If only it was that simple. Thankfully, plenty of people still understand that economics is adjacent to history as a field of study. Some might argue that they are inseparable. How could you describe the rise or decline of an empire or nation without addressing its economy?
The Roaring Twenties, like any economic boom, was brought about by a variety of factors. We had a continued immigration surge (immigration surges almost always lead to economic growth), widespread electrification, the rise of corporations, the dawn of the modern consumer culture, the rise of the US labor movement, and American culture began to define itself.
A note on the last part: popular culture came of age. The rise of the music recording industry and radio went hand in hand, and great American music genres like blues, bluegrass and jazz were the main beneficiaries. Also, it has to be said that American culture is black. We can give white men some credit for the original American spirits. applejack and bourbon (although black people have been involved with those from the start in one form or another). But blues, bluegrass, jazz, barbecue cuisine, and (later) rock n’ roll, R&B, soul, funk, hip hop and rap are distinctly American and all black. And in the 1920s, only a lucky few black men and women could get a taste -a tiny serving- of prosperity and freedom that came with being an accomplished music artist. Later, some black artists would find more freedom in Paris, especially after the Tulsa race massacre in 1921. Let’s be clear. American culture is driven by black American culture. But black people are not allowed to be prosperous or be free. Still.
On the economic side of things, there really was a sea change. Publicly-traded corporations became powerful in the 1920s. But so did a new labor movement, which led to the standard five-day work week. The 1920s gave us weekends, right before the stock market crash and depression. And incredibly, the depression didn’t take our weekends away. Consumers in the late 19th century would often have to buy goods at a general store, and occasionally order products from a catalog (like a proto-Internet). In the 1920s, consumers still used mail order, but more of what they wanted was immediately available in bigger grocery stores and brightly-lit department stores. The American consumer themes of bigger faster and more had come of age. Automobiles were beginning to be owned by every family. Travelling from coast to coast was now possible in 4-5 days by train. The United States was starting to flex its industrial and technological muscle.
We still have a few intelligent people who know that history won’t be repeated simply because a pandemic is ending. Assuming we are just a few months away from this pandemic bing downgraded to an endemic, there can’t be a long-term surge in prosperity after what we’ve just seen in 2020. There are a few reasons for this.
First, last year was a windfall for the billionaires. The wealth transfer in 2020 alone was shocking, even compared to the overall wealth transfer over the last 40 years. Some individuals just ran away with all the wealth. Kanye West (!) entered the billionaire club. And four of the wealthiest Americans alive saw their net worth grow by a combined $229 Billion. There is no catching up for the rest of humanity. This bigger wealth gap simply sets the stage for stagnant wealth creation for the global middle class, and the greater probability of political and social turmoil over wealth inequality. We can’t have a roaring 2020s if the only ones partying are 5,000 US families with a net worth over $100 Million. That’s a wealth gap on the scale of the Philippines, Russia or Brazil.
Second, there doesn’t appear to be a technological revolution to supercharge wealth creation. Autonomous driving isn’t it. Machine learning (marketed as AI) isn’t it. Billionaires buying tickets to low Earth orbit or the Moon isn’t it. Even the vaccines and biotech, as amazing as they are, aren’t it. Free broadband Internet access for all would be significant. But most municipalities aren’t on-board with that idea. Either that or they’re broke.
Third, did I mention we’re broke? We aren’t rebuilding infrastructure. We’re letting municipal water systems fail and die. We aren’t putting money into the hands of builders. We aren’t making public university free of charge. We aren’t forgiving college debt. We aren’t expanding Medicare for all. We aren’t even trying to house the homeless. And where is our shift to clean, renewable energy? What moon shot do we have in us to kick-start a decade of strong economic growth?
Fourth, American manufacturing will never disappear, but the days of a healthy manufacturing sector are long gone. Manufacturing jobs have been replaced by Amazon warehouse and gig delivery jobs that pay a fraction of what the manufacturing jobs paid. Millions of Americans are working just as hard for less, and half of all Americans are poor. We’re going into to 2020s with the poverty, wealth gap and despair of the Great Depression.
Fifth, after the partial recovery of the travel, live entertainment, hospitality and dining sectors, we will still have a black hole in commercial real estate, as many workers are not returning to office spaces full-time. Working from home is now the norm for many, especially in information technology and information security. Some companies are learning to trust their remote workers to maintain their productivity, and are ending their leases for office space. A lot of commercial office space is going to have to convert to residential apartment space. Oh, and while we’re on the topic of buildings, did anyone notice how many vacant retail spaces there were in cities like New York and San Francisco back when the economy was growing? Brick and mortar retail is dead. All the cash is flowing to Amazon.
In sum, I just don’t see years of strong economic growth ahead. A return to the slow growth seen under Obama and Trump would be welcome. But long term, we are still in late capitalism. And man, does it suck. It’s a dystopian capitalist nightmare, frankly.
