Monday, October 30, 2023

Family Vacations and the American Dream

The furthest I ever went on a family vacation growing up was one state over east--to Wisconsin. It lasted about 5 days or so. Most years, the routine would be 3 or 4 days and a 3-to-4 hour car trip to either Duluth, Minnesota at the western end of the Great Lakes or to Minneapolis, Minnesota where we'd take in a Twins baseball game. On no level is this a complaint. This was sufficient and I only had two real comparisons to it. 

My father had never stayed overnight with his parents anywhere. This was not necessarily an economic choice, but a product of my paternal grandfather's experiences in the Second World War and a desire to never leave home again for the night. The other comparison was to peers. Here I'd get a bit more of a sense that friends of my would go on trips to Europe or Florida or elsewhere. To this day I've never traveled on a plane with my parents and likely never will. Earlier this month my wife and I traveled with our son for the fifth time on a plane in his seventeen months of life so far. Partly a consequence of living far away from family, yes. But it reminds me of these markers of what was once considered a middle-class life, how unattainable it's becoming for the current generations trying to raise kids, and how lucky to buck these overall trends the family we're building is. 

Traditionally, a marker of a middle-class life, which used to not just be the standard in America, but the genuine preference, meant going on a family vacation to really anywhere else... whether by car or by plane. Owning your own home, two cars, and maybe if you live near a lake in a not-too-expensive area, maybe you had a boat too. 

In the three decades since the country started electing baby boomers to the Presidency and the majority of seats in Congress, American culture, society, and home economics has taken a drastic turn for the worse, especially for the American middle-class. 

The middle-class squeeze in an era of growing financialization, globalization, outsourcing, and wage stagnation relative to inflation has affected the ability of households to keep the home, the cars, maybe the boat, and yes -- the family vacation. Mostly, we're just treading water to keep the family intact in the wake of these forces at all. And rather than a picture of despair, the American middle-class has for years fought hard to keep these markers of the American Dream. 

First, an adjustment was made years ago and a bit more each year with one-income households becoming two-income households. While the political and cultural mainstream hailed this as a victory for one of the various waves of feminism, it really was a victory for corporate outsourcing, union busting, and shifting labor-management battles away from the private sector and into the public sector where the competition with the well-defended ownership class was replaced with pitting the interests of public employee unions against the mostly defenseless taxpayers. What happened was a lot of rhetoric, junk food, temporary good feelings, then a sugar crash on borrowed money, exploding debt, and now--overall inflation. But this first story took decades to hit the wall. Besides, many, many households stayed single income anyway because they were single parent households, married to the state rather than a person. 

The second middle-class course correction was charging these things at the edges on credit cards. The credit card economy exploded throughout the 1990s, although it is far exceeded (see 2nd chart below) by household debt and spending items on a myriad other a handful of other goods and services. 

The third and what is proving to be final course-correction was borrowing against the main asset of the middle-class lifestyle-the home. Reverse mortgages and home equity lines of credit helped maintain for a few years longer, the illusion that the American Dream and possibilities for the next generation to do better than their parents a little bit longer. Last decade, as this squeeze became more and more apparent to honest observers of our structural economy people theorized about what the fourth course-correction or adjustment would be. The period of adjustment came and went. What for three years was the best economy, especially for the bottom 3 quintiles in 2017, 2018, and 2019 gave way to COVID-19 era of moral panic, induced economic devastation, and a deliberate sabotage of the social fabric. The best economic conditions in at least twenty years, if not thirty years that resembled a Goldilocks economy has been wiped out in 2021, 2022, and 2023. Over the past many decades, America has gone from a family wage supporting, production-oriented, export-driven, manufacturing economy to a debtor, consumer-oriented, import-driven, "services" economy. And I put "services" in quotation marks because service might remind us of Home Depot or a small business later replaced by Amazon and the convenience economy. Nope. For the most part the "services" economy has been areas of heavy government spending that have induced and driven price increases along the way with each round of "reform" because that's what introduced a large guaranteed annual purchaser does to any sector or industry. 

The chart below shows health and medical care, higher education, and childcare and nursery services as having risen far past wages and inflation. The same result largely occurs if you replace 2000 with 1990 or so as the starting point. This is not a new problem, but it is an escalating one. And from the end year, this chart undersells how bad our economy actually is for the American middle-class and what is left of the American Dream. With housing and food just behind wages and inflation, in the three years since both of those areas contributed greatly to bringing up overall inflation rates. Home mortgage interest rates are higher than they've been in decades and for the first time in the lifetime of anyone under 45, food inflation is being experienced at painful levels. 

Every single one of these areas has been heavily subsidized by the government, and every time it's been a mistake that has dented the American Dream and upward mobility just a bit more. There was no fourth course-correction or adjustment coming. What is instead happened though could be better in the long run for the country. A political realignment by social class. 

The past few decades every good and service that has risen past wages and inflation has been heavily subsidized by the federal government and takes up significant total government spending.

Since Obama's election, student loan debt and higher education spending have skyrocketed. Today, a college degree signifies one of the biggest political divides. 

The Democrats long goodbye to the middle and working classes can be seen strikingly below, and this has continued to expand in the years since. The chart below illustrates that the party of the future is far more likely to be the Republican Party, whether it be in the more populist-variety or the more Reagan-era variety. More likely, a mix of both impulses will govern on economic matters, with each economic "wing" winning out and leading the areas they care about most. 

It's not lost on my growing family that our ability to own a home in Manhattan, to fly five times with our oldest, and so fourth -- puts us in rarified air for millennials in this economy. We are achieving the American Dream adjusting for New York City living (minus the two cars and the boat, add access and opportunity). Never in my wildest dreams, or in my conception of the American dream, did I think this would happen ten, twenty years ago. 

And never in a million years would I have traded the upbringing I had in cars listening to my Dad's favorite band The Beatles, or watching the Twins in the Metrodome, or being together in general with a family that never will be in the same room again -- for anything in the world. But as proud as I am of the risks taken to buck this trend against and onslaught against middle-class families, I think often of how elusive it's becoming for the most of us, the structural inadequacy of this economy, and how we can reverse the tide before it is too late. 

We will never save America with a nation of renters. Sorry. We just won't. We will also not save civil society and civilization with a bunch of tech and finance elites who take in conferences in Aspen and Davos. 

But we can save both the American nation and people, and rediscover a communitarian civic tradition if we build an economy that is centered around the real needs and aspirations of intact and resilient households and families of the middle-class -- the place where citizenship either lives or dies. 

Troy M. Olson is an Army Veteran, a lawyer by training, and the co-author (with Gavin Wax) of the upcoming book ‘The Emerging Populist Majority.’ He lives in New York City with his wife and son. You can follow him on Twitter and Substack at @TroyMOlson


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