The 1920s Roared After a Pandemic, and the 2020s Will Try

A year ago I was faced with an incredibly difficult decision. Do we close the gyms because of the pandemic or do we fight to remain open. Yesterday I wrote an e-mail to my staff and posted it on the Atlantic Gymnastics Blog. Just to help them keep things in perspective. Not on what we have lost- but on how far we have come.

Today I was reading Bloomberg Business Week and I came upon an article from a couple weeks ago. 2020s Will Try To Roar Like The 1920s by Peter Coy. It gave me a lot to think about.

The 1920s Roared After a Pandemic, and the 2020s Will Try

The day was cold and windy. Standing outside the Capitol, the just-sworn-in president called for “a new unity of spirit and purpose” to bind together a nation that had been wracked by a pandemic and high unemployment. His predecessor wasn’t on stage. The inauguration of Warren G. Harding on March 4, 1921, marked the inauspicious, unofficial start of an historic decade. The somber mood gave no hint that America was about to go on a tear.

The Roaring Twenties saw widespread adoption of the assembly line, the automobile, radio, motion pictures, indoor plumbing, and labor-saving electric appliances. Consumerism and mass culture took shape. It was the decade of art deco and jazz, Coco Chanel and Walt Disney, The Great Gatsby and the Harlem Renaissance. It was “the first truly modern decade,” says retired Marquette University economic historian Gene Smiley.

As the U.S. suffers through another pandemic, it’s tempting to ask whether history will repeat itself. Once the virus passes, will the 2020s roar the way the 1920s did?

It’s not impossible. The past year demonstrates that the economy and society can change shape quickly. We’ve seen multiple Covid-19 vaccines developed in record time and an almost-overnight transition to remote work. Tesla Inc. delivered just shy of a half-million electric vehicles in 2020 despite the pandemic. A London-based unit of Alphabet Inc. solved a half-century-old scientific puzzle, using artificial intelligence to predict accurately how proteins fold, which could revolutionize drug discovery.

In all probability, though, the U.S. will continue to wrestle with “secular stagnation,” an economic plague of developed nations. Preconditions include an aging population, slow labor force growth, and weak demand for credit, which is why the disease is resistant to traditional monetary remedies. The latest evidence that investors aren’t holding out much hope the coming decade will break out of that mold: The yield on inflation-protected 10-year Treasury notes is around negative 1%, down from 4% during the ’90s tech boom.

Despite the differences, by copying what was done right in the Roaring Twenties and avoiding what went wrong, Americans can make the 2020s a success—by today’s standards, anyway.

The world of 2021 is “a muddled mix of the Twenties in a lot of ways,” says Rutgers University economist Eugene White. Stock prices are high in relation to corporate profits, as then. Today’s suspicion of international institutions such as the United Nations and World Health Organization would be familiar to a traveler from the 1920s. Race relations are once again strained, though Black Americans are in a far better position than they were a century ago. Tariffs rose under President Donald Trump, as they did in the 1920s. Americans continue to complain about overbearing government, as they did during Prohibition. The 1920s was the first decade in which the rural population was smaller than the urban one; in the 2020s, rural White America is feeling disenfranchised after having gone strong for Trump’s failed reelection.

“There is no chance of sustained decade-long growth that matches the achievement of the 1920s”

The 1920s didn’t get off to a good start. The Spanish flu pandemic, which killed about 675,000 Americans out of a population of 100 million, was over, but the U.S. was deep into an 18-month downturn marked by the sharpest one-year decline in wholesale and consumer prices in 140 years of record-keeping. The economic miracle of the Twenties didn’t really begin until July 1921, when the recession ended and boom psychology set in.

This summer, depending on how vaccinations progress, there will likely be a flicker of that mania as people emerge from their Covid-19 bubbles, ready to party. Economists surveyed by Bloomberg are predicting above-average growth in gross domestic product after a difficult first quarter, with the median forecast peaking at an annualized 4.7% in the third quarter.

Indications of pent-up demand are abundant. Carnival Corp., in a sign of confidence in the public’s desire to socialize again, plans to begin boardings in April for its biggest ship ever, the 5,200-passenger Mardi Gras. Finally free to do as they please, Americans may make like the Lost Generation, who chose to “live in the pure moment, live gaily on gin and love,” as the literary critic Malcolm Cowley wrote.

