Norton Garfinkle

The American Dream vs. The Gospel of Wealth

VTR Date: July 6, 2006

Norton Garfinkle discusses contemporary American economic issues.


GUEST: Norton Garfinkle
VTR: 07/06/06

I’m Richard Heffner, your host on The Open Mind. And though on the air now for more than fifty years, in my teaching for far longer than that … and I hope in my personal as well other professional involvements, I’ve always embraced and acted on the essential need for having an open mind.

Despite that, I also know that I simply won’t ever pretend to be an intellectual eunuch that needs to have a mind so open that my brains and my beliefs fall out. And I hope that my viewers, too, will … not indulge … that would be the wrong word, but will accept the notion that permits me moments when I can express my own beliefs while conversing about controversial issues here on The Open Mind.

Now that sounds, I suppose, as if I’m now strenuously going to challenge the central thesis set forth by my guest today, economist, entrepreneur Norton Garfinkle, Chair of the Future of America Foundation and author of the provocative new Yale University Press volume, “The American Dream vs. The Gospel of Wealth: The Fight for a Productive Middle Class Economy.”

But that’s not true as my own enthusiastic book jacket comments about “The American Dream vs. The Gospel of Wealth” indicate … because I had the temerity to write, “A dramatic description of contemporary American economic issues and their origin in the continuing struggle between the true American dream inspired by Lincoln, Wilson and the two Roosevelts, and the Gospel of Wealth identified in the 19th century with Social Darwinism and more recently with Harding, Coolidge, Hoover, Reagan and George W. Bush, in particular. In its intelligence,” I wrote, “historical understanding and felicity of style, Garfinkle’s eminently readable volume is in the best tradition of American historical literature.”

Of course my guest might be happier if I were at least also to quote Senator Hillary Rodham Clinton’s comments. For she wrote, “We can choose to chart a wiser economic path by starting with the principles that have inspired Americans from the beginning, sticking with fiscal discipline, rewarding hard work, investing in our people and growing a strong middle class.” And Senator Clinton continues, “In the American Dream vs. The Gospel of Wealth” Norton Garfinkle addresses these important economic issues, issues that should be addressed at all levels of government and our society if we expect to maintain the American dream for future generations.”

My guest’s opening of his book is equally direct. For he writes, “Americans today confront a choice between two fundamentally different economic visions for America”. And I want to begin today by asking him which he truly believes will prevail. How and why? Now that’s the big question, Norton. What’s the answer?

GARFINKLE: Well, I’m … as you know, a fundamental optimist even when faced with difficult facts. And I think the underlying issue, I do believe that the American dream will prevail. And I think it will prevail first and foremost because it’s right. Second because it has the facts on its side, both from an economic standpoint and it also has the, the basic objective of our society on its side. That our society is dedicated to removing barriers of opportunity to providing a basic social safety net for the poor and more important, ensuring that Americans who work hard and play by the rules, can maintain a middle class way of life. Now if you want to argue against that case …

HEFFNER: Not the principles …

GARFINKLE: Not the principles … if one wants to argue against that case, not you, one has to argue that a society that is organized primarily for the benefit of the wealthiest members of the society will somehow prevail against the great majority of the public that is … expects and desires and is willing to work hard to achieve a middle class way of life.

The arguments are being made and one of the basic objectives of the book is essentially to address those counter arguments to the American dream, address them both from an economic standpoint, a moral standpoint, and a political standpoint.

And by the way, those three standpoints are rather straightforward questions. The economic question is “does it work?”. The moral question is, “is it fair?” and the political question is, “will it sustain the democratic structure of our society?”

Now I think that the broad majority of the American public, based upon the polling data that we’ve seen, that my colleague Dan Yankelovich does periodically and that we’ve quoted in our recent book, that the data indicate that the public really stands four square behind the concept of the American dream and has not been mesmerized by the counterarguments for the Gospel of Wealth. That really have no substantial basis in fact or in morality.

