The question of the American Dream can be regarded from various perspectives, including sociological, cultural, conceptual, historical, and economic ones. The latter perspective has to be applied in order to measure the economic well-being through the study of wealth as being an indicator of the American Dream. Since the main argument of the report is that the American Dream, which means each generation has more success than the previous one, is dead, the situation with wealth should be seriously considered. The wealth of the majority of the population has been declining in the country along with the rising levels of wealth inequality between the top 10 percent of the population and the rest. In fact, the American Dream in its original version, related to the rise from rags to riches, is dead for those 90 percent of Americans who are the primary target population for pursuing the Dream.
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Prior to focusing on the statistical evidence supporting the aforementioned claim, it seems reasonable to provide a definition of the selected indicator of the economic well-being. Thus, there are many definitions of wealth that prioritize some particular aspect of the concept. For instance, Adam Smith considered wealth to be a combination of raw materials, labor, and land, characterized by the generation of profits (Lecture on Wealth, 2016). In turn, Karl Marx distinguished between the material matters, separating land, labor, and human wealth as opposed to wealth in human relations (Lecture on Wealth, 2016). Elizabeth Parker prioritized the sustainability component of wealth, thereby defining the concept as having enough to meet individuals personal, social, and environmental needs without compromising ability of future generations to meet their needs (Lecture on Wealth, 2016). However, the present report will accept the definition of wealth provided by Mishel et al. (2012), since it seems to be the most suitable for reflecting economic well-being of Americans, and it comprehensively addresses all potential sources of wealth. Hence, Mishel et al. (2012, p. 375) define a familys or individuals wealth or net worth as the sum of assets, such as home, bank account balances, stock holdings, and retirement funds (such as 401(k) plans and individual retirement accounts), minus liabilities, such as mortgages, credit card balances, outstanding medical bills, student loans, and other debts, at a point in time. Wealth is considered to be one of the key determinants of peoples standards of living.
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Therefore, the tracking and analysis of the progress of wealth over the years can help to understand the Americans as individuals and as the united nation. In fact, there is an obvious discrepancy between the average wealth rate denoting wealth changes of the nation as a whole and median wealth rate across different percentiles of the population. Thus, within the first perspective, the American Dream should be claimed to be alive, since the average net worth, which is a key element of wealth, has been increasing. As shown in Figure 1. below, the average net worth of American households was growing at a steady pace since 1965 to 1994 (Mishel et al., 2012). The changes in the increasing numbers were rather small, amounting to slightly more than 1 percent, yet it still implied that each subsequent generation would be more successful than the previous one, thereby fulfilling the American Dream. These hopes were especially prevalent in the 1990s, when the pace increased and reached its peak in 1999, but as seen from Figure 1, this peak was followed by a rather pronounced decline just like in 2006, explained by the influence of the economic crises. However, the numbers quickly recovered and began increasing again after a short period of time.
Consequently, at the first glance, the wealth of Americans has been growing over the last 25 years, implying a gradual fulfillment of the American Dream. Nonetheless, the reality is drastically different, since these average indicators are high and depict the growing tendencies only because of the growth in wealth of the top 10 percent of the population, while the situation with the remaining 90 percent of people is gloomier. In fact, the distribution of wealth in the USA is more unequal than distributions of income and wages (Mishel et al., 2012). Figure 2 below presents a table with changes in different population groups shares of total wealth over the period from 1962 to 2010. As evident from this table, the share of the top 20 percent was steadily increasing over the years and was always exceptionally high, especially with respect to the top 1 percent of the population. Moreover, the two economic crises of 1999 and 2006, that made a significant impact on the average wealth, failed to influence the top 1 percent of the population, as all occurring changes in their wealth were positive. The table also shows that the remaining four fifths, especially the third and fourth groups, were the most significantly affected by the economic crises. The share of the top 5 percent increased from 56.1 percent as of 1983 to 63.1 percent as of 2010, while the share of the bottom four fifths decreased from 18.7 percent as of 1983 to 11.1 percent as of 2010 (Mishel et al., 379).
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In terms of the median wealth represented in US dollars, the wealth of a typical US household grew by only 47.5 percent from 1983 to 2007, i.e. from $73,000 to $107,800, and subsequently fell by 22 percent to $57,000 in 2010 because of the economic crisis, housing bubble, and the recession (Mishel et al., 2012, p. 379). Over the same period of time, thye average wealth of the top 5 percent increased by 83.1 percent, from $3.2 million as of 1983 to more than $5.8 million as of 2010 (Mishel et al., 2012, p. 380). Figure 3 below depicts changes in real average wealth of top 1 percent and bottom 90 percent of the US households over a longer period than the aforementioned observations, ranging from 1946 to 2010. It is evident from Figure 3 that real average wealth of both groups was growing, yet the inequality between them is obvious, given that the growth of the top 1 percents wealth is in millions, while the growth of the bottom 90 percents wealth is in thousands. In 2012, the average real wealth of bottom 90 percent of the population was at the same level as in 1986, thereby showing no intergenerational progress required for the fulfillment of the American Dream (Saez & Zucman, 2014, p. 25). It is also evident that there were hopes for its fulfillment in the 1990s and early 2000s, when the average wealth of the bottom 90 percent was growing at an increased pace because of the tech boom and the housing bubble, reaching its peak of $130,000 in 2006, yet it fell to $85,000 in 2009 because of the housing bubble collapse and the emerging of the economic crisis (Saez & Zucman, 2014, p. 25). The bottom 90 percent of the population have not managed to recover from the crisis yet, which has a negative impact on their wealth and its growth.
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Furthermore, the above analysis of wealth as an economic well-being of Americans shows that their well-being has worsened over the past years, and the current level of wealth is not much higher than it was 25 years ago. Policy-makers could address and improve this situation by promoting economic stability in the country and helping average households fully recover from the effects of the crisis and the great recession. This can be done by developing and implementing a range of policies aimed at strengthening the US economy in general and focusing on the well-being of the bottom 90 percent of population. Although imposition of the wealth tax for the top 1 percent seems to be unlikely under the Trumps administration, a temporary reduction of taxes on wealth for the bottom 90 percent may be achieved. Of course, this measure is likely to meet strong opposition because of high governmental spendings, yet it can significantly help the poor households recover and boost economic growth in the country, which will be beneficial for all stakeholders in the long run. Nevertheless, the most important measure is the implementation of policies aimed at preventing occurrence of another housing bubble and economic crisis, since this may completely destroy the well-being of the bottom 90 percent.