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Friday, October 7, 2022

A Bursting Bubble

Just when we thought it was no longer socially gauche to boast about how the value of our house has risen, along comes a splash of cold water that shows "the bubble" may be bursting and we'll soon have just regular old tract houses again, not McMansions.

Just when we thought it was no longer socially gauche to boast about how the value of our house has risen, along comes a splash of cold water that shows “the bubble” may be bursting and we’ll soon have just regular old tract houses again, not McMansions.

Already the White House has stopped inserting in President Bush’s speeches the flowing rhetoric about how well off so many more Americans are because of equity in their homes. Perhaps we’re jaded, but it seems even those evil TV ads for home equity loans are a little less frequent and intense. Well, maybe.

In America, we’ve always been told, you are what you make of yourself, not the class that begat you. But it’s also true that a home of one’s own is the American Dream, and the more bedrooms and bathrooms and the larger the lawn, the more Americans feel they’ve arrived.

But what about the millions of Americans who make average incomes and can’t afford a $260,000 house, now about the average price of an existing home?

From 1980 to 2000, according to the Economic Policy Institute, the real income of the top 1 percent of Americans rose 184 percent. The income of the poorest 20 percent rose by 6.4 percent. The income of the top 20 percent rose by 70 percent. One percent of Americans control one-third of the country’s net worth.

Even that champion of the status quo, Alan Greenspan, chairman of the Federal Reserve, warns about the growing disparity of wealth in America: “For the democratic society, that is not a very desirable thing to allow it to happen.”

The top 0.1 percent of Americans had an average annual income (not assets, but income) of $3 million in 2002, 250 percent more than they had in 1980. The rich are getting richer much faster than they ever have before in U.S. history.

And everybody else is just about staying the same.

We’ve been told that the key to getting ahead in America is education. Easy for the rich to say _ the colleges that now demand $35,000 or more a year are finding that the government trough of student loans and financial aid for middle-income students is drying up. Thirty-five million households in America don’t even earn in one year what one year in the “best” colleges costs.

And four years of college ain’t what it used to be (in more ways than one). Thousands of graduates are finding their hard-won degrees won’t even get them in the front door to apply for the jobs of their dreams (or even nightmares). For one thing, a lot of starter jobs have been outsourced to countries such as India.

The rich and well-born are, as we’ve seen, doing better than ever. The Harvards and Yales are full of them. But how do you get ahead if you don’t have a first-rate education, or money to start a business, or collateral for a loan, or family backing or experience by getting a job in the field you want?

The odds are bleak.

And what about the growing rate of high-school dropouts?

The Economist, a British magazine as fine as any, is focused on what it argues is an increasingly class society in America:

“Everywhere you look in modern America, in the Hollywood Hills or the canyons of Wall Street, in the Nashville recording studios or the clapboard houses of Cambridge, Mass., you see elites mastering the art of perpetuating themselves. America is increasingly looking like imperial Britain, with dynastic ties proliferating, social circles interlocking, mechanisms of social exclusion strengthening and a gap widening between the people who make the decisions and shape the culture and the vast majority of ordinary working stiffs.”


This isn’t one of those immediate crises that obsess breathless powerbrokers. It is one of those subtle trends, such as the loss of confidence in Social Security, that inevitably will change our country _ and not for the better _ unless we get serious about rearranging our priorities to provide superior educations to our children so they are more competitive globally and either get or create good jobs so they can buy nice houses and be happy.

At least until they find out their neighbor got a better house deal.

(Ann McFeatters is Washington bureau chief of the Pittsburgh Post-Gazette and The Toledo Blade. E-mail amcfeatters(at)

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