Last week my son David – a seventh-grader – came home from school with a complaint.
His class had discussed the American Dream – the idea that every American has an opportunity to rise as far as his talent, persistence and hard work will take him – and the vast majority of his classmates, including the teacher, insisted it wasn’t realistic.
His teacher referred to it as “the American Pipedream.”
David asked if I would come in and offer a rebuttal. So yesterday I did.
[ad#Google Adsense 336×280-IA]It was an eye-opening experience.
Someone had convinced these bright 12-year-olds that ordinary Americans no longer have an opportunity to become financially secure, that the U.S. is not an exceptional nation and – oh yeah – that the American Dream is as dead as Thomas Jefferson.
I listened patiently.
Then offered a different perspective.
I pointed out that American life spans have never been longer.
Our standard of living has never been higher.
Educational attainment has never been greater. American cities have never been safer. (Despite the images you see on TV, violent crime is in a long-term cycle of decline.)
We have less than 5% of the world’s population yet we generate almost a quarter of the world’s wealth. We are the world leader in technological innovation.
“If the U.S. is no different from other Western democracies,” I asked, “why were the internet, Apple, Amazon, Facebook, Google, Twitter, Tesla and Uber – plus too many medical companies to mention – all created here?”
Innovation revolutionizes our lives, making us all richer and more comfortable than ever before. And I reminded them that much of this new technology is free. Facebook and Twitter don’t cost a thing. Neither does YouTube. And the kids admitted to downloading dozens of free apps on their phones.
I told them that most of their ancestors performed hard physical labor in farming, construction, mining or forestry. Today their parents are far more likely to provide white-collar services or technical skills in our knowledge-based economy.
And I reminded them that when their ancestors got home from work, they worked even more. Life was tough. Today we don’t think twice about our central heat and air, indoor plumbing, washers and dryers, microwave ovens, dishwashers, coffeemakers, and lounge chairs that give massages.
The U.S. has the world’s finest hospitals and universities. No nation on Earth attracts more students, more immigrants or more investment capital.
And everyone has a chance to rise here. There is no institutionalized discrimination based on race, color, gender or sexual orientation. There are no class distinctions or caste system to hold anyone back from economic success.
People who come here from other countries understand this, even if we don’t. Last year, the majority of new businesses in this country were started by immigrants or their children. We grouse that the American Dream is dead. But they’re too busy achieving it to listen.
Americans have never been richer than they are today. The Federal Reserve reported last year that U.S. household net worth hit an all-time high of $86.4 trillion. And stock prices and real estate values have only risen since then.
Of course, there is income inequality here too. In fact, the U.S. is the most economically unequal of the 34 countries in the OECD. However, we are also the richest OECD country, both in terms of household income and net worth.
I doubt whether many Americans would want to earn or have less for reasons of “fairness.”
I reminded David’s classmates that all over the world there is a struggle between freedom and equality. The freest nations are the most unequal. And the most equal nations are the least free. In North Korea and Cuba, for instance, the citizens are completely equal in their economic misery.
One girl pointed out that it is harder to rise in this country if you are born into poverty.
I wholeheartedly agreed. Being born in inner-city Baltimore is like starting a footrace in a 6-foot hole. But there are many state and federal programs to address this issue – and public education is free. I won’t pretend this levels the playing field, and, in particular, the public education system should be reformed. But – regardless of our circumstances – what can any of us do but play the hand we’re dealt?
It’s true that not every kid gets the same attention, support or role models at home. But if you believe the American Dream is dead, why study, work, save or invest? After all, you’re never going to achieve your dreams, right?
I told David’s class this was a terribly pessimistic way to live, without goals, without hope.
I also pointed out that poverty in this country is highly correlated with three factors:
- Dropping out of high school
- Having children out of wedlock under age 25
- Being addicted to drugs or alcohol.
I reminded them that these are all choices and that no one is required to drop out of school, become a single parent, or abuse drugs or alcohol.
Still, a few kids persisted that it simply isn’t possible for most Americans to earn a comfortable income or “become rich,” as one boy in the front row put it.
I disagreed. And in my next column, I’ll explain why.
Good investing,
Alex
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Source: Investment U