HEFFNER: Well, you started by saying … this was a matter of economic fact. Before I ask you to demonstrate that, the superiority of that thesis, how do you account for the fact that we have elected to office over the past six years people who rather much stand for, and I think you would make this concession the, the 19th century Gospel of Wealth.

GARFINKLE: Well I think that the issues of any election are very specific to the time period. And historically the American public has elected people dedicated to the American dream, starting with Abraham Lincoln and going on to Teddy Roosevelt and to Woodrow Wilson and to Franklin Roosevelt and also to Bill Clinton. So, in those elections … these issues are not always the central issue of an election. Interestingly enough they were a large part of the central issue of Lincoln’s election because Lincoln’s election pitted a Northern society that was devoted to opening the path, clearing the path for the ordinary citizen to attain a middle class way of life, against the Southern economic society which was aristocratic based upon slavery and upon cheap labor.

So in that election, strangely enough, while we think of it today as an election about slavery, it was actually an election about the economies … the two visions of the economy and with Lincoln success we actually became the kind of democratic society that we wanted to be and with Franklin Roosevelt’s election we became a society where the government would actually take an even more active role in clearing the path for the ordinary citizen to achieve a middle class way of life.

However, we can’t guarantee that that will be the issue of every single election. It clearly has not been the issue of the election of the year 2000 or the year 2004. We will see …

HEFFNER: Do you think it will be in 2006?

GARFINKLE: I, I am hopeful that it will be a significant segment of the basis for the elections of 2006 and 2008, but I am confident that over the long run of time the American people will not abandon the American dream and will not accept the Gospel of Wealth as a permanent way of thinking about how our society should function.

HEFFNER: But Norton if you talk about facts, the economic facts. Let us take, for instance, a major element of Franklin Roosevelt’s triumph, the triumph of the New Deal and that was labor. Look at organized labor today and when I look at it I feel things have changed. In, in 1952 when I wrote the Documentary History of the United States, a chapter on the Roosevelt Revolution. Well I feel now that I ought to go back and strike those words because it seems to me we have experienced a counter-revolution and that’s why I wonder where your optimism comes from.

GARFINKLE: Well, the counter … the reality is that the American dream idea, in the modern form, which was initiated by Franklin Roosevelt was carried forward for a period of thirty years from 1950 to 1980 and was accepted even by, as a consensus point of view, by the Republican Presidents that came after Franklin Roosevelt.

It’s only with the new rhetoric of the Gospel of Wealth that started with an anti-tax approach and an anti-government approach by Reagan that there has been a shift in thinking. But the shift in thinking is not permanent and it started, strangely enough, not because of a confrontation of the issues that we are discussing today.

It started because … as pure happenstance, not related to the central issue of the American Dream versus The Gospel of Wealth … we had a terrible period of “stagflation” that culminated in the Carter years and, in fact, this new thinking that Reagan brought, in which he claimed that the anti-tax approach was going to provide the basis for a restoration … there’s no evidence that the anti-tax, the lowering of taxes, especially the lowering of marginal tax rates, had anything to with it.

What created the new society thereafter was the defeat of inflation. Now we can come back to recognizing what are the economic principles going forward. And I do think that not only will the facts prevail, but the public, the majority of the public that is disadvantaged by a Gospel of Wealth philosophy, will begin to see more clearly exactly where their interests lie.

Now, of course, things like the war in Iraq can keep people’s thinking going off in other directions than the economics and the fairness and the democratic future of our home democracy. These issues do arise in Presidential elections, there’s no guarantee that you will always get an election based upon what I view as a fundamental set of issues related to our future as a democratic society.

But there will be elections that are, that hinge on that. And they will end up with a majority in support of the American Dream as distinct from the Gospel of Wealth.

HEFFNER: You’re very certain of that and I delight in your certainty. But I fear that the facts of the matter in contemporary America may not demonstrate that as clearly as you insist.

GARFINKLE: Well, the facts demonstrate it. The question of whether the message is out. The reason that I wrote this book was, in fact, to confront the issues on each of the levels, economic and moral and political.

And to start with the economic issue because that’s the argument that the other side makes. And the argument that the other side makes is … you have to have a limited government … you have to have low taxation, that will produce economic growth. Their whole argument is based upon GDP growth.

