For a long time, it has been getting harder to achieve the American dream. While average income for a full-time working male, adjusted for inflation, has remained pretty constant since 1973, the top 1% of US earners has gained ground decade after decade.
The objective economic data supporting those facts is solid and has been well documented. The graphic below is based on data provided by the non-partisan Congressional Budget Office. My objective is to explain why this is happening and show how to identify the policies that make this happen so we can do something about it -- ultimately at the ballot box.
To download a pdf file of this position paper, please click here.
(To view a video and subtitles of this text, see the video below. Otherwise, keep reading.)
These trends are the result of policies that originate from a "survival-of-the-fittest" philosophy and a system that requires individuals to be increasingly exceptional in order to achieve prosperity. Independently of the current economic climate, the rules of the game have become more difficult over time making it not only harder to win but also costlier to not be in the winning 1% of the population. Increasingly, in America fewer people win but winning means winning big. However, if you don't win, the consequences are dark. It's also harder than ever it's to break the cycle of loss and begin with a clean slate. Losing begets more losing in today's America.
An economic system rooted in behavioral psychology?
(I know but stick with me).
Psychologists discovered long ago that the most effective way to obtain a desired behavior is to reinforce that behavior with intermittent rewards on a variable schedule.
I'll explain.
Let's say you have a monkey in a cage and you want to teach that monkey to press a button (psychologists actually do this to study learned behavior). First, you wait for the monkey to press the button by accident or happenstance and then immediately you reward the monkey with some food. Soon, the monkey learns that by purposefully pressing the button he can avoid hunger. Press the button. Get a peanut.
The problem is that as quickly as the monkey learns the behavior he can unlearn it. Stop rewarding the button-pressing and the monkey will cease pressing the button. However, if you start making the reward intermittent (a peanut only after every 3 presses, for example), the monkey will quickly learn that the reward only comes after a certain interval. If at that point you stop rewarding the behavior, it will take little longer for the monkey to unlearn it than in the continuous reinforcement example. But, the behavior still soon goes away.
However, if you really want that learning to stick, you have to change the rewards to a variable ratio. Sometimes you give the peanut after every three button-presses. Sometimes you give it after every five and sometimes you even increase it to ten presses or more before you give up the food. In fact, over time you can increase the interval to over a hundred button-presses. When the monkey can't predict how many times he will have to press the button before getting a reward, he will continue to press and it will take a long time to unlearn the behavior. The monkey just keeps working.
Each time you increase the interval, you've made the rules more difficult for the monkey. Each time, he has to work harder to achieve the same result. Yet, the monkey willingly works harder. He learns that his hard work isn't consistently rewarded. He learns that if he keeps at it long enough, doing what he's learned is supposed to work; eventually he will get his just reward.
These kinds of experiments work with insects, reptiles, rodents, primates and yes, with humans too. This is all well documented in psychology research. You can easily research it yourself.
America's policy makers know this to be true and even if each individual politician is not consciously aware of this, the big political think tanks (e.g. The Heritage Foundation and the Brookings Institution and scores of others) are keenly tuned into this fact. They know that as long as our rules still make it possible for someone who starts at the bottom to wind up on top, the idea of the American promise is alive.
Going back to our experiment, if you have a limited supply of peanuts and you want the monkey to deliver the maximum number of presses, the smart thing to do would be to find the point of maximum return. You want to optimize the monkey's output. What is the least number of peanuts you can give to the monkey without discouraging the monkey to the point the behavior slows down? In other words, how do you keep getting the button pressed and avoid making the monkey so frustrated that he stops pressing the button?
"Occupy Wall Street" is not just about Americans who can't find work. It's about the fact that even when they can find work, the rules have gotten so difficult; the deck has been so stacked against them that there just aren't enough rewards in the game to make it seem worthwhile. By trying to optimize the output of our workforce to the breaking point and by keeping too many peanuts for themselves, the 1% has created this situation -- with the help of our politicians they support with their political contributions.
It's not about unions. It's not about government spending. It's not about collective bargaining. It's not even about our nation's debt. It's about the erosion, little by little, of the ability of the working person in this country to control their destiny. It is still possible to be very successful in America. Equality of opportunity is still alive. The problem is that it takes more hard work, more good luck and a greater degree of being exceptionally good at what you do to become wealthy or to even do as well as your parents did just a generation ago.
There are far too many policies to enumerate that have created this situation to fit into this short position piece. Both parties have contributed to this. But in all fairness, one has and continues to far more then the other. When you take a debate with someone on the right to the underlying philosophy behind their policy proposals; I mean, when you break through the surface issues about them being against Welfare, Medicaid, Medicare, Obamacare, Social Security, higher taxes for the wealthy, diminished workers' rights etc. It boils down to a basic belief that it's about survival of the fittest with a "winner-take-most" strategy and that that's the best way to create a competitive and prosperous society. They believe in giving workers just enough to keep them producing in what they believe is a completely optimized economy. They want to get the maximum economic return not only from workers but also from our crumbling infrastructure and even from the money that was earned by workers and set aside in corporate pension funds - which was given to Wall Street to invest, thereby optimizing that money.
Is there anything wrong with believing in maximum optimization? It's really just a fundamental belief they have about where we should take the country. You may agree. That's OK. You just have to know fundamentally what you're agreeing with. If you are not in the top 1%, you are among those being optimized. And you need to understand that when you vote.
Look, I'm an entrepreneur. I believe that the one of the roles of business is indeed to get the maximum return on investments. But I also believe that when you extrapolate that to try to run a country as if it were a business and you treat humans as a resource that should be squeezed to extract its maximum output, you disregard inherent but non-measurable values like quality of life, fulfillment and dignity. When you deprive people of those things they actually are less productive, less creative and actually less optimized. Life for the individual becomes more about the pursuit and less about the happiness and when the pursuit isn't getting us closer to our hopes and dreams for our children, and ourselves we get frustrated, angry and filled with resentment. And I just can't get on board with that, despite the fact that I aspire to and work hard toward my own prosperity. And I make no apology for that.
