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Has the American Dream Been Stolen? Athens to New York Spring, 1999 Prof. Kim Pearson Outline Who Stole The American Dream? The Series and the Controversy What has happened? The Evolution of Capitalism Current Issues Who Stole The American Dream? The Series 1996 series Followed 1990 series -- “America: What Went Wrong” Both became books Who Stole the American Dream? Major Claims American middle class is shrinking while ranks of rich and poor are growing Major cause is export of high-paying manufacturing jobs, increase of lowerpaying, less stable service jobs U.S. tax and trade policy favors this trend, in effort to assist US corporations The Controversy Critics contend that Bartlett and Steele’s reporting was biased; ignored the good Also contend that Bartlett and Steele’s reporting failed to take into account the realities of the global economy Supporters argue that government and society should be more concerned about the losers in the current economic transformation What has happened? Shift from industrial to global information economy, booming markets Decline in US manufacturing jobs Few jobs available for unskilled/lowskilled workers that support a family Shortage of skilled workers Labor union membership in decline Two-income households the norm An Old Debate: The Evolution of Capitalism Adam Smith Thomas Malthus David Ricardo Karl Marx John Maynard Keynes Arthur Laffer Robert Reich Adam Smith 1776: Wealth of Nations; first description of capitalism Pre-industrial revolution Core concepts: free market, supply and demand, free trade Believed “invisible hand” would ensure fairness Ignored caste differences and other artificial barriers Thomas Malthus 1766-1834, a cleric Published Essay on the Principle of Population, 1798 Argued: Population rises faster than food supply; must cut birth rate Critics cite history of growth David Ricardo 1772-1823, tycoon Went in to business at 14, retired rich at 42 Iron Law of Wages: Analyzed effects of markets on wages; argued against government role Karl Marx Work influenced by Dickensian world of the 1850s A theory of history that was translated into an ideology Declared, to his dying day, “I’m not a Marxist.” Karl Marx Progress comes from expanding the ownership of the means of production When workers control the means of production, classes will disappear Capitalism can reinvent itself John Maynard Keynes Studied “boom-bust” cycle of business Businesses fail when demand is inconsistent. Government can “prime the pump” when business is slow by cutting taxes and spending more This was rationale behind “New Deal” policies during the Depression Arthur Laffer 1974: Argued that excessive tax rates can actually decrease revenue Rationale for Reagan tax cut Robert Reich Former Labor Secretary under Clinton Critic of “Corporate Welfare” Argues for investments in worker education, retraining Conclusions: It’s a Small World After All Free market capitalism no longer exists All industries are global, not national While Mathus’ nightmare never materialized, sustainability is a real issue for the whole planet Increasing dependence on technology makes the issues of education and equity more critical than ever.