The Poor in an Affluent Society, and America's Growth Predicament | QDaily Annual Book Recommendations ⑱

Why did the American economy succeed, and why is that success so hard to sustain today?

A year has passed, and China's relationship to the world, society's relationship to the state, and the economy's relationship to our own lives have all been governed by big questions. In the middle of that bewilderment, the disappearance of intellectual voices — or their drowning in the noise — only deepens the confusion. Or perhaps this is the moment a turning point appears. In any era, wise thinking is scarce, and people of insight are what guide us to see the road ahead.

That is why, in our "2018 Annual Book Recommendations", we want to introduce, as widely as we can, some books we think are worth your time.

As in past years, every book we have covered has been read by our editorial staff, and we introduce them to readers in good faith.

We also drew on the help of contributing writers. They are always ahead of the curve, and their thinking runs deeper. Our thanks to them all.

This is the fourteenth piece in our nonfiction book recommendation series, and it looks at American society and its growth predicament. The author, Liu Zhizhen, is an editor at QDaily.

1.

Camden, a suburb of Philadelphia, is a textbook case of urban decline.

The city "once housed dozens of factories belonging to blue-chip corporations — RCA, Campbell Soup Company, New York Shipbuilding Corporation. At its peak in 1950, Camden had a population of 125,000, forming a vibrant community of the middle and working classes." Then came the 1960s. Manufacturing moved away, factories closed, stores shut, services vanished, and working-class families left for better prospects in the surrounding towns. Camden spun into decline. By 2010 its population had fallen to 77,000 — half Black, 42 percent Hispanic (mostly Puerto Rican), and 38 percent of families living in poverty. In 2009, Camden became the most crime-ridden city in the United States, with "2,333 violent crimes per 100,000 people."

New England was the first region in the United States where industry began to decline. As early as the 1940s, William Foote Whyte wrote Street Corner Society about the social problems caused by the region's inability to provide work; by the 1960s, Jane Jacobs had already summed up the problem from the angle of urban decay:

By the twentieth century, New England's factories had been shutting down and laying off workers one after another. To most New Englanders, the reason for the region's economic decline seemed obvious enough — the failure of industry. They pondered the causes of that failure: cheap labor in the South, the decay of the old brick mills along the rivers and waterfalls, the decline of Boston's docks, imports from Switzerland and Japan. They tried every way they could to overcome these disadvantages, hoping to stem further losses.

The Economy of Cities

Jane Jacobs quoted a line from Ralph Flanders, a New England businessman who later became a U.S. senator: "The trouble with the region is not the failure of old industry, but the absence of new industry." But before the 1970s, against a booming American economy, problems like these looked relatively unimportant. The dazzling new industrial belts, the way modern services were remaking the economic structure of the old metropolitan areas, and the new jobs they created all kept people believing that this was only a small piece of the picture. People had reason to believe that within a larger trend, growth elsewhere would absorb whatever discord arose along the way. Solving the problem of the "stock" with the "increment" — almost a modern-economics version of borrowing against the future — rests on an unshakable faith that future increments are certain.

In the years when Jane Jacobs was active, she pointed out the hidden danger in neglecting manufacturing and in failing to create new manufacturing jobs, but nothing yet looked unsustainable. And that was not really where her interest lay. What she cared about most was the rise and fall of cities.

By the early twenty-first century, the financial crisis exposed all of it, above all as the traditional automakers of the Rust Belt went bankrupt one after another. Then it became a big problem.

2.

After The Rise and Fall of American Growth was published in 2016, Robert Gordon became the loudest voice among economic historians. He put forward the idea of the "special century" — the hundred years from 1870 to 1970 — which contains the following arguments:

