How they relate to the dark stories that we hear in our politics about the conditions americans of experience and what our prospects are. I think its fair to say, he finds things are much better than the mood of o our politics and the critics of the market economy would sometimes suggest that we do face risks and maybe the mood in the critics are among the most important to those risks. It is a controversial thesis and as a conservative im resistant to being. Up until everything is fine but it is a very powerfully argued thesis a agile see tonight a very supportive thesis in t the book. Joining us to respond to his argument is one of the smartest social analyst and policy thinkersrs in washington, richad is the whitehead chair in the senior fellow in economic studies at the institution. He is the director on the future of the middle class, the author many important articles in a number of important books including dream orders, how the american middle class is leaving everyone also the dust and why that is a problem and what to do about it. Our format will be very simple, Michael Offer an overview of the argument of the book and richard will offer a response in all moderate a bef conversation between n the two of them and tn will draw all of you into the conversation with q a. With that lets welcome michael strain. [applause] thank you also much for coming thank you for that generous introduction. The dialogue of the book contains argument that i am making which is the American Dream is not dead and t the subtitle makeses a secondary argument that im makinghich is the populism and excellent cover and theres no reasonor any of y you to read on the inse of it but well tal about that anyway. What do we mean by the american drm, lets start from the top. There are many definitions in many Different Things to many different people, the freedom to choose how to live your own life, to have a good life, meaningful work, good family, a Strong Community a comfortable retirement, Home Ownership is a bibig part of the American Dream and the popular imanation. I would argue a key part of the dream is based on economic success, no matter what flavored the dream youre interested in and no matter what your particular definition is. I think everybodys definition involves a large economic component loosely defined, the idea that your kids will gro up to be betttter off than you, the idea that you can do better yourself through hard work and that you can see your economic outcome advance. And then the idea that there is a rags to riches component, this is a strong economic component the idea that a poor kid could grow up to be a billionaire and the perky can be president. That sort of thing. This is part of the American Dream i focus on in this book, the economic component because i think its central to evererybodys shared understanng of this important but a beating the National Conversation assumes the American Dream is dead. President t trump with this nuae s said the American Dream is dead, this was an courses theme during the primaries of the 2016 cycle, his theme after he was elected his inaugural a address with american carnage and how terrible everything is. Pivoted in the last few months which is good but this is been a defining characteriscs in his presidency. Senator rubio tells a story about his family and aut how his family came to america and did not have a lot of education in his advancement across generations. He told the story when he was running for president in 2016 as an example of the human can dream being alive, in the past few years he tells the same storory with the same set of fas but he uses it to argue that the American Dream hasisappeared. Elizabeth warren, they gave him his rig, Bernie Sanders for many of the American Dream has become a nightmare, joss holly 70 of amamericans havent seen a real wage increase in 70 years. And from the trevor Administration Says the American Economy is filling the citizens. The billionaire investor since humor can dream is lost. Tucker carlson referring to the dark agent we are living through in the American Dream is dying. My point, this is bipartisan, this is something you hear from senior electoral officials and Business Leaders and something that you hear from Public Opinion leaders and public intellectuals and theres a consensus. My point in this book that the consensus is misplaced. Americans have high expectation for the economic outcome. High expectation for the wage growth, for the success the children will have, that is a good thing in america does face serious economic challenges and i spent a chapter in my book discussing the most serious. America faces serious social challenges pritam not trained to diminish or sugarcoat or to ignore any of the real problems you face, instead and trained to be accurate about the broad picture off the american experience. How american lifes experience but typical people, by most people in the circumstances. I think we are focusing so much on the pockets of real struggle that we are confusing those pockets of struggle for the common experience facing pple. I think the American People keep aring that the experience of people and places were really suffering and struggling, i dont want to deny the suffering or the struggle, i do want to say those are typical situations and that the common experiences that are much more positive than the narrative suggests. Some simple assertions, the economy is delivering for american workers. Wages and income have not been stagnant for typical workers over the past three decades. The quality of life has improved significantly for typical household