|"Who Stole the American Dream?" by Hedrick Smith, 2012.|
Hedrick Smith’s 2012 book “Who Stole the American Dream?” is a powerful look at the way things have shifted against the middle class over the last 40 years in America. It’s an important book that everyone interested in American politics or economics should read.
Hedrick Smith is a veteran journalist who worked for The New York Times for 26 years. While he was with the Times Smith was a part of the team that broke the Pentagon Papers story and won a Pulitzer Prize in 1971. In 1974 Smith won the Pulitzer Prize for International Reporting for his stories reporting from the Soviet Union and Eastern Europe. His work in the Soviet Union was the basis for his 1976 best-seller “The Russians.” Smith’s other books include “The Power Game,” his seminal study of political power in Washington, D.C., “The New Russians,” and “Rethinking America.” Since retiring from The New York Times, Smith has produced many documentaries for PBS.
I was an intern in Hedrick Smith’s office during the fall of 2001. While I was there I helped work on Smith’s documentary “Rediscovering Dave Brubeck,” which I would highly recommend to any jazz fan. While I interned at Hedrick Smith Productions, I saw first-hand Smith’s tireless work ethic and his dedication to journalism. He’s won two Pulitzer Prizes, but he’s not just resting on his laurels.
Smith’s reporting for “Who Stole the American Dream?” is deep and incisive. He weaves the threads of his story together very well, writing in clear prose that is easy to understand. The book covers a lot of ground, but Smith excels in presenting the reader with the most relevant points in each chapter. The book is separated into short sections that make for quick reading.
Smith does a great job of showing how many government policies over the last 40 years have favored the rich at the expense of the middle class and the poor. As Smith writes in the Prologue:
“This book sets out to describe how, over the past four decades, we came to this point-how we became two such polarized and dissimilar Americas, how the great economic and political divide affects the lives of individual Americans, and how we might, through changed policies and a revival of citizen action, restore our unity and reclaim the American Dream for average people.” (Prologue, p. xix)
In the first chapter, Smith stresses the influence of the Powell Memorandum, which was a call by lawyer Lewis Powell in 1971 for increased activism of business to strength their position and influence within government. At the time, Powell was a corporate lawyer, but a few months later he would be named to the Supreme Court by President Richard Nixon. The Powell Memorandum was written to the U.S. Chamber of Commerce, and it was not meant for public consumption at the time. The memorandum said, in part, “Business must learn the lesson…that political power is necessary.” (P.7) During the 1970’s business interests would take Powell’s message to heart as they began to lobby Congress in much greater numbers than ever before.
Smith then chronicles how the middle class grew and flourished in the decades following World War II, and how the middle class’s earnings have stagnated over the last 30 years. As he writes, “…while productivity was rising close to 3 percent a year, hourly wages of the average worker, adjusted for inflation, were essentially flat, the same in 2011 as in 1978. Three decades of getting nowhere.” (P.73)
But while the middle class has been treading water for 30 years, the wealthy have been getting richer and richer, as compensation for CEOs of companies has skyrocketed over the last 40 years. Smith writes, “In the 1970s, the Federal Reserve reported that chief executives at 102 major companies were paid $1.2 million on average, adjusted for inflation, or roughly 40 times an average full-time worker’s pay. But by the early 2000s, CEOs at big companies had enjoyed such a meteoric rise that their average compensation topped $9 million a year, or 367 times the pay of the average worker.” (P.59) CEOs certainly have a right to be well compensated for their work, but the way their pay has skyrocketed is outrageous. CEO stock options have also skyrocketed in the last few decades. The thought is that CEOs will do a better job of leading the company if they have more of a stake in that company. Which is rather ridiculous, as pure self-interest will keep a CEO doing their job as best they can. The suggestion that CEOs need the extra incentive provided by stock options to do the best for their company is absurd.
Smith also writes about Congress, and how politicians are more beholden to special interests than actual voters. The reality of politics today is that money buys you access to a politician, and access gets you influence. And since special interests are contributing more to PACs than middle class and lower class voters, the special interests have more influence than ordinary voters. Gun control is a recent example of an issue where the majority of people want action, but Congress was unable and unwilling to do anything substantive on the issue. The will of a majority was thwarted by a powerful minority.
Smith details how Congress used to work in the 1950’s and 1960’s, as politicians from both parties would frequently work together to craft legislation. Compromise was essential, and there were more moderate politicians in both parties. In contrast, Congress now is extremely dysfunctional, and is barely able to pass any kind of legislation. Compromise has become a dirty word. Filibusters, and the threat of them, have become much more common. Thomas Mann of the Brookings Institution says of the Senate: “In the 1960s, about 8 percent of significant legislation was subject to delaying tactics like filibusters or holds. It is now about 70 percent. Obstructionism is now the hallmark of the Senate.” (P. 322)
While it’s true that Democrats have become slightly more liberal, it’s also very true that the Republican Party has shifted steadily to the right since the 1960’s. Moderate Republicans are now an endangered species. One of the key moments in the Republican Party’s shift to the right was the 1964 nomination of Barry Goldwater as the Republican candidate for President. Smith and other authors have highlighted this turning point as the moment when the right wing started to take over the party. Even though Goldwater lost to Lyndon Johnson in a landslide, it was the moment when the right wing first asserted itself. When moderate Republican Nelson Rockefeller was booed by Goldwater supporters at the 1964 convention, it marked the beginning of a huge change in the Republican Party.
In Part 4 of the book, Smith discusses many of the things that have caused the middle class to lose their wealth, from the subprime mortgage crisis, to Wal-Mart and other companies moving good jobs overseas. There was a time when companies were actually concerned about the welfare of their employees. Now the focus is often only on the bottom line of the balance sheet.
“Who Stole the American Dream?” is a book that should make you angry. It should make you think about what’s happened in the country over the last 40 years, and how the wealth disparity in this country is growing larger and larger. You should get indignant about the status quo as you read this book. My high school Social Studies teacher Mr. Anderson would always say to us “Be indignant!” He wanted us to have a reaction to current events, and Hedrick Smith wants us to have a similar reaction to his book.
Personally, I think that Hedrick Smith hit the nail on the head with “Who Stole the American Dream?” He accurately diagnoses many of the maladies that plague our country today. He describes how we’ve gotten there over the last 40 years, and what can be done to change it. We would all do well to listen to him.