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July 10, 2008  |  The Golden 50s  |  10563 hit(s)

The nostalgic spot that the good ol' 50s have in American culture has some economic justification. In some ways, it was indeed a golden age. Charles Morris, writing in The Trillion Dollar Meltdown:
Birth rates dropped sharply during the Depression years, so the generation of men entering the labor market in the 1950s was an unusually small one and was much in demand. The pay gap between young workers and older workers therefore became unusually narrow, facilitating early marriage and family formation. All measures of social disruption, like crime rates, dropped like a stone. Earlier marriage and greater economic security also made couples more willing to have children.
Thus, the 50s of "Leave it To Beaver" and the great explosion of the American suburbs, so fondly remembered, were the result of unique social conditions. These circumstances were not (and are not) the norm.[1]

Moreover, the very benefits that the 50s brought to the US carried with them the seeds of their own destruction:
When the boomers reached school age, elementary schools everywhere were forced onto double and triple sessions; it was even worse in the suburbs, where schools had to be built from scratch. As they hit their teens, juvenile delinquency moved to the top of the social agenda. Struggling to cope, police forces became more selective about the behaviors that elicited an intervention, a process that Daniel Patrick Moynihan later called "defining deviancy down."
And so on.

This is in the intro to the book. Morris is merely recounting the economic (and incidentally social) history that has brought us to our current economic, um, situation. He goes on to cite the predicted and successful rise of the Republican party (culminating in Nixon's 1968 victory over Humphrey). From this point, I believe we will be going on a wild ride through the inflationary 70s, the 80s Reagan era, the boom years of the 90s, and the confluence of events (and technologies) that have brought us to where we are.

The only positive notes that have emerged from the intro so far are that a) the US has seen strong hits to the dollar before (and recovered) and that b) the Japanese economy went through something like we are experiencing (tho in their case, government inaction has prolonged the pain a long, long time). But we'll see, won't we.

More as I encounter interesting tidbits.

[1] Slightly surprisingly (to me) is that Morris does not note that the economies that we did and do compete with -- Japan, Germany, China -- were lying in piles of rubble, leaving the field wide open to American companies. The end of the 50s is defined not just as he does here, namely the maturation of the baby-boom generation, but as the time during which the great econmies of the world (less China) started coming back on-line. For example, in 1973, the year of the Arab oil embargo, Japanese and German car companies, which had been slowly establishing themselves in the US, were ready with small vehicles to take huge pieces of market share away from US companies. Had the embargo occurred in, say, 1955, Volkswagen, Honda, and Toyota would not have been ready to be as spectacularly successful as they later proved to be.

mgroves   10 Jul 08 - 11:06 AM

I find it very hard to believe that government *inaction* is the cause of a prolonged economic downturn, because it's a very rare thing where government intervention does anything but exacerbate the problem. That's my bias, of course, but I think there are many examples to back it up.

mike   10 Jul 08 - 12:26 PM

Well, for example, he credits Paul Volcker as chairman of the Fed with taking action that ultimately tamed inflation in the 70s. It seems unlikely that the financial markets in the US will recover entirely from the current mortgage crisis without any government action whatsoever, be it by the Fed, government loan guarantees, or (as seems already to be happening) increased regulation of that industry. Given my own bias :-), I interpret the current situation as an example of what can happen in a completely unfettered market. And we're all paying for it, thank you very much.