over the past several decades. Middle income jobs have been hollowed out but the economic diamonds increase industries. We hear a lot about the destruction of but we dont hear about the creativity and if you look, you see a new metal starting to f form where the old middle has been eroded. America is broadly characterized by abilility. A couple other assertions, they narrative about the American Dream matters and that we need to do more to advance and secure the dream for the next generation. Very briefly, im going to stand up your for 20 minutes and i would giveichard the opportunity to respond and to have some discussion. I will not be able to cover all that but ill do the best i can. I thought it would be better to have some real disagreement then to just have me stand up your lecture for an hour. The economy is delivering for workers, simple statistics, 10 have grorown over one third fasr than growth at the median over th last several years. The Unemployment Rate for workers without a High School Diploma is below the longterm average then the Unemployment Rate for College Graduates currently. Wages for nonsupervisory workers have been grgrowing faster than overall average wages since last february. The argument that the gains from the economy are only incurring to people to top that the game is rigged against workers who are not at the very top, it is not supported by the data. Currently the recovery is reaching wide swaps of the market including the lea skilled, least expensive most probab workers. My secondrgument, it is not segmented for decades, will spend more time here. This is a graph of wages of nonsupervisory workers. The production worke in manufacturing and nonsupervisory in services and this includes about 80 of workers and you can think of these as workers, not managers. And for the average raise of worker in that group. And justin for inflation. I want to make some supple observations. And drop the 1960s going into the 1970s, there was a rapid and sustained wage growth for the group of workers, then what you s see is from the mid1970s to the 1990s,his group of workers did not do so well, you stagnant and declining wages since the mid1990s, i see wages going up. I dont see wages being stagnant, are there periods where wages are not growing during the 30 year. Yes. On the whole, if you choice is to characterize this as s staant or as increasing, i think its quite clear that over the last three decades,s, the most accure way to characterize this is wages have been increasing. Lets look at this, it is common to go back to 1973 and o of the things that i want to do in this book is to argue comparisons between 1973 in the year 2020 is too long of a window to make cparisons about. It is common to go back to 1973, wages of growing 23 since 1973, i would not call that stagnant or spectacular but i certainlyly would not call that stagnant. I want to argue that we should not start the comparison in 1973, this debate about wages among the policy community here in washington often get hung up on what price index to used to adjust for inflation. I want to say that what we really should be debating is the starting year. We should spend less time debating the price index and more time debating the actual. That were making the comparison over. Why did the default and the start of 1973 or 1979 when you see there is a 30 year period where wages have been going on. I argue the start of 1990. Wh when politicians and opinion writers have said there stagnant for decades, they refer that to their wages. The wages of people who are currently working. 1973 was 47 years ago. For the purpo of the policy debate, a more recent year, a year that is more relevant to people who are working seems pretty straightforward. 1990 was a Business Cycle peak, the summer of 1990s close to a structural break in the series that seems to have accrued around the mid1990s, what i mean by that if you start in 1973, what youre doing, youre comparing, completing a period of stagnation and decline with the period of growth. That to me seems to be statistically inadvisable. I think instead calculatehe votes and calculate stagnation over the period of were wages are stagnating and dont complete the two if youre trying to get a handle on what wages are doing. 1990 was roughly 30 years ago, you hear a talk about several decades,hat seems a reasonable time to go back, its hard to adjust for inflation the further back you go, one of t ways we can sidestep these debates of which price index to do is to not go back 50 years, if you go back ten years, the price index is more strongly than if you go back 20, if you go back 20 they agree more than if you go back 30. One way not to get near down in a price index debate is to focus on on a shorter time period. But my main point, even if you do want to go back to the 70s, it is really not a complete picture to argue that wages have been stagnant. Instead, you need to characterize the two different periods. If you want to go back to the 70s, fine, he should be saying that wages stagnated throughout the 70s and throughout the 80s and the 1990s and since the 90s, wages have been growing, that seems to be a much more complete characterization of the behavior wages. 