CAN AMERICA LIVE UP TO THE AMERICAN DREAM?
AMERICAN CHAMBER OF COMMERCE, CANBERRA
WEDNESDAY 6 DECEMBER 2023
I acknowledge the Ngunnawal people on whose lands we're meeting today and acknowledge all First Nations people present.
I am honoured to have this invitation to address the members of the American Chamber of Commerce today. Founded in 1961, AmCham has a proud history of fostering stronger ties between our two countries. Fundamentally, commerce comes down to the interpersonal links between people. Your organisation is in good hands with CEO April Palmerlee, who not only has a strong commitment to the bilateral relationship, but also comes to the role with an impressive history of distance running. April has run ultramarathons in multiple countries, and organised running events: perfect training for getting business leaders to run towards a shared goal.
My focus today is on how the United States can live up to the American Dream. The best of America is on our screens and in our pockets. Hollywood, Silicon Valley and New York produce movies, devices and pharmaceuticals that are used the world over. Yet compared with other advanced countries, the United States ranks low on democracy and social mobility and high on inequality (Isaacs 2016; OECD 2023).
Like many families, the influence of the United States can be seen in mine. My father, Michael Leigh, graduated from the University of Melbourne with an interest in southeast Asia. He was encouraged to undertake his PhD at Cornell University, where he wrote about government and business links in Malaysia. My Australian-born mother joined him, and they were married at Cornell’s chapel in 1967. They were in the United States in 1968, the year that Robert Kennedy and Martin Luther King were assassinated, and saw the racial reckoning shape life on the Cornell campus and beyond.
A generation later, I followed in my father’s footsteps, studying a PhD at Harvard University. My focus was on poverty and inequality, and my empirical research looked at both the United States (analysing its Earned Income Tax Credit) and Australia (looking at long-run trends in top incomes). I met my wife Gweneth, and we married in West Chester, Pennsylvania in 2004. Gweneth and our three children are now dual citizens. To assuage any concerns about my constitutional ability to serve as a member of parliament, I can assure you that I am not.
If you were to come into my office, you’d see reminders of my interest in the United States. Photos of Robert Kennedy and Barack Obama hang on the walls, and the bookshelves include biographies of Lyndon Johnson and Bill Clinton.
Today, I want to discuss some of the opportunities and challenges facing the world’s largest economy and what they mean for Australia and the world.
The American Dream
The American Dream is the accumulation of centuries of ideas about democracy and economic and social mobility condensed into three very powerful and transformative words. On one definition, the American Dream is the conviction that ordinary Americans can achieve success based on talent and hard work.
The American Dream has inspired millions of people to migrate, start businesses and create new products. They are driven to achieve the American ideals set out in the Declaration of Independence: equal rights to “Life, Liberty and the pursuit of Happiness”.
Those people are attracted to the success which can be achieved the American way: through individual hard work and ingenuity. They are embodied in the multitalented Founding Fathers like Benjamin Franklin, who created bifocals, libraries and a fire department, and Thomas Jefferson, who designed the University of Virginia and the Virginia State Capitol. They were intellectually restless and saw their role as bettering the human condition not only through policies, but also through their ingenuity, applied to the common good.
Today, those ideals still inspire. Around the globe, people are drawn to the opportunity offered by the democratic system of “government of the people, by the people, for the people,” where equality of opportunity for advancement is promised, no matter your race, religion, ethnicity or place of birth. These ideals have changed the flows of people, capital and ideas across the world.
The American Dream acted as a magnet for millions of Europeans the late 19th and early 20th centuries, many of whom were facing financial plight. America’s open door offered them an opportunity for upward mobility and economic and social advancement, a safe haven from persecution and a new life with their family. Millions of people achieved the dream and have rags-to-riches stories from this era: of migrants who started with little and achieved the American Dream of improving their lot.
Perhaps there is no more prescient example than the family story of Georgia Senator Jon Ossoff. His great-grandfather Israel arrived in Peabody, Massachusetts in 1911 from Lithuania. By 1920 he was working as a labourer in a leather factory. He worked hard, saved, and 20 years later in 1940 became a local petrol station owner.
