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+Alan Reynolds, Economic Foundations of the American Dream

+Alan Reynolds, Economic Foundations of the American Dream

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Published by Alan Reynolds
from The New Promise of American Life, Hudson Institute 1995, edited by Lamar Alexander& Chester E. Finne, Jr
from The New Promise of American Life, Hudson Institute 1995, edited by Lamar Alexander& Chester E. Finne, Jr

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Published by: Alan Reynolds on Mar 30, 2014
Copyright:Traditional Copyright: All rights reserved

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04/04/2014

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I
 hapter welve
EconomicFoundations
 
t
merican ream
 lanReynolds
Itisoftensaid,andapparentlymuchbelieved,thatlivingstandards
of
typicalAmericanshavestagnatedordeclinedoverthepastdecadeortwo,thattherichhavegottenricherandthepoorpoorer,whilethemiddleclasshasbeenupagainstawall,goingnowhere.Thesebeliefsbuttress
 noth r-
namely,thattoday syoungadultswill
be
thefirstAmericansnottodoaswellastheirparents.EdwardLuttwak,author
of
TheEndangered mericanDream
wrotethat thegreatmajority
of
individualshasexperienced
 
anabsolutetwenty-yeardeclineinpersonalincomes.
1
 
Vision
of
ChangeforAmerica, apol-icystatementreleasedbytheClintonadministrationinFebruary1993,madethefollowingassertions:Forabouttwodecades
 
realwageshavestagnatedandfamilyincomeshaveadvancedatasnail space
 
Throughoutthe1980s,slowgrowthinlivingstandardswasaccompa-niedbygrowinginequality.Therichgotricherwhilethemiddleclasspaidmoreintaxesandfellfurtherbehind
 
 
 lanReynolds
195At
today s
anemicrate
of
growth,
our
standard
ofliving
willnolongerdoubleevery
generation-but
once
everyhundredyears.
2
Surveysconfirmthatmostpeoplesharetheseopinions.Yettruthis
not
amatter
of
opinion.Amajority
of
AmericansalsobelievethatU.S.industryhasbeenslippingbehind
that
of
othernations,forexample.Asthe
 conomist
pointsout,however,
 America s
industrialoutput
expanded
by39percentbetween1980andmid-1994,abiggerincreasethaninanyotherG-7country[includingJapan].,,3Inasimilarway,thefactsdonotsupport
many
widelyheldbeliefsandassertionsaboutwhathasbeenhappeningto
the
growthanddistribution
of
incomesince1980.Theremaybeaproblemaheadforyoungergenerations,butthatriskliesinthesoaring
cost
of
government,
not
inanydeepflawsintheprivateeconomy.
The
 American
dream
involves
more
thanmaterialthings,
of
course.
There
areasmanydifferentdreamsasthereareAmericans.
But
the
conceptdoesatleastimplyawidespread
opportunity
toraise
one s
livingstandardbysomecombination
of
hardwork,study,frugality,andthatsubtleblend
of
innovationanddaringthatdefinesanentrepreneur.Nothing
aboutthe
American
dream
everimpliedthatincomegapsshould
not
widenbetweenthosewhoworkandthosewhodonot,orbetweenthose
who
strivetobecomeeducatedandthosewhodonot.Yetincomedifferences
of
thissortare,infact,thesubject
of
considerableacademicanxietyabout inequality.
The
factthatcollegegraduateshaverecentlyexperiencedbetterincomegrowththanhighschooldropouts,forexample,isoftensaidtobeunfairin
some
sense.Yetnocountryhaseverprovidedbroaderopportunitiesforpeo
ple
toachievewhateverlevel
of
educationtheirdesiresandabilitiespermit.Americansareextremely
self-critical-a
venerabletraditionthatflowsfromimpatience.Everysocialcritic,whetheronthe
Left
or
the
Right,
must
firststirupsomesort
of
 crisis asthereasonforadoptinghisorherfavoritepolicies.Thoseinclinedtowardextensivegovernmentinterventionare
eager
topersuadeusthatAmericansarefaringbadly,incomparisonwiththe
past
orwithothernations,inordertoarguefora
more
powerful,
more
expensivegovernment.Those
of
the
oppositeconviction
may
nonethelessbeaseagertoarguethatAmericansarefaringbadly,orareunabletocompete,in
order
todrawexactlytheoppositeconclusion:thatgovernmentistoointrusiveandburdensome.Suchcompetitionincrisismongeringwouldbeaharmlessandevenpotentiallyusefulsport
if
peopledidnottakeitsoseriously.
MeasuringLivingStandards
Atthe
turn
of
eachdecade,wehavealmostalwaysbeeninundatedwithgloomyforecasts
of
thefuture.
The
decade
just
pastisalwaysdescribedasa

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