I believe in the American principle of higher advancement to those willing to leverage their natural talents, educate themselves, work hard and create value. But I do not believe in a winner-take-all system where if you're not contributing the most, you receive next to nothing.
I believe in a system in which everyone can avoid poverty and even achieve the American dream by simply working hard and being honest. If you want more than that, I think you should work harder, be more and yes, it should be competitive. I do not believe in a system, like the one we have created, where politicians tell you that if you're not making ends meet you're simply not working hard enough.
It shouldn't take more than a hard day's honest work to make more than peanuts.
And that's what the "Occupy Wall Street" movement means to me.
Please reflect on this. Please vote.
Follow Mike McCready on Twitter: www.twitter.com/mjmccready
But lets be realistic here...There are differences in low skill labor and high skill labor...therefore there are different wages. If everyone could be business owners or CEOs or NBA stars...then the wages would be very little. But then if you had these skills...you wouldn't be protesting wall-street as if it was the only reason the US went into a recession...
How did America develop into a great nation so quickly? Not because everyone was paid equally...it was because of the competitive nature of our lovely country, which gives all the chance to contribute. As long as you work hard at it. By working hard, I do not mean flipping burgers for 60 hours a week. There is much more to it than that. I come from a low income family, I would love my father to make more, but due to skill level he can not. Don't whine about not being able to go somewhere with your life...Work hard and you will get atleast 60k a year...and be satisfied...
Someone give me a good response :) I cant seem to support OWS. I need good logical reasoning...and this video did not give it to me with peanuts
btw, yes I say 60 hours a week, not the normal full-time 40hours
Lastly, I would point out that half of everyone in the country is below average in key attributes such as ability or intelligence. That's what average means, right? Half are below and half are above with most clustering toward the center. But still, we must have a society that enables everyone to have the basic necessities. I'm not saying people should do really well if they're not willing or able to go above and beyond. I am saying that almost everyone should be able to find work and that they should be able to make a living wage. In the wealthiest country in the world, it is inexcusable that we have such a high poverty rate and my point in the video is that the deck is increasingly stacked against those starting out at the bottom.
Real Reason of this economy: Greed; not only by bankers, but also those who participated in the economy with irresponsible spending... financing through loopholes to buy out of income ability...thats y variable rates destroyed mortgages...and etc...
most approach from top down...why not bottom up?
its also a matter of social change not necessarily economic/capitalistic change
when i grew up, i grew up in poverty. being smart was "uncool" haha...do you see where i am getting to? if kids and adults down want to improve...then society will never get better...income will increasingly be separated and complaining will continue.
hhaha i dont think i got my point across fully...but this will have to do...the limit does not work well with me... :)
How much more fair do you want America to be? relative to other countries, what are we missing?
The top 1% contains, households of over 250k a year...which contains, business owners, professional sport players, high government officials, actors, singers...some are even popular religious icons...and of course, the people making a career from "dreadful" wallstreet.
Are people going nuts? How many of you put you whole life of hard work 60 hours a week or more to improve and develop yourselves to become successful. I am not only talking about wall-street successful. I am talking about becoming actors, singers, professional sports, politicians...
And there is the student loan argument of those who seem to think they should be forgiven for their schooling...Ya of course by all means...dont go to school...but if you already did...then get a job and pay for the loans...while doing so...work hard and improve yourself to become successful and stop crying...
(Im 23 with a large amount of student loans)
The question is as OWS grows will their purpose unite into a common theme like Occupy Congress? Will the 99% awaken to the fact that if they want change they have to VOTE for change. Not just vote, but do so with knowledge and education of whom they are voting for.
The reason Congress is not listening to OWS, or anyone else, is they see themselves as omnipotent, they have the view they are demigods and can buy the next election as they have in the past and continue their path of destruction and corruption. Only the few states allow recall and it is a difficult process.
Americans can change that. Vote a change in Washington that will rock it to its roots. Make the biggest change in incumbents in history, and send the message WE THE PEOPLE are who you work for, and don't forget it again.
Students were left with tens of thousands of dollars of debt and no chance of obtaining a job that would allow repayment. Students debt is not dischargeable in bankruptcy. If an individual is unable to pay, unpaid interest is capitalized until, quite often, the capitalized interest is greater than the original debt.
In my youth, I was proud to be an American. I loved and still do love my country, but of what have I been left to be proud?
These people have that responsibility and if their career paths are not providing jobs, they should start seeking jobs in other areas. Burger joints, farmers, general laborers are always needed. You want jobs deport the illegals then you have those jobs, open up oil drilling and new refineries there are some more jobs, ease regulations on existing companies more jobs, construct more nuclear power plants hey even more jobs, so why not tell Washington there are opportunities out there if Washington gets out of the way.
well said indeed! Fanned even...
you provide not only very well thought out and valid points, but explain your conclusions with pertinent research and data...going even further in making it a pleasant , if disturbing, read
would that more could understand and grok the basic Principles you have typed
woe is U.S.
Example, how can you blame the banks for loaning you money to go to an expensive college and obtain a degree that does not offer you a real chance at obtaining a career? The only person to blame is the one that signed the load paper, aka the student.
And, how about all of the Anti-Semitic hatred being spewed at these protests.
I guess that sums up what type of people are really at OWS events across the nation.
Sure, you keep telling yourself these lies. Sorry you are scared to open your eyes.
So do you support these people or not?
Possibly Oct. 29th.