(1) Economic growth is not a steady-state process that generates progress at a constant rate century after century. On the contrary, the process runs faster in some periods than in others. For the thousand-odd years before 1770 there was almost no economic growth (the economic historian Angus Maddison: from the year 1 to 1820, the average annual growth rate in Western countries was only 0.06 percent — that is, 6 percent per century). In the transitional century before 1870 there was only slow growth, while the century up to 1970 saw remarkably rapid growth, which slowed again after 1970. Our central argument is that some inventions matter more than others, and that the revolutionary century after the Civil War grew out of a set of unique inventions in the late nineteenth century, which we call the "Great Inventions." (2) Economic growth after 1970 has been both dazzling and deeply disappointing. The key to this paradox is that progress after 1970 gradually narrowed to one small slice of human activity — the slice tied to entertainment, communication, and the collection and processing of information. For everything else people care about — food, clothing, housing, transportation, health, the working environment inside and outside the home — the pace of progress, measured by quantity or by quality, has slowed since 1970. The best measure of the pace of innovation and technological progress is total factor productivity, which measures how fast output grows relative to the growth of labor and capital inputs. After 1970, total factor productivity grew at barely a third of the rate it had from 1920 to 1970. (3) The rise in Americans' living standards over the past 150 years has depended, to a great extent, on innovations large and small throughout history. But any consideration of America's future economic progress must look past innovation to the headwinds — headwinds that, like a gale, are already dragging down the pace of economic progress. The chief one is worsening inequality: since 1970, the share of America's economic growth captured by the highest-income group has kept expanding.

The Rise and Fall of American Growth

No century in American history mattered more to the American economy, or contributed more to it, than the one that began in 1870. That much is beyond dispute. What is contested is how to judge the information-industry revolution we are living through — think of the entrepreneur-heroes, knowledge-heroes and richest-man-heroes we hear about every day, the ones who have already changed the world and the ones who are changing it now or say they will. Set against Gordon's data, all of that looks a little like bluster. Gordon's doubts come mainly from two points. The information industry contributes too little to U.S. GDP, especially compared with the Second Industrial Revolution — the application of electricity and the invention of the automobile. And it has not produced enough jobs; in fact America's employment rate has been falling in recent years, which has left the United States showing more and more of the symptoms you normally see in poor countries. Pulling it together, Robert Gordon offers a chart of the average annual growth rate of total factor productivity (the chart on p.551), and in it you can see the growth predicament after the 1970s.

Looking at the United States alone, the chart really is alarming. But Gordon looks at the problem too much from inside the American market — another kind of American insularity, and one just as worth worrying about. This is certainly a big problem for the United States, but if it is not thought through and solved within the frame of globalization, then in the end it is no different from Trump's shut-the-door strategy.

Seen from the angle of global manufacturing as a whole, the postwar shift in where cars were built was an important reason total factor productivity fell — but that shift was part of a broader remaking of global manufacturing led by the United States itself. Drop Japan's economic data into that huge trough between 1970 and 1994 and you might find the change around 1970 was not so large after all. "You can't use the first hundred years to negate the last fifty, and you can't use the last fifty to negate the first hundred." (A joke that falls a bit flat.)

Gordon also gives the information revolution too little time. Consider how long the Second Industrial Revolution was allowed: it began in the 1870s and broke through in the 1920s — a full fifty years to build up, or thirty if you count conservatively from the start of the twentieth century. The Third Industrial Revolution, with the information revolution at its center, has not in fact been running nearly as long as people imagine. And it too is a matter of globalization: the jobs created by IT manufacturing have appeared one after another in Japan, South Korea and China, while the effect the internet has had on work and life is, at least for now, only just beginning. China has shown some different, or leading, effects, and all of that has yet to be assessed. I am skeptical of overstating the information revolution too — the habit of seeing what is close as big and what is far as small is everywhere — but Gordon may have overlooked a few things.

Gordon's core idea, of course, is still his insistence on manufacturing. Between 1994 and 2004, America's growth figures regained a little competitiveness, clearly thanks to IT manufacturers including Intel, Microsoft, HP and IBM — an effect close to what the auto industry had contributed over the previous hundred years. That decade of "anomalous" performance proves, from another angle, the very thing Gordon cares about most: without manufacturing, economic growth loses its foundation.

3.

One thing is beyond doubt: within the United States alone, the two industrial revolutions produced very different outcomes. The Second had a bigger effect than the Third, and it lasted longer:

In 2014, U.S. per capita GDP was $50,600. If productivity from 1970 to 2014 had grown as fast as it did from 1920 to 1970, real per capita GDP in 2014 would have reached $97,300 — almost double the actual figure. For every American man, woman and child, that $46,700 gap is a striking symbol of the difference in force between the Second Industrial Revolution and the Third.

The Rise and Fall of American Growth

Poverty wears a society down bit by bit, even in the United States. In the 1990s, Robert Putnam's Bowling Alone recorded and analyzed the decline in American civic participation, which shook the foundation of American democratic society — the very "new society" Tocqueville had praised so warmly nearly two hundred years earlier.

