The middle class is ruining the American dream

Is the American dream over? Photo / 123 RF

Does the American dream exist? Or has the middle class ruined it by hoarding opportunity on a scale that makes even the infamous one per-centers appear harmless and ineffectual?

That's the question economics professor and Brookings Institution fellow Richard Reeves has set out to answer, and his findings are worrying: the top echelons of the US middle class - those earning more than US$120,000 ($168,000) - are separating from the rest of the US, and pulling up the drawbridge behind them.

The result, Reeves writes in his book Dream Hoarders, out this week, "is a less competitive economy, as well as a less open society".

"The upper middle class families have become greenhouses for the cultivation of human capital. Children raised in them are on a different track to ordinary Americans, right from the very beginning," he writes.

The upper middle class are "opportunity hoarding", making it harder for others less economically privileged to rise to the top; a situation that Reeves says places stress on the efficiency of the US economic system and creates dynastic wealth and privilege of the kind the nation's fathers sought to avoid.

"The US labour market is mostly meritocratic and not some kind of medieval cartel," Reeves told the Guardian, "but it's what happens before that that is unfair."

The problem, he says, is that people enter the race with very different levels of preparation.

"Kids from more affluent backgrounds are entering the contest massively well prepared, while kids from less affluent backgrounds are not. The well-prepared kids win, and everybody pretends to themselves it's a meritocracy," he says.

Reeves believes we have to think much earlier about equality of opportunity, including the way the education system, labour and housing markets work. Without reform, society continues with a system that replicates inequality, he argues.

For proof of enduring discrimination that starts in the cradle, Reeves, a former Guardian journalist, looks to the persistent inequality of wealth distribution. He observes that there has been very little change in income distribution of the bottom 80 per cent over the past 30 years.

The action, he says, takes place in the upper 20 per cent, who "are pulling away".

"It's true that the top 1 per cent are pulling away even faster, but they are a constantly changing group with a lot of circulation in and out of it. On terms of their effect, the top 1 per cent aren't really a big enough group to have much of an effect."

The problem, he says, is that upper middle class are able to point to the 1 per cent as the problem: "It's those rich bastards up there."

"'We are the 99 per cent' turned out to be an incredibly unhelpful slogan, because it allowed the person in the 98th per centile to convince themselves in they're really in it together with the person in the 50th or 20th. But that's empirically wrong, because it's not where the inequality is, and morally wrong because the upper 20 per cent have actually been doing pretty well," he says.

In Reeves' estimation, the failure to address the issue correctly has led to fundamental misunderstandings. While many agree that the rich should pay more in taxes, no one is willing to admit they are rich. "We need to be honest that the inequality problem does not kick in at 99 per cent, but much earlier than that."

Further, the hoarding of economic opportunity by the upper middle class has served to maintain and reinforce systems that were, pre-civil rights, racist. Zoning laws that were once used to maintain racial segregation in the housing market are now used to maintain classist segregation.

"Such laws that were once race-based serve class purposes quite well so while we've seen a reduction in race-based segregation, we've seen an increase in class-based segregation," he says.

Reeves, born and raised in the UK but now an American citizen, says he was astonished to learn that some US university admissions systems are openly preferential, favouring "legacy" students whose parent or parents also attended. Systems that were developed to keep Jews out of Ivy League colleges have now been re-purposed to maintain class-based preferences.

A further example is the use of internships. Dream Hoarders cites data that found even in institutions that promote their belief in meritocracy, including Mike Bloomberg's New York mayoral administration, rely heavily on nepotism and its affiliated systems.

Of the 1500 interns hired during Bloomberg's three-term administration, one in five had been recommended by someone within the administration, Reeves writes. Such practices, he writes, undermine claims of a meritocratic society. "In some ways, the myth of United States as a classless society is getting in the way," he writes.

That belief, Reeves adds, "stands in the way of the recognition of privilege and advantage that's needed before any change can be brought about. Is it about privilege to give internships away? Internships are a leg up into the labor market, and it's striking we don't have those conversations."

But as controversy swirls around Trump's willingness to rely on his children or their spouses as White House advisers, and indeed the ethics of Trump's business practices, Reeves believes conversations about privilege and its effects on a meritocracy-based society are coming to the forefront.

"One of the silver linings of Trump's victory is some introspection among the upper middle class. There's a growing willingness to accept that some advantages are not the result of purely meritocratic society and are the result of a rigged system and people have a right to be angry. It's a difficult conversation but until we have it, there's no chance of a solution."