32 growth or 34 growth over the last 30 years, some properly described as stagnant, is slow growth in the top 1 , i i a significtncrease in purchasing power and we should be content with that. So not stagnant, but not fast enough and lets acknowledge that it is different than whats happening at the top. I willll are the 30th person to lead the there is no thing you could argue that gone up by a quarter. Again, not stagnation. What about income . They have three different measures of income and if you look at the posttax and transfer income you see its gone up by 44 and Market Income by about 21 . If you look at the bottom you see that its gone up by two thirds in the Market Income by 44 again, not stagnant. Slower than the top 1 is not stagnant. If you look at the Standard Measure of inequality what you see is a significant increase in the 1980s and 1990s0s and then since the Great Recession when concern about inequality exploded, you see the 7 decline in this measure of inequality using the posttax and transfer income and if you look at the Market Income you see an increase of about 2 . This is another example of how thee narrative about the americn workers hasnt kept up with the data. Wages are stagnant a tt hasnt been true for three decades. It was growing rapidly in the 80s and 90s and for the past decade its been growing less rapidly. This is with the other measures asell and you see that these also have not shown any Significant Growth over the period. Do people care about inequality . Im going to cover this briefly. This chart shows concern about inequality against actual inequality. The Public Perception about whether the rich are getting richer versus the actual behavior there isnt much of a relationship. This is a graph of concern about inequality and wage growth. Concern is going dn and they carereebout what they were doing than actua the actual behr of the rich and poor gap. My third plant life was better decades ago and this goes without saying i like to show this graph. Its very important to me personally and you see the share of homes with airconditioning over this seriously thereve been significant advances. The idea that life was somehow better 30 or 40 years ago borders on the absurd and if you take the argument seriously it is impossible to imagine many people if anybody would actually go back in time and live 40 years ago no matter whathe cuent socioeconomic situation is now. Middle class jobs this is a chart that shows the hollowing out of the distribution and you see employment losses in the middle, prproduction workers and Clerical Workers and you see the increase along with increases in hires go high wage jobs. You look at the low middle and high occupations you see that constitutes 38 of the total employment so spread equalally d then if you look from 1970 to the present you see those occupations constitute about 23 of the employment so that is a significant decline. What happened to these workers . A whole lot ended up moving into a higher income bracket so you see the line shows th that linef households making between 3 35. To 100 has gone down considerably. But theyve been replaced with households earning more than 100,000. Theyve not been replace by those earning less than 35. I will skip over this in the interest of timeou do see they are declining as the share is the blue line. But if you see there is Significant Growth in other types of middle skilled and middle wage jobs. These are healthcare support, transportation occupations, education and training, personal care and services. The whats happening in those middle wage occupations is what happens in the dynamic in the capitalistic economy. Upward mobility, rags to riches, i wont explain this in any great detail, but i did some calculations to see what share of people who were born in the bottom make it to the top and its about 7 . What share of people who were born in the top make it to the bottom. I cannot read that. It looks like 8 . It isnt common. Its not the norm or something to be expected if you are in the bottom 20 , but you can go from the bottom to the top. If you want toemper that and look at rags to comfort you can see considerably more upward mobility and rising into the middle class. In these calculations there were people in their 40s today o or e you earning more than when your parents were your age and about three quarters of people who were in their 40s today have a higher houhold income than their parents had when they were in the 4. If you were born in the bottom 20 , e. G. 6 of those 40yearold have a higher Household Income than their parents had when their parents were inn their 40s. This strikes me as considerable upward mobility. How much more is up to 54 across those two generations and if you were raised in the bottom 20 of his bike 153 . How many eard more in the labor market than their father than he was in his 40s . Those that were raised at the top of one of them earn l less than their dads did. If you were raised in the low income bracket or the wking class i have some material prepared on the populist threat but in the interest of time i think im going to hold onto until we get to the discussion so i will advance through all this. I copied this pretty much verbatim so everybody should just go read that you should really just read the book and then see if it is consistent. I want to thank richard for doing this and the competition of ideas that i am tackling in this book are difficult and not straightforward and theres plenty of room for reasonable disagreement so when i was thinking of how to put it together i thought that it would be better to have some of that on display at the event rather than have me stand up and presentsts my version of the situation and i was thinking to myself who is the most thoughtful person i could find to present a compelling counter narrative and he wasnt available so i asked my friend if he could come. [laughter] and he was happy to do so. Welcome. [applause] thank you for that introduction. An irritatingly