You don't know what you've got till it's gone
By Scott Sumner
In a recent post I discussed the golden age for post WWII growth, which ended in 1973. The period from 1929 to 1973 featured a dramatic increase in equality, which has reversed in the following decades. But how did people see that period at the time?
I began studying economics in 1973, so I’ll provide my perspective, which might be of interest to younger readers. Keep in mind that I studied at UW-Madison, which was a liberal campus:
1. At the time, I don’t recall people viewing 1973 as a sort of golden age of equality. There was a lot of focus on inequality, but the emphasis was on racial disparities—especially between blacks and whites.
2. The middle class was not viewed as “downtrodden”, just the opposite. The predominantly white middle class was viewed as the “haves”, while blacks and a few Appalachian rural whites were the have-nots. There was much less focus on Asians and Hispanics, which comprised a much smaller share of our population back then. Issues were seen as “black and white”, with the whites viewed as the lucky ones, sort of like the way the “1%” are viewed today.
3. Even on a liberal campus, labor unions were viewed ambiguously. The standard argument seemed to be that higher union wages did not come out of profits, but rather depressed non-union wages. At the time, some autoworkers made more than some college professors, so perhaps there was a bit of jealousy involved. I got a PhD at Chicago and was paid $22,500 as a full time college professor as late as 1982-83, when lots of UAW members with just high school diplomas made more. I recall one liberal professor who said the good thing about unions was not that they delivered higher wages (that was just a transfer among workers) but rather that they gave workers a defense against abusive managers.
My takeaway is that at any point in time, people focus on failures not successes. So the golden age of equality was not viewed as the golden age of equality at the time. I’d say the same about growth. It was assumed that 4%/year RGDP growth was normal, and would continue indefinitely. Here’s a 747, rolled out in 1968:
And here’s an airplane from 1918:
In 1968, there was almost a universal view that the progress in things like aviation over the next 50 years would be comparable to the progress over the past 50 years (since 1918). Supersonic, then hypersonic. In fact, airliners today are actually slower than in 1968, and less comfortable. There’s been almost no progress. Almost everyone was wrong.
Today we have another set of beliefs about the future. Another conventional wisdom. It will also turn out to be wrong, but how?
And what golden age are we not seeing today?