Monthly Archives: November 2023

The Influence of Consumer Credit on the American Dream

Marilyn vos Savant, famously known for her record-high IQ, describes the American Dream as “a house in the suburbs with a backyard for the kids to play in, a patio for barbecues, a shady street, bright and obedient children, camping trips, fishing, two family cars, seeing the kids take place in school and church plays, and online access to the world” (Calder 12). Today, most Americans strive to build the experience Savant describes — a comfortable, happy, and wholesome lifestyle. However, this modern version of the American Dream is quite new; in fact, when the American Dream was first described in 1931, it represented opportunities for freedom and equality in the United States that were not offered elsewhere in the world. While these two ideas may seem rather similar, the American Dream of the 1930s represented entirely different qualities than the current dream.

In the 1930s, the American Dream was defined in the collective sense that the U.S. offered new opportunities for all its citizens to climb the social ladder and achieve a better life than previous generations. Americans believed the United States offered the unique opportunity to move up in the workforce despite coming from low-income families. In contrast, the American Dream today is much more individualistic and materialistic, placing goods and items at the forefront of success. Furthermore, in the 1930s, the American Dream was new, leaving people optimistic about their future as well as the country’s future. However, in today’s society, many people have lost faith in the American Dream, believing it is nearly impossible for the average citizen to earn enough money to afford all the goods and services required by this new American Dream. Although many factors contributed to shifts in the American Dream, the introduction of consumer credit in the 1960s along with modern technologies fueled a materialistic society, morphing the American Dream into what it is today. As society increasingly pushed the use of consumer credit and materialism, the country reached a turning point in 2008, with the Great Recession, leading many citizens to lose faith in the American Dream entirely. Although the American Dream has changed throughout time, the dream itself has always represented American aspirations, playing a significant role in societal norms and attitudes.

Before the 1960s, the American Dream was the collective belief that the United States modeled the idealistic society for the rest of the world. The idea that people from low-income families should be allowed to climb the social ladder was a relatively new concept that was not common in many countries. When James Truslow Adams first coined the term “The American Dream” in 1931, he described it as just that — a dream. Adams described the American Dream as “that 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” (Smith). By this, Truslow described the unified goal that the United States would one day offer new opportunities and progress not offered in other countries. Although the U.S. was amidst the Great Depression at the time, citizens still saw the potential for this dream to become a reality in the future (Smith).

Several important factors contributed to this growing belief that the United States could offer new opportunities and potential for every citizen, starting with the growth of women in the workforce. Beginning in 1890, women gradually gained a place in the workforce, as more and more opportunities opened up over time. Additionally, married women gained more of a place in the workforce, as the percentage of employed women who were married in 1890 was only 8%. By 1930, that number rose to 26%, and by 1950, it had reached 47%. Even though women were earning less money than men, women felt a new sense of purpose and belonging, families earned more money, and the economy grew (Jacobs & Bahn). As roles for women expanded, the American Dream started to become a reality, as the United States truly was offering new opportunities and equality for all of its citizens.

Additionally, the Great Depression led to a new type of workforce in the 1940s, as the influence of unions and governmental protection plans expanded. Throughout the Great Depression, strikes and campaigns for better working conditions gained momentum, enacting real change to better the working environments. For instance, in 1933, President Franklin Delano Roosevelt signed the National Industrial Recovery Act as a part of the New Deal, allowing workers to join unions. In 1935, Congress signed the National Labor Relations Act, creating new rights for unions and workers alike. By the end of the 1930s, unions celebrated their influence on the governmental level, leaving workers across the country optimistic about their role in democracy and their future (Gregory). Furthermore, wages increased, and by 1942, a child born into the average American family had a 92% chance of earning more money than their parents (Leonhardt). These facets of progress excited the American population, establishing the original American Dream that all citizens were given equal opportunity to achieve a happy and successful life through hard work and dedication.

While this version of the American Dream persisted from the 1930s to the late 1950s, this all began to change in the 1960s with the introduction of a small piece of plastic — the credit card. In 1958, American Express was the first major company to issue a credit card, with Bank of America also releasing a card that same year. At first, Bank of America’s card was only available in California, but a few years later, in 1966, the company expanded and released its card across the entire country. The credit card became an immediate success, as citizens rushed to get their hands on such a thing. The idea that people could now spend money in the present and pay it off later completely transformed the possibilities of middle-class families especially. While previous middle-income households could hardly dream of expensive lifestyles with the latest technologies and materials, these citizens were suddenly handed unlimited opportunities through their credit cards (Johnson).