Gin and love make a powerful cocktail but won’t sustain a decade’s worth of growth. The bull case for a repeat of the 1920s is that the pandemic lockdown has accelerated the adoption of technologies such as videoconferencing and digital commerce that will keep paying dividends long after the virus is vanquished. McKinsey & Co. says a global survey of executives revealed that they were a “shocking” seven years ahead of where they planned to be in terms of the share of digital or digitally enabled products in their companies’ portfolios. And there’s still headroom. Cowen Research reports that almost half the corporate technology buyers it interviewed said they were in the early stages of a transition to cloud computing.

What’s hard about forecasting technological progress is figuring out where we are on the adoption curve. Take robots. The word was coined in 1920 by a Czech playwright, Karel Capek, but a century later robots haven’t lived up to hopes—or fears. It took 13 years, from 2005 to 2018, for the number of installed robots in the U.S. to double, according to the International Federation of Robotics. To a pessimist, that’s almost a plateau. To an optimist, it means robots are still on the bottom of the S-shaped adoption curve and are poised for takeoff at any moment.

Disclaimer

Bearish forecasters say labor-force expansion and gains in schooling don’t match those of the 1920s, and information technology and biotech breakthroughs, while impressive, don’t measure up to the transformative, general-purpose technologies—electrification and the internal combustion engine, to name two—that powered growth a century ago. As investor Peter Thiel famously said, “We wanted flying cars, instead we got 140 characters.” (It’s 280 characters now, but still.)

For the average American, life changed more from 1920 to 1929 than it’s likely to change from 2020 to 2029. Electrification gave us refrigerators (instead of ice boxes), washing machines (instead of washboards and hand-cranked wringers), and radio (instead of your sister at the piano). With electrification, factories no longer had to rely on power from a single engine that was connected to machines via noisy, inefficient belts and pulleys.

The internal combustion engine came into its own in the 1920s, powering cars, trucks, farm equipment, and airplanes. The number of registered drivers almost tripled during the decade. The automobile’s rise sparked investment in roads and suburbs as well as production of rubber, steel, glass, and oil.

Two Decades Far Apart

Robert Gordon, an economist at Northwestern University, is a leading proponent of the argument that these modern times don’t live up to those modern times. At the request of Bloomberg Businessweek, he assembled figures on labor productivity for the entire economy from 1893 through 2019, clustering the data into roughly equal spans that begin and end at high points in the business cycle. The data up to 1948 come from a book he wrote, The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War. For the rest he relied on government figures.

The data compiled by Gordon demonstrate that productivity growth jumped in 1920 and remained high for a half-century before slumping after 1973. “While it is likely that productivity growth will revive somewhat in the 2020s from the dismal record of the 2010s,” Gordon wrote in an email, “there is no chance of sustained decade-long growth that matches the achievement of the 1920s.”

One lesson, then, is that timing matters. The 1920s roared because technologies that had been nurtured for several decades were finally ready for mass deployment. That may not be the case today.

It’s easier to spot social similarities between the decades than economic similarities. Then as now America was divided between a fast-moving, multiethnic, urban society of immigrants and a predominantly White, conservative, rural society pining for a past that it perceived as purer and less tumultuous. Americans elected three Republican presidents in the 1920s—Harding, Calvin Coolidge, and Herbert Hoover. Harding vowed a “return to normalcy,” while Coolidge, a taciturn Vermonter, “appeared to be a reluctant refugee from the previous century,” wrote Nathan Miller in New World Coming: The 1920s and the Making of Modern America.

The reformist Progressive Era that began around 1900 had lost its moxie, and the big-government New Deal hadn’t yet arrived. Business was given free rein. “Never before, here or anywhere else, has a government been so completely fused with business,” the Wall Street Journal wrote in 1928. Said Coolidge: “The man who builds a factory builds a temple. The man who works there worships there.” Elon Musk slots in nicely as this century’s answer to Henry Ford, though our society is more skeptical that what’s good for business is good for the country.

Gordon calls the 1920s “a Janus-faced decade that defies simple characterization.” It was a time of liberation, in which women got the vote and dared to wear short skirts, smoke cigarettes, and drink bathtub gin, while Black poets, authors, and musicians found wide audiences. “It was the period when the Negro was in vogue,” poet Langston Hughes wrote.

