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The rising American dream - the future of baby boomers and their children is better than they think - includes analysis of Katherine S. Newman's controversial

Insight on the News - October 4, 1993

Journalists and social scientists have long asserted that the standard of living in the United States is declining -- a piece of conventional wisdom that has become a staple of Bill Clinton's rhetoric. The historical pattern of each generation prospering more than its predecessor has been broken, claim these cultural observers, who say that today's younger Americans cannot expect to match, let alone exceed, the living standards of their parents.

The pundits have focused on the baby boom generation, the roughly 77 million Americans, born between 1946 and 1964, a group that h s grown larger in recent years as immigration.

In the 1960s, the first boomers to hit college campuses sparked both praise and condemnation for their political activism. Throughout the 1970s and 1980s, their entry into adulthood provoked a marketing frenzy as corporations tried to judge the generation's tastes, giving rise to one of the most infamous stereotypes of recent history -- the affluent, self-involved yuppie.

Lately, that image has given way to a new characterization of the boomers as victims of economic decline. Katherine S. Newman, a Columbia University anthropologist, is a prominent advocate of the latter point of view. In Declining Fortunes: The Withering of the American Dream, published this year, she writes that the boomers comprise "the first generation since the Great Depression that can expect to have a lower standard of living than its parents."

Newman draws a sharp contrast between the boomers and their parents' generation (called the "postwar generation" because its members entered adulthood in the years following World War II). There is, she writes, a striking difference between their economic fates: "the postwar generation, beneficiaries of an expanding private sector and generous government benefits, and the baby-boom generation, heirs to the vagaries of deindustrialization, deregulation, speculative gains in the housing market, and unprecedented competition driven by their own numbers."

Newman, along with others who have sounded the alarm about falling living standards, argues that those born after the baby boom face even bleaker prospects.

"The fury of the twentysomething generation may be directed at the wrong people, but there can be no question that they have a lot to complain about," she wrote in a New York Times op-ed article in May. "America's youth have been even more savagely affected by the declining state of the economy than the boomers." This younger generation, variously known as "baby busters" and "Generation X," was born during a period of relatively low fertility. (Although there is disagreement about precisely when the baby bust occurred, many demographers place it from 1965 to 1977.)

Numbering some 47 million, the busters "are expecting to live like middle-aged people, when in fact they're entry-level workers," says Cheryl Russell, a demographer and author of The Master Trend: How the Baby-Boom Generation is Remaking America. "I think they have overly high expectations for themselves at too early an age." Younger Americans often regard as necessities products that their parents would have considered luxuries. "Our concept of what the basics are is much more elaborate today," she says, "so that even though we are near a peak of affluence in this country, we don't feel that we are rich."

As a result, busters have adopted a kind of self-protective cynicism. "Sometimes I wonder why we haven't all committed mass suicide, because we don't have a hell of a lot to look forward to," a 23-year-old woman told the Wall Street Journal recently Her 24-year-old boyfriend noted, "My friends are my only wealth."

Politicians have expressed concern about falling living standards, but few have been more vocal than Clinton. Both as a candidate and as president, he repeatedly has evoked the specter of decline. "I refuse to stand by and let our children become part of the first generation of Americans to do worse than their parents," he said in announcing his presidential candidacy In August, after his budget was passed narrowly by Congress, Clinton described a higher living standard for each generation as "the American dream," and said that, as a result of the new legislation, "that dream will not be deferred but, rather, fulfilled."

Yet Clinton often has been vague about which generations are threatened by lower living standards, and usually has presented the problem as one that could be rectified or averted by his proposals. Speaking to a group of high school students early in the campaign, he said that unless new apprenticeship and scholarship programs are set up, "you run the risk of not living as well as your parents have." He added, "And you know better than I how hard it is for them." Unveiling his economic program in February, the president warned that, in the absence of debt reduction, "we will be condemning our children and our children's children to a lesser life than we enjoy."

Clinton is not the only one to combine warnings of economic decline with calls for political action. Political analyst Kevin Phillips, in his recent book, Boiling Point: Republicans, Democrats and the Decline of Middle-Class Prosperity, criticizes the Republican Party for ignoring signs of economic distress. And Newman, in her op-ed piece, wrote: "These problems are not going to be resolved by the free market. They require the Clinton |laser-beam' attention that was promised." She added, "Politicians who stand in the way, posturing toward 1996, are going to be remembered as obstructionists." The same day that Newman's op-ed piece appeared, a New York Times business columnist wrote that the Clinton administration could strengthen itself politically by sending several cartons of Newman's Declining Fortunes to Congress and to lobbyists.

Yet Newman has limited enthusiasm for the budget that finally passed, and she laments the defeat of the "stimulus package" proposed by Clinton early this year. In Declining Fortunes, she calls for greater political assertiveness on the part of the boomers. "The baby-boom generation," she writes, "could become the most powerful political interest group ever seen in the United States." Newman, born in 1953 and thus a boomer herself, also calls for increased public-works investment and cites national parks and other government projects as examples of "what can be done, even in a period of declining fortunes."

But do we live in a period of declining fortunes? Are younger Americans experiencing -- or in danger of experiencing -- a lower standard of living than their parents? The answer is complicated by the fact that there is no universally accepted way to define and measure standards of living.

Many economists seek to resolve this ambiguity by focusing on something quantifiable: income. In particular, economists often measure the standard of living by using a little-publicized Commerce Department statistic: personal income, on a percapita basis, after taxes and adjusted for inflation. This statistic -- technically known as "real, per-capita, disposable income" -- provides a picture very different from that presented in the litanies of decline. Income, by this measure, rose more than 93 percent from 1960 to 1992. (It declined between 1990 and 1991, as it has during previous recessions, but regained much of this ground the following year and currently is near an all-time high.)

"What we're doing is doubling our real standard of living in a single generation" says Fabian Linden, executive director of the consumer research center at the Conference Board, a research organization in New York. "This is not a unique experience. In the comparable prior period, it doubled as well." Indeed, says Linden, such dramatic improvements repeatedly have occurred in American history, with incomes doubling every 3S to 40 years. It is a pattern, he asserts, that shows no sign of ending.

In fact, income statistics tend to understate the extent to which the buying power of consumers has increased over the decades, since they do not take into account improvements in the quality and range of available products. They do not reflect the difference in sound quality between today's compact-disc players and the phonographs of a previous era, for example, nor the power of modern personal computers beyond that of the most sophisticated machines decades ago.

Moreover, according to Richard A. Easterlin, an economist at the University of Southern California, pessimism about living standards often is based on excessively narrow measures of income. "A lot of the assertions about the deterioration in living standards [are] based upon the movement in the earnings of males, particularly males of particular educational groups," he says.

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