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Stephen Smith: From American Public Media this is A Better Life: Creating the American Dream.

I'm Stephen Smith and I'm standing in the great registration hall on Ellis Island-a huge, tiled room with vaulted ceilings and American flags. Something like a quarter of all Americans descended from immigrants who passed through this room on Ellis Island. They were seeking freedom and opportunity; they wanted a better life for themselves and especially for their children.

Ellis Island is now a museum and a park, not far from the Statue of Liberty in New York Harbor.

At the beginning of the 20th century, the promise of Ellis Island, the promise of America, was the chance to better your circumstances no matter what your family name was or what your station was. The American dream meant it didn't matter where you started in life, but what you did with your life.

Over the course of the 20th century, the American dream came to mean many other things as well. Among them: you are what you acquire, like a home, a car or two, or a large-screen TV.

For the next hour we're going to explore how the American dream got defined and redefined in the 20th century. In this time of economic crisis, some people are wondering if the American dream is still attainable, and sustainable. Will the American dream change once more?

[Music]

No one knows who created the term, "the American dream." An historian first wrote about the dream in the 1930s. But the dream's ancestry dates back to the first boatload of European settlers who spilled onto Native American land. And from the beginning there was disagreement over what the newcomers' dream really meant.

Jim Cullen: You know, the first people to come over here, you know, some of them wanted to get rich; they wanted to make a lot of money.

Jim Cullen wrote a history of the American dream.

Cullen: There are other people who came over here who did not define their American dream in terms of money. They wanted religious freedom; that was their dream.

For centuries now, writers and political thinkers have described America as a place of possibility. Here, you can pursue your dreams…and achieve them. We admire men and women who "make something of themselves," as the saying goes. Like Ben Franklin, the iconic self-made man. Franklin was the son of a candle maker. Through hard work and ingenuity, he got an education; he made money, and became an influential author, inventor and statesman. And he coined a lot of memorable phrases about getting to work early and saving your pennies.

[Music]

Making money, saving it and spending it to create a better life, always formed a core part of the American dream. But that mattered more in the 20th century. No nation in history has ever created wealth on the scale that America did in the 1900s. Americans learned to dream not just of homes, but of mansions; not just of comfort, but of riches. That fantasy began rather humbly about 100 years ago - with a mass invitation, to buy.

[Music]

Archival film announcer: America, industrial miracle of the century!

This vintage promotional film does a lively job explaining how a revolution in consumer products was born.

Announcer: Industrial America marshals resources, science and power unlimited to bring a quality product within the reach of millions.

[Music]

In the 1910s and '20s American factories pumped out waves of new devices to make life easier and more fun.

David Farber: In the 1920s, really in some ways for first time, Americans began to see themselves as consumers. And that American happiness was something you can purchase.

Historian David Farber.

Farber: People were buying radios. They were buying phonographs. They were buying refrigerators. They were buying all sorts of commodities that really hadn't even existed before. And so not only did they phonographs, they bought phonograph records.

Archival Radio Announcer: Columbia Double-Disc Records: Music on both sides. A different selection on each side. Two records at a few cents above the price of one.

[Music]

[Sound of a film projector]

America in the roaring '20s was soaked in visions of rising abundance. Millions of people went to the picture shows each week. And as one historian put it, the movies made it seem like most people "dressed in evening clothes, lived in elegant homes and passed their time in cabarets." Indeed, there were some people making it rich, like Hollywood moguls, and Wall Street financiers. But the new prosperity of the Jazz Age left many people out.

[Music: "I Want to Die Easy, Lord, when I die."]

Farber: Most Americans-and it's really important to stress this-most Americans did not actually participate in that era of abundance. Over 80 percent of Americans by 1929-before the Great Depression-had no savings whatsoever. Overwhelming, Americans could not afford, for example, to buy an automobile. Most Americans still hadn't lived the prosperity that the era promised. They saw it; they were surrounded by it; but it wasn't yet omnipresent.

Historian David Farber says this was especially true for African-Americans.

Farber: They were at the bottom of the job queue. They were restricted by Jim Crow laws; in the South they couldn't vote. Overwhelmingly, rural blacks and even urban blacks were not part of these ballyhoo years.

[Music: "Now I wanna cross over, Lord, when I die"]

And yet, it was in the 1920s that African-Americans began streaming north from the south, choosing factory work over the fields. The great migration would reshape the lives that black Americans could imagine for themselves.

The ballyhoo '20s included women more directly. Women got the vote; more women started going to college; and for those who could afford the new appliances, housework got a lot easier. But it would still be many decades before women would enter the work force in big numbers, and transform the wealth and buying power of American households. The American dream didn't necessarily include all that in the 1920s. But the expanding prosperity seemed almost limitless. But of course, it wasn't limitless.

Sidney J. Weinberg: October 29, 1929.

Studs Terkel: Do you remember that day?

Weinberg: Very intimately.