On the day Senator Ossoff was sworn in – becoming one of the youngest senators in US history – he carried two ship manifests in his breast pocket to remind him of the journeys of his great-grandparents, later wondering on social media that “a century later, their great grandson was elected to the U.S. Senate.” It was a reflection on the power of the American Dream and the realities it could deliver (Abramitzky & Boustan 2022).
Senator Ossoff’s story is not unique in this period. Just by arriving in America, migrants could more than double their income, and could expect even greater advancement for their children (Abramitzky & Boustan 2022). Whether you were a child of a migrant or not, you were very likely to do better than your parents economically. Approximately ninety percent of all children born in America in 1940 could expect to earn more than their parents (Chetty et al 2016).
The stories which showed the American Dream was possible continued to draw people, capital and ideas to America and its ideals.
The magnetism of the American Dream only grew as the Second World War drew to a close.
President Franklin D. Roosevelt was determined to make the economic pillars of the American Dream a lasting reality for his own citizens, to avoid a repeat of the Great Depression, and to show how American ideals could help to rebuild the world through openness.
At Bretton Woods, New Hampshire in 1944, America led the creation of an international system of institutions and rules, putting the foundations of the International Monetary Fund and the World Bank in place. They provided the financing for post-war reconstruction and industrialisation, driving low-inflation growth and increasing living standards for decades to come.
This openness to the world spurred the movement of American people, ideas, products and capital out into the world, exponentially increasing the awareness and allure of the American Dream. American companies expanded their global operations and sold products in global markets. They invested extensively in European reconstruction, including “in transportation equipment, chemicals, machinery, food products, electrical machinery, and primary and fabricated metals” (Friedman 2020). Major US oil companies rebuilt damaged oil refineries in Europe and merchandisers expanded into Latin America and Europe. People in Britain, Australia, Germany and Canada were now shopping at Safeway, and driving American-manufactured cars from Ford and General Motors.
The advent and mass uptake of the television in this period mythologised the American Dream and turbocharged its magnetism. American films, shows, sports and advertisements beamed images of America, its ideals and purported realities, to millions around the world.
As the US opened up in the post-war era, children of the first wave of migrants came of age – the same generation that Ossoff’s grandparents might have belonged to. They had plentiful employment opportunities in the growing manufacturing and services industries which had grown steadily to support the war effort. Incomes were rising and American living standards were the envy of the world, many of whom observed American freedom and prosperity from the ashes of the fight against fascism. For some Americans, it was the apogee of the American Dream.
Living up to the American Dream
Can America live up to the American Dream? Many writers, academics, analysts and screenwriters have held a mirror up to the American Dream. They tell stories of the tensions inherent in progressing the ideals set out by the Founding Fathers.
Still, the ideals of the American Dream, and US openness and engagement with the world on challenges and opportunities can – and still do – inspire the world to commit to, and invest in, America.
The United States has a proud tradition of advocating greater engagement. From Bretton Woods to the creation of the World Trade Organisation, Republicans and Democrats alike pursued policies that lowered trade barriers. Over these decades, trade grew faster than output, and a commitment to solving trade disputes through international forums was a cornerstone of the system.
The US still attracts the greatest number of migrants in the world (Migration Policy Institute n.d.). In 2023, over 9 million people applied in the Green Card lottery, putting their name forward in the hope of winning one of 55,000 permanent residence visas (US Department of State 2023). Today’s immigrants to America mainly hail from Latin America and Asia and studies suggest that their chances for successful upward mobility are just as likely of the immigrants from Europe who migrated to America 150 years ago (Abramitzky & Boustan 2022).
Still, too, America leads the world in innovation and business creation. The pandemic spurred an upward trend in entrepreneurship, led by women and people of colour. An astonishing 19% of Americans are in the process of founding a business or have done so in the past few years (Bhattarai 2023).
The new heart of American technological innovation – Silicon Valley – continues to develop new software, technologies and companies that are transforming lives, and the way we think about the future, across the world. This is the American story of hope, where hard work and a good idea can lead to advancement and success, not just for individuals and families, but for communities and the nation, and even the world. It is a story which says that business creation and innovation can still power the American Dream, just as car manufacturing in Detroit or meatpacking in Chicago once did decades ago.
