Crushing Middle-Class  Prosperity

The American Dream is of obtaining middle-class prosperity and socio-economic mobility. Hedrick Smith analyzes how it was lost in America.

The American middle class in the 1960s was the largest and most prosperous in the world. Now, the disparity between top and bottom is huge. Even the wealthiest 5% are falling behind the super-rich 1% that controls 2/3 of the nation’s wealth—trillions of dollars. The remaining 99% earn the remaining 1/3. America has the largest income disparity in the world.

Who Stole the American Dream, in its analysis of the socio-economic interactions between society, the economy, businesses and government,  also provides an excellent foundation for analyzing how a sociocratic society could function to restore the American dream.

(I’m not being revolutionary or extreme here. Just suggesting that even an understanding of sociocratic principles and  practices  would have prevented these events. They would have helped individuals make better decisions.)

Who Stole the American Dream

In Who Stole the American Dream, Smith presents a history and analysis of the 2008 economic crisis and the political ineffectiveness of Congress in correcting the systems that caused it.

Hedrick Smith was a journalist at the New York Times when he shared a Pulitzer Prize for his work on the Pentagon Papers series. He won another Pulitzer for his international reporting on Russia from 1971-1974. He has written several books, including, Russia, that are both best-sellers and used in college and university courses. His Emmy Award-winning PBS series examined systemic economic and political problems in the United States.

The book is an eminently readable, though long— 426 pages of text and another 131 of pages of back matter: Acknowledgments ; a Timeline of Key Events, Trends, and Turning Points, 1948-2012; and Notes.

I usually don’t post recommendations until I’ve completed a book.  But for that reason they sometimes don’t get posted at all. By the end of the book, I’m ready to move on to the next book and often have so many notes and comments that I don’t have time to write them. The book sits by my computer for “later” when I have the time, which never comes.

And readers would probably be so filled up from reading my comments they wouldn’t want to read the book.  So this time, I’m recommending a book before I finish its 557 pages. (Yes, I read endnotes.)

Relationship to Sociocracy

It will be a long time before we have leaders who have even heard of the fundamental principles and practices of sociocracy but an understanding of them would not only have helped individuals make better decisions, but understand why they were better. Many other books on socio-economic realities and possibilities are valuable in understanding sociocracy, but this one is particularly valuable for its analysis of what created the losses of the middle class, the 2008 financial crisis, and the incredible disparity in incomes. The facts and figures are Smith’s and the sociocratic analysis is mine. I hope I have made the distinctions clear.

The Deception of Free Markets

In 1971, the theory of free markets began to take hold. Businesses and trade associations began heavily lobbying Congress for advantageous laws and regulations. The number of companies with lobbying offices in Washington DC grew from 175 in 1971 to 2,445 in 1981. In 2012, the number of business lobbyists outnumbered members of Congress 130 to 1. The markets were hardly free, they were heavily influenced by corporate interests.

By the late 1970s, corporate CEOs began taking stock options as compensation. Sales of businesses, which often leave the workers with no pensions and end job security became very profitable for CEOs as investors.

The new market economy led to deregulation, lower taxes, and free trade that was supposed to raise the quality of life for all. Instead, middle-class wages stagnated and the rich got richer. In 2012, 60 million people were considered upper class with incomes over $100,000 in 2012, but 90 million lived at or below the poverty line of $40,00 0 for a family of four. Three million people received 2/3 of the country’s income while 300 million received 1/3. For Princeton University economist Alan Krueger this is mind-boggling. And he is used to big numbers.

Our  political leaders are in constant conflict and polarized, unable to solve basic problems.  Thinking sociocratically, majority vote could be blamed for political jockeying for position and winning elections rather than focusing on governing the country. Smith’s analysis shows that business interests may be a greater force than majority vote because they exert the power of money. Sufficient money can produce almost anything it wants.

A People in Crisis

Congress is unable to govern because it is powerless, lost in a sea of opposing forces who are not interested in the welfare of the nation. There is no common aim as there was from World War II into the 1950s. A common aim is sociocracy’s foundation. It is the basis for decision-making. Instead we have a house divided, which shall fall in one way or another.

Smith quotes British historian Arnold Toynbee’s analysis that a crisis arises in a mature society when participants no longer feel a part of that society, no longer feel they matter.  The late head of the pubic advocacy group Common Cause John Gardner said the people are part of the problem when they become cynical and disaffected. In a sociocratic society neither of these things could be true. There would be greater transparency and more accountability.

In a reversal of the dictum that power corrupts, grass-roots organizer Ernie Cortes says, “Powerlessness also corrupts.” Smith’s analysis of the economic crisis of 2008 shows how the powerlessness of middle management and white-collar workers also led to corruption. They acted as if they were no longer participants in a social economy. They were themselves lost at sea and scavenging whatever they could get, along with their co-workers.

Know Your History in Order to Change It

Those who don’t know history are doomed to repeat it. This analysis will help to understand  what could be right in a sociocratic society and why. All the analysis is here. You just have to read between the lines and apply sociocratic principles and practices to understand how the crisis could have been prevented and how the American Dream can be restored.

Links to Amazon

Who Stole the American Dream? by Hedrick Smith (Hardcover, 2012)

Who Stole the American Dream? by Hendrick Smith (Softcover,