Declining Fortunes: The Withering of the American Dream. - book reviews

Washington Monthly, May, 1993 by Jonathan Rauch

Something happened to the American economy around 1973. We don't know exactly what, but we do know the consequences: Productivity growth slowed markedly and has never fully recovered. From 1947 to 1973, hourly work output increased by 3 percent a year; afterwards, by less than 1 percent. Productivity drives living standards. When it slows, so does the growth of wealth. Median family income doubled from 1947 to 1973; since then, it has risen only slightly.

This is the great economic change of our time, and it is where Declining Fortunes begins. Katherine S. Newman, an anthropologist at Columbia University, sets out to explore how economic change translates into generational friction. In a northern New Jersey town near New York City--"Pleasanton," as she calls it (all names are changed to protect privacy)--she conducts more than 150 interviews. And she concludes: "There is virtually no aspect of daily life that has been left unruffled by the shock of declining fortunes ."

Newman is at her best parsing the intricacies of middle-class hopes and discontents. She has an attentive ear and a gift for putting her finger on points of social tension. Subterranean economic change, she demonstrates, leads to eruptions of moral strife. For example, in the age of the working woman, who is a moral mother? The mother who works may be frowned upon as materialistic, but the mother who stays home may be frowned upon as unfulfilled. Or again: Baby boomers, she says, feel economically insecure and so wait longer to have children. "Hypercalculation thus replaces the casual, unplanned style of pregnancy of the postwar parents." This opens another values gap. Postwar parents think their children are being too finicky and waiting too long; the baby boomers think they are being prudent.

All of that is good and useful stuff. Newman's insistence on rooting her analysis in the real lives of real people, supported by her clear and unpretentious prose, makes her book a good example of how the anthropologist's lens can help bring American life into sharper focus. But wait a minute. The book wants to do more than map the changing middle-class mindset. Is it also selling a world view, a new victimology, beginning with its title, "Declining Fortunes"? Something fishy is going on here.

Pleasanton in the fifties--and, by extension, America in the rifties- is bathed in a nostalgic glow. The town was an upwardly mobile melting-pot community where houses were cheap, jobs secure and plentiful, hard work amply rewarded. It was the town of the American Dream. But those days are gone, and, through the bleak picture of the present day sketched by Newman, you'd think the Great Depression had returned. "Contractions, leveraged buyouts, bankruptcies, layoffs, and general despair over the state of American competitiveness--these are the headlines in today's business pages." Manufacturing is "on the skids." Baby boomers comprise "the first generation since the Great Depression to have a lower standard of living than its parents," and so on.

This is, very largely, nonsense. American manufacturing is not "on the skids"; mainly, it is thriving. Newman mentions the "slow descent" of wages but does not mention that total compensation (a better measure which includes fringe benefits) has risen 15 percent since the early seventies. She says that the median income has fallen since 1973, which is wrong. And she says that the eighties brought "steep declines in the purchasing power of the vast majority of Americans," which is bizarre.

One soon begins to notice that Newman trots out all the depressing economic statistics while leaving all the cheerful ones on the shelf. She notes that inequality has increased, but omits that the effects are relatively minor; overall distribution of income has changed remarkably little since World War II. In 1949, the bottom fifth of families received 4.5 percent of the income, the top fifth 42.7 percent; in 1991, the figures were 4.5 percent and 44.2 percent, respectively. Some sea-change. Partly because more poor and near-poor families are headed by single women, family income has fallen since the early seventies, but by and large the middle has held its ground or gained. True, the richest fifth gained faster than the middle fifth, but that's not the same as "declining fortunes." Newman bemoans the shrinking middle class. Says economist Gary Burtless of the Brookings Institution: "The middle class is shrinking, all right, but partly because they're jumping above ."

She writes of recessions as though they were permanent. "There appears to be no end in sight to the economic downturn of the late eighties." Oops. And: "Unemployment was at record levels in the early eighties, as the impact of the 1979-82 recession devastated the younger boomers." But the Reagan recession ended, unemployment fell, and the otherwise mediocre eighties expansion created 18 million new jobs. She points out that home ownership rates have declined for people under 50 but does not mention that homes are greatly improved. For instance, three-fourths have central air conditioning, twice the percentage of 1971.