Dream Hoarders: My Reaction

For the sixth book in my Seven Books plan for this summer I picked Dream Hoarders by Richard Reeves. I’m glad I did. The book is only 150 pages and I breezed right through it, but this doesn’t mean it isn’t weighty and important. The subject matter is extremely important for people to understand. There is an urgency to this book that makes it crucial for all of us – investment managers, business owners, parents, teachers, higher ed administrators, recruiters, economists, policy makers, etc.

Reeves is a senior fellow in Economic Studies and the co-director of the Center for Children and Families at the Washington think tank the Brookings Institution. He’s from England but recently became an American citizen. He looks at what’s going on in his newly adopted country and sees echoes of what he thought he’d left behind in the UK – a class system that is gradually becoming self-perpetuating through the generations and increasingly difficult to break out of, in either direction.

Reeves fully admits that he is part of the problem here, as are the majority of his colleagues. When Thomas Piketty talks about the 99% and the 1%, he’s missing the point about what’s really happening. It’s the Upper Middle Class, loosely defined as households (nationally) with incomes above $112,000, that comprises the top fifth (20%) of the nation. They’re increasingly pulling away from the bottom 80%. Reeves makes the case that as the Upper Middle Class pulls away, it is also pulling up the ladder. He calls this dream hoarding, but what he’s really describing is a sort of unofficial system where the top 20% arrange things so that their children can’t drop out and other people’s children face increasing difficulty keeping up.

He describes the economy as a race in which everyone has to compete on a “level playing field”, but some people are starting off with advantages that the majority don’t have. He sees this as threatening the American dream, calcifying a sort of permanent overclass and slowing down the economy at large.

How are the Upper Middle Class hoarding dreams from the rest of the country? Through practices like legacy admissions at elite universities, which keep spots from going to other deserving children. Or zoning restrictions on multi-family real estate development that keep lower income households segregated from where the better schools and teachers are. He takes issue with the unpaid internships at large corporations or within the halls of government, which effectively keep out students whose parents can’t afford for them to go all summer not earning anything.

The solutions he proposes generated a reaction within in me that I was surprised about – my response to them was mostly, “Okay, that makes sense – but you first.” Who wouldn’t want their own children to have every possible advantage under the sun? Who doesn’t see the wealth they accumulated as earned and deserved? I’m all for leveling the playing field, as long as I don’t have to drop whatever opportunities I’m able to secure for my own kids. I get the sense that Reeves has no plans to disadvantage his own children either, in the name of fairness or the breaking of the nascent class system that’s being forged in the modern economy.

But it is a real issue and shows no signs of abating.

According to the book:

The top fifth of U.S. households saw a $4 trillion increase in pretax income in the years between 1979 and 2013. The combined rise for the bottom 80 percent, by comparison, was just over $3 trillion. The gap between the bottom fifth and the middle fifth has not widened at all. In fact, there has been no increase in inequality below the eightieth percentile. All the inequality action is above that line.

In other words, there has been a much different level of increase in the quality of life for the bottom four fifths than for the top fifth of US households – and the gap is widening. More to the point, social mobility in this country is now as difficult as it’s been throughout Europe for generations. It’s not impossible for someone on the bottom to end up on top, but it’s nearly impossible for someone from the top to fall down into the middle or the bottom. This is because the top fifth have increasingly rigged the system to keep their offspring up high at all costs.

I highly recommend that everyone reads this to understand what’s happening among the classes and why things are trending further in this direction. You don’t have to agree with the prescriptions offered up by the author, but the information contained here is vital on background regardless.

Get Dream Hoarders here.

Are you ready for the next book in the plan? Remember, we’re reading Ready Player One by Ernest Cline for the final book of the summer! I’ll be back next week with a reaction to it and I hope to hear yours as well!