And poverty does not stop there. In another of his books, Our Kids, Putnam lays out a further cause of an American crisis:

After a local economy collapses, what follows is a decade in which both the divorce rate and the rate of births outside marriage spike. And we have to recognize that the true root of the crisis in American families is not the cultural upheaval of the 1960s but the factory closures and bankruptcies of the 1980s. This did not happen only in the industrially depressed regions — it spread across the whole of the United States.

Our Kids

On one side, the backbone of society — the traditional middle class born of manufacturing — was losing its jobs. On the other, cities were producing more low-end service jobs. The result was that the gap between rich and poor widened further inside the cities. In How to Change Society (《改变社会》), Eiji Oguma reviews the shift in employment in the United States and other OECD countries:

Manufacturing shrank in the developed countries, while information industries and finance — which uses IT to invest around the world — thrived, giving rise to a huge range of new support businesses, such as courier services and data entry. Simple clerical staff, cleaners, convenience-store workers, restaurant staff and the like also became indispensable to support the core elite working on the commercial strip. These are the jobs of the short-term hires known as "Mac Jobs," symbolized by the person working the counter at McDonald's. It is generally reckoned that around five peripheral workers are needed to support each core elite worker.

How to Change Society

These jobs cannot be outsourced overseas, but they are not a choice the traditional middle class would make either — so naturally they became the first stop for immigrant labor. In Landscapes of Power: From Detroit to Disney World, Sharon Zukin describes the services immigrant workers provide in New York City:

Saskia Sassen, in her study of New York City's low-wage immigrant labor, points out that the new consumption practices of gentrification are labor-intensive. English nannies look after the children of dual-income households while Salvadoran maids clean their apartments; Ethiopian or Haitian cab drivers ferry hard-working couples home late at night; Dominican home workers hand-knit sweaters for expensive Seventh Avenue designers; the delivery boy comes from the local Chinese restaurant; and Korean grocery families keep the fruit stands open twenty-four hours a day.

Landscapes of Power

The remaking of the social structure did not stop there. The final blow to the idea of the male breadwinner came from the role women played inside the family. Sharon Zukin records that process in Landscapes of Power:

Yet in the long run, the local landscape of economic power cannot be expected to be rebuilt on car and steel production. Looking at the shift in employment around Wyandotte and the Detroit downriver area confirms the national trend of growth in service jobs and in the female labor force, especially in health care, schools and retail. Changes across generations and households reflect this shift. Take, for instance, the family of a McLouth steelworker, where the men experienced downward mobility over three generations. The husband, in his forties, is an active union member, and his father, too, was a skilled worker; the son is a young steelworker who was laid off in 1980. But the wife has an administrative job in the public sector, and the daughter works at a nearby retail store. This is a typical household at McLouth and at many other manufacturing companies — wage and benefit concessions, along with layoffs, pushed more wives and daughters into the labor force. More kinds of jobs will be created in the deindustrialized landscape of the future.

Landscapes of Power

This ebb and flow of household income between men and women changed the role men played in the family. It is both the employment crisis Eiji Oguma summed up and, in a deeper sense, the "family crisis" Robert Putnam described — and in the end it shakes the foundation of the whole society.

4.

Why do we care so much about the United States? Because the world is far more brutal than we imagine, and we are not bystanders.

Eric Hobsbawm writes in Hobsbawm on the 21st Century (《霍布斯鲍姆看21世纪》):

In the economy, and above all in military force, we have powerful technology that keeps reinventing itself. Today, technology decides military affairs more than it ever has. A political power of global scale must now be able to command this technology and combine it with an extremely large national territory. Before this, sheer size did not matter much: at the height of its power, the British Empire's home territory was, even by the standards of its own time, only a medium-sized country. And in the seventeenth century the Netherlands, no bigger than Switzerland, could still rise to become a dominant global player. But today, no matter how wealthy a country is or how advanced its technology, without a relatively vast territory it simply cannot ascend to the throne of global hegemony.

Hobsbawm on the 21st Century

That tells us something simple. China's future path has few precedents to draw on; there is not much to refer to. The United States may be the only one: the problems it has run into are the problems we may run into later.

