Another Roaring Twenties?
Lost in the focus on life after the pandemic are all the forces that were already shaping our future. I explored many of them in various posts, but none have been as intriguing to me as the forces tied to history. If we look at history and apply it to current day, we can seek out periods that look like ours. This Application of History illuminates possible futures and has the potential to inform our actions. What happened in these similar periods and what can we learn? A recent article posed this question: Will the 2020s Really Become the Next Roaring Twenties? This seemingly simple question is loaded with implications. The article provides several links with great content and I highly recommend it.
Author Steve LeVine explores the thesis that the United States and perhaps the rest of the world are on the cusp of one of the biggest economic outbreaks in memory. The connection to history? The thesis comes a century after the iconic decade of prosperous decadence. One can see how pent-up demand released after the pandemic leads to a boom period. But can the boom last, or do other similarities to the 1920s pose a bigger problem? First the boom-related similarities. The 1920s represented a continued period of great invention — a period that started in the late 19th century. As described by Mr. LeVine, the first affordable vacuum cleaner, washing machine, temperature-adjustable iron, food mixer, and automobile drove consumer convenience. This was the era of electricity, internal combustion, and the telephone — an era that to this day is viewed as the greatest period in human history. That invention-driven economy seems remarkably similar to current day. This quote from the article underscores the point:
“Today, numerous economists and technologists say that long-gestating technologies may be ready to propel a similar frenzy of commerce. This time, the economic engine might start with artificial intelligence; the pharmaceutical industry, turbo-charged by the historically fast creation of the Covid-19 vaccine; a new era of super-batteries and electric vehicles; and a re-imagination of cities, with much of the workforce permanently dialing in from home. A currently dammed-up tidal wave of cash could finance this economic deluge, these economists say — some $3.7 trillion sitting on the sidelines in personal savings accounts and corporate cash reserves.”
But a look back at history is instructive. Although electricity burst onto the scene, it was initially expensive, required industries to form around it, worked against the heavy investment in steam, and required a complete reimagination of how things were done. It led to a period of slowed productivity and mini depressions before the roaring twenties could take flight. This begs the question: are the 2020s a boom cycle or does it mirror what happened in the lead up to the roaring twenties? Per the article, many economists believe it is the former, predicting significant growth by the end of the year. From the article:
“To understand why, consider last year’s hospitality industry bloodbath. Some 110,000 restaurants have closed nationwide during the pandemic, according to the National Restaurant Association, an especially gutting number. In order to serve that orgy of hungry and boozy Americans, investors will have to come off the sidelines and fund a reopening of shuttered establishments and launch new ones, igniting a considerable design and construction boom. Restaurants and bars will hire not just servers and barkeeps, but construction workers, plumbers, and specialists in the installation of virus protection technology and equipment.”
Now let us shift to similarities that may represent a bigger problem. In a Post on the topic, I listed these: inequality, immigration backlash, pandemic, job-impacting automation, nationalism, rapid scientific advancement, mind-altering substances, focus on socialism, financial crisis, and liberalized social norms. As we know, a convergence of these forces led to a great depression and a very dark 15 years. Here again from the article:
“ As the end of the 1920s neared, the nation’s top 36,000 families were earning as much as the rest of the nation’s 12 million families. Up to 60% of the country lived below the poverty line. Rural America was worse off, largely left out of the revolution on American roads and in American homes. At the end of the decade, just 10% of rural houses had electricity, while in cities the percentage was about 85%. From magazine ads, the rural population could see and feel its deprivation: Resentment seethed below the surface and emerged sharply in the next few years. ‘
Sound familiar? The pandemic has worsened the wealth gap, but importantly, it has made it very visible. All one must do is watch the news to see the red-flashing lights. As Beverly Gage, a history professor at Yale says: “The 1920s looked like a lot of fun from a distance, but what comes next was a lot more complicated.”
Originally published at http://frankdiana.net on January 25, 2021.