wellwritten book, congratulations. I thihink it could be a useful disagreement with some general comment for the then with the incentives are. As the american carnage in as president of trump, etc. I think that is true there is a bipartisan overstatement of the problem. Its not spectacular but not stagnant. Followed by the stagnation and more growth albeit not as strong. I think one of the problems is in the postwar years when you have an economy thats growing by an average of 4 a year and almost for 25 years than you will get a lot of upward mobility into seems to me it casts quite a shadow over at the debates because at some level particularly those that were old enough to remember those years it is fixed as the norm and it was the exception to the norm. We agree trade is goo and the shock to the u. S. Manufacturing was real and small and geographically targeted and magnified. Its estimated the impacact of less than a 1 impact to the population ratio and its mostly in the past. But there is a risk to prosperity for the protectionism and reduced innovation and social. There is a dynamism the business startups and i would also add the geographical mobility are the reason to worry about the dynamism. We agree that it goes way beyond economic utility to include the dignity purpose structured etc. And i strongly agree with the statement on page 135 that the government needs to do more to advance the Economic Opportunities to those who need it the most and that brings me to t the four areas of disagreement. I dont think that he nee to be as antigovernment as michael appears to be to be antipopulist. He talks a lot about the need for the limited government and has a view of the government burereaucrats etc. Ratively straightforward for somomeone wo is as freemarket but it seems to me you can think about this differently in some ways it takes two to tango the government can provide assurance, security. The market can reward risktaking, innovation, hard work rather than seeing them opposed to each other i prefer to think of the role as being to arms you might put out as you balance your way across the fallen will. Too much of one and yo the willl but too much of the other and you might fall also. I think little bit about the way that the activity is less of an anxiety and then potential even boost risktaking and im rereminded of the conservative chancellor Kenneth Clarke who made the argument for socialized healthcare on the grounds if you never have to worry about where your healthcare is coming from. I dont plan to get into that particular debate rig here that as an example you can have a strong and active government and indeed i would aue that the false choice that is posed between the two on both left and right is in some ways one of the biggest dangers we face and the political philosophy are stuck in the era defined by the attitude towards government. What is the best within the markets, state etc. In achieving those goals rather than having this pro antigovernment approach. The wastefulness that was true until the tax reform, until it was passed for every dollar the u. S. Federal government spent on trade assistance we spend 25 on the tax subsidies to the elite colleges. I would argue quite strongly we should be spending that money but not o on the elite colleges. They should be spending it on the workers that might be affected by trade, and no wonder people might start to think of this when for every dollar i get to help adjust, 25 were going to the elite colleges and this is the difference between the levels that the government has been doing quite a lot and i will say more about that in a moment. The second thing, and i will be brief about this, we are not in great shapape having agreeing to some of these i would say one thing in particular. You can make an argument the middle clas class havent been g quite as well. This is Household Income g grow, the cumulative percentage chae that goes back to 1979 so what this does is show the growth for the top 20 , the blue line below is the bottom 20 and the red line is the middle three which is how we define the middle class. Some 80 plus increase on Household Income but obviously not the same but of those groups which is about twice as much as we have seen in the distributi distribution. So that might speak a little bit to the sense people have been left b behind. But from the Congressional Budget Office it includes the value o health care and if you get into the bottom percentage drops significantly. Its actually kept up as a large part of the story for the government provided healthcare and health subsidies. So the way that i interpret this is over the longer time. How come it is the top 20 the government served reasonably well but the middle 60 arguably havent been quite as well served. Michael says on page 87 i find it difficult for the downward mobility. As he talks about these transitions. Im not going to enthusiastically cheer for it but if we want more people rising up into the top 20 as a matter more people have to fall out of the top 20 . And ii am more troubled that the top 20 is stickier overtime but theres more movement into it over time it i is lower than otr coununtries and it is pretty stic in certain places but more importantly we should ask how it is that those in the top 20 are passing on the advantages to the kids and some of the ways we do that including the Higher Education system are blatantly unfair and im not just talking about the operation. I al think that the contributionowards the downward mobility is somewhat greater than suggested. Its a different chart than which was shown in a social