The American Nightmare

04/07/2010 05:00 pm ET | Updated May 25, 2011

"If we kill the rich," one columnist asks in yesterday's Huffington Post, "don't we kill the dream?"

There may well be a dream on the line, but it's not the one the writer is worried about -- namely, "the American dream of meritocracy," which allegedly "Congress is trying to strangle." In fact, of all the misdeeds carried out on the southern tip of Manhattan over the last decade, perhaps Wall Street's greatest fraud was to arrogate the very meaning of the American Dream. What Ward and others are peddling as an American Dream -- and what lies on its deathbed today -- is not that storied Dream, but an ersatz ideology, a vision corrupted, distorted, perverted and bastardized; in short, a nightmare.

Speaking to the Democratic Leadership Committee in 1993, Bill Clinton called the American Dream a "simple but powerful one -- if you work hard and play by the rules you should be given a chance to go as far as your God-given ability will take you." And what does God have to say on the issue? Luke 16:13: "No servant can serve two masters. Either he will hate the one and love the other, or he will be devoted to one and despise the other. You cannot serve both God and Money." While the American credo stops short of condemning profit, it was never intended to equate the two.

Looking back on the origin of the American Dream trope, as David Kamp does in this month's Vanity Fair, there was not, from the get-go, "any promise or intimation of extreme success in the book that popularized the term," as Kamp writes of James Truslow Adams' The Epic of America. Nor was astronomical wealth the "dream" promised in Horatio Algers' rags-to-riches stories. In Ragged Dick, Alger's first great success, the protagonist winds up a clerk, happily ensconced in the middle -- and not the upper- upper -- class.

In 1907, Burton J. Hendrick authored an anti-Semitic piece in McClure's Magazine called "The Great Jewish Invasion." Manhattan's Jews, Hendrick wrote, "are not what are commonly regarded as the most enlightened of their race." Yet among his accusations of money-grubbing, Hendrick admitted that the Jews' "enthusiasm for America knows no bounds." He continued: "The rapidity with which the New York Jew adopts the manners and trappings of Americans almost disproves his ancient heritage as a peculiar people...Better than any other element, even their native stock, do they meet the two supreme tests of citizenship: they actually go to the polls, and when once there, vote independently."

Even in this city -- what Ward today calls the "national epicenter of ostentation and consumerism" -- a bigoted commentator could distill from the basest of stereotypes the true nature of the American Dream: the litmus test was not a paycheck, but a ballot.

Yet in the last half of the last century, something changed. Americans started betting, in the words of Joe Nocera, "that tomorrow would be better than today." Consumer credit swelled in the 1960s, and was underwritten in the 1970s by the rise of credit cards. The gold rush reached its apotheosis in the 1980s, when under Ronald Reagan, the American Dream was finally "decoupled from any concept of the common good," as Kamp writes, "and, more portentously, from the concepts of working hard and managing one's expectations."

Thus, Michael Lewis, the author of Liar's Poker, who wrote recently of his own foray into the so-called American Dream: "I'd never taken an accounting course, never run a business, never even had savings of my own to manage. I stumbled into a job at Salomon Brothers in 1985 and stumbled out much richer three years later, and even though I wrote a book about the experience, the whole thing still strikes me as preposterous."

The American Dream had, and has, become a farce. Over at AIG, Edward M. Liddy is grumbling that they "cannot attract and retain the best and the brightest talent" if those much-bemoaned bonuses aren't paid out. But as Judith Warner recently asked, "When was it, exactly, that the titans of Wall Street, among their many other perks and privileges, got to be crowned with the title of best and brightest'?" In other words, why should Wall Street occupy the vanguard of the American Dream?

Under their watch, we saw the American Dream supersized and subsidized. As economist Robert H. Frank writes in the Sunday Times, "Trillions of dollars, many of them borrowed from China, financed tax cuts for the wealthy, who spent much of their added wealth on things like bigger mansions. But beyond a certain point, when everyone builds bigger, the primary effect is merely to raise the bar that defines the size of home that people feel they need."

This was an American Dream bought on the cheap. In the ugliest sense of the word, it was bigger, but in no ways loftier.

The anecdote the blogger leads with is something a hedge-fund manager told her at dinner: "If your only identity is in your job or your money then there is no point living in New York anymore," he said. "Anyone who thinks like that will leave."

And good riddance. In this month's Atlantic, Richard Florida predicts that "the financial crisis may ultimately help New York by reenergizing its creative economy." New York has become a haven for people whose personhood begins and ends with their wallets. As the urbanist Jane Jacobs told Florida, "When a place gets boring, even the rich people leave." "With the hegemony of the investment bankers over," Florida concludes, "New York now stands a better chance of avoiding that sterile fate."

As the nightmare passes, there will be time to repair, revitalize and, yes, rethink the American Dream. And with any luck, we'll soon be stewing over bonuses for overpaid Huffington Post writers.