The actual conditions we face over recent decades with the dark stories that we hear with those conditions of diamerican experience and that the critics of ther market economy those are among the most important of those critics the controversial pieces i am resistant to be told everything is fine. But it is an argument that you will see here tonight that is a fairly supportive thesis in the book. When the smartest social analyst and policy thinkers in washington the chair and senior fellow of economic studies at the Brookings Institution with the future of the middle class and the author of a number of books including dream orders. And the format is very simple. And the moderator brief conversation and with the q a. So lets welcome michael strain. [applause] thank you for that very generous introduction. It contains the argument that you are making the American Dream is not dead the subtitle it is excellent cover theres nothing to read on the inside but we will talk about that. So what do we mean by the American Dream . There are many definitions with the freedom to choose how to live yourou life and a good family and a comfortable retirement that a big part of the American Dream and the popular imagination. So based on economic success whatever part you are most interested in the particular definition with a large economic component the idea that your kids will grow to be better off than you and that you can do better yourself and to see the economic outcome. And that they can grow up to be a billionaire grow up to be president. And with the American Dream is dead and this is during the primaries of the 2016 cycl cycle, after he was elected with the american carnage and how terrible everything is and this is a characteristic of his presidency. Lso i tell the story of his family about how they came to america and didnt have a lot of education and across generations and told the story when he was running for president in 2016 as an example of the American Dream being alive. In the past few years he tells me the same story with the same set ofme facts except uses the view that that path is no longer possible the American Dream has disappeared. The rich get richer everybody else falls behind it is rigged and for Bernie Sanders the dream is a my nightmare. 70 percent of americans have not seen a real wage increase in 50 years. And then the billionaire investor say the American Dream isre i lost and the dark e we are living through says the American Dream is dying. It is bipartisan and something you can hear from. And from business leaders. And from business leaders. Is that it is misplaced. And to have High Expectations for their economic and outcomes and the wage growth but the good thing to face the serious economic challenges and also to face very serious social challenges. Im not trying to diminish or sugarcoat board to ignore any of the real problems that we face instead im trying to be accurate about theo broad picture of the american experience. How American Life is experienced by typical people and most people in those circumstances. I think we are focus so much on the pockets of real struggle that we are confusing those pockets of struggle for the common experienceac facing people. I think the American People keep hearing that their experience is the same of those who are suffering and struggling. I dont want to deny their suffering or their struggle but those are atypical situations and the common experience is much more positive than the narrative suggests. But the economy delivers for American Workers income has not been stagnant for typical workers over the past three decades but the quality of life has improved significantly for households over the past severalit decades the middle class has been bhollowed out but it creates and destroys we hear about the destruction of Creative Destruction but not about the creativity. And if you look you see a new middle starting to form where the old middle was eroded. America is broadly characterized by upward economic mobility. With a couple other assertions that the narrative matters and we need to do more to advance the dream for the next generation. So very briefly, went to give richer the opportunity to respond and then have discussio discussion, i cant cover all that but i will do the best i can. I thought it would be better to have real disagreement than me come appear in lecture for an hour. The economy is delivering for workers in the bottom 10 percent have grown over the median over the last several years the Unemployment Rate without a High School Diploma is further below the longterm average than College Graduates currently. Not supervisory workers are growing faster than overall average wages. The argument from the gains that it is rigged against workers who are not at the very top and not supported by the data. Right now currentlyeri the recovery is reaching wide rtswath including the least skilled and least experienced and most vulnerable workers. The next argument of stagnant wages this is a graph of wages this is a graph of the wages of non supervisory workers in manufacturing reason and construction and nonsupervisory workers and services that include a group of workers that is 80 percent of all workers four out of five think of them as workers and not managers i plot the average wage of workers in that Group Adjusted for inflation and i want to make some simplefl observations. What you see throughout the sixties and seventies there was rapid and sustained wage growth. Then what you see from the mid seventies through the mid 19 nineties this group of workers did not do so well. We see stagnant and declining wages. Since the early through mid 19 nineties, icy wages going up. I dont see them being stagnant. There are periods wages are not growing during the 30 year period, yes but on the whole of your choice is to characterize this as stagnant or increasing i think it is quite clear over the last three decades the most accurate way to characterize this that wages have been increasing. Look at this. It is common to go back to 1973. One of the things i want to do in the book is argue the comparisons between 73 and 2020 is too long of a window. But its common to go back to 1973 wages going 20 percent over the call stagnant or spectacular but i wouldnt call it stagnant but i will argue that this debate among wages with thee, policy community often gets hung up on the price index to in just one to adjust for inflation. Really we should be debating the starting year less time debating the price index and more time debating the actual. We are making the comparison over. Why the default of 73 or 79 when there is a 30 year period wages are going up. I argue the start of 1990 because the politicians argue wages have been stagnant for decades and people refer that as their wages those who are currently working. 