Many people like to look at Japan, South Korea or Taiwan for how they have practiced democracy, for a route through the post-affluence society — but in fact there is not much to learn there. This is not chauvinism; it is simply the situation. China is not only a country that took on manufacturing from elsewhere; it is also a maker of markets, and its own depth and population mean the possibility of real innovative capacity. Hobsbawm was not encouraging hegemony. He was stating a fact.

And we obviously cannot rule out the United States, the best system we know of. We plainly believe that although the social development and institutional change of the past two hundred years offer almost no ready-made rules to borrow directly, the ideal of universal values and the pursuit of an affluent society are things every country and every government has to face and accept — reason, liberation, the dignity of human nature, all of it rests on that foundation, unless we give up the hope ourselves.

Tony Judt once quoted the anguished confusion of a Spanish diplomat:

We grew up under the Franco regime carrying an American dream. That dream encouraged us to imagine a different, better Spain, and later it encouraged us to build a different, better Spain. All dreams inevitably fade, but not all dreams inevitably turn into nightmares. We Spaniards know something about political nightmares. What has happened to America now? How do you explain what happened at Guantanamo?

When the Facts Change

Our concern for America today is much the same.

5.

Look back, then: why did the American economy succeed, and why is that success so hard to sustain today?

Any analysis of America's economic success after the two world wars has to touch on its imperialist streak, though whether that imperialism was a cause or a consequence of economic success remains an open question. The Rise and Fall of American Growth mostly treats it as a consequence. Economic success came from several forces of production working together; at least in the stretch from the end of World War II to 1970, the dividing line Gordon cares about, the deployment of productive capacity and the allocation of resources were the main drivers of sustained growth. Look at it the other way and you can also see that the rise of Japan and then China — despite the Plaza Accord and today's trade frictions — is hard to credit with much effect either way on U.S. employment and growth, and looks little like the imperialism of the early twentieth century or before.

So what made the American economy succeed?

Population is still the most important reason — specifically, the value created by the baby boom generation, a point economists, sociologists and scholars of every stripe have written about at enormous length.

Gordon draws a comparison with the old developed countries of Europe: "The development of postwar American metropolitan areas differed from that of other developed countries, especially Western Europe and Japan, and the most obvious difference was population growth. America's population more than doubled between 1950 and 2015, while Britain's population grew 15 percent, Italy's 17 percent, and Germany's 18 percent."

Besides having a larger labor force, Americans also worked harder, at least compared with Europeans. Tony Judt once cited a figure: "They work longer hours — 28 percent longer than Germans, 43 percent longer than the French — and their vacations are shorter, or they take none at all."

This may be a digression, but according to data in Economics Supermarket (《经济学超市》), a pocket book edited by the Economist Intelligence Unit, Americans have been growing lazier: their annual working hours fell from 1,867 in 1950 to 1,794 in 2007. Still, that is much better than the French, whose hours fell from 1,926 to 1,561. Denmark logged 2,283 hours in 1950, the hardest-working of all the countries with data, but by 2007 it had dropped to 1,574 — about level with the French as one of the laziest. For comparison, South Korea's annual working hours in 2007 came to a full 2,305.

The manufacturing employment data Eiji Oguma cites sits neatly alongside Robert Gordon's argument that the manufacturing decline of 1970 marked the growth turning point. In the United States, "the share of manufacturing employment peaked in 1966, and by 2011 the ratio had fallen from roughly 28 percent to 9 percent." That too shows a strong correlation between economic decline and a weak manufacturing sector — a view running in an unbroken line from Jane Jacobs to Robert Gordon.

Oguma offers a counterexample. In Japan, secondary industry (manufacturing) first overtook agriculture in employment in 1965 and peaked in absolute numbers in 1992, though the service sector passed it just two years later, in 1994. The years from 1965 to 1993, when manufacturing led the Japanese economy, run roughly "from the Tokyo Olympics to the bursting of Japan's bubble economy" — the same period when the United States began moving its manufacturing offshore, which is what fueled Japan's takeoff. Japan's total workforce peaked in 1997, likewise a result of its demographic dividend.

Contrary to our old impression that "Americans don't like to save," saving was an important factor for the United States too, just as it has been for every late-developing or near-developed country rising today.

