Opportunity Society or Banana Republic?

posted on: January 21, 2011

“Americans can always be counted on to do the right thing…after they have exhausted all other possibilities.”

– Winston Churchill

We Americans have faced plenty of huge domestic challenges in our 234-year history. And in most cases – usually after agonizing delay – we eventually make progress towards overcoming them. Some of the big ones include winning independence and securing a republic in a world of monarchies, ending slavery, extending the suffrage to women, and abolishing Jim Crow.

We, the current generation of Americans, face new domestic challenges. One of them looms so large it could be called a “Mega-Challenge”: the declining upward social mobility in the U.S.

Why is the downward trend in social mobility a Mega-Challenge? Because if unsurmounted it would destroy the most basic element of the social compact that has kept our hyper-diverse, continental nation together during its quarter millennium of existence. This social compact – nothing less than the American Dream – can be stated in a single sentence: “In America, if you work hard and play by the rules your absolute living standard will improve from decade to decade and your children will have a good chance of moving up the social ladder.”

Is the American Dream just a dream? No. Until recently it was reality. A mountain of sociological and historical research proves that until the 1970s there was more upward social mobility in the U.S. than in any other country. Native Americans and African Americans were of course violently excluded from the bonanza. Nevertheless, the living standard of a majority of Americans improved rapidly over the course of our first two centuries as a country.

My own family made full use of this opportunity. My grandfather emigrated from Ireland as a 16-year old boy and arrived penniless and alone in New York City. He worked in restaurants and saved enough to buy a building and become a landlord. Then he bought more buildings. Eventually he bought a nice house in the suburbs for his family. Most of his kids and grandkids went to college. Millions of American families can tell a similar story.

But around 1975 upward social mobility and broadly shared prosperity began to diminish, as has been documented by a number of researchers, notably at the Economic Policy Institute and Center for American Progress. And this year, the Bureau of Labor Statistics reports that for the first time in American history median family income declined over an entire decade. Meanwhile, the wealthiest 5 percent of Americans got richer and richer.

If these trends continue, ours will be the first generation of Americans whose majority will live worse than their parents – and the U.S. will look more and more like a banana republic.

Massive downward social mobility is a recipe for social unrest in any country. But it is especially destabilizing in our hyper-diverse nation with so few bonds to hold us together. Is it fanciful to speculate that some of the rage animating the Tea Partiers stems from a declining standard of living?

How do we restore the American Dream? Nobody has all the answers. But as we Americans debate this mega-issue, we need to make sure the voices of those most affected get heard.

That won’t be easy. The voices of working families get drowned out by the wealthy special interests that shower lawmakers with campaign contributions, hire swarms of well-heeled lobbyists and feed at the public trough.

Foundations have a special responsibility to help regular Americans make their voices heard. Not only because foundations are legally required to “promote the public good,” but also because they are ethically obligated, as stewards of partially public dollars, to do so in a maximally effective manner.

Too many foundations flunk that test. As NCRP research shows, only 33 percent of foundation dollars currently go to help marginalized communities. And only 15 percent go to fund the kind of nonprofit advocacy that helps regular Americans make their voices heard.

Will traditional charity – George H.W. Bush’s “thousand points of light” of private soup kitchens and private homeless shelters – play an appreciable role in restarting the giant conveyor belt of upward social mobility that in the 20th Century lifted tens of millions into the Great American Middle Class? Of course not.

If foundations truly want to make a difference, they should heed the unrefuted research by NCRP and others proving that investment in advocacy for underserved communities usually gets foundations more bang for the buck than service provision, which in turn helps foundations better fulfill their own mission statements.

Opportunity Society or Banana Republic? Our generation of Americans will decide. What role will organized philanthropy play in the biggest challenge to face our country since Jim Crow?

Sean Dobson is the Field Director at the National Committee for Responsive Philanthropy (NCRP).