Saving the middle class has become a battle cry in the 2012 presidential campaign — and it’s no wonder. According to a recent Pew Research Center study, the percentage of Americans considered middle class has dwindled to 51 percent from 61 percent in 1971. But the Pew report does not explain the political and economic forces behind this decline. That’s a task Hedrick Smith sets for himself in his new book, “Who Stole the American Dream?”
Long before most reporters and social scientists took note, Smith had established himself as television journalism’s foremost expert on the forces eroding the ranks of the middle class. In a series of penetrating “Frontline” documentaries over more than a decade, he chronicled the rise of a new buccaneer brand of global capitalism that relentlessly undermined the middle-class dream of “a steady job with decent pay and health benefits, rising living standards, a home of your own, secure retirement, and the hope that your children would enjoy a better future.” Now in a sober, self-described reporter’s book, Smith deepens his analysis using the latest data.
(Random House) - ’Who Stole the American Dream?’ by Hedrick Smith
The American dream’s demise, Smith says, began with a corporate rebellion against President Richard Nixon’s aggressive business regulations. That blowback ended a long postwar era of shared prosperity and power based on relatively stable relationships between business, government and labor. Alarmed corporate chiefs raised an army of lobbyists who helped pave the way for new federal legislation and regulations that benefited American businesses operating in an increasingly globalized marketplace. Corporate domination of U.S. politics, Smith writes, set off an era of economic dislocation and political polarization.
In Smith’s telling, America’s corporate plutocracy has largely abandoned even the pretense of stewardship, loyalty or patriotism. It has imported cheap foreign workers to replace millions of Americans in an increasingly wide range of occupations: from agricultural and construction labor to high-tech and banking professionals. Corporate chieftains also moved offshore many of the nation’s once-unionized, blue-collar jobs and low-level white-collar jobs, such as working in call centers. (Smith cites Thomas Jefferson’s prescient warning: “Merchants have no country.”)
Smith views 1978 as a pivotal year. First, Congress revised bankruptcy laws to allow troubled corporations to restructure rapidly by abrogating union contracts and other employee agreements. Second, lawmakers enacted a little-noticed tax-code provision designed to let workers supplement existing pension plans with individual retirement accounts. Corporations unexpectedly seized upon the new plans as an excuse to eliminate expensive, professionally administered, lifetime pensions. The result: Employees’ share of retirement costs went from 11 percent in the 1950s to 51 percent by the mid-2000s; insufficient or badly managed retirement investing by individual workers has given rise to predictions that perhaps half of aging boomers may end their lives in poverty. (Employers also took a parallel path in health insurance, shifting costs to employees via higher premiums and deductions.)