science showing the chances of being better off than your parents dropping from 90 of your born in 1940 to 50 of your born in the 80s. The. At is something that we need to think of the distributional parts of the story. And then i just want to make a couple of broader points. The first thing as michael suggested. But i just wanted to make a point that this is cumulative not dollars and what ive done is use the different data sets to make sure they work pretty similar. This is the preferred time period wage growth using his preferred deflator. Now it isnt quite so great but are we using the average we can pull it down little bit. Ive broug it down and now want to get a bit lower so i will tell you what i do. And now we have a nice drop. We will make the big argument about which is the right one or the wrong one that having these debates is important very hands above the table. Why are you only looking at men. The wage stagnation is such a story we should be careful that we dont choose the narrativive and find the fact to support it. Expectations really matter. If you cant read the whole book theres an interesting argument on the right. I think about these issues and it is interesting. Because of their gender or thehr father etc. They tend to look at their working class fathers. The last thing i want to talk about is why is it that we are drawn to these stories the American Dream is dead. In passing i would note it is greater to the lef than it is to the right because the government has done more in the last 30 years so it is true to ask for more investments. I think the government has done pretty well the last 30 years and they should say that instead but this brings it closer to home. But both pessimism and the best of both worlds is the, jon stewart now my hero said it is thought to be essential any man who knows anything of the world to think ill of it. There is something rather dull and stupid about optimism and too many of our minds. The. It is the incentive to do the ct reasonable, modulated and responsible but without any loss of intellectual brilliance but rather the other way around, and that makes it even more. I congratulate him on his work. [applause] thank you both and congratulations and thank you for being hehere for a great commentary. Anything that struck you . [laughter] it seems with some of our friends on the right theres the question of women and eve even in the case of tucker carlson. It isnt an undercurrent. There are places wre theyve had it worse, certainly populm is driven by the f fact that men have had it worse but theres not a lot of discussion about what to make of that fact that men are lagging while women are rising is one that causes the other cover resulting politics best understood through the difference betetween them. What do you make of the economic effect of women entering the workforce . I want to focus on the broader picicture. Workers that are more educated have been doing fine but if you are a man and didnt graduate high school, you are in bad shape. Its the opportunity for those workers and i think that you are also right that a group of workers particularly in the american heartland in. Fullstop stateand west bothst of the cururrent political moments. They are not wrong to think that the opportunities are less than they would hope for a. I think that the conservative and where i tak issue with our friendnds on the right, the conservative response to this reality i think has been deeply di we had in the 1980s and 90s a major debate about welfare reform in this country and conservatives got accustomed to making the argument that low income africanamerican single moms should be expected to work, but the argument of that was beyond the typical for the beyond their ability given the circumstances of life was denying them agency and there was ample Economic Opportunity if the policy is correct and that the bill eventually passed into law a and now the wall street elite opened up the free trade to enrich themselves and the conversation on the right asks if they do not have responsibility or agency and they are able to take advantage of the opportunities they have. I find that disconnect is analytically wrong. But theres ample opportunity for many of the workers in the current economy cecertainly more dan would be suggested. Finally i think they would respond better to a different message and we need some of the leaders to give that a shot. I dont think anyone disagrees with that. Its been hugely beneficial no one denies that but i think what is at stake here is something about the fact that the capacity to there is a good reason why thats wrong but we take seriously the idea that the capacity is less today but the expectation. They were to perform the traditional role and the ongoing exexpectations on the part of women that they should do so that puts them in a difficult position and that mht be the heart of many of the problems we are seeing. You began with the premise the amecan dream is to a great extent about economics and then you wonder why people complain even though the economy is doing fine. It is a complicated concept and i think the complaints are driven by the Great Recession there were millions and millions of workers and households have suffered enormously as a consequence of it and that disruption is the spark that lit this fire that we are still living through a. If theres a financial crisis followed by a procession, you see a big upswing in the populist sentiment in those countries. You see a large increase in the share of seats in the Moses Fletcher told by populist candidates. The United States is that