According to a recent National Journal poll, just 20 percent of Americans believe that their children will have more opportunity than they have had. Conversely, 68 percent predict that today’s children will enjoy less financial security than their parents.
Unfortunately, that sentiment is not merely Norman Rockwell nostalgia. All of the economic data confirm that it is harder today to advance economically than it used to be. Study after study finds that economic mobility — the chance to do better than your parents did — has declined in the United States and is now lower than in some European countries.
Nor can that pessimism be explained away by our current economy, because again, the data tell a different story. Even during the eight years prior to the recession — an era of false prosperity created by real-estate and financial bubbles — real income for the bottom 80 percent of American households was in decline. In fact, the share of income going to the bottom 80 percent — defined today by the Census Bureau as households with incomes below $104,000 — has been in steady decline for 35 years.
Setting aside income data, today’s middle-class and working-class households also live with much more economic insecurity than their predecessors did. The fear of losing home, job, career or health insurance is a gut-level reality for millions.
Now comes the hard part of the discussion: What causes this change, and how do we respond to it? Both questions have profound political implications, and we’re simply not very good at politics these days. What ought to be a forum for debate has instead become a means of shutting down discussion and even thought. But since I’m not yet cynical enough to surrender to that reality, let’s plow ahead.
From what I can see, the conservative analysis allows for only one villain in this story — government — and only one solution, which is less government. That argument has a certain simplicity, but I just don’t think you can explain away a complex, global and long-term phenomenon with a single causative factor. For one thing, the data don’t support it. We do not pay more taxes than our parents did, and in many cases we pay less. And in fiscal 2013, the federal government spent less of our national output (22.7 percent) than it did 30 years ago under President Reagan (23.5 percent).
A more realistic analysis will acknowledge that today, we face global competition unknown to previous generations. Technology has also made it possible for one employee to do the work done by 10 or even 100. That efficiency adds to the profitability of corporations, which is good — the stock market and corporate profits are at historic highs — but the disconnect between Wall Street prosperity and Main Street struggles is obvious.
As with any problem, your assessment of the cause will drive the solutions that you advocate. If you believe that such changes are driven by the single cause of excessive government, then your preferred solution is obvious. If you believe that they are driven by a complex interplay of technological, historical and economic trends, then your reaction must be more complicated as well, and government will play a part in it.
Government cannot and should not even attempt to reverse such trends, but if wisely deployed, it can help ensure that both the sacifrices and benefits of this new economy are more broadly shared. The alternative is to do nothing and let these trends play out as they will, but doing so may ensure that popular pessimism about the future is justified.