But if you actually compare the facts; if you look at the eight years of the Clinton Administration, which was the last version of the American Dream, the average growth of the economy was 3.7%. In the five years of the Bush Administration, through 2005, the average growth was 2.6%. So the economic facts support the American Dream approach rather than the Gospel of Wealth.

The numbers on, on employment are even more striking. The average monthly employment growth during the Clinton years, the eight Clinton years … every month was 240,000. Now we … economists believe that you sort of need about 150,000 to just provide for new entries into the labor force.
Well, Clinton’s economy was so successful that it not only provided the 150,000 but provided much more by bringing people into the work force who were otherwise not in the workforce. The average number … when I say this to people … I say, “guess what the average number was under the Bush years?”

Well, for the first five years of the Bush Administration the average number was not 240 … was not the 150 that’s needed, but only 34,000. So when they claim that unemployment is at a low … that the unemployment rate is at low level, its all because people left the workforce because they couldn’t find jobs.

And even if we forecast the number that will exist at the end of eight years of the Bush Administration, the best forecast is that the average number will be less than 75,000 per month. So the economic facts are very clear that one approach, as exemplified by the Clinton approach is far more effective economically and the other data.

There’s a lengthy Chapter 8 in, in this book that, that deals specifically with the economics of the issue and shows that over the last 54 years, in fact, the economics of the American Dream are far more effective in bringing growth of the economy and, as well as growth of employment, as compared to what happens under supply side thinking.

Just to mention the one key point … the supply-siders claim that low marginal tax rates produce high GDP growth. And yet in the 18 years with the highest GDP growth of the 54 years there are only two in which the marginal tax rates were low.

Whereas in the … the economic side of the American Dream is that providing funding for consumers to maintain a middle class way of life is the way in which the economy will work best, and in fact, the correlation is in fifteen of those 18 years there was a high real personal consumption rate.

So that it’s, it’s these … I don’t want to belabor the economic points, but the reality is … one of the reasons that this book was written was to provide that economic data that provides the underpinning for the current argument for the American Dream rather than the fallacious arguments for the Gospel of Wealth.

HEFFNER: Norton if you looked outside of our country, would you find support for your thesis?

GARFINKLE: I don’t think anybody has actually done that kind of research. So I, I haven’t studied it … nor has anybody else. Therefore, there is no evidence that goes one way or the other from other countries.

HEFFNER: Is there any …

GARFINKLE: And there’s a reason. I mean our country is rather unique. We have had a, a self sufficient economy, most of our activities are domestic rather than foreign and only 15% of our GDP comes from foreign trade.

HEFFNER: Do you think that can continue that way?

GARFINKLE: I think it will increase some, but it’s increasing very slowly. We are still, our consumer population is the mainstay of not only our economy, but the world economy because our consumers want to maintain a middle class way of life. And even if they have to do it as they have to do it now, by borrowing on their houses and their credit cards they will continue to do it so long as its humanly possible.

HEFFNER: Where are we as a nation in terms of debt? Personal indebtedness? National indebtedness?

GARFINKLE: Well the national indebtedness when, when, when Clinton left office, he left office with not only no deficit per year, but actually a surplus for three years in a row. That was almost a remarkable event in our history. The total national debt was about six trillion dollars when Clinton left office over all the years. And under Bush it’s increased by close to three trillion on top of that, so there’s a 50% increase. Because the current Administration basically believes reduce taxes and spend more money. And its one of the things that economists understand that in the long run you cannot keep doing that.

Vice President Cheney said “deficits don’t matter”. And what he meant was that in the short political span of the Bush Administration it hasn’t harmed their political situation. But eventually it comes home to roost politically and, and economically.

HEFFNER: You’re saying you do believe it will.

GARFINKLE: It will come to roost. There’s no economist that believes you can keep reducing taxes and increasing spending in the way that the Bush Administration has.

HEFFNER: Then what will happen?

