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  • Writer's pictureAdrian Emery

the shrinking pie

One of the all-time greats, in terms of ballads, has to be Don McLean’s American Pie: all eight and a half minutes of it. How often have you sung those words – bye, bye, Miss American Pie – and wondered what was he really talking about?  And who exactly are the jester and the king? What did happen in that Chevy at the levee and all those other mysterious references?

There is no doubt McLean is talking about the demise of the Great American Dream with the assassination of JFK. That McLean is prophetic is undisputed. At the age of 15, he had a premonition that his father was going to die but no one believed him. Within 3 days, his father did indeed die in front of his eyes.

There is also no doubt that the Dream did also begin to die in 1971. Although, once again, no one believed McLean because it has taken the last 50-odd years for the dream to linger in the twilight of dusk. It is also no coincidence that the fatal blow was inflicted by Richard Nixon, in 1971, when he decoupled the American Dollar from gold and destroyed the Bretton Woods International Monetary Agreement which was both the crux of the dream and the apples baked into the pie.

The golden years of the American Dream (and thus the rest of the western world) were the post war years between 1948 and 1971 when workers’ remuneration or salaries roughly kept pace with the rising productivity propelled by the post war boom. Then, between 1971 and 2024, they parted ways with productivity increasing 246% but wages only growing by 115%.  

In 2021, one American dollar was only worth 15c of its 1971 parent. The currency had lost over 85% of its value! The average annual inflation rate between 1971 and 2021 was 3.97%. Since 2021, it has risen to 5.33%, so the terminal decline is accelerating.

The shrinking pie has become the shrinking dream. Our money simply does not purchase what it used to. In 1971, average annual salary in the USA was $11,859. By 2021, it had grown to $59,500. Not bad until you look closely at the purchasing power of those new dollars. In 1971, a car cost about $3,853, average rent was $165 per month and annual tuition at Harvard cost $2,800. Fast track to 2021 and a car now costs $48,080, average rent is $2,500 (considerably more in desirable suburbs) and annual tuition is $85,000.

So, not only have salaries not kept pace with productivity, the purchasing power of those dollars have shrunk considerably. More than half of Americans earning $100,000 per annum, live paycheck to pay check. The six-figure income, once viewed as the hallmark of the land of milk and honey, now will not even buy jam.

Although, we quote American figures, the same story pervades the western world where the music has died and there are simply not enough seats (read houses) for everyone! As the reserve currency and the dominant world empire, what happens in America affects the world. When the US sneezes, we all catch cold.

How did Don McLean foresee the impending cultural, political and economic American decline all those years ago? How did the land of milk and honey turn sour? How did so much hope and prosperity leave us all wanting? How does one extricate one’s own personal consciousness from the collective mayhem?

A new year – a new hope. A new dream is born. Till we meet again.

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