But women still faced discrimination, and Black Americans and immigrants faced that and worse. In 1921 a White mob burned more than 1,200 homes in a Black neighborhood in Tulsa, Oklahoma. In 1925 thousands of unmasked Ku Klux Klan members marched down Pennsylvania Avenue in Washington.

The Immigration Act of 1924 barred the gates to immigrants from Asia and seriously restricted immigration from southern and eastern Europe—drawing the admiration of none other than Adolf Hitler, who wrote approvingly in Mein Kampf, “The American Union categorically refuses the immigration of physically unhealthy elements, and simply excludes the immigration of certain races.”

The 1920s was a time of rising prosperity on the whole but also rising inequality of incomes and wealth and deepening divisions in society. Prohibition, which took effect in 1920, drove a wedge between “drys” and “wets” and fueled organized crime. Factory workers, stock investors, and Big Business mostly did well, but the still-sizable agriculture economy was shocked by a 53% decline in farm product prices in the 1920-21 recession and would take years to recover.

The first three years of Trump’s term were likewise marked by a tide of strong economic growth that lifted many boats, though not all. The unemployment rate for Black Americans, for instance, reached a record low. The pandemic has wrecked much of that progress. Bringing the economy back to its potential to lift up the less fortunate is a second reason, after saving lives, for President Biden to accelerate the distribution of vaccines.

Perhaps the most important lesson the 2020s can learn from the 1920s is the peril of isolationism. The U.S. emerged from the Great War of 1914-18 as the world’s most powerful economy as well as its biggest creditor, having lent heavily to the Entente Powers to finance the war effort.

Yet the U.S. resisted taking on the responsibilities of global leadership. Fed up with Europe and its bloody quarrels, isolationists in Congress prevented the U.S. from joining the League of Nations. With stringent fiscal and monetary policy, the U.S. forced its deflation onto other countries. Washington also insisted that the U.K. and France repay their war debts to the penny. In a vise, those countries raised the money to pay the Americans by exacting reparations from Germany. That fed the resentment among Germans that contributed to the rise of Hitler.

Much has changed since then. The U.S. is now a debtor nation, consuming more than it makes. Trump was correct that this is a problem: The U.S. is accumulating debts, while its productive capacity is being hollowed out.

What’s similar is that today, as in the 1920s, the U.S. can’t escape the special obligations that go along with being the world’s biggest economy. Americans learned that lesson after the twin disasters of the Great Depression and World War II. The U.S. was instrumental in the founding of the UN, the International Monetary Fund, and the World Bank and led the push to lower tariff barriers, which enabled poor countries and those ravaged by war to prosper through trade. Nations such as Germany and France set aside imperialist dreams and focused on quality of life. “If you ask an average European man what he cares about, it’s very often soccer,” says Columbia historian Adam Tooze, author of the 2014 book, The Deluge: The Great War, America and the Remaking of the Global Order, 1916-1931.

In four years in office, Trump revived isolationism, even resurrecting the “America First” motto that Harding campaigned on in 1920—and that was embraced by the anti-Semitic, fascist-sympathizing America First Committee that fought to keep the U.S. out of World War II.

In the absence of U.S. leadership, nations such as Kenya, Ethiopia, Nigeria, Malaysia, and Vietnam are at risk of falling into the orbit of China, says Tooze. “As in the Twenties, we are our own worst enemy,” he says. Biden must attempt to demonstrate that the U.S. is once again a reliable partner.

Meanwhile, the notion that the Covid-19 pandemic is some kind of trampoline that will bounce the U.S. toward a bright future is not only off-putting, but wrong. Pandemics enduringly damage societies in ways that go beyond the death toll. In October the IMF released a working paper by senior economist Tahsin Saadi Sedik and economist Rui Xu that uncovered a vicious cycle: Pandemics reduce output and increase inequality, stoking social unrest, which further lowers output and worsens inequality. The study was based on disease outbreaks in 133 countries from 2001 to 2018. “Our results suggest that without policy measures, the COVID-19 pandemic will likely increase inequality, trigger social unrest, and lower future output in the years to come,” the authors wrote.

A final lesson of studying the 1920s is simply that history does have something to teach us—a point that the movers and shakers of that frenetic decade sometimes had trouble grasping. “History is more or less the bunk,” Ford said in 1916. “It is tradition. We don’t want tradition. We want to live in the present, and the only history that is worth a tinker’s damn is the history we make today.”