When the stock market crashed in October 1929, Sidney J. Weinberg was a senior partner at the Wall Street investment firm Goldman-Sachs. Weinberg told interviewer Studs Terkel how the appalling events of the crash unfurled from his ticker-tape machine.

Weinberg: I was down all night long. And the tape was running--I've forgotten how long at night. I think the New York Stock Exchange ticker tape … ten, eleven o'clock at night before we got the final reports of what was done.

Terkel: Do you remember what the men were talking about-the people, their feelings…?

Weinberg: They didn't-well, by that time, they were so stunned, they weren't thinking anything. They didn't know what it was all about. 'Cause it came on like a thunderclap, out of the air!

Terkel: And what happened on the street then, following?

Weinberg: Well, on the street you had general confusion, all throughout the street, because they didn't understand it any more than anybody else.

At its lowest point, the stock market lost 90 percent of its value. Banks started to fail. Depositors large and small lost their savings. Vast fortunes were wiped out.

[Music: "Once I built a railroad, made it run, made it race against time. Once I built a railroad, now it's done. Brother, can you spare a dime?"]

Now, only a few percent of Americans actually owned any stock when the market collapsed in the fall of 1929. But the economic fallout hit virtually everyone. In the depths of the Great Depression, a quarter of the nation's workers lost their jobs. Most others saw their wages or hours cut back. The American dream seemed to vanish for a time, like sunlight blotted out by an Oklahoma dust storm.

Peggy Terry: We didn't get anything for Christmas. I mean nothing. Not an orange, not an apple; nothing.

Peggy Terry spoke with Studs Terkel about growing up during the Depression.

Terry: I, I just felt so bad. I was so depressed and sad. So I went to the church, and to the children's program. And I stole a Christmas package. And it was a pretty box and it had a big, red ribbon on it. And I stole it off the piano. And I took it home with me. And I told my mother that my Sunday school teacher had given me a Christmas present, which she hadn't. And so my mother says, "Well, open it and see what it is." And when I opened it, it was a beautiful, long scarf made out of velvet. But it was a cover for a piano. And my mother knew that my Sunday school teacher wouldn't give me that, because we were living in one room in a little shack. And I've looked back on that, and how sad that Christmas was. For a child, they teach you about Santa Claus, and then for a child to have to go to a church and steal a present, and then it turn out to be something so fantastic: a piano scarf.

Americans kept dreaming about better times in the Great Depression. But longings for luxury gave way to more practical desires - like a stable job or freedom from worry. And since the government wasn't much help in the early years of the depression, ordinary folks had to rely on each other.

Robin Langston: Now, we were fortunate, compared to the situation of other people. Uh, we always had food.

Robin Langston grew up in Hot Springs, Arkansas. He shared his memories of the Depression with Studs Terkel.

Langston: My father had a restaurant.

Terkel: This was where?

Langston: This was in Arkansas.

Terkel: Say, during that depression, the restaurant was still going-the restaurant didn't close…?

Langston: Yeah, yeah. The restaurant went right through the depression. We were selling hamburger for a nickel. There were no whites working and no blacks working.

Terkel: Now at that time, there was a great deal of unemployment on both sides.

Langston: Oh, on both sides.

Terkel: And do you remember actually help carrying some white people?

Langston: Well, I remember, I remember distinctly, feeding little, snotty-nosed white kids. My father and mother just did this out of the goodness of their hearts. I guess there must've been ten white families within 50 feet of us. I remember feeding them; I remember my parents feeding little black kids. I remember when the times got so hard, this sheriff I was talking to you about, pawned a radio to my father for $10. This was a white sheriff-a white official-who had to come to a black man to get $10.

[Music: "Happy Days Are Here Again."]

In the darkest months of the Great Depression, Americans elected President Franklin D. Roosevelt as president. His 1932 campaign theme song promised the return of happy days. At his inauguration, FDR famously declared that fear was the nation's chief enemy.

Franklin D. Roosevelt: And I am certain that on this day my fellow Americans expect that on my induction into the Presidency I will address them with a candor and a decision which the present situation of our people impels.

To save America from economic ruin, Roosevelt pledged to combat the depression like a president at war.

Roosevelt: This nation is asking for action, and action now! [Applause] Our greatest primary task is to put people to work.

To do that, Roosevelt launched revolutionary new government works programs and social safety net agencies. It was called the New Deal.

Newsreel: Unskilled laborers, the forgotten men of past generations, now work steadily at decent wages. The nation over, they're building schools, public buildings, community centers and airports, to meet the changing needs of our modern world.

Newsreel: Under the program for rehabilitation and the conservation of human resources comes the WPA Household Arts Training School at St. Paul. In this school, future housewives are instructed in the art of making a home.

Newsreel: Many thousands of such jobs as these dot the map of the United States, giving work and hope to people who can't find jobs.

Before President Roosevelt came along, the federal government had been relatively small and remote. The most contact many Americans typically had with it was a visit to the post office. Imagine: no social security, no federal insurance for savings accounts.

