Society

The week is the most artificial and recent of our time counts yet it’s impossible to imagine our shared lives without it

Years, days, seasons, even months correspond to natural divisions of time in most parts of the Earth. We split those into hours,

January 6 was practice. Donald Trump’s GOP is much better positioned to subvert the next election.

Reminder: The pre-commercial web and most of web 1.0 were decentralized. Publishers and hobbyists ran their own servers, many quietly stashed under desks. Bits and bytes were not scarce, everyone had a printing press, revenue was not the goal, and information wanted to be free.

Blockchain technology is going to change everything: the shipping industry, the financial system, government … in fact, what won’t it change? But enthusiasm for it mainly stems from a lack of knowledge and understanding. The blockchain is a solution in search of a problem.

What I learned from my own years building a virtual world

What are the applications with real potential, and what is just hot air?

About five years ago, a funny thing happened: for birthdays and holidays, instead of LEGO sets or basketball jerseys, my son sta

Amazon’s logistics investment makes the company increasingly attractive to 3rd party merchants.

These indicators are mostly for travel and entertainment.    It is interesting to watch these sectors recover as the pandemic subsides. -...

Put crypto back in the crypt

It’s not your imagination: the pandemic made your boss worse. On this episode of The New Way We Work, we find out why the people who get promoted are often the least qualified.

Privacy advocates warn of the dangers of the technology.

Lessons from the ice cream factory

Amazon is worried that American workers will go the way of Europe: toward collective bargaining for their labor rights.

About 30 years ago, the political scientist Joseph Nye overturned convention when he suggested that states exert not just “hard” power — i.e., military might — but “soft” power as well. Soft power, Nye wrote is "when one country gets other countries to want what it wants … in contrast with the hard…

I wrote Out of Control 27 years ago (1994). That is a long time in the past for a book that promises to talk about the future. A lot in our world has changed in that time, including our attitudes

Four ways the $500 billion industry can serve a bigger portion of the population—and make money, too.

As a result of the prohibition of alcohol in the United States, the supply of beer and wine decreased while that of hard liquor increased. Bootleggers realized they could make more money and be les…

Computers didn’t immediately lend themselves to retail, but ambitious early computer retailers sold 'em anyway. Eventually, they got trampled.

In my article on the value-chain of the metaverse, I described the seven layers of the ecosystem. In this article I’m going to focus-in on…

Posted on Thursday 2 Dec 2021. 1,963 words, 10 links. By Matt Webb.