During World War II, 5.2 million women flooded into the labor market and had their first experience of paid work. Rosie the Riveter became a symbol of American women's patriotism and service during the war, at a time when the economy was struggling to overcome a severe shortage of adult male labor. Partly because women were now earning money, and even more because workers were bringing home unprecedented wages while rationing and production bans meant there was often nothing to buy even with money in hand, the war left America with enormous savings. Personal savings as a share of household disposable income peaked in 1943, then peaked again at 27 percent in 1944 — far above the 5 to 10 percent of an ordinary peacetime year.

The Rise and Fall of American Growth

Robert Gordon believes World War II rescued the American economy from long-term stagnation: "Without the war, growth after 1939 would certainly have been dismal." And the household savings the war created were spent on consumer goods afterwards — a textbook case, Gordon says, of "pent-up demand."

That is not all. Gordon argues that the "supply-side" adjustments that began with the New Deal mattered even more over the long run. This might be counted as a third reason for America's postwar growth.

...The supply-side effect was subtler and more meaningful. It included a massive expansion of the nation's capital stock: the government funded the construction of new plants and equipment, which it then handed to private companies to run, producing aircraft, ships and weapons. This expansion of government capital had already begun in the 1930s, and it included not just the factories that made military supplies during the war but a surge of infrastructure investment through the 1930s and 1940s — an ever-expanding national highway network, and major projects finished one after another: the Golden Gate Bridge, the San Francisco Bay Bridge, the Tennessee Valley Authority, and the Boulder (later Hoover) Dam. Another channel that raised productivity was "learning by doing." The wartime supply constraints of 1942 to 1945 forced every firm to adopt new technology to raise output, breaking through the limits of scarce capital and labor.

The Rise and Fall of American Growth

Then there was the growth of the educated population and the gathering of technical talent from around the world in the United States. Their effectiveness is often questioned, but over a span of several decades neither the growth they produced directly nor the industrial growth that education and technology brought is in any doubt.

The decade in which the four-year college graduation rate rose fastest was 1940 to 1950. This owed a great deal to the GI Bill, passed in 1944, which provided federal funding for every World War II veteran to attend college. Because 16.1 million people — 12 percent of the 1940 population — had served in the war, the bill's impact was enormous, bringing a huge wave of enrollment to colleges nationwide between 1946 and 1949. The bill also funded veterans who wanted to finish high school, provided low-interest loans to home buyers, and offered unemployment relief during a veteran's first year back.

The Rise and Fall of American Growth

These are exactly the ingredients of success that China today — or China over its first forty years — likes to talk about with relish. So what comes next?

6.

The America of the future, as Robert Gordon writes it, is a dim one.

Just as we described earlier: manufacturing shrinks, the mechanism that produces a middle class breaks down, the total population falls, and the gap between rich and poor widens.

As manufacturing jobs disappear, the demand for a more skilled workforce rises, years of schooling lengthen, the age at which people start work keeps climbing, the number of years each worker can create value shrinks, and total output actually falls. You can see the same pattern in China now: the starting point has moved from a high-school diploma to a college degree and now often a master's, and entering the job market around age twenty-five is normal, which means the real number of years in which a person creates wealth is, in theory, only a little over thirty. Gordon reckons that in manufacturing-led countries and markets that span could be fifty years — in practice, roughly from age twelve until you can no longer work.

Fewer working years, more pressure. So raising the retirement age becomes an almost inevitable outcome.

America's biggest problem is the retirement of the baby boom generation, which once created enormous wealth.

The Social Security system currently allows retirement at three ages — 62, 66 and 70 — so the impact of baby boomer retirement is relatively spread out, starting in 2008 and extending to 2034. Other demographic issues include a shift in work patterns, as the share of people over 55 choosing to keep working has risen, while labor-force participation has fallen across every age and gender group under 55. Taken together, the retirement of the baby boomers and the falling participation of younger age groups have reduced per-capita working hours, which means the rate of improvement in living standards, defined by output per person, must be lower than the growth rate of labor productivity, defined by output per hour. Roughly 10,000 baby boomers retire every day and begin drawing Medicare and Social Security benefits. In 1960, five working people supported the benefit payments of one retiree; by 2030, it will take just two working people to support one retiree's benefits. Anyone inclined to dismiss long-term budget projections should reread that last paragraph. The retirement of 77 million baby boomers into the Social Security and Medicare system is not a theoretical projection. Demography is destiny.