With new opportunities to spend, middle-class Americans splurged on homes, cars, vacations, the latest technological advancements, and anything in between. The number of American households with a television set, car, swimming pool, and telephone drastically increased, making this comfortable lifestyle the new norm. For example, only 9% of American households owned a television set in 1950, but that number quickly jumped to 90% in 1960 (Library of Congress). In 1940, only 44% of households owned their home, but 62% of families owned a home by 1960 (Eugene et al. 2).

The credit card rapidly changed American citizens’ goals and aspirations in life, morphing the idea that more goods equated to more happiness. As more and more people spent on credit cards, the standard of living rose, completely changing the criteria of what qualified as a successful lifestyle. In this way, Americans were faced with new pressure to own a home in the suburbs, purchase the latest technological developments, and live comfortable lifestyles. Although job opportunities and wages were increasing, middle-class families still could not afford all of these luxuries in life alone, forcing them to open a credit card if they wanted to keep up with society’s push for a materialistic lifestyle. The increasing pressure to live luxuriously changed people’s goals in life, changing the American Dream, as well.

The American Dream has always symbolized the overall American population’s goals and aspirations, so as people’s focus shifted to more materialistic lifestyles, the American Dream started to represent these same ideas. Although people still believed the United States represented the forefront of progress and opportunity in the world, the definition of progress slowly changed from equality and opportunity to more materialistic and comfortable lives. People no longer focused on a collective, unified goal for the United States to offer better work opportunities and treatment for all; instead, Americans focused on more individualistic goals to keep up with the latest fashion, technological, and societal trends. Americans saw the credit card as their path to an upper-class lifestyle without necessarily needing an upper-class job. Although the credit card immediately reframed the American Dream into a materialistic one, advertisements further pushed this new American Dream throughout the 1960s and 1970s, permanently ingraining a new goal for the American population.

The credit card quickly offered middle-class citizens the opportunity to spend more, introducing a materialistic society. However, the credit card alone was not enough to permanently alter the American Dream in such an extreme way. With the help of the credit card, companies designed new advertisements to convince consumers that their expensive product was a necessity in life. By the early 1960s, most American households owned a television set and telephone line (Library of Congress). Companies quickly capitalized upon this new advertising opportunity, crafting commercials that convinced consumers they must purchase their product if they wanted to live a happier life. In this way, the credit card opened up an entirely new market for luxury companies and high-end brands; the working middle class. New advertisements flashed luxury shampoo bottles, kitchen appliances, home installments, and ever-evolving technologies at the front of a happy and successful family. The new marketing strategy aimed to convince consumers these products would create a happy family life (Bod).

In previous generations, high-end companies never could have successfully targeted middle-class families, as they simply did not have the money to afford such items. However, the availability of credit completely changed the marketing world, making the middle class the primary target for expensive home items and goods. Companies saw the eagerness in middle-class adults to buy these new products, as it was an entirely new concept for them. So, they crafted advertisements aimed at these vulnerabilities, portraying happy couples using their product. In this way, advertisements enforced a materialistic society, relying on credit cards as fuel. Advertisements no longer focused on the basic necessities of life, but instead the most extravagant ones. As a result, people no longer felt as much pride in work opportunities, but instead in materials and goods. While equality and opportunity were still essential to American core values, people saw the future in technology and innovation rather than specific qualities. This continued to enforce a new materialistic version of the American Dream for years to come, changing the goals and aspirations of U.S. citizens.

This new American Dream centered around consumerism has persisted for years, creating the modern society that equates material goods to happiness. However, attitudes towards the American Dream have changed again in recent years, as people have lost faith in the American Dream. Following the financial crisis of 2008, many Americans lost faith that they could live a more prosperous life than their parents. The 2008 crisis, often referred to as The Great Recession, was ultimately caused by the accumulation of too much debt. Mortgage loans were being awarded to people who would not have typically qualified for a home loan (Boyle). The Great Recession led to the closure of banks, spikes in unemployment rates, and more debt among citizens (Weinberg). Some of the most prominent effects of the Great Recession were felt among the young generations. Student loan debts grew and the number of employment opportunities for young adults dropped (Sorkin and Thee-Brenan).

