What is the American Dream?

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Definition:

The American Dream embodies the belief that individuals can and should follow their chosen paths to personal fulfillment regardless of their background and heritage.

🤔 Understanding the American Dream

The American Dream is the concept that people have the fundamental right to become the best possible version of themselves. This idea includes the belief that no one should be trapped in their current condition. People should be able to move freely away from their past or present and toward their future. The American dream has often been cited as the driving force behind the upward mobility for many whose family histories include refugees, immigrants, and slaves.

Example

The co-founder of Yahoo! Inc., Jerry Yang, knew only one word of English at the age of 10 when his widowed mother moved the family from Taiwan to the U.S. With her help, he became fluent in English in just three years. He later attended Stanford University, where it took him only four years to obtain both his Bachelor and Master of Science in electrical engineering. During his time at Stanford, he and a friend began work on what would soon become one of the largest web services providers on the internet.

Takeaway

The American Dream is like planting a tree in fertile, well-watered land...

Ideally, the tree (any American) should be able to reach its maximum potential without hindrance from oppressive conditions. The opposite approach would be to stunt the tree’s growth by keeping it planted in a container (societal and social restraints).

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New customers need to sign up, get approved, and link their bank account. The cash value of the stock rewards may not be withdrawn for 30 days after the reward is claimed. Stock rewards not claimed within 60 days may expire. See full terms and conditions at rbnhd.co/freestock. Securities trading is offered through Robinhood Financial LLC.

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What is the American Dream?

Historically, the term American Dream has meant different things to different people. However, there’s general agreement that the definition of the American Dream entails moving forward toward a better tomorrow.

Progress is at the heart of the American Dream. Others might add that the dream carries the prospect of living in a way that one chooses. While some people hope that their path leads to material wealth, others look for less tangible treasures. Another way to describe the American Dream is the pursuit of happiness.

How did the American Dream originate?

The term “American Dream” dates back to 1931. It first appeared in the book The Epic of America by historian James Truslow Adams. At the time of the book’s publication, the U.S. was struggling with the Great Depression. Adams sought to write an American history book built around what he saw as the primary dream of America.

Adams defined this dream as the opportunity for every man and woman “to attain to the fullest stature of which they are innately capable.” He wasn’t speaking primarily of material wealth, but of the potential everyone has to become a better version of themselves.

Soon afterwards, President Franklin Delano Roosevelt spearheaded programs that created jobs for millions of out-of-work citizens. America eventually emerged from the Great Depression to enjoy previously unknown levels of economic success. It was no longer enough to have the necessities of life in America. The American Dream became associated with high wages, a comfortable lifestyle, and an excess of material goods.

What was the American Dream in the 1920s?

The 1920s earned nicknames such as the Roaring Twenties and the Jazz Age, highlighting the non-stop party America seemed to be enjoying.

During this period, Americans were capable of economically advancing in greater numbers. The rise of factories and other industrial centers gave people the opportunity to earn higher wages compared to traditional agricultural jobs.

In the 1920s, obtaining a better-paying job was taken as proof of improving one’s lot in life. Consequently, the idea of the American Dream then was quite different than it is for many people today.

For example, owning a home in the suburbs had not yet become a standard part of the dream for various reasons. Most people still rented their homes and apartments because mortgages required huge down payments and the loan balance was due in a short amount of time. The banking industry had yet to restructure mortgages to place homeownership within the grasp of the average working couple.

What is the American Dream today?

Each generation usually refashions the American Dream to its own interpretation of a better life.

After the horrors and rationing of World War II, Americans headed for the relative quiet and comfort of the suburbs in great numbers. New banking laws made it possible for returning service members to do what had been out of reach for most of their parents — purchase a house and land. The suburban home with a car in the driveway became a new version of the American Dream.

Despite these changes in the financial landscape, fewer young Americans can afford to purchase a home today.

This is largely due to the aftermath of the economic downturn referred to as the Great Recession. The recession began in December 2007 and lasted until June 2009, according to the U.S. federal government. Many factors contributed to what is generally thought of as the worst financial crisis since the Great Depression. However, significant blame is placed on the collapse of Wall Street investments that centered on the housing industry.

As the housing market crashed during this period, the American Dream once again morphed to fit its time.

In terms of homeownership, many people are swapping the traditional suburban home and instead trending towards a house that may be smaller than what was previously popular.

