The American Nightmare

Millions of Americans cannot believe what is happening to them, and with good reason. Most of the nation's working-aged population (anyone under age 45) has never experienced a recession this bad, including many of the business executives who have steered their companies into bankruptcy. The last severe economic downturn--at least equivalent to what we are experiencing today--occurred in the early 1980s. Consequently, too many Americans thought the good times would just keep on rolling: the value of their home would only increase, the stock market would be a safe place to park their college and retirement savings, and there was little chance they would lose their job.

The results of a 2009 MetLife survey reveal the grim consequences of that kind of magical thinking. The survey finds that many Americans have no safety net, so confident were they in a prosperous future. An astonishing 28 percent of currently employed workers say they would not be able to pay their bills after less than two weeks of unemployment. Within a month, half of American workers say they would be unable to meet their financial obligations.

This lack of a Plan B explains why the country is in such a panic. The 56 percent majority of the employed are concerned that they could lose their job in the next year, according to MetLife. Fifty-nine percent of the employed fear that if they lose their job, they might have to file for bankruptcy. An even larger 64 percent of employed homeowners are afraid that a spell of unemployment will mean the loss of their home. Overall, three out of four respondents admit that they lack an adequate safety net. Welcome to the American Nightmare.

Although the pundits often scold Americans for being too deeply in debt, in fact debt is not the problem. The average household owes a relatively modest amount, according to the Federal Reserve Board's Survey of Consumer Finances. The problem is the precarious income stream that keeps so many families afloat--an income stream now threatened by the deepest recession in a generation. If the stream dries up, as it is for many, then debt becomes a problem because there is no backup plan.

Are we finally learning a lesson? Will we be humbled by the hard times? Not likely. The freewheeling cowboy culture is too deeply ingrained in the American psyche. To see it in all its glory, take a look at a new study from the Economic Mobility Project. This organization, which tracks the economic mobility of the American population, fielded a survey in late January and early February--a time when you might think the public would be chastened by events. But you would be wrong. Rather than rethinking the rules of the game, most Americans are still cheerleaders for the American Dream--even as it turns into a nightmare. When asked to define the Dream, the top three qualities mentioned by survey respondents were the freedom to accomplish anything (74 percent), the freedom to do what you want (68 percent), and children being better off financially than you (64 percent). Huh? Aren't those the same Anything Goes, Me First, and Bigger is Better ideals that got us into this mess?

Even now, Americans overwhelmingly credit success to individual characteristics rather than structural factors. Hard work and ambition are the top two factors behind success, say 89 to 92 percent of us. Fewer than half think people get ahead because they are born into the right family, know the right people, or are just plain lucky. And what about the poor wretches on whom hard times have fallen? They should not look to their fellow Americans for sympathy. The largest share of the public, including both conservatives and liberals, say the downward mobility so many are experiencing is due to "poor life choices." In other words, it's not the economy, stupid.