A Short History of the US Economy 1945-2019
Morgan Housel, an economics writer and venture capitalist, recently took a crack at summing up (in just 5000 words) what happened to the U.S. economy since the end of World War II. Even if you disagree with it (or parts of it), the whole thing is worth a read. I think this captures a large part of the main point:
Everything in finance is data within the context of expectations. One of the biggest shifts of the last century happened when the economic winds began blowing in a different, uneven direction, but people’s expectations were still rooted in a post-war culture of equality. Not necessarily equality of income, although there was that. But equality in lifestyle and consumption expectations; the idea that someone earning a 50th percentile income shouldn’t live a life dramatically different than someone in the 80th or 90th percentile. And that someone in the 99th percentile lived a better life, but still a life that someone in the 50th percentile could comprehend. That’s how America worked for most of the 1945-1980 period. It doesn’t matter whether you think that’s morally right or wrong. It just matters that it happened.
Expectations always move slower than facts. And the economic facts of the years between the early 1970s through the early 2000s were that growth continued, but became more uneven, yet people’s expectations of how their lifestyle should compare to their peers did not change.
Along with this:
The biggest difference between the economy of the 1945-1973 period and that of the 1982-2000 period was that the same amount of growth found its way into totally different pockets.
This reminded me of Matthew Stewart’s piece from The Atlantic that I read when it came out but never blogged about: The 9.9 Percent Is the New American Aristocracy.
When it comes to the division of wealth, many Americans believe that the country is split between the 1%, which possesses a significant share of the country’s money, and the 99%, or “the people.” In reality, The Atlantic writer Matthew Stewart argues, 9.9% of the population comprises America’s new aristocracy, which often “takes wealth out of productive activities and invests it in walls.” But this group of people is rich in more than mere money, and its constancy poses an insidious threat to the promise of American democracy.
The related video is a good 3-minute summary of Stewart’s piece.
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