Farber: The New Deal, by the time it was finished in the late 1930s, had fundamentally refashioned the relationship of the government to the creation of the American dream for masses of Americans.

Historian David Farber.

Farber: So what had once been a kind of Horatio Alger story-the American dream was where you somehow started poor and through your own boot straps pulled yourself up into upper-middle-class-dom by your own pluck and initiative--had changed somewhat in that now the federal government was going to be on your side in that struggle. The government was going to insure that individuals had help in managing the vagaries, the difficulties, the challenges that capitalism presented to, to every American. So suddenly the American dream was sort of a team effort.

[Big-band music]

America's vast mobilization for World War Two helped put an end to unemployment. In the early 1940s, the nation's factories retooled from making cars and refrigerators to building tanks and airplanes. Millions of Americans essentially put their dreams on hold to fight the threat of fascism. And sacrifice became patriotic.

[Sound of airplane zooming by overhead (Archival tape)]

Announcer: America's fighting men need meat! The best meat! Plenty of it!

Man: That's why we civilians are holding our consumption to two and a half pounds weekly.

Woman: As a housewife, I find I can still prepare delicious, nourishing meals. There's no limit on chicken and fish…

But in the midst of these wartime sacrifices, Roosevelt still promised that his government would make prosperous times return. He said the security of the nation depended on it.

Roosevelt: People who are hungry, people who are out of a job are the stuff of which dictatorships are made.

In this 1944 speech FDR went farther than any other president in history to declare economic security as an American birthright. Roosevelt's New Deal had already put in place an economic safety net that included social security for the aged and the sick, and insurance payments for the jobless. But this time Roosevelt suggested Americans should be guaranteed even more. He called these entitlements a "second Bill of Rights." Among them were: the right to a job, the right to a living wage and:

Roosevelt: The right of every family to a decent home; the right to adequate medical care and the opportunity to achieve and enjoy good health; the right to adequate protection from the economic fears of old age, and sickness, and accident and unemployment; and finally, the right to a good education.

Roosevelt essentially wanted to guarantee Americans a middle-class standard of living. His message was: not only can you dream about prosperity, you are entitled to it.

[Big-band music]

Of the many huge changes FDR introduced, perhaps none shaped American life as much as the G.I. Bill. The law that FDR signed in 1944 put home-ownership and college education at the center of the modern American dream. Historian Edward Humes says early drafts of the G.I. Bill included benefits like medical care and unemployment payments.

Edward Humes: And then the notion arose that, "Well, you know, maybe some of the veterans will want to come back and go to college. Let's pay for that."

The G.I. Bill offered free tuition for any veteran who could get into college. University presidents hated the idea. They said veterans would drag down educational standards.

Humes: The president of the University of Chicago at the time said, "Well, we're going to transform our colleges into hobo jungles if we do this."

George Shultz: When I came back from two and a half years on active duty with the United States Marine Corps in World War Two, I decided that I wanted to go on to graduate school.

Marine Corps Captain George Shultz was one of roughly seven million returning veterans who used the G.I. Bill to get a degree.

Shultz: And earlier, before the war, I'd applied to the graduate program at MIT in economics. I'd been accepted. So, I said, "Here I am. You admitted before the war; how am I going to pay for this?" Well, I heard about something called the G.I. Bill. I got my tuition paid and I got a little tiny stipend to go with it.

George Shultz built a distinguished career on that G.I. Bill education - as a scholar, a business executive and as U.S. Secretary of State. Schultz says the G.I. Bill didn't lower standards at American universities; it transformed them.

Shultz: Because all these veterans came back and they were very serious people. We were there strictly to learn something. And we were demanding, and there were lots of us. And so I think it helped to raise the standards all across America. And now we have, without any question, the best system of higher education in the world.

The G.I. bill also offered returning veterans major subsidies to buy a home. But after years of throwing all its power and materials into the war effort, America didn't have enough housing for veterans to buy. Author David Kushner.

David Kushner: People were sleeping in the backs of boxcars. You know, they were shacking up with family members in very small apartments. It was a genuine housing crisis and it was really just a national embarrassment.

Man: Dottie's folks are swell, but a fellow would like to spend a little time alone with his wife after three and a half years of community living, in barracks and foxholes.

A government film made just after the war explained the acute housing shortage. It called on landlords to keep rents low until new housing could be built.

[Music]

In the post-war years the federal government scrambled to build housing for veterans. It funneled money to private developers to get homes nailed together and on the market. Builders converted miles of bean fields and broccoli farms into tracts of modern housing. In the late 1940s and the early '50s, millions of American families decamped for the new suburbs, all courtesy of the G. I. Bill. Historian Edward Humes.

Humes: It made something possible that hadn't been possible before: for these vets who had, of very modest means to come in and, because the government was underwriting their loans, buy a house with no money down. And a mortgage payment that was cheaper than they could rent a place in town. And boy, that house came with a [laughing] new washing machine and refrigerator if you just paid an extra 50 bucks or something absurd like that. And it was a wonder!

