Rags to riches, from the bottom to the top – the American Dream is one of the symbols of the USA everyone knows. The belief that one can achieve everything simply when putting enough effort into the own goals, has made the country a popular destination for people around the world. And, in fact, comparing to Germany, over ¾ of the multimillionaires owning more than 30 million Euro are self-made millionaires, while in Germany only 41% made it on their own. In Germany, it is much likelier that people are wealthy due to inheritance.

Nevertheless, the American Dream showed some cracks in the last years: Income inequality and hampered social mobility are threats to many Americans. In 1998 over 80% believed that there are many opportunities to climb the ladder of success, nowadays only 52% of the people feel this way. And yet, it is true that challenges have grown: the Gini coefficient – a sophisticated tool to measure inequality – shows that since the end of World War II, the USA have never been as unequal as they are today. Moreover wealth inequality grew as well: the top 1% in the USA hold 22% of the wealth, in 1980 it was only 10%, meaning that the rich become richer and the middle class is shrinking. Even worse, the fundamental value of equal opportunities seems to lose its worth.

Lacking Social Capital – A Reason for Weaker Social Mobility?

Recently, I had the possibility to attend a lecture of the famous political scientist and Harvard professor Robert Putnam. Humorous, professional and with a catchy momentum of emotional anecdotes, he led his lecture focusing on the importance of social capital.
In 1995, his article “Bowling Alone: America’s declining Social Capital”, portrayed two types of capital: bonding – related to peers with similar socioeconomic characteristics (your class) like your own – and, bridging – related to peers who have different socioeconomic characteristics. Putnam claims that these two types of social capital strengthen each other and have been crucial in the history of the USA in order to achieve success, but the decline of social capital hampers individual success. So far, so good, but how is this connected to today’s challenges?

The research for his soon to be published book “Our Kids: The American Dream in Crisis” brings back the variable of class to the discussion in tight connection to the social environment. In his lecture he argued how severely the social class determines life in modern America, especially when talking about education. While only one third of the students with good high school test scores from lower social classes statistically graduate from college, over 70% of the children from higher classes with the same test scores do. Strikingly, even one third of the students with low test scores from high social classes will achieve the same, while for poor students from low social classes the chances equal almost zero.

This consequently affects as well chances on the labor market and social mobility. Putnam explains this development by the erosion of community sense, or social capital, in the USA. Regarding education, he states that children from high classes from an early age have a beneficial network through their parents’ contacts or access to additional classes. Furthermore, through mentoring or a greater information flows they have an advantage. Thus, children from lower classes are likelier not to access proper day care or join extracurricular activities. The social segregation, Putnam emphasizes, has become more evident when looking at the marital patterns – more than ever, people tend to marry somebody from the same class.

Identifying the gaps between the classes and their consequences as the greatest challenges to the American Dream, Putnam concludes that a reinforcement of conservative family and community values could close these gaps.

Can violet approaches reverse the trend?

While Putnam stated that the highly market liberal economic policies by Ronald Reagan during the 1980s had a severe impact on the rise of inequality, the Harvard professor suggested a combination of democratic (blue) and republican (red) approaches to solve the problem. Especially because regardless of the political camp, the sum of all policies has contributed to the current situation, it is important to tackle these problems with „violet“ solutions.

In practise, this means two things: strengthening conservative values regarding family and community and increasing public expenses for the education sector.
While in European countries, state intervention is accepted and the pillar of the welfare state, in the USA the striving for individual responsibility and freedom creates the necessity for a stable social environment, when there is no social net to support the citizens. Putnam explains that family values should return since children of lower classes experience in their early years less bonding time with their parents and less security. This reinforces and perpetuates the unequal starting conditions of children. Moreover, even if families cannot provide a stable environment, Putnam claims, that children have to be better integrated to extracurricular school activities – sports, music, theatre and debating clubs can be not only encouraging to children, but as well create an important network for the future.

Although the emphasis on social capital seems reasonable, the basic components of manufacturing and labor must not be forgotten – without the creation of jobs, it will be difficult to return the more equal opportunities. Policies towards growth and investment incentives can play a significant role, especially in structurally weak regions. If the trend towards inequality cannot be reversed, in the worst case, the American Dream might turn into a nightmare.

Cover photo: flickr.com; user: Just Joe