Today you are going to learn why the American Dream is alive and well... in Sweden.
When most people think of the American Dream, white picket fences, 2 kids,
1 television, a dog and a station wagon.
Not Volvo, Semlas and Abba.
But, why do these things represent the American Dream?
Because they’re synonymous with the rise of the American middle class.
Before I show why the American dream is alive in Sweden
Let’s first go back in time for a moment.
In June 1944, the same month that American and allied troops landed on the beaches of Normandy
to begin the liberation of Europe. President Roosevelt signed the GI bill, providing World
War II veterans benefits that included payments for education and loans for starting businesses.
Suddenly, millions of Americans were able to purchase homes for the first time.
The boom was manifested by urban sprawl. The world’s first master-planned communities,
suburbia as we know it, were constructed in places like levittown, long island.
And this is Levittown, here you can own your own home
complete with it’s own television set and clothes dryer.
Then came the cars. In 1954: General Motors celebrated the production of its 50 millionth car.
Flint, Michigan became a middle-class boom town and a center of industry.
The highway act of 1956 provided $25billion
to fund vast and modern highway systems. This facilitated the transport of goods
and services between industrial, commercial and residential areas.
As the cold war with the soviet union escalated, defense spending by the US
Government injected billions of dollars into the economy. Around that same time,
the Aerospace industry sprung up in my hometown of Los Angeles.
Aerospace is the fastest growing industry.
Testing and assembling of space equipment all take place within in California’s borders.
There were endless, well-paid, blue collar jobs, no education needed.
This is what you could call the golden age for the middle class, and this is why a home with
white picket fence and a station wagon are synonymous with the American Dream.
So what really is the American Dream?
It is the belief that anyone, regardless of where they were born or what class they were born into,
can attain their own version of success. The American Dream is
achieved through sacrifice, risk-taking, and hard work, rather than by chance.
The term was coined in a 1931 book by James Truslow Adams titled "Epic of America."
Adams wrote “that dream of a land in which life should be better and richer and fuller for
everyone, with opportunity for each according to ability or achievement."
The idea of the American Dream dates back even further, to the founding of the country, and to
the Declaration of Independence, the founders wrote: “We hold these truths to be self-evident,
that all men are created equal, that they are endowed by their Creator with certain
unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness.”
The realization of the American Dream was due to one simple concept, social mobility.
Social mobility refers to the shift in an individual’s social status
from one status to another. The ability to climb the socioeconomic ladder.
So why do you often hear that the American Dream is dead or dying?
And why is the American dream alive and well in Sweden?
Well before I explain, I just want to take a second to thank you for clicking the like
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So as I mentioned, many people say the American dream is dead or dying.
And well, they’re not wrong.
Between 1980 to 2016, the share of income for the poorest half of the US population has steadily
been declining, the share of income for the top 1 percent has been increasing. To put it simply. The
gap between rich and poor is growing. In Western Europe and Sweden, this just isn’t the case.
It’s sad to think that a child’s feature should be dictated by their parent's status and wealth.
But this is becoming increasingly true in the USA, but as we’ll see, this is not the case in Sweden.
Let me show it visually. Let’s divide the American population into 5 groups of equal size,
or quintiles. In a fictitious, equal society, each group would get a 1/5th of the income, or 20%.
But in reality, the income distribution in the US looks like this.
The bottom quintile, the poorest quintile, receives 3% of the income,
and the top quintile, the top 20% of richest people, receives 52% of the income.
The problem is that alongside increased inequality,
we’ve seen diminished levels of upward mobility in recent years.
A child born in the top 20 percent has about a 2-in-3 chance of staying at or near the top.
A child born into the bottom 20 percent has a less than 1-in-20 shot at making it to the top.
He’s 10 times likelier to stay where he is.
In Sweden, it looks like this. The top quintile has 37% of the income
and the bottom quintile receives 8% of the income.
Keep in mind this is for income, not wealth. They are two very different concepts. As I
explained in the economics of Sweden video, the GINI wealth coefficient for Sweden is actually
quite high. You can watch the video by clicking the link up there.
So we know that the American Dream is essentially the opportunity for social mobility. So let’s
take a look at the Global Social Mobility Index published by the World Economic Forum.
In countries with high levels of social mobility, people born into a low quintile have a better
chance of climbing the socioeconomic ladder into higher quintiles. For example, the ability of a
child born into low income quintile to work hard and climb into a middle or high income quintile.
So looking at this report. The higher the index ranking, the better chances for mobility.
Denmark, Norway, Finland and Sweden round out the top 4.
Denmark is the most egalitarian society in the world. Sweden is 4th.
And the United States? It’s way down in the 27th spot.
Perhaps the name “The Danish Dream” is more fitting than the “American Dream.”
In theory, let’s say two identical children of equal capability
born into low income families in Denmark and the USA. They both work hard to achieve their
dream. The child in Denmark has much higher odds to move up the socioeconomic the ladder.
In Denmark it would take an average of 2 generations for someone born into a low
income family to approach the mean income. In Sweden 3 generations. In the USA 5 generations.
And in Brazil and South Africa it would take 9 generations.
Why should care about any of this anyway? Well, first and foremost I think we can all agree that
fighting for a just and fair society were everyone is given an equal chance is just the right thing
to do. Our parents wealth and status shouldn’t dictate our ability to achieve our dreams.
But aside from that, low social mobility and the loss of the American dream
is quite literally tearing the United States apart.
Low social mobility has damaging consequences on the US and is weakening the social fabric.
When people are disfranchised and disheartened, there is a loss of dignity.
An erosion of trust with the government and institutions.
Social unrest becomes more frequent.
Inequality has been Exacerbated by nation-wide lockdowns that have brought the economy to a
standstill. We haven’t seen a V-shaped recovery that everyone was hoping for,
but rather a K-shape reconomy. Tech companies and the stock market are
booming, while mom and pops business are going out of business.
There are also opportunity costs for low social mobility. It’s estimated that if each country
increased its mobility index score by just 10 points, it could result in an extra 5.1
Trillion in GDP growth for the global economy by 2030.
I don’t have all the answers for how the US can decrease the wealth gap between rich and poor,
and both political parties have their differing ideas on how to achieve this, but I think the
USA can learn from Sweden and its nordic Neighbors. Like Norway, Denmark and Finland.
Ranked side-by-side, Sweden does a better job at providing opportunities to all its citizens.
Access to health care, which is explained in the USA vs Sweden healthcare video. You
can watch that by clicking here.
Access education, technology, work opportunities, a fair wage,
working conditions, social protection and inclusive institutions.
I believe the US could lower inequality and greatly benefit
by pivoting from a shareholder economy to a stakeholder economy.
Currently, in the USA, the system is shareholder capitalism, which says
corporations have one purpose—to make as much money as possible for their shareholders.
Whereas nordic economies adhere to stakeholder capitalism.
corporations are oriented to serve the interests of all their stakeholders,
including customers, suppliers, employees, the environment, shareholders and local communities.
To be clear, I’m not advocating for the destruction of wealth. Abraham Lincoln said
“"I don't believe in a law to prevent a man from getting rich;
it would do more harm than good. So while we do not propose any war upon capital,
we do wish to allow the humblest man an equal chance to get rich with everybody else."
Thanks for watching and if you have any ideas for how the US can lower gap between rich and poor,
please leave them in the comments section below. I read every single comment.