Throughout history, the younger generations have determined the American Dream, carrying the hopes and dreams to live a more prosperous life than their parents. In modern society in which material goods and home ownership define success, a financial crisis as steep as the 2008 one was extremely detrimental to the younger generation’s views on the American Dream. With accumulating student loan debt, less job opportunities, and inflation rates, the younger population has never been so pessimistic about the American Dream. Today, only about 64% of the population believe the American Dream is attainable, citing the price of college, homes, children, and retirement as too costly for most jobs, even with consumer credit and investment options available (Sorkin and Thee-Brenan).

The 2008 financial crisis is largely responsible for the overall pessimistic attitude towards the American Dream, as the crisis left young people in an extremely challenging financial situation. Although the American Dream still focuses on consumerism like it did in the late twentieth century, people today do not have as much hope in the American Dream as they did then. There is the growing belief that the cost of living has become too costly for the average American to possibly afford everything that the American Dream consists of: a house in the suburbs, two cars, multiple children, summer vacations, and a long retirement. Although many factors contributed to a depressing modern view of the American Dream, consumer credit plays a role behind it all. The introduction of credit in the 1960s created this idea that home ownership was key to a successful life. Furthermore, consumer credit first transformed the financial opportunities in the U.S. by introducing the idea that money could exist in different forms. The ability for people to spend money through credit and pay off their debt later on established entirely new views on money. Views that helped grow the prevalence of loans, the stock market, and investments in America. Through these different options, debt accumulated, leading to the severe crisis of 2008 followed by a diminished sense of faith in the American Dream. In this way, the credit card transformed the American Dream in more ways than just one; although it may have created exciting, new, materialistic opportunities in the 1960s, debt accumulation has led to a depressing view on the American Dream in modern society.

The American Dream is a phrase to describe the American population’s overall goals and definition of success. Since the American Dream was first established in the 1930s, it has experienced major reforms, turning from a dream of opportunity and equality into one of materials and goods. Although the American Dream has slightly changed throughout its time, the introduction of credit in the 1960s, the growth of advertisements in the 1970s, and the Great Recession of 2008 all led to distinct changes in the American Dream. All of these changes can ultimately be linked back to consumer credit, as the ability to spend on credit first allowed middle-class citizens to consume more goods in the 1960s. From there, advertisements capitalized on new financial opportunities for middle-class citizens, convincing them that products were essential to a happy life. The introduction of credit also came along with the growth of debt, ultimately leading to the Great Recession of 2008 in which people lost faith in the American Dream. This showcases how new innovations and technologies can completely transform societies, as the credit card quickly changed the goals of an entire society.

When James Truslow Adams first coined the term “American Dream,” he described it as “that 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” (Smith). In 1931, Truslow first put a name to this commonplace of freedom, opportunity, and equality offered by the United States. At a time when Americans were first experiencing signs of the Great Depression, the country still symbolized hope and opportunity for many (“American Dream”).  Although Truslow was the first to place a name to this common idea, the belief that America offered freedom and opportunity was established long before in 1766 at the country’s birth. The United States was built upon the ideas of religious freedom, democratic government, and new opportunities, embodying similar ideas Truslow referred to years later in his definition of the American Dream.

Since Truslow’s first definition of the American Dream in 1931, the American Dream has persisted through generations, evolving amidst new technologies, social standards, and political environments. Since the early 1900’s, there have been three major changes in the American Dream; one in 1931, one in the 1960’s, and the final around 2010. Although the specific dream itself may have changed over time, the American Dream has always represented the common goal all Americans strive towards. It represents the comfortable, ideal, and happy life Americans aim to achieve for themselves. In 1931, the American Dream represented opportunities for people to find employment, as the primary goal of many families included having steady income. Following World War II, the country experienced drastic social changes with new technology, opportunities for women, and jobs in the corporate world. With rapidly evolving technology, the American Dream became a materialistic one in which people viewed home ownership with the latest cars, television sets, and technology as the ideal life. While this materialistic version of the American Dream has persisted into modern years, the economic crisis of 2008 changed the way people saw the American Dream. While the majority of people truly believed the American Dream was achievable throughout the late twentieth century, just about half of millennials today believe the American Dream is dead (“American Dream”). Each of these major changes exhibit the ways in which American aspirations have changed over time, creating new versions of this “ideal life.”