1973 was 47 years ago for the purpose of a policy debate , more recent year to those who are working seems pretty straightforward. 1990 was a big cycle the summer of 1990 is close to a99 structural break in this series and i mean if you start in 1973, you are conflating a period of stagnation and decline with a period of growth and that is what is to calculate growth over where wages are growing where wages are stagnating and dont conflict if you try to get a handle on what wages are doing. 1990 was roughly 30 years ago you hear talk of several decades that seems like a reasonable time to gole back. But adjusted for inflation one t the ways we could sidestep all the debates is not just go back 50 years if you go back ten years they agree a lot more strongly than if you go back 2 30. So one way not to get mired down in the debate over a shorter time. But even if you do want to go back to the seventies its really not a complete picture to argue wages have been stagnant. Instead you can characterize the two different periods what you should be saying is that wages stagnated throughout the seventies and eighties and the 19 nineties and then since then wages have been growing. That seems to be a much more complete characterization of the behavior. 33 percent growth over the last 30 years. And not fast enough and lets acknowledge but it is more wrong than a right instead of one third of purchasing power so quickly about the price indices that adjust wages using growth the closer you get and not to go back so far. Median wages have grown by 24 percent wages by 10 percent have grown by one third and wages for the 30th ghrcentile are roughly around there as well so worth that workingclass so that is not stagnation if you look at the post tax imposed transfer income it has gone up by 44 percent if you look at the bottom 20 percent you see it has gone up by two thirds and again not stagnant income inequality is stagnant or declining if you look at the income series of that gene coefficient which a Standard Measure of inequality you see a significant increase in the eighties and nineties and since the Great Recession when concern about inequality exploded you say a 7 percent decline using post tax and transfer income if you look at Market Income you see an increase of 2 percent. This is another example of the narrative how it is not kept up with the data and hasnt been true for three decades inequality was growing rapidly in the eighties and nineties but it has been growing much less rapidly. And the ratio of Weekly Earnings of the 90th percentile or those not shown any Significant Growth over that. People care about inequality. And we cover this very briefly this chart shows concern against actual inequalities so Public Perception if they are getting richer versus the actual behavior theres not much of a relationship it actually thats a negative and if you look at this graph this is concern of inequality and wage growth and you can see that wages are growing throughout the 19 nineties and concern is going down. Measured inequality is going up wages are going up. People care more how they are doing than the a actual behavior of the rich poor gap. My third big point life was better decades ago this is very important to me personally. And you can see Significant Growth and conditioning over this. But more seriously they are have a significant about Transportation Safety and the idea that life was somehow better 30 or 40 years ago even for the White Working Class borders on the absurd if you take that argument seriously it is impossible to imagine that anybody would go back in time 40 years ago the matter their current social Economic System is now. Middleclass jobs this shows the hollowing out and you see the employment waffle in the middle with production workers and Clerical Workers these are the jobs with political failures and to see and increase along with high wage jobs with the economic dislocation considerable suffering in the lives of many people and our coalition between expectations and reality. And is very serious with economic. And those constituted 30 percent of total employment and then if you look from 70 to the present that those only constitute 23 percent so that is a significantnt decline. So what happened to these workerss . Oh whole lot ended up moving into a higher income h bracket so the red line shows the share of households making between 35,100,000 has gone down considerably but replaced with households earning more than 100,000 not replaced with those earning less so that story of disruption so i will skip over this in the interest of time that if you focus excessively on the projection one production and clerical jobs then you do see they are declining their total share of employment but then you see there is Significant Growth and other types of middle wage jobs healthcare support occupations transportation, education and training and personal care and services so apparently we need. More chefs. So i wasnt lying. And those Sales Managers are right there at the bottom. The moral of the story Creative Destruction also that it destroys and we hear about the destruction on the creativity but what is happening in the middle wage occupations where Technology Comes along and replaces some workers but that creates a new opportunity and workers need to take an take advantage and in doing so. So that economic change would end up hurting those workers you are trying to help. So rags to riches i wont explain in any great detail but just to see what share of people that are born in the bottom make it to the top and its about 7 percent. What share of people who have learned in the top make it to the bottom . I cannot read that but it looks likekes l 8 percent. Its not common its not the norm or something toot be expected. But you can go from the bottom to the top in america. If you want to look at rags to comfort you see considerably more upward mobility and to end up rising for the middle class at a pretty good clip. The measure of upward mobility is not that relative ranking i just want to ask are you doing better than your parents did . And what i have done is look at people in their forties today and their Household Income if you are 20 something year old today are you earning more than