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Who Stole the American Dream? A Q&A with Hedrick Smith

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Pulitzer Prize-winning journalist and author Hedrick Smith joined us here today to discuss his new book, Who Stole the American Dream? Can We Get It Back? at an event sponsored by the AFL-CIO and the Economic Policy Institute (EPI).

In Who Stole the American Dream? Smith deploys his formidable investigative skills to trace how we got to a point where U.S. economic policy overwhelmingly favors the rich—and looks at whether it's possible to undo the damage done to our working and middle class. Smith, known for his investigative journalism, is author of the national bestseller, The Power Game: How Washington Works. In 1971, as chief diplomatic correspondent for the New York Times, he was a member of the Pulitzer Prize-winning team that produced the Pentagon Papers series. We asked Smith a few questions about what he found in researching his new book.

Question: Many pundits and analysts recently have been noting the decline of the American dream. Most focus on the economic shifts caused by federal policy decisions, such as the role of corporations in pushing for tax law changes that benefit Big Business at the expense of working people. What sets your analysis apart?

Smith: There's no question that the power shift in Washington, starting in the late 1970s that made corporate America the dominant influence with Congress, brought changes in the tax system and rolled back regulations to the advantage of corporate America, Wall Street and capital investors. What needs to be added, as I do, is that the middle class has been severely hurt by the change in the business ethos from a vision of stakeholder capitalism in the 1950s, 1960s and 1970s that saw it as the duty of CEOs to balance the interests of investors, workers, management and local communities to the New Economy ethos of "wedge economics" of the 1980s, 1990s and 2000s, which cut many average Americans out of their fair share of America's growth and prosperity. Under "wedge economics," corporate profits continued to rise along with the productivity of the American workforce, but average wages and salaries remained stagnant. Productivity rose roughly 80 percent from 1973 to 2011, but the hourly wages of the typical worker rose only 4 percent and, even adding in benefits, the increase was only 10 percent. What my analysis does is to focus on the shifting in business thinking and strategies as well as on the power shift in Washington and its policy impact.  

Q.: You argue that unlike the 1960s and 1970s, Americans today feel politically powerless. What the reasons for this shift? How does the Occupy Wall Street movement fit into this analysis?

Smith: We had strong, powerful citizens' movements in the 1960s and 1970s with real impact on policymakers in Washington—the civil rights movement, environmental movement, women's movement, labor movement, consumer movement and the peace movement. But after the mid-1970s, those movements lost momentum. In part, some of those movements ran out of steam because they had been so successful in pushing Washington to adopt civil rights laws, environmental laws and consumer protection laws and to end the Vietnam War. But they also lost power and influence because business interests became so well organized and special interest lobbyists became so dominant in Washington that ordinary Americans lost faith in their ability to have a voice with policymakers. The Occupy movement was an attempt to reverse this trend and give voice to ordinary people. It succeeded in changing the national dialogue so that today, when people talk about the 1% and the 99%, everyone understands that this refers to the unfair and dangerous hyper-concentration of wealth and power in America today. But unlike those earlier movements, Occupy did not have a short list of clearly defined goals that could attract wider support and have an impact on Congress and the White House.
 

Q.:  What will it take to politically mobilize working- and middle-class Americans?

Smith:  It will take an effective organized people power, a broad-based movement built on a change in the public's mindset—a sense that the current lopsided split in the nation's economic gains is unfair to most Americans and that this is no longer tolerable. Plus, a willingness of ordinary people to literally put themselves on the line, to go out and protest in marches and sit-ins and talkathons in the same way that the civil rights, environmental and anti-war protests of the 1960s and 1970s brought people together to act for the common good. It will take organized people to offset the dominant power of organized money.

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