What Happened to the American Dream?

It Saturn Fiveseems like very other week there is a new survey of young adults asking them if they think the American Dream is still available to them.  The answers come back more and more negative each time, with a recent poll showing that only about half of young adults believe that the American dream is still there.  Part of the issue is that the media keeps talking about how bad things are for Generation Y and asking them if they think the American dream is dead.  So is the American dream gone, and if so, where did it go?

Well, first let’s talk about what the American dream is.  It is probably a little different for each person.  For me, the American dream is the ability for each person, regardless of where he or she started in life, to end up significantly better off economically if he/she has the drive and talents to do so.  In America, there are countless stories of individuals who immigrated into the US with nothing who were millionaires or billionaires within twenty years.  There are even more stories of parents who worked hard and gave their children the ability to go to college and move from the labor-intensive jobs they performed into office jobs and occupations where they used their brains more than their muscles to get work done.  Contrast this with places like India where the caste in which you are born or into which you marry determines how far you can go in life.  Be born into the lowest caste and you’ll spend your life cleaning up other people’s waste with your hands.

I would say that the American dream is not dead, but it is dying off and will disappear unless it is reinvigorated.  There are two factors involved – one that requires a change in laws and those within the political system, and the second that must come from within each individual.

The first factor is the prevalence of protectionist regulations and crony capitalism.  Many of the people who became very wealthy in the past did so through starting a business.  When they did so, they didn’t need to spend years and thousands of dollars getting certifications and applying for licenses.  They just raised the needed cash and started the business.  Maybe they started making baked goods in their kitchens.  Maybe they manufactured computers in their garage.  Maybe they started selling hotdogs on a street corner.   Maybe they started a bank by just opening up an office and putting out a sign.

Today you need many hours of training and expensive licenses just to cut people’s hair.  Due to Federal laws, you need extensive training in lead paint remediation to do work on windows and other home renovations.  If you hire employees, you’ll need to keep track of numerous tax and employment laws and possibly provide your employees with health insurance.  While some regulations and laws are well-intentioned, many are put in place by existing businesses to protect their turf from competitors.  These businesses either get grandfathered in and therefore not need to go through the training and other steps that new entrants would need to take, or they have the money and resources to comply with the regulations – plus they pass the costs onto the consumers – while the financial barrier is too great for net entrants into the field.

Perhaps one of the biggest example of crony capitalism is Obamacare.  In this law, consumers are forced to buy expensive health insurance.  This is a result of the hospitals, insurance companies, and politicians getting together and passing the law over the wills of a majority of the people so that they can make more money with a captive set of customers.  The real danger of Obamacare is that it will eventually take every extra dime that middle class workers have.  A big part of this blog is explaining how to grow wealthy through budgeting, saving, and investing.  If Obamacare is allowed to continue to exist, the costs will increase and swallow up everything people making between $30,000 and $150,000 per year make beyond what is needed to pay for basic necessities.  By design, the subsidies you receive are based on your income.  This means that if you earn more, you pay more, so that working harder or moving up in salary will not allow you to generate more free cash for investing and saving.   Getting a raise or working more hours will just result in paying more for health insurance to fund other who aren’t working as hard or as smart.  (Note that as people realize this, many will work less, causing the health insurance cost for those working more to rise still further.)  Middle class workers cannot save the money needed to become financially independent while paying usurious taxes.

Changing this will take a change in the political environment where politicians and businesses cozy up to one another.  It will take constituents paying attention to what’s going on; voting; and  expressing themselves in letters to the editor, calls and emails to their representatives, at public forums, and on the internet.  In some cases, it may take new people running for office and getting involved in the political parties which are run now almost entirely by those getting political favors.  In the least, talking to friends about the issue and making more people aware of crony capitalism will help.

The second factor comes within.  Unfortunately, many young people have come to believe that all they needed to do was to go to college and get good grades (either legitimately or through cheating) and they will be set for life.  They then get out of college and discover that there is no one waiting with a six-figure job with eight weeks of vacation each year.  In actuality, achieving the American dream will take a great deal of work, often for far less pay than your parents are currently making.  People who built great companies often worked for little or nothing in the early years.  Many had other jobs to pay the bills while they worked nights and weekends to build their companies.

Even if you decide to work for someone else, you may still need to start in a lower pay grade than you wish and work to move your way up to a higher salary.  You need to spend the early years learning skills and gaining connections so that you can become more valuable to your company.  If you do this for a number of years and can’t find a way to progress in your own company, you may need to look at opportunities outside.  Unfortunately, often the only way to increase your salary significantly is to change companies since most companies don’t give the raises they should for those early in their career who are learning new skills and becoming more valuable at a fast rate.

What do you think?  Please leave a comment?

Contact me at vtsioriginal@yahoo.com

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Disclaimer: This blog is not meant to give financial planning or tax advice. It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.


  1. I do think that there are more laws, regulations, licenses, etc., that a business owner needs to obtain before opening a business, and yes this makes it more difficult than years ago, but compared to other countries we are still better off here in the US. My aunts moved to the US in the early 80’s and worked for years in a factory across the street from where we lived. All of them saved their money and bought a house in Ecuador. Go figure! We, their kids, all ended up living, working and staying in different parts of the US. We all did different things. I will be using different names for I haven’t ask them if it’s ok to share this with you. Alex currently works for a school in NC and is about to go to college. Yay! Casey is a full-time mom of four and her husband has his own business, he is a contractor. Bella works as a teller in a bank and she seems to enjoy her life with her kid and husband. I, Marcela, that is my real name went to school to get my MBA, worked for companies in different industries and one day I had an epiphany: I wanted to be my own boss. With that in mind, I opened my own business, all my canine companions, in Maryland and I did well. My wife got a job offer in MA and we are currently living in Boston. We are about to close in a house and I am excited like crazy because I will be able to start my business again. The American Dream is still alive. But it takes a little more work to get to it than before, but that’s ok.

    • I’m glad that things are working out well for you so far, and I agree that things are better in the US than many other countries, but things are changing and not in a good way. Probably the most troubling things for the middleclass are the subsidized-based-on-income programs that we are seeing. College has become this way, where the full cost is more than people in the middleclass can pay, but the amount they actually pay is less but increases with their income. Even worse is Obamacare since in that case buying the product is mandatory. Because the subsidy you get decreases with your income, you pay more and more as you earn more. This means that people who earn a lot of money are able to save and invest, because they have extra money after they pay for everything, but those in the middle class do not. It’s like you walk into a store and the price is “whatever you have in your pocket.” Whether you make $30,000 or $70,000, you’ll still have the same amount of money left over after you pay for everything. These types of programs will take away the ability of the middle class to pull themselves into the upperclass because they won’t have money to save and invest, or save and start a business. That is definitely not the American way.

      • I totally agree with you, so let me start by saying that, but, yes there is a but. What I’ve realized, and this is from experience, is that the emphasis is placed on how much we make rather than on what you do with what you make. Every point you made, I totally agree with you, but we, I was one of those, live in a society that is used to living above our means because of the ability to get credit so easy. Yes, the government has a huge impact on our way of living, but we also have to take responsibility. I do hope the new administration, democrat or republican, would do a better job for all of us and leave their petty quarrels on the side.

      • Agreed – we’re responsible, both for the government we elect and for the choices we make in what we decide to do with our time. And the latter is the more important.

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