your parents earned when they were the same age . Three quarters of people in their forties today have a higher Household Income than their parents did when they were in their forties. If you were born in the bottom 20 percent, 86 percent of those 40 yearolds have a higher Household Income than the parents had in their forties this should be considered upward mobility. And across those two4 generations and if youre in the bottom 20 percent these are not trivial games. What about earnings . It includes government transfers. So of those that were in their forties how many of them earned more many in the labor and their father earned in his forties . At the bottom its about 80 percent. Because people in their forties were raised the whole lot of them so that central tendency is pushed down and so if you were raised in low income bracket for the working class it is three quarters through 80 percent. How much more for the working class was 30 percent. I have some material prepared on the threat to the American Dream but i will put a hold on that until we get to the discussion so i copied this pretty much verbatim from the Washington Post today really what you should do is buy the book and then by the oped. But i would now like to invite richard read up to the stage i want toer thank richard for doing this. So the ideas on tackling this book are difficult and not straightforward and plenty of reasons for disagreement so thinking about how to put this together, i thought it would be better to have that on display here at the event rather than me present my version of the situation. And i was thinking to myself whos the most thoughtful person i can find to present that compelling counter narrative . He was not available so i asked my friend richard if he wuld come. [laughter] he was happy to do so. [applause] thank you for that kind introduction michael strain has written a clear and compelling and grounded in the wellwritten book so with that agreement then to focus on the useful disagreement and somenk general comments with a broader debate and to focus on those incentives is it true we are pessimistic because its working for us in some way. Lets start with the agreement first of all i agree its an overstatement of what is affecting us the middle class the american carnage i think that is true. In fact wage and Income Growth are solid, not spectacular but not stagnant seems to be the right word to be using an pricing that world war ii economy is a very strong growth followed by stagnation followed by more growth. One of the problems of the debate in the postwar years were the exception when you have the economy that hastice grown at 4 percent per year for 25 years and you will got one get a lot of People Better off. So thataf era of history cast a shadow. Because at some level those who are old enough to remember , that was not the norm but the exception. We believe that trade is good. The china shock was geographically targeted and magnified in certain places and to estimate the impact had less than a one percentage point impact for that ratio. But there is a risk to prosperity to immigration and social harmony through racial animosity. There is a risk from dynamism people needing jobs with a sharp decline in geographical mobility of americans is another reason to worry about dynamism. We agree it is way beyond economic utility with purpose and structure and i strongly agree with michael statement on page 135 the government needs to do more to advance Economic Opportunity to those who need it most. And for areas of disagreement come i dont think he needs to be a fancy government to be anti populist thats for limited government a dim view of democrats and someone with the free market as michael is but it seems to me you can think about it differently because it takes to to tango. The government can survive the Human Capital market and reward risk taking and hard work rather than being opposed with that role of government for what you put out as you balance your way. Too much of one you were will fall so im thinking of less than anxiety for fear of the future and in my home country with a free market arguments of healthcare the great thing is if you never have to worry where your healthcare is coming from and i dont plan on getting to that particular debate right here i but you can have a strong and active y government and the open ended economy and it is a false choice to choose between the two on the left and the right those are some of the biggest dangers that we face and politics are stuck in the era defined by your attitude towards government. So the better question is what are the institutions that can help us achieve them . And with that government approach. Very often the government is wasteful and with that tax reform and with us federal government to spay one spend on trade adjustments and to have 25 on tax subsidies. I would argue quite strongly we shouldnt be spending that kind of money on elite colleges but workers that would be affected by trade and no wonder people would stop to a think that with every dollar i get 25 goes to the elite and i think the chart shows the difference between the pretax tax and transfer the quality level that the p government has been doing quite a lot but the second thing and i will be brief is that yes is not death. And to make an argument with that project design it has been doing quite as well. And with that change to go back to 1979. And with that cumulative Income Growth for the top 20 percent. And with the middle 60 percent. It with the Household Incomes and that is twice as much as the distribution. And crucially it is from the Congressional Budget Office and the value of healthcare. And then a drop significantly. And those that have kept up with the top 20 percent and it is the story in particular of government provided health subsidy. So over the longer time. The market serve the top 20 percent pretty well the governments of the bottom 20 percent reasonably will but the middle 60 percent are not faring quite as well. I find it difficult to enthusiastically cheer for downwardr mobility but i will say if you want more people rising up more people have to fall out but i am more troubled that it gets stickier over time and is in certain places. That doesnt to the Higher Education system. And so the contribution for the downward mobility of inequality it is a different chart and then to drop 90 percent from 1940 and there are all kinds of issues with this chart. So then what they do is about lower growth or the distribution of that growth . And whathe it shows is what it would be like if we held inequality at the same level and if we show that the drop of downward mobility is from that distribution. So as suggested to choose a story and with those ecological decisions and to make a point it is cumulative for wages and what i have done use that different data set and that is michaels preferred time. So now it is not quite so great so are we using the average median. So i will tell you what i will do i use a different inflation measure we will not get into a discussion about livelihood but so you can argue one is better for wages or Household Income and then when we get lower. But i think it is pretty stagnant now. And that is a really nice drop. So the point is its not right or wrong with you can make those arguments but having these debates why that year and not this year . Why you only looking at that . So i just made that point thats an important part of the story we should be careful that we choose our narrative tsd the facts to support it. Expectations really matter. There is a very interesting argument on the right so what do people expect . How much wage growth did they expect and why . Because of the gender . And quantitatively he makes a strong case but qualitatively people compare themselves to the previous generation and they agree its people like them. That may be the wrong thing to do but lastly i want to talk about why is it we are drawn to the stories . Thats what politicians will do they want vote so they can fix and donald trump is the example now according to the least it one the latest statement its in his interest to say that media narratives are drawn to the extreme but the pessimism is more to the left than it is to the right the government has done more but it is true that more and more Government Investment to say where does all that money go . But they should say that instead and then we should be honest about the fact that intellectual glamour of pessimism that is a pessimistic polemic my hero said the middle of 19th century for any man that knows anything to think ill of it. Study people looking at book reviewers summer negative some are positive that is much more clever there is something rather dull and stupid into many of our minds and the danger of selling books as we are but to justify our solutions especially if they are radical in order to gain a larger share public attention more people are signing up to our idea. It is attractive with that incentive to doo so and even more to his credit but it is provocative but not polemical to be reasonable and responsible without any loss of intellectual brilliance or the other way around and that makes it even more annoying altogether i congratulate him on his work. [applause] thank you both. Congratulations on a great book and thank you for being here for great commentary im eager to open people up in the room i want to give you a chance to respond if theres anything that requires an answer . No. Great. [laughter] that i need to debate you again. [laughter] but it seems to me and some of the arguments you were having with our friends on the right there is a lot of traipsing carefully around the question of women. And less carefully in the case of tucker carlson. But i think he described women in the workforce as a disaster which is more of a statement. But i wonder if first of all you do that yourself there are places in the book you mentioned men have had it worse certainly populism is driven byme the fact that theres not a lot of discussion on discussion what to make of that fact that men are lagging well women are rising is one the cause of the other resulting politics best understood through the lens of the difference between them . What is the economicc effects . I didnt want to get bogged down in discussions of specific specifics. Its here in the book i really wanted to focus on the broad picture. But since you are asking workers that are relatively more educated has been doing fine. But if you are a man and did not graduate high school you are in bad shape. The opportunities available to you in the labor market are significantly limited limited but it is still imperative we have those policies to advance Economic Opportunities to those workers and you areat also right that that group of workers in particular in the american heartland was driving the current political moments. So youre not wrong . Im suggesting they are not wrong to think there opportunities are less than they would hope for. They are not wrong to say more than they could reasonably have expected when they were growingg up. But i think the conservative with our friends on the right to this reality has been ht cdeeply disappointing. In the eighties and nineties a major debate about welfare reform in this country. And conservatives made the argument that low income africanamericans should be expected to work, the argument somehow that was beyond their capability given the circumstances in life denied them agency there was ample Economic Opportunity of Public Policy was corrected to help them create that and then it was passed into law personal responsibility in the title. Now when we talk about white men in the heartland who dont have a College Education now all of a sudden they are victims of the elites and the wall street eliteses open up as a free trade and that has ameliorated them at the expense and the conversation on the right acts as if they do not have responsibilityha or agency to take advantage of the opportunities that they have i find that disconnect to be extremely troubling and i also think the narrative on the right we certainly need better policy for these workers but there is ample Economic Opportunity for those workers in the current economy and finally i would say that they would respond better to a different message and we need our leaders to give that a shot and the stagnant wage story i dont think anyone disagrees with that and with significant wage growth for what we put together a different story economically the rise of w women has been hugely beneficial to the labor force and no one denies that but what is at stake is the fact so the capacity to only focus on men. And there is good reason why that is wrong but to take seriously the idea of the capacity of men to be a breadwinner in the traditional sense is significantly less than it was today that requirement that they are with the man is significantly less and the expectation they have of themselves and that women still have of men to have that breadwinning capacity so there could be a lag between