[Music from "In the Suburbs"]

By granting millions of World War Two veterans access to home ownership and higher education, the G. I. Bill helped spur unprecedented postwar prosperity. And that prosperity went hand in hand with a mid-century revolution in mass consumption. In their new suburban homes with their shiny new cars, the post-war American family needed a new place to go shopping.

Announcer: It's a happy-go-spending world, reflected in the windows of the suburban shopping centers where they go to buy.

Lizabeth Cohen: In 1957, Redbook magazine put out movie called "In the Suburbs"…

Historian Lizabeth Cohen.

Cohen: …which was an effort to appeal to advertisers and convey to them that Redbook had the pulse on this exploding market of young, middle-class families, who were moving to the suburbs, and who were basically buying a lifestyle.

Film Announcer: The shopping centers see these young adults as people whose homes are always in need of expansion. People who buy in large quantities and truck it away in their cars. [Sound of car horn]. It's a big market.

Cohen: Our culture in the post-World War Two period has really been built around mass consumption, where important events in our lives, like getting married, like having a child, were marked by the purchases of particular kinds of goods. And the larger prosperity of the nation depended on individual choices to consume.

Once again, the American dream of a comfortable and secure domestic life was not open to everyone. Even though the federal government subsidized new suburbs, unfolding across the landscape, many were for whites only.

Announcer: This is Levittown, Pennsylvania, a new community of 60,000 people.

Levittown became an archetypal American suburb in more ways than one.

Film Announcer: With its giant shopping center, winding lanes named for flowers and trees, it is fairly typical of communities all over America, where families are pursuing the American dream to give their children a better chance in life.

In 1957, William and Daisy Myers wanted the same chance at that dream for themselves and their children. Levittown looked to be the ideal place. But like many suburbs, Levittown had a rule against selling to black families like the Myers. Even so, a white couple who lived in Levittown helped them buy a place. Then, the neighborhood found out. Levittown historian David Kushner.

Kushner: Well, it started from the day they moved in. And when the mailman showed up to the front door to deliver the mail, and, you know, saw Daisy come to the door, and he left and basically went down the street, alerting the neighbors, in his words, that niggers have moved into Levittown.

Mobs began menacing the Myers family. In a recent interview, Daisy Myers said they just tried to endure.

Daisy Myers My husband and I were very close to each other. We had good faith in each other. Every night before we went to bed, we said a prayer in the event we didn't wake up the next morning.

Daisy and William Meyers only stayed in Levittown a few years. They just didn't fit into what some of their neighbors thought of as "a better life."

Woman: Well, I just could not live beside them. I don't feel that they should be oppressed. But I moved here because it was a white community. And that's the only place I intend to live. If I have to leave Levittown, I will do so.

And it would be decades before African-Americans would move to the suburbs in any meaningful numbers.

As the nation neared the end of the 1950s, more and more Americans reached out for their piece of the American dream.

[Music]

The early 1960s were the most prosperous time in American history. Historian David Farber:

Farber: It's really an extraordinary change from any decades that had preceded it. Suddenly working-class Americans were homeowners; they could buy a boat sometimes; they certainly were buying cars by the 1960s; televisions; all the good stuff. If the good life, if the American dream is measured by your ability to consume all that good stuff Americans make, it was a widespread phenomenon in the United States by the early 1960s.

Family incomes were rising, in part, because women joined the workforce in big numbers. So more households now had two wage earners. And in the mid-1960s, President Lyndon Johnson fought to extend the nation's abundance to all Americans. Johnson pushed Congress to pass historic civil rights legislation. He broadened health care coverage for poor people and the elderly. And he launched programs like Head Start to give poor kids a better shot in school. Lyndon Johnson called his crusade "the Great Society."

Lyndon Johnson: The Great Society rests on abundance and liberty for all. It demands an end to poverty and racial injustice to which we are totally committed in our time.

It was the biggest expansion of federal social programs since Roosevelt's New Deal. And like FDR, Johnson believed it was government's job to make the American dream accessible to everyone. But the cost of the new programs, on top of the staggering cost of the war in Vietnam, wrecked the economy. And it doomed Johnson's Great Society. In coming years, there would be a powerful movement to get government out of the business of the American dream.

[Music]

I'm Stephen Smith. You're listening to an American RadioWorks documentary, "A Better Life: Creating the American Dream." Coming up…

Ronald Reagan: In this present crisis, government is not the solution to our problem; government is the problem.

Visit our Web site to find out more about the American dream in the 20th century…including essays, photographs and video exploring the history of this iconic ideal. While you're there, you sign up for our podcast, and tell us what you think of this program. That's all at americanradioworks.org. "A Better Life" continues in just a moment, from American Public Media.

Part 2

[Music]

Stephen Smith: From American Public Media, this is an American RadioWorks documentary, "A Better Life: Creating the American Dream." I'm Stephen Smith.

This program is about the evolution of the American dream in the 20th century. Specifically, how the highs and lows of our nation's economy have defined what Americans mean by a better life. We pick up our history at the close of the 1960s, a decade of intense social ferment in the United States, and a time of economic prosperity. When the 1970s came across the horizon, it was like the end of a binge. Americans were in for a big letdown.

[News Montage]

July 10, 1971: The Vietnam War has cost the United States $98billion.

Aug. 17, 1971: They fought the Vietnam War almost as if they had charged it on a plastic credit card: hugely running up the debt, and inflating the economy.

Oct. 8, 1975: The American dream of owning a single-family house is not dead, but it is in jeopardy…

Oct. 26 1979: Inflation now is the worst in this country since the months after World War Two.

The 1970s were gloomy economic times. Gas ran short; things cost too much; jobs disappeared. Americans worried their way of life was slipping. Inflation lasted the whole decade--it was more than 12 percent at times. But no one in Washington seemed to know how to stop the spiral.

David Farber: You see a lot of flailing in the early to mid 1970s about what to do about America's economic debacle.

Historian David Farber says President Gerald Ford was a case in point. In 1974, Ford declared inflation "public enemy number one." In a televised address, he tried to rally the nation in a fight against that enemy.

Gerald Ford: Here is what we must do, what each and every one of you can do: To help increase food and lower prices, grow more and waste less; to help save scarce fuel in the energy crisis, drive less, heat less.

Ford gave his campaign a slogan: Whip Inflation Now, or WIN. The president débuted his program with a campaign button…

Ford: …which I am wearing on my lapel. It bears the single word WIN. I think that tells it all.

Farber: Poor Gerry Ford perhaps becomes the epitome of the clueless political leader, because, you know, it didn't work.

Fed up with Gerald Ford, Americans elected Jimmy Carter in 1976, hoping he could lead the way. In a show of thrift, Carter switched off the lights on Washington monuments; he turned down the thermostat and pulled on a cardigan sweater. But inflation raged on, and energy crises of the 1970s forced Americans to wait in long lines at the gas station.

News Announcer: Panic buying of gasoline continues for the third day in many metro areas of state…

News Announcer: And those who are willing to wait could eventually get gas here…

News Announcer: Tomorrow, then, expect higher prices if you can find gasoline.

[Music]

With the economy stalled out, many Americans felt their dreams were out of reach. President Carter went on television in 1979 with an unusually somber message: America, he said, was suffering a crisis of spirit. It became known as Carter's "malaise" speech, even though he never actually used the word. Carter suggested that the American dream was ailing because we were dreaming about the wrong things.

Jimmy Carter: In a nation that was proud of hard work, strong families, close-knit communities and our faith in God, too many of us now tend to worship self-indulgence and consumption. Human identity is no longer defined by what one does, but by what one owns.

Carter declared that America had lost its faith in the future. He said that was partly due to the nation's demoralizing dependence on foreign oil. So he implored people to drive less and obey the speed limit.

Carter: Every act of energy conservation like this is more than just common sense; I tell you, it is an act of patriotism.

[Music]

Throughout the 1970s, the message from Washington was this: buy less, consume less, want less. It was a hard sell. American's don't dream about surrender; we figure out new ways to have it all. So while Washington was trying to whip inflation, the American people tried to outsmart it--or, rather, outspend it.

Man: I bought the little lady a diamond ring with a $425 loan from the First National Bank of Miami.

Woman: The First National Bank of Miami gave me a loan for a color television. Isn't it beautiful?

Man: First National Bank of Miami college plan is paying for my kids' college education without strapping me.

Nocera: The '70s taught a new generation of Americans that you were a fool not to pile up debt because it was a way to play inflation.

New York Times business columnist Joe Nocera says the way to beat inflation was with credit. It was better to buy now and pay later because your money was going to be worth less later. So by the late '70s the use of credit cards and consumer loans exploded. And Nocera says the habit of piling up debt would stick.

Nocera: Every generation is influenced by the economic circumstances in which they live. My parents could tell me till I'm blue in the face, "Debt is bad, debt is bad, debt is bad…" But my experience told me debt is good. You know, you get a credit card, you buy all this stuff, you can pay it back however you want as long as you make the minimum payments. You know, every once in a while somebody would go bankrupt, they'd make a mistake, but you would tend to blame the person. It's like, well, "He was a spendthrift. He didn't know how to control himself." But it didn't change the basic generational feeling that debt was good.

In the 1970s, the credit card was just a tool for savvy consumers to get ahead. Paying with plastic started to feel normal. It was the American way of debt.

[Music]

So, by the end of the 1970s, the American dream was still in a serious slump. And many Americans were fed up with the gloom…including a politician from the Golden state.

Ronald Reagan: I pledge to all Americans that we'll get inflation under control and keep it under control-so you can save for the home of your dreams, and plan a safe and secure future. We can do it, and we do it now.