the pattern perfectly into the crisis that we experienced was larger than the typical financial crisis and recently it would take longer to work its way through the system and others of the reasons it might take longe in the ft that we are not a permanent three system. But i still see this as being driven largely by economics. The people experience lifas participants in their communities and there are a lot of signs of trouble so im very open to the idea that theres something more complicated going on there. We have a microphone going around the room. Please tell us who you are intricate frame your question as a question. The. What is populism and how can it kill the American Dream . It is a kind of system of animosity in which the people are put against that you nee ele there is more than one thread of the populism in play rightow but a defining characteristic is the people fightining against te elite. How could it kill the American Dream because it did in two ways. One way is the policies andnd a populist response to the plight of the working class has been the president s trade for its been the most salient expression of populism in terms of actual public policyhats been enacted. If you look at the trade for its greatest Consumer Prices and a variety of products households can buy. Its actually heard some of this talk for the company that are supposed to be helped by it and the most recent evidence suggests its reduced manufacturing rather than increased so these policies are bad for american workers. Bernie sanders also running a populist campaign has economic agenda would be a disaster and even though he would only get a small fraction of the past that isnt a lot of solace in and of itself. I think that there are policies also affect longterm prosperity and more pernicious ways. The extreme animosity threatens the United States role as the destination for some of the best and brightest. Thats a direct threat. The president attack on institutions in on the norms of governance that are carried out on behalf of the people against the system threaten longterm prosperity by weakening those institutions and by weakening the culture in terms of governance. Bernie sanders similar effects. He said they shouldnt exist. That is the oppositite message. The president shod be rooting for more billionres, not fewer. The president houldnt be sending a message that they should be punhed and success is something to despi. There are serious risks from the posture of populism. The second way that i think it the narrativeging to the precely because it is not true that hard work pays off, workers enjoy the fruits of their labor, wages andnd income a not stagnant, that america is a portly mobile precely because those things are true if all the people here is that they are false and that can reduce their energy and since those things are false if people work less hard to get this kind of a double threat and not just the policies. I dont think that we can just discount the idea that ther are certain aspects dot we dont usehe word but it certainly was more effective to help those in positions of power you your self talk about the hohousing market in the book. Theres other examples of cu cant discount the possibility against the system that doesnt seem to be working for me in Middle America but for the people like us. I dont think we can discount the truth to that. Where i agree with is it is a turning inwards and the distinction, not left and right. Its very dangerous and damaging but i also think thatt feeds on pessimism which is part of the argument here so i will agree with we have to take serious these problems country runs on optimism. The reason you invest and take risks. If you ceased to believe so the real enemy isnt socialism, its pessimism so that is the reason we can find a consensus around this. We will disagree a bit about the role of gernment but nor are we going to because then you are indeed. We have time for one more quick question right here in the middle. Its hard not to commt a little bit. Mark anderson indepenendent journalist. It sounds like you are defending the status quo at all costs and another comment is all taxes make the prices go up. It would raise the prices so people say freetrade protectionism in the trade war thats bad because it makes the prices go up. But all taxes make the prices go up. Thats something people focus on. One of the things i would mention that have you heard of the social Credit School and the idea was not that the economy is rigged but that we have a money system and the problem is consumerism and the ability of peop to buy what is purchased and that we need a debtfree Monetary System based on introducing new money into the economy comes of it is more of a monetary infrastructure problem which the government could be involved. Have you ever looked at that aspect, not to be confused in the socialinaudible] it is a monetary problem and the inability of people to buy what is produced because of the shortfall. The are obvious answers housing is one of them and occupational licensing is another one. In the book i devote a chapter to describing the pressing prproblems facing the country, d i devote a chapter to discussing some policy solutions that could help improve things. So my point isnt to say everything is perfectct. Theres no need fothere is no ne solutions. My point is instead to say that the National Narrative about these issues is so completely disconnected from the underlying reality that there needs to be a corrective to the. It justeeds to be re contexextualized. Thank you very much. The boo is the American Dream is not dead