This tradition of engagement is at the heart of the US-Australia bilateral relationship. The US and Australia are building an innovation alliance, as set out in the United States-Australia Joint Leaders’ Statement, with America’s innovation and advanced technologies front and centre. This is a new chapter in the long American story which says that American business and innovation can drive positive outcomes around the world.
American movies, music and goods still tell and sell the optimism and possibility of the American Dream to the world, and the foreign investment and global expansion of US companies deliver it. America’s cultural products are still attracting diverse and growing global audiences. Sports such as the NBA are seeing rising international demand and are even adjusting their broadcasting and communications strategies so that viewers across the world, from India to the Middle East, can follow the league (Neelakandan 2023). Baseball’s ‘World Series’ may not be the global contest that it purports to be, but you can go to any city on the planet and see people wearing Red Sox and Yankees caps.
Like America’s Fathers, I am inclined towards optimism. Every time I visit the United States, I’m struck by the vibrancy of its universities, the creativity of its innovators, and the generosity of many Americans to those around them. If you doubt the entrepreneurial energy of the United States, just sit in any Starbucks and eavesdrop on the conversations around you. I guarantee that someone will be planning a startup or pitching a social enterprise. Then try the same exercise in a European café. The coffee might be better, but the discussions are more likely to centre on the pleasures of life. Americans want to change the world. Europeans are more inclined to enjoy it.
The US-Australia Leaders’ Joint Statement affirms, “we share a commitment to the rules-based multilateral trading system, with the World Trade Organization (WTO) at its core” and “to evolving multilateral development banks to better address global challenges”. This guardianship is vital to ensure that protectionism does not spread.
The good news is that openness benefits the United States as it does other countries. Opening trade not only benefits consumers, but also unlocks the potential of growth by tapping into global supply chains. An interconnected world is more prosperous, and safer too. By drawing on the best of its traditions, the United States can live up to the American Dream.
Abramitzky, R. and Boustan, L. (2022). Streets of Gold. Public Affairs.
Bhattarai, A 2023, ‘American entrepreneurship is on the rise’, The Washington Post, September 14, 2023, https://www.washingtonpost.com/business/2023/09/14/small-business-entrepreneurship-gem-report/
Chetty, R., Grusky, D., Hell, M., Hendren, N., Manduca, R. and Narang, J. (2017). The fading American dream: Trends in absolute income mobility since 1940. NBER Working Paper No. 22910, December 2016 (Revised March 2017).
Friedman, W.A. (2020). American Business History: A Very Short Introduction. Oxford University Press.
Isaacs, J.B. (2006). International Comparisons of Economic Mobility, The Brookings Institution, https://www.brookings.edu/wp-content/uploads/2016/07/02_economic_mobility_sawhill_ch3.pdf
Migration Policy Institute n.d., Legal Immigration to the United States, 1820-present, Migration Policy Institute, https://www.migrationpolicy.org/programs/data-hub/charts/annual-number-of-us-legal-permanent-residents
Neelakandan, L 2023, ‘The NBA is back and expanding its global reach. Here’s how’, CNBC, 25 October 2023, https://www.cnbc.com/2023/10/25/nba-season-starts-how-its-expanding-global-reach.html
Organisation for Economic Co-operation and Development 2023, ‘Trust in government (indicator)’, https://data.oecd.org/gga/trust-in-government.htm
Organisation for Economic Co-operation and Development 2023, ‘Income inequality (indicator)’, https://data.oecd.org/inequality/income-inequality.htm
‘United States-Australia Joint Leaders' Statement - Building an innovation alliance’, https://www.pm.gov.au/media/united-states-australia-joint-leaders-statement-building-innovation-alliance
US Department of State 2023, DV 2023 – Selected Entrants, U.S. Department of State – Bureau of Consular Affairs, https://travel.state.gov/content/travel/en/us-visas/immigrate/diversity-visa-program-entry/dv-2023-selected-entrants.html