The Transformation of the ‘American Dream’
Author: Robert J. Shiller, Sterling Professor of Economics at Yale
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“The American Dream is back.” President Trump made that claim in a speech in January.
They are ringing words, but what do they mean? Language is important, but it can be slippery. Consider that the phrase, the American Dream, has changed radically through the years.
Mr. Trump and Ben Carson, the secretary of housing and urban development, have suggested it involves owning a beautiful home and a roaring business, but it wasn’t always so. Instead, in the 1930s, it meant freedom, mutual respect and equality of opportunity. It had more to do with morality than material success.
This drift in meaning is significant, because the American Dream — and international variants like the Australian Dream, Le Rêve Français and others — represents core values. In the United States, these values affect major government decisions on housing, regulation and mortgage guarantees, and millions of private choices regarding whether to start a business, buy an ostentatious home or rent an apartment.
Conflating the American dream with expensive housing has had dangerous consequences: It may have even contributed to the last housing bubble, the one that led to the financial crisis of 2008-9.
These days, Mr. Trump is using the hallowed phrase in pointed ways. In his January speech, he framed the slogan as though it were an entrepreneurial aspiration. “We are going to create an environment for small business like we haven’t seen in many many decades,” he said, adding, “So, essentially, we are getting rid of regulations to a massive extent, could be as much as 75 percent.”
Mr. Carson has explicitly said that homeownership is a central part of the Dream. In a speech at the National Housing Conference on June 9, he said, “I worry that millennials may become a lost generation for homeownership, excluded from the American Dream.”
But that wasn’t what the American Dream entailed when the writer James Truslow Adams popularized it in 1931, in his book “The Epic of America.”
Mr. Adams emphasized ideals rather than material goods, a “dream of a land in which life should be better and richer and fuller for every man, with opportunity for each according to his ability or achievement.” And he clarified, “It is not a dream of motor cars and high wages merely, but a dream of a social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and recognized by others for what they are.”
His achievement was an innovation in language that largely replaced the older terms “American character” and “American principles” with a forward-looking phrase that implied modesty about current success in giving respect and equal opportunity to all people. The American dream was a trajectory to a promising future, a model for the United States and for the whole world.
In the 1930s and ’40s, the term appeared occasionally in advertisements for intellectual products: plays, books and church sermons, book reviews and high-minded articles. During these years, it rarely, if ever, referred to business success or homeownership.
By 1950, shortly after World War II and the triumph against fascism, it was still about freedom and equality. In a book published in 1954, Peter Marshall, former chaplain of the United States Senate, defined the American Dream with spiritually resounding words: “Religious liberty to worship God according to the dictates of one’s own conscience and equal opportunity for all men,” he said, “are the twin pillars of the American Dream.”
The term began to be used extensively in the 1960s. It may have owed its growing power to Martin Luther King’s “I Have a Dream” speech in 1963, in which he spoke of a vision that was “deeply rooted in the American Dream.” He said he dreamed of the disappearance of prejudice and a rise in community spirit, and certainly made no mention of deregulation or mortgage subsidies.
But as the term became more commonplace, its connection with notions of equality and community weakened. In the 1970s and ’80s, home builders used it extensively in advertisements, perhaps to make conspicuous consumption seem patriotic.
Thanks in part to the deluge of advertisements, many people came to associate the American Dream with homeownership, with some unfortunate results. Increasing home sales became public policy. In 2003, President George W. Bush signed the American Dream Downpayment Act, subsidizing home purchases during a period in which a housing bubble — the one that would lead to the 2008-9 financial crisis — was already growing at a 10 percent annual rate, according to the S.& P. Corelogic Case-Shiller U.S. National Home Price index (which I helped to create).
This year, Forbes Magazine started what it calls the “American Dream Index.” It is based on seven statistical measures of material prosperity: bankruptcies, building permits, entrepreneurship, goods-producing employment, labor participation rate, layoffs and unemployment claims. This kind of characterization is commonplace today, and very different from the original spirit of the American dream.
One thing is clear: Bringing back the fevered housing dream of a decade ago would not be in the public interest. In “House Lust: America’s Obsession With Our Homes,” published in 2008, Daniel McGinn marveled at the craving for housing in that era: “In many neighborhoods, if you’d judged the nation’s interests by its backyard-barbecue conversation — settings where subjects like war, death, and politics are risky conversational gambits — a lot of people find homes to be more compelling than any geopolitical struggle.”
This is not to say that homes have no appropriate place in our dreams or our consciousness. To the contrary, in a 2015 book “Home: How Habitat Made Us Human,” the neuroanthropologist John S. Allen wrote, “We humans are a species of homebodies.” Ever since humans began making stone tools and pottery, they have needed a place to store them, he says, and the potential for intense feelings about our homes has evolved.
But the last decade has shown that with a little encouragement, many can easily become excessively lustful about homeownership and wealth, to the detriment of our economy and society.
That’s the wrong way to go. Instead, we need to bring back the American Dream of a just society, where everyone has an opportunity to reach “the fullest stature of which they are innately capable.”
Robert J. Shiller is Sterling Professor of Economics at Yale.
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