The Rise and Fall of American Growth

A word here about China's own situation. The reality facing the tragic generation — those born in the 1980s and 1990s — is this: raising the retirement age means paying into social insurance for a few more years and collecting a pension for a few fewer, and the gap between what goes in and what comes out could run close to a million yuan. Measured purely by total years worked, that is not unfair; measured by fairness between generations, it is enough to make you want to die.

From another angle, of course, this generation, or these two generations, have lived in an affluent society, a society on the way up, and one at peace for a long stretch. Compared with their grandparents' generation, or the one after them, that alone is already a considerable fortune — in traditional Chinese terms, a blessing. The next generation may not get a prosperous society to accompany them all their lives, and whether they even get the chance to live in peace is unclear.

To borrow the classic formula: the earth cannot support all of humanity living the energy-heavy life of Europe and America. The more urgent question, in fact, is that it cannot support all of humanity working in services or modern services while neglecting primary and secondary industry.

What the final outcome will be, we do not yet know.

But one outcome is already visible. People are often happy to watch the stock market surge and take it as a sign of economic stability and growth. In fact it points to one thing only: it is the most important cause of wealth distribution tilting toward capital owners and management, and, alongside the breakdown of the mechanism that produces a middle class and the abandonment of the working class, it is the blow that comes from the other end of the widening gap between rich and poor.

The steady rise in America's Gini coefficient correlates strongly with the rise of stock indexes.

As the market gets talked up and executives' performance is tied to it, the ratio between CEO pay and average worker pay keeps stretching, and the gap between rich and poor becomes unsolvable. "If the stock market continues to rise, we know inequality will worsen, because capital gains on stocks will accrue disproportionately to the top of the income distribution," Robert Gordon concludes.

Worsening inequality, a faltering education system, demographic headwinds, and a fiscal reversal that now looks all but certain — the combined effect of these four headwinds means median real disposable income will grow much more slowly in the future than it has in the past. Factor in the weak effect innovation has had on productivity since 1970, and there is almost no room left for economic growth. Given all these headwinds, future growth in real median per-capita disposable income is unlikely to be positive at all, and will fall far below the growth in median disposable income that generations of Americans have enjoyed since the nineteenth century.

The Rise and Fall of American Growth

And that leaves out housing — the thing Chinese readers may care about most.

Nate Silver founded 538.com, The New York Times's election site. In The Signal and the Noise he describes another way illusory wealth eats away at the public mood:

By 2007, more than 65 percent of the wealth of America's middle-class households was tied up in their own homes. And yet their lives kept getting worse — they had come to treat home equity as an ATM. Over the six years from 2001 to 2007, the non-housing assets of American middle-class households — savings, stocks, pensions, cash, and income from small businesses combined — fell by 14 percent. So when the housing bubble burst and took their home equity with it, these middle-class families found their financial position drastically worse than it had been a few years before.

The Signal and the Noise

Nearly fifty years ago, Jane Jacobs only raised a warning: the reason there was no new industry was not that new companies lacked capital but that capital was not being put to good use. "Much of the capital was held captive by moribund trust funds, invested in tax-exempt government bonds or in the stocks and bonds of well-known corporations, while some was exported elsewhere, and some was poured into gradually abandoned old mills, watch factories, and railroads run by incompetent managers or squeezed dry by notorious scoundrels."

Venture capital was just getting started then, and to some extent, after Jane Jacobs raised the question, capital found a new path to innovative companies, and it really did work — it helped the information and internet companies of Silicon Valley and San Francisco take off. But have you noticed where the capital that calls itself angel money, the funds that treat risk as their cost of doing business, has actually been putting its money these last few years?

What Jane Jacobs said about her own time reads just as well today:

A great deal of the capital the United States has exported over the past twenty-five years is owing to the fact that the costly trial and error and development needed by Black people — and other races — in the cities was never undertaken, and to the fact that as sharp practical problems began piling up, cities never tried to develop the new goods and services that would solve them. Prosperity bought by shortchanging development is only temporary; it is the prelude to economic stagnation.

The Economy of Cities

7.

Camden became a byword for urban poverty for two reasons. One, it became the most crime-ridden city in America in 2009. Two, its decline set off a long lawsuit over an affordable-housing program.

As Camden declined, people with money chose Mount Laurel Township, New Jersey, eight miles away, as their new middle-class community. The refined suburban life there became part of their American dream. Then a government plan to build affordable housing in Mount Laurel threatened to break that dream's continuity.