Introspection wasn’t the forte of the Roaring Twenties. “Torn nerves craved the anodynes of speed, excitement, and passion,” Frederick Lewis Allen, looking back from the near remove of 1931, wrote in Only Yesterday: An Informal History of the 1920s.

Our nerves, too, are torn. But learning from the past can help the healing begin.

October 19. International Evaluate Your Life Day

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Evaluate Your Life Day is a bit scary. It sounds just a little bit too serious for my liking. And, what if I evaluate my life, and find out that I don’t like it????????

fullsizeoutput_497fWell, for starters, you can then make positive changes.

Evaluate Your Life Day gives us the opportunity to pause and reflect upon our life, where it’s been, and where its going. C’mon, be honest with yourself. Are things going well? What is bothering you? What do you need, or want, to change? How’s your Job? Why are you stressed? How is your relationship with friends and family?

With a self evaluation, you can then make big changes to improve the quality of your life, as necessary. Or, if things are going well, just tinker with small adjustments.

I have to believe that  Evaluate Your Life Day is the beginning of a happier and healthier you!


Origin of Evaluate Your Life Day:

Evaluate Your Life Day was created by the good folks at Wellcat.com

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This I Believe

Beginning in 1951, radio pioneer Edward R. Murrow asked Americans from all walks of life to write essays about their most fundamental and closely held beliefs . In creating This I Believe, Murrow said the program sought “to point to the common meeting grounds of beliefs, which is the essence of brotherhood and the floor of our civilization.”

In spite of the fear of atomic warfare, increasing consumerism and loss of spiritual values, the essayists on Murrow’s series expressed tremendous hope. They heard a country moving toward more equality among the races and between genders. They heard parents writing essays that are letters to their newborn children expressing the hopes and dreams they have for them. And they heard the stories of faith that guide people in their daily experiences.

The events in Charlottesville, VA show us that as in the 1950s, this is a time when belief is dividing the nation and the world, We are not listening well, not understanding each other — we are simply disagreeing, or worse.  As an adult I feel that there’s a responsibility to change that, to cross borders, to encourage some empathy.

I want to hear what YOU believe. I have written about HOPE, I have written about PEACE. I want to encourage people to begin the much more difficult task of developing respect for beliefs different from their own.

THIS I BELIEVE

I can believe things that are true and things that aren’t true and I can believe things where nobody knows if they’re true or not.

I believe that people are perfectable, that knowledge is infinite.

I believe that the future sucks and I believe that the future rocks and I believe that one day that the Flying Spaghetti Monster is going to come back and kick everyone’s ass. I believe that all men are just overgrown boys with deep problems communicating. I believe that people may be having MORE sex but that the sex may not necessarily be good and that the decline in good sex in America is coincident with the decline in drive-in movie theaters from state to state.

I believe that all national politicians are unprincipled crooks and I still believe that they are better than the alternative. I believe that California is going to sink into the sea when the big one comes, while Florida is going to dissolve into madness and alligators and toxic waste.

I believe that antibacterial soap is destroying our resistance to dirt and disease so that one day we’ll all be wiped out by the common cold like martians in War of the Worlds. I believe that vaccines work and that the earth is round.

I believe that Robert Frost was the  greatest poets of the last century.

We are stardust. I believe that mankind’s destiny lies in the stars. I believe that candy really did taste better when I was a kid,  that light is a wave and a particle, that there’s a cat in a box somewhere who’s alive and dead at the same time (although if they don’t ever open the box to feed it it’ll eventually just be two different kinds of dead), and that there are stars in the universe billions of years older than the universe itself.

I believe in a personal god who cares about me and worries and oversees everything I do. I believe in an impersonal god who set the universe in motion and went off to hang with her girlfriends and doesn’t even know that I’m alive. I believe in an empty and godless universe of causal chaos, background noise, and sheer blind luck.

I believe that anyone who says sex is overrated just hasn’t done it properly. I believe that anyone who claims to know what’s going on will lie about the little things too.

I believe in absolute honesty and sensible social lies. I believe in a woman’s right to choose, a baby’s right to live, that while all human life is sacred there’s nothing wrong with the death penalty if you can trust the legal system implicitly, and that no one but a moron would ever trust the legal system.

I believe that life is a game, that life is a cruel joke, and that life is what happens when you’re alive and that you might as well lie back and enjoy it.

I believe in love.