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.
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.