Announcer: The time is now for Reagan. Reagan for president.

In the 1980 presidential contest, Americans chose Ronald Reagan's optimism by a landslide. Reagan decreed that the American dream was being smothered by the very regulations and the social safety net programs inspired by the New Deal and the Great Society.

Chris Farrell: Reagan believed that these programs made people dependent.

American RadioWorks economics correspondent, Chris Farrell.

Farrell: He thought best way to get ahead was to do it on your own. So he cut spending for welfare, housing subsidies for the poor, education, food stamps…

Reagan: In this present crisis, government is not the solution to our problem; government is the problem.

This is Ronald Reagan's 1981 inaugural address.

Reagan: It is time to check and reverse the growth of government, which shows signs of having grown beyond the consent of the governed.

[Music - "Footloose"]

Farrell: Reagan's idea was to free business of government interference and the free market will create a rising tide of prosperity that will float all of America's boats. It was called the market revolution.

Farrell: So think: mergers and acquisitions, the corporate raider… Wall Street starts to expand. And the thing is, the economy grew, inflation came down. It worked.

Chicago businessman Jerry Pekow hustled his way into the market revolution.

At the start of the 1980s, Pekow was an old-fashioned entrepreneur. He owned a small chain of tire shops in Chicago. But selling steel-belted radials just wasn't very lucrative.

Jerry Pekow: And, I didn't know what to do. I really didn't know what to do. Then somebody happened to mention, "Why don't you go down to trade commodities? It's easy; they all make a lot of money."

[Sounds of the trading floor]

So Jerry Pekow became a commodity trader in Chicago - one of those guys who yells his head off on the exchange floor selling futures on corn and soybeans. Pekow was 41 years old when he started trading. He had a wife and three kids to support. He remembers his first day in the trading pit.

Pekow: When you trade back and forth, I mean, you've gotta really hear the noise in the pit. It's an auction. It flies around like -- the prices vary and there are people screaming at you. And the chatter sounded like another language that you never heard. And when I bought something, I felt like I was standing in boiling oil. I couldn't wait to get rid of it. It was so frightening.

Pekow did get used to trading…and made a good living. Chris Farrell says he was part of a much bigger trend.

Farrell: So this is a time when just about everybody was putting money into mutual funds. And then, we had this thing called the 401k. So we started investing for our retirement in stock market. And it's not just the rich people that are investing in the stock market; I mean it's teachers, factory workers, clerks, and this is when Main Street became big business for Wall Street.

Pekow: Really and truly, easy money, big money, headlines, that really got people excited. And all of a sudden the Dow Jones average was news and people started talking about it in the elevators and all of the sudden you're getting tips.

[Music- "I want money, lots and lots of money. So don't be asking me why. I wanna be rich…"]

In the 1980s, Wall Street became pop culture.

Balky: Cousin, guess what today is!

Larry: Wednesday?

Balky: Yes, but better than that. This is the day we found out how to get rich.

Larry: Balky, leave your money in the bank. Forget about the stock market. You know nothing about it.

Balky: Well of course I do, don't be ridiculous. [Laugh track]

In this episode of Perfect Strangers, Balky buys stock in a cereal company.

Balky: I own a piece of America! [Laugh track]

Investment firms began to sell themselves as the way for mom and pop America to make real money.

Announcer: Freedom. It's becoming what you want to be. Doing what you want to do…

This Merrill Lynch commercial shows a bull running through fields of grain… then parents embracing children in the living room of their home...

Announcer: Because at Merrill Lynch we believe your world should know no boundaries.

Jingle: Now you see what the world can give, to Know No Boundaries…

In the 1980s, corporations and advertisers invited Americans to dream big. President Reagan replaced the austerity of Jimmy Carter's White House with luxury. Instead of a cardigan, the nation saw tuxedos and evening gowns.

Announcer: It's morning again in America. And, under the leadership of President Reagan, our country is prouder, and stronger, and better. [Music]

But it was not morning for all Americans. The radiant 1980s cast a shadow. The haves and the have-nots were pulling farther and farther apart. Critics of Reaganomics blamed the growing inequality on the president's big cuts in welfare, housing and other safety-net programs. At a time when more people hoped to get rich, more people were actually losing ground.

Farber: I think there's always been a part of American society that sees this country as place where you can get rich. And of course, it's true!

Historian David Farber.

Farber: And so there's this funny tension in the United States. So people are always, always kind of admiring and adulating those who really did it. And you see in the 1920s, all those goofy Hollywood movies where people are wearing tuxedoes in the middle of the day and living in fancy 5th Avenue apartments. Even though, again, the vast majority of Americans are barely getting by. And you see the same thing in '80s: this sort of hope, once again, that, "After the hard times of the '70s, man, some people are gonna get rich and maybe it will be me. Maybe I can escape out of this drudgery."

