What happened to the American dream in the 20th century?

Why is everyone so disappointed in the state of the post-pandemic economy? Economic indicators are generally positive, but polls indicate that many people think the US economy is headed in the wrong direction. David Leonhardt’s new book was conceived well before the pandemic, but it speaks to this moment of economic discontent. The New York Times senior writer offers in this book a history of the decline and fall of the American dream. His point of departure is this statistic: while children born in 1940 had a 92 percent chance of growing up to have higher household incomes than their parents, children born in 1980 have about a 50 percent chance. No wonder everyone is so upset: we are all operating with a sense of unmet expectation.

Leonhardt divides the economic history of the United States from the Great Depression to the present into two eras. The first is “democratic capitalism,” encompassing Roosevelt’s New Deal, Eisenhower’s campaign of public investment, Johnson’s Great Society, and the regulatory agencies of the Nixon administration. The second, “rough-and-tumble capitalism,” was driven by the ideas of Milton Friedman and Robert Bork, reached its peak during the Reagan administration, and then was confirmed and extended by Reagan’s successors, both Democratic and Republican. According to Leonhardt, the period of democratic capitalism was marked by economic growth shared by workers and managers alike and underlain by strong unions. Rough-and-tumble capitalism, by contrast, has seen a significant growth in income inequality and the weakening of unions.

Leonhardt describes himself as someone who offers “human storytelling interwoven with plainspoken analysis.” Certainly the stories just keep coming in this book. The chapters open with portraits of individuals that Leonhardt (usually) wants to lionize. The archetypal hero for Leonhardt is probably Asa Philip Randolph, who began his career as a union organizer among Pullman porters and then built on this success to work for integration in factories, greater civil rights for Black Americans, and economic prosperity for workers. Leonhardt quotes Randolph in words that could summarize Leonhardt’s own view: “The great movements that achieve justice and also make the world a better place to live in are movements that are based upon economic facts and economic problems and economic conditions.” Civil rights were a by-product of union organizing.