Today, if you ask any ordinary American what the American Dream is about, you shall expect an answer of this type: “The American Dream is about owning a home, having a college degree, having a full-time job, and building wealth through your homeownership.” This is the conventional answer to expect has been ingrained into people’s minds to believe that the achievement of the American Dream is to become middle-class. This assessment of the American Dream is a very misleading understanding of what the American Dream is truly about.
What is the American Dream? The essence of the American Dream is the attainment of freedom through a better standard of living. The American Dream is the belief that anyone, regardless of where they were born or what social class they were born into, can attain their own success in a society in which upward mobility is possible for everyone. Now, how to achieve the American Dream is where the lie has been sold to ordinary Americans.
The lie sold to settle for the middle-class
The ordinary American has been conditioned to believe that in order to achieve the American Dream, s/he must be a homeowner, must have a college degree, and a full-time job, and becoming wealthy through their home equity. Of course, these criteria aren’t inherently bad but the problem is that these criteria don’t lead to the freedom promised but to more debts, instead. If the American Dream is about the attainment of freedom, then why does an ordinary American need to go into massive debt prior to attaining that freedom?
Most homeowners in America do not own their homes because there is a mortgage on their homes. It is a debt that the homeowner must pay over a 15- or 30-year period before becoming the full owner of the home. Moreover, most middle-class Americans have a college degree. Today, attending university requires one to take student loans and repay these loans over a 10-year period.
The concept of the American Dream given to ordinary Americans is the definition of what being middle-class is about. It is not the concept of freedom. The middle-class is the social class that pays the most taxes among all social classes, and it is the social class that is the most indebted.
The poor do not pay any taxes since they have no income, and the very rich also do not pay as many taxes because their wealth is tied to their investments and other types of tax-exempt securities. So long as they do not sell their investments, there are no taxes to pay since an investment is only taxed when it is realized (sold for a profit). Thus, the middle-class is the social class incurring most of the cost of taxes.
Total Debt Balance
Source: Federal Reserve Bank of New York
The reason why the average American was made to believe that the American Dream was to be a homeowner and earn a college degree is that the economy runs on a credit-based system. The credit-based system could be summed up in one phrase: “Buy now, pay later.” In such a system, debt is the main financial instrument dictating how the economy is run and managed. As a result, the average American borrows for literally everything, such as buying a house, a car, college, or even a wedding. Indeed, according to the Federal Reserve Bank of New York data, total household debt rose by $148 billion, or 0.9%, to $17.05 trillion in the first quarter of 2023. And according to Reuters, three in four Americans worry default could hurt them.
The misleading homeownership narrative fed to ordinary Americans on the American Dream could be summed up in one word: consumer debt, which is a bad type of debt to have because it leaves the borrower into a financial abyss. And this is the lie that was sold to ordinary Americans.
Business Ownership is the soul of the American Dream
Business ownership is the soul of the American Dream, not homeownership. Business ownership is what enables a regular person to afford homeownership without having to go into massive debt. The greatest fortunes of this country are mainly held by business owners more than anything. Indeed, entrepreneurship has been the core of the American culture and its social order. People like Andrew Carnegie, John D. Rockefeller, Cornelius Vanderbilt, and James Forten (one of the wealthiest Black individuals in the nineteenth century), just to name a few, were all entrepreneurs and business owners.
Business ownership has been the foundation of the American Dream because it is the path that leads to a radical improvement of one’s material condition and living standard. The United States is one of the countries that has the easiest laws to start a business venture.
Indeed, it is easier in America to start a business than to buy a home. One can start a business with $500 in America while it is impossible to buy a home with these same $500 in America. For example, Jensen Huang, the co-founder, and CEO of Nvidia, stated in one of his public speaking events that he started Nvidia with $200 in 1993. Today, the man owns a company that has a market capitalization of $1 trillion and his personal net worth is more than $38 billion according to Forbes.
Business owners are generally wealthier than most people, especially W-2 employees who are essentially middle-class. According to an article published in Market Insider in 2021, self-employed people are four times wealthier than workers. Indeed, a release from the Small Business Administration’s Office of Advocacy found that business owners were, on average, wealthier than their non-self-employed peers. The median net worth for self-employed families was $380,000 in 2019 compared to $90,000 for families of workers.
To Sum Up
The American Dream isn’t dead. It is simply misinterpreted and misunderstood by ordinary people who have been lied to. They have been lied that achieving the American Dream is to be middle-class. While being middle-class is surely better than being poor, being middle-class is not the reflection of the American Dream because the middle-class is the most indebted of all social classes. If for one to be free, s/he must go into debt, then such freedom isn’t worth it being pursued.