the ability of the men to perform that additional role and the expectations on the part of women to do so that puts men in a difficulto position and that might be at the heart of what we see. One further related question for me begin with the premise the American Dream is about economics and then you wonder why people claim why the economy is doing fine , maybe the complaint means its notot about economics it is a complicated concept and with the Great Recession which is the economic event it was tremendously disruptive millions and millions of workers so that is the spark of what we are living through. This is part of a pattern if you look back over the last 150 years and 30 or 40 of their democracies you see that empirical regularity if there is a financial practice you can see a big up spring one upswing and then you see a large increase in the legislature held by populist candidates. The United States has but that pattern perfectly and there other structural reasons why we are a twoparty system and not a parliamentary system. But i still see this as being driven largely by economics but of course experiencing life of their participants and their families and their communities and there are a lot of signs of trouble so i am very open to the idea there something more complicated going on. Lets take questions tell us you are in frame your question is a question. What is populism and how could it kill the American Dream . Populism is a system of animosity the people are pitted against the elites. With the different context i would argue there is more than one thread of populism and play right now but that characteristic is the people fighting against the elites it kills the American Dream in two ways. One way is policies and a populist response with the White Working Class with the president s trade war with that salient expression in terms of populism in terms of actual Public Policy if you wars to raise Consumer Prices with a variety of products that households can buy with export growth has hurt some of the stocks of the company and the most recent evidence suggest it has reduced manufacturing employment rather than increase. These policies are bad for American WorkersBernie Sanders also running a populist campaign it would be a disaster for American Workers and households even though you can only get a small fraction thats not a lot of solace in andnd of itself those policies also affect longterm prosperity more perniciously the president s extreme animosity threatens the United States role as the destination for the best and brightest and most ambitious people and that is a direct threat the president s attacks on institutions and the norms of governance that are carried out on behalf of the people against the system threat in longterm prosperity by weakening institutions like the fed and the culture of governance. And saying that billionaire should not exist. And the president of the United States not fewer billionaires. Not sending a message that they should be punished for success so there are serious risks from the policies and posture of populism and also what is deeply damaging to the American Dream is the narrative precisely because it is not true the game is rigged and precisely because it is true that hard work paysec off to enjoy the fruits of their labor and that america is broadly upward the mobile. If all people here is that it is their fault that will dim their aspirations and since those things t are false they work and economic outcomes will suffer i think it is a double threat. And not just the policies to be worried about but the policies that arerr troubling. I will disagree and agree. We just cant discount the idea that we dont use the word rigged. And then to talk about how we market in the book and then with a Higher Education system it is not rigged and to be well educated to go in that failure on dash because it is against the system it doesnt feel like it is working for me and Middle America but its working for people like us. There is some truth to that. And that should create where i agree populism it is anti elite and so that is the real distinction you see this closing in and i agree with that but also i think these are pessimism which isis the argument and with these problems because capitalism generally an american especially the reason you and best there is that liable sense it will pay off in the future and to come from that risk if you start to believe that it wont then why move for risk college or start a new business if you cease to believe i there is a Better Future the real enemy is not socialism. And then define that reasonable consensus. Americans disagree about the role of government but are we going to hell in a hand cart . Because if you believe that and that is where you are at. One more quick question. It is hard not to comment a little bit it sounds like you are defending the status quo at all cost and another quick comment that all taxes make prices go up not just tariffs. Income taxes, property, that will eventually reach the price tag and result in increasing prices some say free trade protectionism that trump did with the trade war is bad because it makes Consumer Prices go up but all taxes go prices gonso up that is something people overfocus on. One of the things that we mentioned have you ever heard of the social credit score . The idea that it is in the economy is rigged but it has defects with the debt based money system and the problem is consumerism with the ability of people to buy what is purchased and we need a debtfree Monetary System not debt based based on introducing new money into the economy so its more of a monetary infrastructure tprogram. Have you ever looked at that aspect . Not to be confused with the chinese social credit. I would contend it is monetary infrastructure problem and the inability of people to buy what is produced because there is a shortfall. I am not attempting to defend the status quo. Let me agree with richard that there are obvious areas for improvement of Public Policy. Housing is one and occupational licensing and Higher Education theres plenty of low hanging fruit there. In the book i devote a chapter to describe some pressing problems facing the country and to discussing some policy solutions that i think will help improve things so my point is not to say everything is perfect and there are no problems and no need for any new solutions but instead to say the National Narrative is so completely disconnected from the underlying reality that needs to be corrected. Cor. A corrective