Blog | Entrepreneurship

Two Different Pandemics and the Death of the American Dream

The entitlement epidemic and why we need a financial education

More than one hundred and fifty years ago, Alexis de Tocqueville, a French aristocrat, wrote about the power of the American Dream and how millions immigrated to America from all over the world in pursuit of that dream.

In Europe and Asia, at the time, there were basically two classes of people: the royals and everyone else. If you were born into the peasant class, you could never be a royal, no matter how hard you worked.

The American Dream and a land of opportunity

The American Dream represented the opportunity for someone who was a peasant to become American “royalty,” someone who could own property, control production (of goods or services of a business they could own), and work hard to create the life of their dreams. The American Dream— the spirit of entrepreneurship —is the driving force behind capitalism. This dream was the spirit that caused people to leave their homelands and immigrate to America. While most were happy to join the American middle class, America did create its own nobility—entrepreneurs like Henry Ford, Andrew Carnegie, Thomas Edison, Walt Disney, Steve Jobs, and Mark Zuckerberg.

Alexis de Tocqueville believed that Americans could tolerate the gap between the rich and the poor as long as there was the hope that a person could move from peasant to middle class—and maybe even become rich.

Economic crisis and the death of the American Dream

In 2007, when the markets crashed, the American Dream began to die. As the economic crisis lingered and more people lost their jobs, homes, businesses, and retirement funds, the spirit that had been the driving force in this country began to die.

The bedrock of middle class status was to own a home. The result of the Great Recession was millions of homes worth less than the amount of the mortgage. Millions of people lost their homes. The American Dream died for a lot of people.

The US spent many years rebuilding from the economic wreckage of the Great Recession, and just when things seemed to be back and even better, COVID-19 happened, the great 100-year pandemic, bringing an economic crisis with it. In the blink of an eye, millions upon millions of people were unemployed and struggling. We have yet to see the economic impact of this pandemic. Again, the American Dream is dead for millions of people.

Today, more people are moving out of the middle class and joining the ranks of the poor, rather than moving into the upper middle class or joining the rich. Alexis de Tocqueville would be worried for us.

A growing lower class and the death of American capitalism

In 2011, thanks to the economic crisis of the Great Recession, the number of Americans living in poverty grew to 46.2 million people —a full 15.2% of the US population. Approximately one in six Americans lived in poverty at the time.

By 2019, things were looking up. According to the US Census, “The official poverty rate in 2019 was 10.5%, a decrease of 1.3 percentage points from 11.8% in 2018. This is the fifth consecutive annual decline in the national poverty rate. Since 2014, the poverty rate has fallen 4.3 percentage points, from 14.8% to 10.5%. The 2019 poverty rate of 10.5% is the lowest rate observed since estimates were initially published for 1959. The number of people in poverty in 2019 was 34.0 million, 4.2 million fewer people than 2018.”

By 2020, COVID-19 spread across the world and over 40 million people in the US alone lost their jobs and had to file for jobless claims. As I write this, jobless claims are still over 1 million per week, and Wall Street is just happy that it wasn’t the 1.4 million they were expecting. The new normal is mass unemployment.

When a person joins the ranks of the poor, they become dependent upon the government to take care of them. And the more they receive from the government, the more dependent and entitled they become.

During the Great Recession, the US, under a Democratic president, gave away a record-breaking $831 billion in relief. Now there’s a new record in town, and this one under the watch of a Republican President. The US government’s response to COVID-19 was twice the 2009 relief package, coming in at $1.9 trillion. Now there is talk of another $2 trillion. Today, we have two pandemics: the coronavirus pandemic and a pandemic of entitlement that just like COVID-19, doesn’t seem to be going away and is only growing.

The pandemic of entitlement

As more people lose their jobs and livelihoods, the more likely it is that the philosophies of communism, socialism, and fascism will fester within America. And capitalists will become the new enemy. This is already on display in the US elections, where there is a growing support for socialism in America. And as CBS News reports, “A 2019 Pew Research Center survey found half of young adults under 30 expressed positive views of socialism — nearly as many as the 52% who felt positively about capitalism. Membership in the Democratic Socialists of America has jumped from 6,500 to 70,000 over the last six years.” Many would even love to see America become a communist country.

America became a great nation because people came here in search of opportunities for a better life. They wanted to succeed. They wanted to be capitalists. Then something changed. Today, rather than work hard in pursuit of the American Dream, many feel they are entitled to the American Dream.

All over the world, millions of people, not just Americans, seem to think the world owes them a living. Many people go to school, receive a great education, get a job, and then expect either the company they work for or the government to take care of them for life.

The growing entitlement mentality has played a role in the way individuals view personal financial responsibility.

These questions come to mind:

• To what extent are the financial problems faced by Greece, France, and the state of California a result of an attitude of entitlement?

• Why do some of the best entitlement benefits go to our leaders—the President of the United States, our Congressional leaders, and other government workers? Once a President or congressman is elected, we the taxpayers take care of them for life. I ask myself: If they are qualified to be our leaders, why can’t they take care of themselves?

• Why do our public servants feel entitled to financial security for life? When did the shift from public servants to self-serving servants occur? How many public servants work for the job security and benefits rather than to be of service?

• Why do CEOs and other corporate executives feel entitled to bigger and better financial packages than their employees? If they’re smart enough to be high-paid employees, shouldn’t they be smart enough to take care of themselves?

• Why do people feel that they are entitled to have their government or their employer take care of them for life?

Where does this attitude come from? Probably from a lot of places, including our classrooms.

A real cure to the pandemic of entitlement is a financial education and a renewed spirit of entrepreneurship. We can no longer wait around for the American Dream to happen to us; we need to fine-tune our financial education and go hard after the dream.

Today, ask yourself, “Do I feel entitled, or am I working hard to make my own dreams come true?” The answer you give will determine the life you live.

Do you want to fight your own sense of entitlement? Join our free, financial education community here to gain financial freedom.