Who Smashed the Up Ramp to the American Dream? Wall Street

Wall Street has come under a lot of fire since the financial crisis, for being greedy and for sticking it to the nation’s economy. But why stop there? A new survey finds almost half the respondents believe Big Finance has made attaining the American Dream harder.

In a poll by RealClear Opinion Research, a full 46% said that Wall Street had made achieving that goal “more difficult”—with 26% saying Wall Street made no difference, 13% indicating achieving the dream was easier, and the rest not knowing.

Now, the poll takers didn’t define the American Dream for its respondents. The term was coined by James Truslow Adams, a writer and historian, in a 1931 best-selling book called The Epic of America. He said that the dream was one of upward mobility.

In Adams’ view, this was a “dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement. It is a difficult dream for the European upper classes to interpret adequately, and too many of us ourselves have grown weary and mistrustful of it.”

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news. 

Writing during the Great Depression, when a large chunk of the population was jobless and poverty was rampant, he noted that a cynicism had developed among some Americans that such an uplifting dream was possible.

In the same vein, nowadays there is widespread doubt about how achievable upward mobility is. According to the Federal Reserve’s 2016 Survey of Consumer Finances, the top 10% of the income pyramid garnered 25% of the nation’s income and held 75% of its wealth. This increasingly one-sided trend been under way for years, starting in the 1970s.

Wall Street has been low on the public trust list for the past decade, and is widely blamed for the 2008 financial crisis, with some justice. Subprime mortgages packaged into bonds were a big part of the meltdown. A 2007 Bloomberg poll found that only 31% of Americans viewed Wall Street favorably.

For what it’s worth, in the RealClear survey, Wall Street wasn’t the biggest villain, stopping people from realizing the American Dream. No. 1 was Congress (56%), followed by President Donald Trump (51%), the judicial system (47%), and the Republican Party (46%).

Upwardly Mobile in China

Integrity Is Still Lost on Wall Street, Survey Finds

Tags: inequality, upward mobility, Wall Street

Slowing growth won’t stop China from finding a few silver linings at its annual legislative session.

The world’s second-largest economy will be raising its fiscal deficit target slightly in 2019, to 2.8% of GDP, a mere 0.2 percentage point rise from 2018. The target is still lower than the 3% international deficit warning, which is also less than that of other major economies.

At the National People’s Conference, Liu Kun, China’s minister of finance, said the target has factored in a balance of fiscal profits, spending, and the issuance of “special-purpose debts” while leaving room for “macro regulation.” He noted that the emerging market’s government debts are used mostly for investing rather than operational costs and employee payments, which occurs in many other countries.

Liu wants to enhance efforts to keep steady economic development while accommodating tax and fee cuts. This would shrink the burden on enterprises while surging markets. The minister said earnings from designated state-owned financial institutions and businesses directly under the central government will get a boost. Local governments will be asked to invest funds and assets through “multiple avenues.”

For more stories like this, sign up for the CIO Alert newsletter. 

One of those roads is infrastructure.

He Lifeng, head of China’s National Development and Reform Commission, said the government is cracking down on all investments that would create new debt or wind up only partially finished.

He did not name any specific targets nor any current projects as an example.

“Financing will support projects that are under construction or new ones that serve the overall economic and social needs,” the official said.

Railway, road construction, and waterway projects are some of China’s current plans, according to a government work report. The programs will cost about 1.2 trillion Yuan, or $178.7 billion. Roughly $86 billion is in the central government budget for related investments this year.

Lifeng also said government spending and industrial policies will go toward more private investments, adding that 62% of the total fixed-asset investments were in private capital. About 35% were made in manufacturing and equipment upgrades.

Related Stories:

Will India Outrun Cocky China?

New York City is Worried About China, and the Fed

Why Is China, the World’s No. 2 Economy, Still Called an Emerging Market?

Tags: China, Economy, Geopolitics, Infrastructure, National People’s Conference