Who Stole the American Dream?

1. The Power Shift: Business Rebellion Transformed American Politics

"The Powell memo sparked a business and corporate rebellion that would forever change the landscape of power in Washington and would influence our policies and economy even now."

Corporate America mobilizes. In 1971, future Supreme Court Justice Lewis Powell wrote a memo urging American businesses to become more politically active. This sparked a massive mobilization of corporate interests in Washington. Within a few years:

• Over 2,000 companies set up Washington offices
• New conservative think tanks like Heritage Foundation and Cato Institute were founded
• Business groups like the Business Roundtable formed to coordinate lobbying efforts

Policy impact. This newfound political clout allowed business interests to shape policy in their favor:

• Deregulation of industries like airlines and trucking
• Tax cuts benefiting corporations and the wealthy
• Weakening of labor unions and worker protections

The result was a seismic shift in the balance of power in Washington away from labor and consumer interests toward business and financial elites.

2. Middle-Class Prosperity: The Rise and Fall of Shared Economic Growth

"The Great Compression succeeded in equalizing incomes for a long period—more than thirty years. And the era of equality was also a time of unprecedented prosperity, which we have never been able to recapture."

Post-war prosperity. From the 1940s to 1970s, the U.S. experienced broad-based economic growth that benefited the middle class:

• Wages rose in tandem with productivity gains
• Strong labor unions negotiated better pay and benefits
• Progressive taxation and regulation constrained inequality

The unraveling. Starting in the late 1970s, this model broke down:

• Wages stagnated while productivity continued to rise
• Union membership declined dramatically
• Tax cuts favored the wealthy and corporations
• Deregulation unleashed market forces

The result was a divergence between overall economic growth and middle-class living standards, with gains increasingly concentrated at the top.

3. The New Economy: How Corporate Strategies Widened Income Inequality

"Wedge economics split the fortunes of CEOs from the fate of their employees. It split Wall Street from Main Street."

Shareholder primacy. In the 1980s and 90s, corporate priorities shifted from balancing stakeholder interests to maximizing shareholder returns:

• Mass layoffs and outsourcing to cut costs
• Stock options tying executive pay to share prices
• Financial engineering to boost short-term profits

Winners and losers. This new model produced:

• Soaring CEO pay (from 40x to 400x average worker pay)
• Stagnant wages for most workers
• Job insecurity and benefit cuts
• Booming profits and stock market gains

The "virtuous circle" of shared prosperity was replaced by a widening gap between corporate elites and average workers.

4. The Great Burden Shift: From Corporate to Individual Responsibility

"The burden shift has turned the traditional definition of the American Dream 'on its ear.'"

Retirement insecurity. The shift from defined-benefit pensions to 401(k) plans transferred retirement risk to workers:

• Only 28% of large firms offer pensions vs. 83% in 1980
• Typical 401(k) balance for 55-64 year olds: $120,000
• Experts say $1 million+ needed for secure retirement

Healthcare costs. Employers have reduced health benefits and shifted costs to workers:

• Employee share of premiums up 3x since 1999
• High-deductible plans now cover 51% of workers

Education debt. As state funding declined, college costs skyrocketed:

• Average student debt: $37,000
• Total student debt: $1.7 trillion

The result is a middle class shouldering far more financial risk and insecurity than previous generations.

5. Unequal Democracy: How Money Dominates Modern American Politics

"In contrast with the past, what is good for America's global corporations is no longer necessarily good for the American people."

Campaign finance. The flood of money in politics has grown exponentially:

• 2010 Citizens United ruling allowed unlimited corporate spending
• 2012 presidential election cost $2.6 billion vs. $540 million in 2000

Lobbying power. Business interests dominate lobbying efforts:

• 30 corporate lobbyists for every 1 labor/public interest lobbyist
• Finance industry spent $5 billion on lobbying and campaigns 2008-2012

Policy outcomes. Studies show policy aligns more with elite preferences than average voters on issues like:

• Taxes
• Financial regulation
• Social programs

The result is a political system increasingly responsive to moneyed interests rather than popular will.

6. The Housing Crisis: Predatory Lending and the Erosion of Middle-Class Wealth

"Instead of enabling ordinary Americans to achieve The Dream, they fashioned stratagems that stole the dream."

Predatory lending. Banks pushed risky loans on borrowers:

• Subprime mortgages with teaser rates that reset higher
• No-doc loans requiring no proof of income
• Pressure tactics targeting minority communities

The bubble bursts. When home prices fell:

• Millions faced foreclosure (6.7 million 2007-2013)
• $7 trillion in home equity evaporated
• Black and Hispanic wealth fell 50%+

Bailouts for banks, not homeowners. Government rescued financial institutions but provided limited help for underwater homeowners.

The housing crisis wiped out the primary source of wealth for many middle-class families, especially minorities.

7. Offshoring and Outsourcing: The Hollowing Out of American Jobs

"Over the past 8 years, China has cored out our manufacturing base and we have closed over 43,400 factories in the United States and lost almost 8 million manufacturing jobs."

Manufacturing decline. Since 2000:

• U.S. lost 5 million manufacturing jobs
• 70,000 factories closed
• Trade deficit with China grew from $83 billion to $315 billion

High-tech exodus. Even advanced industries moved production:

• Major tech firms like Apple, IBM, Intel built R&D centers in China
• U.S. ran $131 billion high-tech trade deficit with China in 2018

H-1B visas. Companies use guest worker programs to replace U.S. workers:

• 85,000 visas issued annually
• Critics say used to undercut wages of U.S. tech workers

The offshoring of both blue-collar and white-collar jobs has hollowed out employment opportunities for the American middle class.

8. Political Polarization: The Disappearance of Bipartisanship and the Center

"Over the past thirty years, the parties have deserted the center … in favor of the wings…. First, at the level of individual members of Congress, moderates are vanishing. Second, the two parties have pulled apart."

Ideological sorting. The parties have become more ideologically homogeneous:

• Liberal Republicans and conservative Democrats largely extinct
• Geographic sorting has created partisan enclaves

Institutional changes. Several factors reinforce polarization:

• Gerrymandering creates safe seats, encouraging extremism
• Primary elections favor partisan voters
• Social media and partisan news create echo chambers

Gridlock. The result is a dysfunctional political system:

• Fewer bipartisan bills passed
• More use of filibusters and government shutdowns
• Difficulty addressing major challenges like climate change, immigration

The disappearance of the political center has made compromise and effective governance increasingly difficult.

9. Reclaiming the American Dream: A Call for Economic and Political Reform

"It will take a political metamorphosis, a populist renaissance, in America to reverse the political and economic tides of the past three decades and to make our country strong and whole again."

Economic reforms. Potential policies to rebuild middle-class prosperity:

• Higher minimum wage and stronger labor protections
• Universal healthcare and affordable higher education
• Progressive taxation and closing of tax loopholes
• Incentives for companies to share profits with workers

Political reforms. Ideas to rebalance democracy:

• Campaign finance reform
• Nonpartisan redistricting
• Ranked choice voting to empower moderates
• Limits on revolving door between government and industry

Civic engagement. Ultimately, change requires an active citizenry:

• Grassroots organizing and protest movements
• Increased voter turnout, especially in primaries and local elections
• Pressure on elected officials through calls, letters, town halls

The path to renewing the American Dream requires both policy changes and a reinvigoration of democratic participation.

Last updated: April 5, 2025