GARFINKLE: What will happen is that we will elect a new Administration …


GARFINKLE: … that follows the American Dream philosophy that was so well fulfilled in the Clinton Administration.

HEFFNER: And if we don’t? If we’re not that wise? What do you see as the path we’ll have to follow.

GARFINKLE: We, we will be wise.

HEFFNER: Norton, that’s not a, an acceptable notion that we will be wise. We’ve been unwise in the past at times.

GARFINKLE: But I think that the, I think the public is now aware of that. If you’re saying, if we are unwise and we go through another four or eight years will the whole house of cards come tumbling down?

HEFFNER: That’s what I’m asking.

GARFINKLE: My answer is no. We are a very strong country and a very strong economy. We may disadvantage large numbers of people. And we may have problems maintaining our currency relationship with other countries. Our currency has declined in the last few years relative to other currencies because of this deficit. Very substantially. So things can get a little worse, or … but the house of cards will not come down.

HEFFNER: That’s very interesting. That you say that. Because there are some people, some people in political life who say, “aye de me” … what is going to happen will be catastrophic. You don’t believe that.

GARFINKLE: I believe it will be serious. It is serious. And needs to be changed. But I do not believe it will be catastrophic. I think that we have a strong economy and a strong political society and, and the, the election history of our country from … I mean one might have said in the, in the gilded age, the age of the robber barons …


GARFINKLE: … one might have said for that forty years after Lincoln, “Gee whiz, things are going so badly and the poor people are getting poorer and poorer. And the rich people are getting richer and richer and the society will not prevail this way.” And then along came Teddy Roosevelt to start the process of renewal and then Woodrow Wilson to continue the process of renewal and then Franklin Roosevelt to continue the process of renewal.

And then after, strangely enough, the whole period after Roosevelt and after Reagan we did elect a President like Bill Clinton who was committed to the basic concepts of the American Dream and turned things around. I think that the, that the election of 2000 was an abberation because we should have been starting a 20 year cycle of renewal of the American Dream and instead we’ve had the extremity … the extreme version of the Gospel of Wealth that this Adminsitration has provided. But it will change.

HEFFNER: I have your word for that.

GARFINKLE: You have my confidence in American democracy for that.

HEFFNER: That, that the economic ship will straighten itself …

GARFINKLE: It won’t straighten itself …

HEFFNER: That the political changes will do …

GARFINKLE: Will straighten it.

HEFFNER: I can’t get you to comment on what will happen if it doesn’t and when we get off the air in a minute or two I’m going to try to squeeze that out of you. But I’m, I’m … I guess I’m nonplussed because the people I’ve spoken with and I would have thought you would have said this, would be holding their heads in their hands in contemplation of what would happen to us economically, rather quickly, if we don’t straighten ourselves out.

GARFINKLE: Well let me say … make my point this way. I am holding my hands in indignation at the way in which we’ve approached it. I am dismayed at the difficult task that the next President will have to pick up the pieces from this very unfortunate eight year period, but I am not holding my hands in despair.

HEFFNER: Because you think …

GARFINKLE: Just in indignation.

HEFFNER: … that the American Dream versus the Gospel of Wealth will turn out that the American Dream prevails.

GARFINKLE: The American Dream will prevail. The Gospel of Wealth will not.

HEFFNER: Thinking that … in the one minute we have left … that the Gospel of Wealth is essentially an un-American notion.

GARFINKLE: It uses the rhetoric of the American Dream to mask a commitment to the notion that winners deserve to win and losers deserve to lose and the government should simply support the winners in this battle for survival.

HEFFNER: Norton, you couldn’t put it better. Thank you so much, Norton Garfinkle, for joining me today on The Open Mind.

GARFINKLE: Thank you.

HEFFNER: And thanks, too, to you in the audience. I hope you join us again next time, for transcripts, please send $4.00 in check or money order to The Open Mind, P. O. Box 7977, FDR Station, New York, New York 10150.

Meanwhile, as an old friend used to say, “Good night and good luck.”

N.B. Every effort has been made to ensure the accuracy of this transcript. It may not, however, be a verbatim copy of the program.