[Music: "Under the Bridge"]

The promise of improving your lot in life has always been a part of the American dream. But John Morton says in the past 30 years, fewer people have actually climbed the economic ladder than we might think. Morton directs the economic mobility project at the Pew Charitable Trusts.

John Morton: Parents' economic situation really is a very strong predictor of where children will end up a generation later. It's a much, much stronger predictor than I think many Americans would like to admit.

Not only is there less mobility than we imagine, but there's been also a widening gap between the rich and the poor. New York Times columnist Joe Nocera.

Nocera: In the '90s there really is not much doubt that the rich got richer. And much of the wealth that was created in the country went to the top strata-you know, the top 20 percent of Americans. And so the rest of the country was, you know, their earnings were flat.

Margaret Bender: I'm Margaret Bender. My husband and I were separated and, uh, I had the two boys. My husband wasn't able to help us and so my parents helped me raise them and my dad got to have to two boys he never had. [Laughs]

In northern Indiana, Margaret Bender was one of the people who struggled to keep hold of the American dream. Bender worked at an orthodontic supply company, and she also relied on her parents to save up enough money to send her boys to college.

Bender: I saw kids growing up here in LaPorte, Indiana, and staying here and sometimes, you know, working in a factory but then losing their job. Industries were moving out so it was becoming more difficult. And I just wanted them to have a more professional background.

Bender's sons did go to college but it was hard to pay for--even with education grants and student loans. She struggled to keep up with her own expenses. And then, she tried to help her younger son start a restaurant. So in order to bolster two dreams at once, Bender mortgaged her house and put her entire net worth on the line.

Bender: So I started, started scraping and trying to figure out what to do. I used every asset that I had. Cashed in insurance policies, borrowed on 401(k), just tried to be as resourceful as I could be to get those debts paid off. And, uh, did all those things to avoid bankruptcy, which I did not want to do.

Margaret Bender scrambled like crazy and fell behind. She was 65 and still held a full time job. Then she took a second job at a farmer's market, hauling jugs of cider and bushels of apples. Bender worked seven days a week. But she couldn't make ends meet. She eventually filed for bankruptcy.

Bender: I think there are a lot of people who just get caught up in some situation where they're trying to solve a problem and it just gets out of hand. And that's where I found myself.

[Music]

Margaret Bender's dilemma reflected a trend that many other Americans got caught up in as well over the last two decades: a swelling tide of personal bankruptcies. Here's Chris Farrell.

Farrell: Bankruptcy rates soar to record levels in the 1990s and the 2000s. I mean, debt had become such a way of life. And, of course there were some people who were borrowing way too much getting rid of it through bankruptcy. But most people were doing what Margaret Bender was doing. You know, put your kinds through college, buy a home in a decent neighborhood. And so with all this debt, you know, Americans think they're living a middle-class lifestyle, but the thing is, they were doing it on borrowed money. So they were living bigger-they were living larger-but they didn't have the income growth to justify all that borrowing.

The nation surged into the new millennium with George W. Bush as president. Home values had been rising in the years leading up to his election. And in 2002 President Bush emphasized that owning a home was a key part of the American dream.

George W. Bush: And part of the cornerstone of America is the ability for somebody, regardless of where they're from, regardless of where they were born, to say, "This is my home; I own this home, it is my piece of property; it is my part of the American experience." It is essential that we stay focused on the goal.

Farrell: Well you can call the 21st century in America the age of real estate.

Chris Farrell.

Farrell: Homes are the number one asset. And for some it's a way to leverage themselves into the next level of prosperity. And for others, the home is simply a way to hang onto their place in the middle class.

Announcer: If you purchase one of the millions of homes that will be sold this year, the National Association of Realtors wants you to know that you're making a good move, for your family and towards building long-term wealth…

Americans assumed that their homes would keep building wealth--that real estate values would keep climbing. More and more people took equity out of their homes to make them bigger, to finance a vacation or even buy a second home. As the saying goes, Americans were using their homes like an ATM.

Farrell: Well, it seemed like a good idea at the time--values were rising, you'd borrow against the home, seemed sensible. But it actually led to a false sense of prosperity.

Mike Heger: I'm a field engineer by trade, and then we got into investing in real estate. It was the beginning of 2007 when our business was having some problems. And then the market went south.

That's Mike Heger. He lived in a Las Vegas suburb when the housing bubble started to deflate. Heger watched a wave of foreclosures roll through his neighborhood. People just deserted their homes.

Heger: Every single person on this street. Yeah. Every one. Next-door neighbors. He says he's going to stay here for 30 years even though he's way over-financed. He's like, "Eh, I'll stay here." But he's the only one. Everybody else has either been foreclosed on or, you know, they've owned two or three, even five houses and they just couldn't make payments; they just abandoned their houses.

So what Heger is saying is that there were two kinds of people on his street. There were the ones who got loans that they couldn't afford, and there were guys like him. He bought a bunch of houses so he could flip them for a profit. But both kinds of people lost out to overwhelming debt.