In the lawsuit brought against the township, the plaintiffs argued that Mount Laurel's zoning rules largely barred poor minorities from moving in, in violation of the New Jersey constitution. From the perspective of the township's residents and local government, they were trying to protect a hard-won American dream by keeping out a certain kind of land use (multi-family housing development) and a certain kind of population (poor families). In their view, that influx would bring higher taxes, rising crime, falling home prices, and a disruption of the suburban way of life, and would in turn destroy their community.

Climbing Mount Laurel

In the many hearings over the lawsuit, the local government and residents came to agree — the government, counting votes, naturally leaned toward its own residents. That is not the frightening part. The frightening part is the divide between "us" and "them" that keeps surfacing in urban society.

"Us" is the middle-class homeowners, the property owners, the people responsible for their own property, including the non-white residents who had already assimilated into the middle-class community. "Them" is the tenants of affordable housing, the people who cannot afford property in a nice middle-class community. "We" presume things about the tenants' moral character, and in doing so break Mount Laurel's implicit moral contract. That contract holds that "people should work hard, follow the rules, save money, and then be properly rewarded by society, living in a nice suburb like Mount Laurel."

In one long summary, the same person listed the traits "they" — the presumed residents of the housing project — would need (but might not have) if they wanted to be accepted by Mount Laurel: If this development is going to come into our neighborhood, if these people are going to live in our community, I don't care how much they earn, but if they're capable, if they're not disabled, if they want to keep up their property and respect themselves and the people around them, then they need to get up and go to work every single day. I think that's the life these people are actually looking for. I'll welcome anyone into our neighborhood, on the condition that they want to be that kind of person.

Climbing Mount Laurel

"We don't get subsidies. We get up early and go earn our own living. We pay our taxes, our car insurance, and for all our kids' activities. If we want to go out for dinner, we pay for it ourselves. Nobody hands us a subsidy."

said one Mount Laurel resident.

Evicted: Poverty and Profit in the American City, an investigation into the lives of trailer park residents in the United States, was written by Matthew Desmond, who sank into a long depression while doing the reporting. After watching so much tragedy, he came to believe that a person has the right to buy herself a little happiness with food stamps.

Larraine hadn't put anything on layaway that day. But the moment her food stamps came through she went straight to the grocery store and bought two lobster tails, along with shrimp, king crab legs, salad and a lemon meringue pie. She carried the real, good ingredients back to Beaker's trailer and started cooking. She seasoned the king crab legs with Cajun spice and cooked the lobster tails at 176 degrees Celsius with lemon butter. Once the meal was done she pushed straight through and ate the whole thing herself in one sitting, washing it down with Pepsi. The meal used up her entire month of food stamps, but it was her anniversary with Glen, and she wanted the day to feel special. "I know things weren't great between us, but we were married once, and there are some knots I'll never be able to untie." A lobster, it seems, can make a person feel a little better.

Evicted

The Mount Laurel resident who divided the world into "us" and "them" talked about his American dream at a hearing in the lawsuit:

I worked for fifty years just to save money, and nobody gave me a subsidy. If Dad didn't earn enough for Mom to keep the house going, Mom would tell him to earn more. So Dad would find another job and work until eleven at night. We never asked for a subsidy. Harry Truman was probably the best president we ever had. He said that if you want to do something for hungry people, you should teach them to fish and grow crops, not give them food, because that kills their motivation.

Climbing Mount Laurel

At seventeen, J.D. Vance thought the same way. He said: "Most of us are living in a struggle, but we get by, we work hard, and we dream of a better life. But a sizable minority are content to live off unemployment benefits. Every other week I get a meager paycheck, and I can see the federal and state income tax taken out of it. Meanwhile our drug-addicted neighbor probably buys T-bone steaks more often than I get paid. I'm too poor to buy myself a T-bone steak, but thanks to Uncle Sam, my money ends up buying one for someone else."

J.D. Vance grew up in a single-parent household in Middletown, went through all kinds of hardship, and finally graduated from Yale Law School. Because he was the one person who made it out of Middletown, he got the chance to write Hillbilly Elegy.

The one difference between the Middletown residents in his book and the middle class of Mount Laurel is this: the once-ambitious white middle class of Middletown is now poor in every real sense of the word.

Cover image: a still from the film The Florida Project, via Douban.