When Truslow first used the phrase, “American Dream,” he was referring to the strong belief within American society that hard work ultimately leads to success. During his time, this success was defined by steady employment and the opportunity to grow within the workplace. The American Dream symbolized American equality, as many people believed the United States offered all people the ability to climb the social ladder through hard work and dedication (“American Dream”). Before Truslow’s time, the American Dream itself still existed in the sense that Americans believed their country presented the opportunity to earn a better life through hard work. However, success itself was defined differently than it was in the early twentieth century. Colonial America first experienced their form of the American Dream, as working environments started allowing employees to speak with employers, giving people the hope they could eventually work up to higher positions. Additionally, Westward Expansion saw huge increases in the American spirit, as people believed they could gain land through persistence and dedication. Although the “American Dream” was not used to define the belief Americans could achieve success through hard work, the idea itself existed (“American Dream”).

However, this goal was still extremely different from what is considered the American Dream. In the late nineteenth and early twentieth centuries, American society was extremely competitive and individualistic. While people believed they could climb the social ladder through hard work, they also believed they needed to compete with other Americans to achieve success, as there was limited land and employment opportunities. While people dreamed of successful lives with a home and steady income, they did not see this as a unifying goal across the country. Instead, they believed only a small portion of Americans could actually achieve the ideal life they all dreamed of (“American Dream”).

This idea first started to change with increased wages and governmental efforts to increase employment rates in the late 1920’s (Anderson & Chang 1). As work opportunities expanded, people began to truly value employment as the path to success. While it was still competitive, the government offered more jobs, creating a more unified country with the goal that every citizen had the right to work their way up in employment and achieve a steady, successful life (“American Dream”). Franklin Delano Roosevelt’s New Deal programs from 1933-1938 especially fueled the American Dream, as this allowed the government to provide more opportunities for its citizens. Although the country was in the middle of the Great Depression, the government found new ways to expand job opportunities, leading to higher morale and purpose in the country. People believed each generation could live a more successful life than the previous generation, fueling the overall desire for people to work hard and earn more money for their families (“American Dream”).

This same general American Dream persisted for years until the development of the credit card shifted society towards a materialistic version of the American Dream. The introduction of credit cards in the 1960’s offered Americans a new style of life, as they could suddenly afford much more in life. With the inventions of new technologies, such as television sets and cars, people developed stronger desires to use credit to purchase homes and the latest technologies. In addition, with the expansion of mass-production factories, companies increased advertising via newspapers, magazines, and television commercials, convincing Americans their path to a happier life required more spending. Suddenly, Americans believed everyone had a path to a successful life. Although the new standard of living was more expensive, people could purchase goods and services with credit cards, working to repay the money later on. The American Dream evolved, as people still believed hard work was required, but there was a growing sense of belief that more technology and materials created a happier life (Bod).

Although this materialistic version of the American Dream persisted for years, increased technological advancements and more expensive lives eventually led Americans to lose faith in the American Dream. Specifically following the economic crisis of 2008, more and more Americans believed hard work did not necessarily create a happy and successful life, as they lost faith in the banks. Even in the years after the economic crisis, faith in the American Dream continued to fall, as the price of homes, cars, technology, and college education drastically increased. While the amount of money needed to live the most extravagant lifestyle exponentially increased, the average American did not increase at this same rate.  While Americans from the 1970’s truly believed their dream life was achievable, Americans of the twenty first century no longer carried this view (Calder).

The new view of the American Dream can be attributed to several factors, including inflation in major life purchases such as college education and homes as well as the increased gap between upper, middle, and lower social classes. Following 2008, college tuition prices skyrocketed, making college education a risky investment for many young students. From 2010-2020, college tuition increased by an average of 9.24%, making the average cost per year around $30,000 (Hansen). At the same time, many families were still suffering from economic struggles following 2008, making college education unaffordable for many students. Additionally, for many students that take out college loans, it takes years for them to pay all their debt off, leading to defeated and pessimistic views of the American Dream. In fact, a poll from 2014 found that only 64% of Americans still believe in the American Dream (Sorkin & Thee-Brenan).