The American Dream of Retirement: Do You Have to Be Asleep to Believe It?

BY Paul Solman  July 18, 2013 at 12:09 PM EST

Does the American dream still exist for American boomers? Photo courtesy of Thanasis Zovoilis/Flickr via Getty.

Paul Solman frequently answers questions from the NewsHour audience on business and economic news on his Making Sen$e page. Today’s query is about the lasting value of the American dream as baby boomers approach retirement. As we’ve been documenting here on Making Sen$e and on our new site “New Adventures for Older Workers,” retirement looks a lot different than it used to. But has the American dream always been a ruse?

David Soasey — Vancouver, Wash: Paul, thanks for the huge and invaluable service you are providing to those of us contemplating our “retirement” years as well as to those who will presumably be contributing by their precious life force (taxes on wages) to help enable it in the coming decades.

There is an elephant in the living room, however, and I believe you have alluded to it many times without, perhaps, saying it plainly. That is that the great majority of our potential “baby boom” retirees have little or no assets, nor do they have funds set aside to live on for even six months, let alone the rest of their lives.

Social Security checks, Medicare and food stamps represent the only income and/or support they will have going into the future. We have millions of people who are about to be trapped, resigned to infernal poverty and insecurity for the rest of their lives — in other words, barely making it, surviving by a thread and marginal in every sense of the word.

Already thousands of them fall into a sort of structured destitution each day without any choice in the matter. The irony is that the “safety net” represents hope, the only hope they have of not being thrown out on the street and starving. But it is only a bone. And that bone, as you have so aptly described it, has been or is about to be stripped bare.

In the final analysis, the so-called “American dream” has always been a terrible ruse on the working man. It was as unreal as believing each of us could look like movie stars, be successful entrepreneurs or own a “McMansion.” Part of that dream was the carrot always hanging just ahead, of not having to work anymore and collecting Social Security. If you ask most of these boomers, I think they would say that they expected the retirement years to represent true happiness and the end of troubles.

Well for so many, that isn’t what lies across the threshold they must cross; it is just the beginning of even more trouble and pain, and for many, hopelessness.

Funding Social Security and Medicare is critical, but being brutally truthful with ourselves about why we must do it is even more so. The lie of the dream has caught up with us. We must find a way to help each other, and if we don’t, the need will overwhelm our people and economy.

Paul Solman responds: As my dad used to say when I was going too fast, Dan, “hold your horses.” You are startlingly right about insufficient savings in America. Just look at our brand new online tool “New Adventures for Older Workers.” Everyone should take a ride through this comprehensive piece of retirement software.

And yes, for many, the “American dream,” which so struck Alexis de Tocqueville when he toured the country in the 1830s, ain’t what it used to be. As George Carlin famously said, “It’s called ‘the American Dream’ ’cause you have to be asleep to believe it.” It is generally accepted that for decades now, the economy has been bifurcating, the split widening between those with less and more money.

But when George W. Bush characterized the split, was he wrong to call it a division between the haves and the have-mores? Compared to truly poor people around the world, or most people ever in the recorded history of the world, are we not comparatively well-off? It’s useful to remember that almost no one starves or freezes to death in America.

Disagree if you like. But when you write that the American dream “has always been a terrible ruse on the working man,” that’s just nonsense. Emulation of the Joneses may come from an unappealing place in our animal psyches and may often have unpleasant side effects. But it sure does work, doesn’t it?

I leave the last word to Adam Smith in his “Theory of Moral Sentiments,” where he captured the fundamental ambiguity of what was then the “British Dream”:

This disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition, though necessary both to establish and to maintain the distinction of ranks and the order of society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments. That wealth and greatness are often regarded with the respect and admiration which are due only to wisdom and virtue; and that the contempt, of which vice and folly are the only proper objects, is often most unjustly bestowed upon poverty and weakness, has been the complaint of moralists in all ages.

But, as the following Panglossian passage makes clear, emulation of those in “higher stations” is what drives the material world ever onward and upward. And so we meet “the invisible hand,” in much the same sense that is is used today, and the value of the competitive drive.

A watch… that falls behind above two minutes in a day, is despised by one curious in watches. He sells it perhaps for a couple of guineas, and purchases another at fifty, which will not lose above a minute in a fortnight. The sole use of watches, however, is to tell us what o’clock it is, and to hinder us from breaking any engagement, or suffering any other inconveniency by our ignorance in that particular point. But the person so nice with regard to this machine, will not always be found either more scrupulously punctual than other men, or more anxiously concerned upon any other account, to know precisely what time of day it is. … How many people ruin themselves by laying out money on trinkets of frivolous utility?…

The poor man’s son, whom heaven in its anger has visited with ambition, when he begins to look around him, admires the condition of the rich. He finds the cottage of his father too small for his accommodation, and fancies he should be lodged more at his ease in a palace. He is displeased with being obliged to walk a-foot, or to endure the fatigue of riding on horseback. He sees his superiors carried about in machines, and imagines that in one of these he could travel with less inconveniency…

He is enchanted with the distant idea of this felicity. It appears in his fancy like the life of some superior rank of beings, and, in order to arrive at it, he devotes himself for ever to the pursuit of wealth and greatness. To obtain the conveniencies which these afford, he submits in the first year, nay in the first month of his application, to more fatigue of body and more uneasiness of mind than he could have suffered through the whole of his life from the want of them. … Through the whole of his life he pursues the idea of a certain artificial and elegant repose which he may never arrive at, for which he sacrifices a real tranquility that is at all times in his power, and which, if in the extremity of old age he should at last attain to it, he will find to be in no respect preferable to that humble security and contentment which he had abandoned for it…

Power and riches appear then to be, what they are, enormous and operose machines contrived to produce a few trifling conveniencies to the body, consisting of springs the most nice and delicate, which must be kept in order with the most anxious attention, and which in spite of all our care are ready every moment to burst into pieces, and to crush in their ruins their unfortunate possessor. They are immense fabrics, which it requires the labour of a life to raise, which threaten every moment to overwhelm the person that dwells in them, and which while they stand, though they may save him from some smaller inconveniencies, can protect him from none of the severer inclemencies of the season. They keep off the summer shower, not the winter storm, but leave him always as much, and sometimes more exposed than before, to anxiety, to fear, and to sorrow; to diseases, to danger, and to death…

Our imagination… in times of ease and prosperity expands itself to every thing around us. … The pleasures of wealth and greatness, when considered in this complex view, strike the imagination as something grand and beautiful and noble, of which the attainment is well worth all the toil and anxiety which we are so apt to bestow upon it.

And it is well that nature imposes upon us in this manner. It is this deception which rouses and keeps in continual motion the industry of mankind. …The earth by these labours of mankind has been obliged to redouble her natural fertility, and to maintain a greater multitude of inhabitants. … (T)he proud and unfeeling landlord views his extensive fields, and without a thought for the wants of his brethren… (but the) capacity of his stomach bears no proportion to the immensity of his desires, and will receive no more than that of the meanest peasant. The rest he is obliged to distribute. … The rich… consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency… they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species…


This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions