor money into risky ventures, invested their depositor’s money in collateralized debt obligations, CDO’s, created by Wall Street investment firms, who created these by buying mortgages from the banks and bundling them up into safe and risky groups for sale to investors. The banks then no longer felt the need to qualify their loans, as they could just identify the level of risk of being paid back and put the potential deadbeats into the risky piles, and send the risk on to the investor.

This was the situation for a perfect economic storm: Banks lending money to people without even checking to see if they had sufficient collateral (really!), and then bundling up those mortgages to sell to Wall Street investment firms, who in turn issued CDO’s and sold these bundled and often stinky mortgages for obscene profits to institutional investors, individual investors, and yes, back to the banks themselves!!!! People were buying houses that they had no reasonable expectation of affording; they often didn’t have the means to pay for these houses in the long term. Some of them were speculators, expecting the housing market to continue to heat up (bubble behavior) and some of them people who just wanted the next step in the American dream, affluence version.

Our then President of the U. S., George W. Bush, was publicly coaxing citizens to spend as their patriotic duty to support a largely consumer driven economy, when the average American was already spending more money, via easily available credit, including 2nd mortgages based on the puffed up value of their home equity, than they had in their savings or future earnings to back it. So when home prices began to sag, an economy propped up by home construction and home sales went south quickly. Many banks were left holding the fumes of their original bad mortgages and 2nd mortgages in the form of CDO’s, with many thousands of mortgagees unable or unwilling to pay for homes that never should have been sold to them in the first place and/or had lost significant market value. This threatened to swamp the FDIC insurance pool that supported failing banks, and to kill many very large banks.

Many trillions of dollars in individual, institutional and corporate net worth were wiped out, and many more trillions would have been, a la the Great Depression, had the U. S. government not stepped in twice with even more deficit spending to prop up the banks. The consumer spending that our economy depended on slowed significantly, businesses laid off millions of workers, and here we are. Everybody had a hand in it, except the poor schmuck who lived within his means, and spent only what he could afford.

Accountability

One of the marks of today’s America is the decided lack of accountability.  Democrats exaggerate their economic success under the Clinton administration (part of our growth was a financial bubble), and ignore their role in weakening controls on the financial system in the run-up to our current deep recession.  Republicans talk about fiscal prudence and balancing the budget while taking no responsibility for their 20 years of steep deficit spending, their own very large role in weakening financial system controls put into place after the Great Depression, and of starting a war of choice, Iraq, also paid for entirely outside the budget via deficit spending.  We the people are just as unaccountable; we continue to vote for these same politicians, whom we have conditioned to lie to us, and tell us that we are the greatest nation in the world, and that we can continue to have it all.  Self-delusion is not a recipe for long term success.<

Health and welfare

We spend more today per capita on healthcare than any other industrialized nation, yet we rank near the bottom in the standard measures of health amongst those same nations.  Our overspending on healthcare is not due to inefficient government programs, as our demagogues would have it, rather just the opposite; Medicare and Medicaid spend three times less than private health insurance companies in administering claims.  The overspending has many sources, but they primarily fall to inefficient delivery of healthcare, and over-treatment, particularly in the last couple of years of a citizen’s life.  This situation has come about by focusing on a market-driven solution to national healthcare.  Our situation  regarding the education of our children is just as problematic; again, we spend more than any other industrialized nation per capita on education, and we rank near the bottom academically amongst the same group.  Our public education systems have collected so many responsibilities beyond basic education that they more closely resemble day care centers than schools; in this government regulation has played a much larger role.

Lassitude

Our politicians are currently acting with little of the urgency that our situation warrants; they take their cue from the American people, who still want it all, and still punish those who look to address our very serious problems. I think that over the next ten or fifteen years, the problems will get worse, enough so as to force some actual change to start a more effective corrective action. This will only come when the American people realize they can’t have it both ways, and are willing to reset their expectations. The leaders we choose must help us to move past the current and unhealthy self-perception of America as a Colossus astride the world; among other things, it is simply unaffordable.

Overly simplistic answers. Many today call for reducing the size of government as the answer to all of our ills. There is no doubt that government can become bloated, but it is also true that these same people often say in the same breath that they will not give up their government entitlements or our massive military, which make up the largest expenditures of government! Without the federal regulations on interstate commerce, or our Federal Reserve banking system, we would not have a functioning free market that small government advocates worship. Without massive federal support for research and development, private technology and pharmaceutical firms, to name to obvious examples, would not be the profit and jobs generators they are: For example, Apple’s innovation was taking the innovations funded by long term federally financed research, and packaging it together effectively for profit.

It is true that too much regulation can make businesses less nimble, but it is also true that without regulation we would have had much more boom and bust behavior in the economy, and we would have a much smaller middle class than we have in America today, without which our consumer economy would be in worse shape. What is troubling about these simplistic notions of “small government” is that too many of its adherents also talk of the government as some kind of monster that must be tamed, the “system” that controls our lives, and is to be feared. Missing in this call is the recognition that the government is us!  We need to address the effectiveness of our government, whatever its size, and do so in a thoughtful manner.