[Music]

Across the country the same was happening to Americans whose debt had reached the breaking point. The dreams that they'd invested in their homes started to splinter. And it became clear that the health of the American economy hinged on real estate.

[Radio News Montage]

News Announcer: Two giant hedge funds managed by Bear-Stearns are in near collapse today. They racked up big losses b/c they invested in risky mortgage-backed securities…

News Announcer: The rest of the world saw beginning of global stock sell-off. And it continues today…

News Announcer: The econ shed 49,000 jobs in May…

News Announcer: More people are looking for work and they're having a harder time finding it.

When the U.S. housing bubble started to pop in 2006, it set off a cascade of failures that brought the world economy tumbling into the worst recession since the 1930s. And that's where we are now. So, what's happened to the American Dream? Is the future cloudy or is it bright?

Nocera: How we think about the America dream depends, in many ways, on how we come through this.

Joe Nocera.

Nocera: We have no idea whether this is going to last six months, a year, five years, a decade. We really don't. Look, if we're in this climate for a decade, they're not going to be talking a lot about the American dream five years from now. I mean, they're just not. We're going to be talking about, you know, holding onto your job, watching your friends get laid off, you know, living through some really hard times. If we get out of this in another year or so, yeah, we'll be talking about the American Dream again.

[Music]

Amidst all this anxiety, it's important to recognize that many people's dreams have been fulfilled. Most people live much better lives than they did a century ago. The average American in 1900 lived to be 49 years old. Now our life span is almost eight decades. Americans stay healthier, longer, and work in less physically punishing environments.

More women graduate college than men do now, and African-Americans are enrolling in college in record numbers. And material comforts abound. Two thirds of Americans still own their own homes--even after the foreclosure crisis. And many of those homes are filled with the latest gadgets, like iPods and laptops and Blu-Ray players.

Farrell: The American Dream is going to change a little bit, but not fundamentally.

Chris Farrell.

Farrell: What we really learned is we can't borrow so much. That isn't sustainable. People are still going to want to own a home. But what we learned is, you can't just borrow as much as a banker will give you to buy a home. You'll have to put a bigger down payment; you probably want to own a smaller home-which, by the way is cheaper to run and therefore makes it easier for you to save. So you're going to have to live within your means, for a longer period of time than you thought.

Most Americans say that their hopes for the future are not drastically lower. A recent poll published by the Pew Charitable Trusts showed that despite the financial crisis, and the loss of nearly six million jobs, nearly three-quarters of all Americans believe their economic circumstances will be better in the next decade.

Katherine Newman: I believe the American dream is quite a resilient idea.

This is sociologist Katherine Newman.

Newman: I think it would take 50 years of this kind of recession to convince us that it's impossible. It's a pretty resilient idea and the American people are a pretty optimistic, can-do bunch.

Schultz: This is not a dream of the status quo.

Former secretary of state George Schultz.

Schultz: This is a dream that says change for the better is possible. [Chuckling] Obviously, sometimes you can change and it's not so good. But we're talking change for the better.

But change can seem threatening, especially since Americans aren't really sure when the economic decline will hit bottom. It's times like these when the nation's leaders call upon the American dream as a way of uniting the public. Like presidents before him, Barack Obama used his inauguration speech to motivate Americans to remake the dream once again.

Barack Obama: Our capacity remains undiminished. But our time of standing pat, of protecting narrow interests and putting off unpleasant decisions -- that time has surely passed. Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America. [Applause]

Farber: I think American dream as a rhetorical tool is just one of those things we got in our tool kit to use to keep each other optimistic.

Historian David Farber gets the last word.

Farber: The United States is an incredibly heterogeneous society. It's a society of incredible economic inequality and economic hierarchy. And yet, this is country that hangs together. And it hangs together on ideas. And one of those ideas is that everyone in America has fair shake to make something wonderful out of themselves. And it's true enough to remain legitimate in the eyes of at least enough Americans to keep this society balanced and harmonious. So that's what the American Dream is. It's one of those ideas we use to keep ourselves thinking forward, and thinking of ourselves as one nation, indivisible, aimed at at least one shared notion.

A Better Life was produced by Kate Ellis and Ellen Guettler, and edited by Peter Clowney. We had mixing help from Craig Thorson. The American RadioWorks team includes Kate Moos, Chris Farrell, Ochen Kaylan, Emily Hanford, Marc Sanchez and Suzanne Pekow. I'm Stephen Smith.

To see and hear what everyday people think about the future of the American dream, visit our Web site: americanradioworks.org. "A Better Life" is part of The Next American Dream series from American Public Media. You can hear more stories from this project at our Web site, americanradioworks.org.

Sustainability coverage is supported in part by the Kendeda Fund, furthering values that contribute to a healthy planet.

American Radio Works is supported by the Batten Institute, the research center for global entrepreneurship and innovation at the University of Virginia's Darden School of Business. Batteninstitute.org


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