Business, Economics and Jobs

Who Stole the American Dream?




Kyle Kim

BOSTON — There's been no shortage of coverage lately on the American middle class.

President Barack Obama and his GOP challenger Mitt Romney have made it the centerpiece of their respective campaigns, a fact that came up repeatedly in Wednesday night's debate in Denver.

But the plight of the middle class is also moving far beyond the day-to-day chatter of the news cycle.

Case in point: a new book by Hedrick Smith, called Who Stole the American Dream, which is resonating in literary and economic circles around the country.

Smith is a Pulitzer Prize-winning veteran journalist, and he attacks his topic with gusto.

Here's the big idea: the decline of the middle class did not happen by accident.

Instead, Smith argues, in the late 1970s a group of powerful corporate and government interests came together to influence policies that ultimately hurt millions of Americans.

He calls it "wedge economics."

This phenomenon was a "change in the business ethos," Smith says. And it really took off in the 1980s when many CEOs moved from a shared system of taking care of all of their stakeholders (investors and workers), to one where equity-based inequality became the norm (big money for the bosses).

Here's a taste of Smith's argument:

"Americans, more than people in other countries, accept some inequality as part of our way of life, as inevitable and even desirable -- a reward for talent and hard work, an incentive to produce and excel," Smith says. "But wealth begets wealth, especially when reinforced through the influence of money in politics. Then the hyper-concentration of wealth aggravates the political cleavages in our society."

And here's a video of how Smith explained the idea recently — in great detail — to the New America Foundation: