How the American Dream Turned Into a Mirage

By MARC McDONALD

Although it's difficult for many Americans to admit it, the "American Dream" was always a lie in many ways, dating back to the nation's founding. It was a lie when slave-holder Thomas Jefferson included the words, "All men are created equal" in the Declaration of Independence. The Founding Fathers believed in equality---as long as the discussion was limited to white, wealthy, male property owners.

But the phrase, "the American Dream" always sounded good. And that was enough to make it seem real in a nation where the often-juvenile culture has often had a difficult time facing up to cold, hard reality, unlike the cynical, world-weary Europeans.

After all, Americans not only tolerate it when our leaders lie to us, we want to be lied to.

Hence, Jimmy Carter got grief when he served up a dose of bitter, but honest medicine to the American people in his so-called "malaise" speech in 1979.

By contrast, Ronald Reagan told us not to worry and assured us that America was still great---and millions of Americans loved him for it.

And speaking of Reagan, if there is a date when the American Dream started turning into a mirage, it would have to be traced back to Jan. 20, 1981, the date Reagan was sworn in.

The "American Dream" was already on life-support when Reagan swaggered into Washington. At the end of his eight years in office, it was all but dead.

Before Reagan, the "American Dream" at least existed on some level in American life. Ordinary citizens could in many cases find prosperity through diligence and hard work. In many ways, America was a land of opportunity. Class mobility was higher in the U.S. than in many other nations (although that's clearly no longer the case).

But even in those pre-Reagan years, much of the "American Dream" was smoke and mirrors. By the time Reagan was finished with America, it was pretty much all smoke and mirrors.

First of all, take a look at the so-called "prosperity" that emerged during the Reagan years. As was the case with Reagan's ideological British soulmate, Margaret Thatcher, much of this "prosperity" was attributed by free-market economists to Reagan's deregulation of the economy and cutting of taxes.

"I will cut taxes and balance the budget," Reagan told America. In other words, we Americans were going to get something for nothing---and that's something we've always been suckers for.

At the time, serious economists scoffed at Reagan's supply-side economics---and they were later vindicated. The only thing Reagan's tax cuts for the rich resulted in were the towering budget deficits which haunt America to this day.

And even the "prosperity" supposedly created on Reagan's watch was all a lie. The only reason Reagan was even able to run giant deficits and fund his massive military build-up was the fact that the Japanese were quietly persuaded to loan the U.S. Treasury the billions that made it all possible. (In this sense, the U.S. author and East Asia expert Chalmers Johnson was correct when he wrote that it was Japan, not the U.S., that won the Cold War).

Similarly, Thatcher's "economic boom" in Britain had little to do with her slashing of taxes, her deregulation and her union busting. Rather it was the massive new discoveries of North Sea oil on her watch that fueled a boom in the U.K. economy.

But back to the death of the "American Dream." The core feature of the latter has always been a strong, prosperous and resilient Great America Middle Class. And the U.S. middle class never really recovered from the Reagan years.

The reasons are many---and they can all be traced back to Reagan's policies. They included the crushing of unions, the weakening of U.S. labor laws, the exporting of manufacturing jobs, and the gutting of America's already-meager welfare state. These are all policies that were carried on by Reagan's successors (including Bill Clinton).

So what's the net result today? A vastly shrunken U.S. middle class. A soaring prison population that is the biggest in the world. The fact that it is in increasingly difficult for most Americans to afford even the basics of a good life (from a college education to decent health care).

Whatever "prosperity" that exists in America is nothing more than a mirage these days. It's a mirage fueled by credit card debt and by the hundreds of billions of dollars from East Asian central banks that prop up the U.S. dollar.

It's an illusion that is clearly unsustainable. The time will come when the likes of China and Japan will no longer choose to bankroll our Ponzi scheme economy.

However, not everyone has suffered in the years since Reagan first took office. America's Top One Percent, for example, have done very well. In fact, since 1980, the Top One Percent has seen its share of the national wealth more than double, from 20 percent to 42 percent.

And thanks to tax loopholes, America's super wealthy often pay less of their income into taxes than the working class does. Even mega-billionaire Warren Buffett has admitted that he pays less of his income into tax than does his secretary, who makes $60,000 a year. (This, despite the fact that Buffett said he didn't even try to avoid paying higher taxes).

Many Americans still have a difficult time accepting that the "American Dream" is over. But as the U.S. economy continues to deteriorate, as the foreclosures continue to mount, and as the good-paying jobs continue to vanish, it is only a matter of time before cold, hard reality sets in.

And when that day comes, American society could undergo a violent upheaval. The only question is: who will ordinary Americans blame? Will they focus their anger on the real culprits (the out-of-control corporations, the bought-and-paid-for politicians, and the Wall Street gangsters?) Or will they succumb to the dangerous Pied Piper's song of the deranged Tea Baggers? Time will tell.