Beyond purchasing a home, today’s American Dream places an increased focus on one’s quality of life, signaling a return to its core principles. A growing number of people are interested in how they can become better individuals rather than concentrating on the accumulation of material belongings. Many speak of emphasizing experiences over possessions.

How do you achieve the American Dream?

If the essence of the American Dream is to live your own life, then only you can determine what it means to achieve this aspiration. For one person, it could mean becoming the wealthiest individual in the world. For another, it could mean devoting a life to the pursuit of spiritual and personal fulfillment.

Is the American Dream real?

The American Dream is undeniably real to some but questionable to others. Let’s take a look at what happened during and after the Great Depression. Government programs made it simple for millions of working-class Americans to join the middle class. Yet those same programs blocked millions more from improving their lot in life.

One such program was the National Housing Act of 1934. The Act helped spur the economy with new home construction. The federal government also made it easier for banks to issue mortgages to lower-income applicants by agreeing to insure the mortgages. But the government backed away from insuring mortgages in racial minority neighborhoods.

Additionally, newly constructed housing developments were often restricted to white Americans. These policies meant that federally-created paths of social mobility to homeownership were off-limits to American minorities.

What are the criticisms of the American Dream?

As far back as the 1800s, French writer Alexis de Tocqueville wrote warnings of America’s preoccupation with material goods. That’s one of the features of the negative side of the American Dream.

The American Dream often references doing better today than you were yesterday and wealth is frequently the chosen yardstick to measure that progress. As a result, mass consumption has become inherently linked to the American Dream.

Unfortunately, some people become easy prey for the high-interest rates of credit card companies as they seek a way to pay for their purchases. They also often become vulnerable to the enticing offer of dubious investments or predatory loan terms.

While the American Dream has not always been inviting to every citizen, particularly racial minorities and women, this notion is constantly evolving. Just as the dream represents individuals becoming something better than they were before, the same concept applies to the country as a whole.

Ready to start investing?
Sign up for Robinhood and get stock on us.Certain limitations apply

New customers need to sign up, get approved, and link their bank account. The cash value of the stock rewards may not be withdrawn for 30 days after the reward is claimed. Stock rewards not claimed within 60 days may expire. See full terms and conditions at rbnhd.co/freestock. Securities trading is offered through Robinhood Financial LLC.

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This information is educational, and is not an offer to sell or a solicitation of an offer to buy any security. This information is not a recommendation to buy, hold, or sell an investment or financial product, or take any action. This information is neither individualized nor a research report, and must not serve as the basis for any investment decision. All investments involve risk, including the possible loss of capital. Past performance does not guarantee future results or returns. Before making decisions with legal, tax, or accounting effects, you should consult appropriate professionals. Information is from sources deemed reliable on the date of publication, but Robinhood does not guarantee its accuracy.

Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.

Commission-free trading of stocks, ETFs and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities and certain OTC securities electronically. Keep in mind, other fees such as trading (non-commission) fees, Gold subscription fees, wire transfer fees, and paper statement fees may apply to your brokerage account. Check out Robinhood Financial’s Fee Schedule for details.

Brokerage services are offered through Robinhood Financial LLC, (RHF) a registered broker dealer (member SIPC) and clearing services through Robinhood Securities, LLC, (RHS) a registered broker dealer (member SIPC). Cryptocurrency services are offered through Robinhood Crypto, LLC (RHC) (NMLS ID: 1702840). Robinhood Crypto is licensed to engage in virtual currency business activity by the New York State Department of Financial Services. The Robinhood spending account is offered through Robinhood Money, LLC (RHY) (NMLS ID: 1990968), a licensed money transmitter. A list of our licenses has more information. The Robinhood Cash Card is a prepaid card issued by Sutton Bank, Member FDIC, pursuant to a license from Mastercard®. Mastercard and the circles design are registered trademarks of Mastercard International Incorporated. RHF, RHY, RHC and RHS are affiliated entities and wholly owned subsidiaries of Robinhood Markets, Inc. RHF, RHY, RHC and RHS are not banks. Products offered by RHF are not FDIC insured and involve risk, including possible loss of principal. RHC is not a member of FINRA and accounts are not FDIC insured or protected by SIPC. RHY is not a member of FINRA, and products are not subject to SIPC protection, but funds held in the Robinhood spending account and Robinhood Cash Card account may be eligible for FDIC pass-through insurance (review the Robinhood Cash Card Agreement and the Robinhood Spending Account Agreement).

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