The vote. There is no doubt that our politicians, our rich, and our media, and not just the “mainstream” media, act in a very self-interested way, and in a way that is often worse for the average citizen. We have one great weapon in the US to counter that; the poor and middle class have a massive advantage in their size, and thereby their political potential via the vote. Harnessing that effectively, alas, is extremely difficult, but it is also the source of the greatest hope for the future of the US.  We the people put legislative and executive leaders in place through our votes, and we can organize to influence and change their behavior and through that our laws, and we can replace them.

Recasting the American Dream

But before we replace our leaders, we need to redefine our goals and aspirations in terms other than personal affluence and world dominance, to something that is more attuned to our current circumstances and perhaps less grandiose. Spending within our means, from individuals to institutions, is ultimately necessary, and it starts from setting more realistic expectations. It also will have to come from readjusting what we define as most important for our nation, whether as individuals or in aggregate. We especially need to think in a less fearful manner.

The American Dream should continue to include the protection of individual freedoms for all of our citizens.  It should encourage in us the selection of real leaders, those that seek to build and shape a nation, not to puff it up with false bravado and whip it into fear-filled frenzies.  It should include that vital check on our rationality:  An expectation of accountability for ourselves and for our leaders.

The American Dream should not be dominated by security (Middle East forays, massive military, the world’s policeman, etc.). Security is not to be dismissed, but as a nation we have wasted vast capital fighting wars of choice, like Vietnam and Iraq. If we are the only superpower left standing from the Cold War, how naive are we?  We need to demand more effort from our trading partners to support global security instead of shouldering the burden alone.  If we are to go to war, the cost of war should be borne by all, not just poor and middle class volunteers, so that we all feel the cost, and make the choice of war that much more reluctant; we should pay for it now, not with deficit spending that places the cost in the future, for our children to pay for, as we have done with the Iraq war.

The American Dream should continue to evolve towards maintaining our infrastructure and institutions, protecting our environment, and doing the hard work of shoring up our economic system from the bottom up, not just the top down. It should be directed towards the health and welfare of its citizens, plural. A universal health care system can be provided with much lower cost than our current system, but that must include resetting expectations for cost-effective health care rather than health care that is designed for massively expensive end-of-life heroics. Improving our schools should be done by bringing the focus back to basic education, rather than treating the schools like massive day care centers.  Taking care of ourselves properly builds a base for us to continue to participate in the world, and to make us more viable in a global economy.

Our government plays a vital role in all of these areas, and part of the American Dream must include an appreciation of our government, and an open acknowledgement that we the people are the government, or, as Lincoln said:  We are a “government of the people, by the people, for the people“.

Individual responsibility is and always has been a keystone of any community or nation; nothing gets done without it. But the idea of the independent individual in America, while it has had its value as a motivator and continues to be a persistent feature of the American Dream, is exaggerated and selfish; community and institutions play a much larger role in our individual success than just our own efforts. Striking it rich and holding onto those riches for dear life should not be the centerpiece of the American Dream; such a goal has come increasingly at the cost of more important things, and the pursuit of such a dream has resulted in the accumulation of massive debt, which we are passing along to our children and grandchildren.

If we are to dream of getting rich, such dreams ought to include reinvesting those riches in our nation, the same nation whose very institutions supported that accumulation of wealth, not avoiding taxes and socking money away in offshore bank accounts. Becoming more realistic and more willing to contribute need not be seen as a sobering burden, but as exhilarating, as being part of a longer term solution that benefits us all, particularly in building a sustainable world for our future: Our children.

3 Comments

  • Anonymous

    I agree with Benn that this should be published. You address the very things that people need to think about and act on. I wish you were interested in running for public office because your views need to be heard by all. They are inspiring, rational, honest, and true; exactly the qualities you yourself embody and the very things we need more of in our representatives. If only Portland had a Hyde Park Corner!

  • Thomas A. Wiebe

    Thanks for the encouragement. And it’s so funny that you liken our elections to high school! I had almost the exact same thought last night. You said it very well.

  • Benn

    This should get published. A most accurate observation of how we have come to be in the place we are now. America and our voting habits reminds me of school elections. Whoever can promise the most, wins, regardless of how realistic those promises are. The American people don’t want honesty, and do not allow for it, as you noted. If our politicians stood up and said bluntly what is really going on, and what we need to do to fix it, we wouldnt elect them. It is the saddest tale of our current times, as it becomes a vicious cycle leaving no wiggle room for anything to change.
    Your piece here, I find to be brilliantly worded, and speaks to the fact that we keep searching for blame, when we have ultimately all played a part in it. Democrats, Republicans, people bickering back and forth, there are no sides, as everybody has bought into this falsehood of the “American Dream” to spend, spend, spend, we are #1, and worry is for the weak. It is the reckless attention to entrepreneurialism as an individual status symbol that has placed the focus on the “me”, rather than the “community”, which you again note, WE are ALL a part of!

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