This is a short story about what happened to the U.S. economy since the end of World War II. That’s a lot to unpack in 5,000 words, but the short story of what happened over the last 73 years is simple: Things were very uncertain, then they were very good, then pretty bad, then really good, then really bad, and now here we are. And there is, I think, a narrative that links all those events together. Not a detailed account. But a story of how the details fit together. Since this is an attempt to link the big events together, it leaves out all kinds of detail of what happened during this period. I’m likely to agree with anyone who points out what I’ve missed. My goal isn’t to describe every play; it’s to look at how one game influenced the next. If you fell asleep in 1945 and woke up in 2018 you would not recognize the world around you. The amount of growth that took place during that period is virtually unprecedented. If you learned that there have been no nuclear attacks since 1945, you’d be shocked. If you saw the level of wealth in New York and San Francisco, you’d be shocked. If you compared it to the poverty of Detroit, you’d be shocked. If you saw the price of homes, college tuition, and health care, you’d be shocked. Our politics would blow your mind. And if you tried to think of a reasonable narrative of how it all happened, my guess is you’d be totally wrong. Because it isn’t intuitive, and it wasn’t foreseeable 73 years ago. Here’s how this all happened. 1. August, 1945. World War II ends. Japan surrendering was “The Happiest Day in American History,” the New York Times wrote. But there’s the saying, “History is just one damn thing after another.” The joy of the war ending was quickly met with the question, “What happens now?” Sixteen million Americans – 11% of the population – served in the war. About eight million were overseas at the end. Their average age was 23. Within 18 months all but 1.5 million of them would be home and out of uniform. And then what? What were they going to do next? Where were they going to work? Where were they going to live? Those were the most important questions of the day, for two reasons. One, no one knew the answers. Two, if it couldn’t be answered quickly, the most likely scenario – in the eyes of many economists – was that the economy would slip back into the depths of the Great Depression. Three forces had built up during the war: Housing construction ground to a halt, as virtually all production capacity was shifted to building war supplies. Fewer than 12,000 homes per month were built in 1943, equivalent to less than one new home per American city. Returning soldiers faced a severe housing shortage. The specific jobs created during the war – building ships, tanks, bullets, planes – were very suddenly not necessary after it, stopping with a speed and magnitude rarely seen in private business. It was unclear where soldiers could work. The marriage rate spiked during and immediately after the war. Soldiers didn’t want to return to their mother’s basement. They wanted to start a family, in their own home, with a good job, right away. This worried policymakers, especially since the Great Depression was still a recent memory, having ended just five years prior. In 1946 the Council of Economic Advisors delivered a report to President Truman warning of “a full-scale depression some time in the next one to four years.” They wrote in a separate 1947 memo, summarizing a meeting with Truman: We might be in some sort of recession period where we should have to be very sure of our ground as to whether recessionary forces might be in danger of getting out of hand … There is a substantial prospect which should not be overlooked that a further decline may increase the danger of a downward spiral into depression conditions. This fear was exacerbated by the fact that exports couldn’t be immediately relied upon for growth, as two of the largest economies – Europe and Japan – sat in ruins dealing with humanitarian crises. And America itself was buried in more debt than ever before, limiting direct government stimulus. 2. So we did something about it: Low interest rates and the intentional birth of the American consumer. The first thing we did to keep the economy afloat after the war was keep interest rates low. This wasn’t an easy decision, because a burst of inflation when soldiers came home to a shortage of everything from clothes to cars temporarily sent inflation into double digits: The Federal Reserve was not politically independent before 1951. The president and the Fed could coordinate policy. In 1942 the Fed announced it would keep short-term rates at 0.38% to help finance the war. Rates didn’t budge a single basis point for the next seven years. Three-month Treasury yields stayed below 2% until the mid-1950s. The explicit reason for keeping rates down was to keep the cost of financing the equivalent of the $6 trillion we spent on the war low. But low rates also did something else for all the returning GIs. It made borrowing to buy homes, cars, gadgets, and toys really cheap. Which, from a paranoid policymakers’ perspective, was great. Consumption became an explicit economic strategy in the years after World War II. An era of encouraging thrift and saving to fund the war quickly turned into an era of actively promoting spending. Princeton historian Sheldon Garon writes: After 1945, America again diverged from patterns of savings promotion in Europe and East Asia … Politicians, businessmen and labor leaders all encouraged Americans to spend to foster economic growth. Two things fueled this push. One was the GI Bill, which offered unprecedented mortgage opportunities. Sixteen million veterans could buy a home often with no money down, no interest in the first year, and fixed rates so low that monthly mortgage payments could be lower than a rental. The second was an explosion of consumer credit, enabled by the loosening of Depression-era regulations. The first credit card was introduced in 1950. Store credit, installment credit, personal loans, payday loans – everything took off. And interest on all debt, including credit cards, was tax deductible at the time. It tasted delicious. So we ate a lot of it. A simple story in a simple table: Household debt in the 1950s grew 1.5 times faster than it did during the 2000s debt splurge. 3. Pent-up demand for stuff fed by a credit boom and a hidden 1930s productivity boom led to an economic boom. The 1930s were the hardest economic decade in American history. But there was a silver lining that took two decades to notice: By necessity, the Great Depression had supercharged resourcefulness, productivity, and innovation. We didn’t pay that much attention to the productivity boom in the ‘30s, because everyone was focused on how bad the economy was. We didn’t pay attention to it in the ‘40s, because everyone was focused on the war. Then the 1950s came around and we suddenly realized, “Wow, we have some amazing new inventions. And we’re really good at making them.” Appliances, cars, phones, air conditioning, electricity. It was nearly impossible to buy many household goods during the war, because factories were converted to make guns and ships. That created pent-up demand from GIs for stuff after the war ended. Married, eager to get on with life, and emboldened with new cheap consumer credit, they went on a buying spree like the country had never seen. Frederick Lewis Allan writes in his book The Big Change: During these postwar years the farmer bought a new tractor, a corn picker, an electric milking machine; in fact he and his neighbors, between them, assembled a formidable array of farm machinery for their joint use. The farmer’s wife got the shining white electric refrigerator she had always longed for and never during the Great Depression had been able to afford, and an up-to-date washing machine, and a deep-freeze unit. The suburban family installed a dishwashing machine and invested in a power lawnmower. The city family became customers of a laundromat and acquired a television set for the living room. The husband’s office was air-conditioned. And so on endlessly. It’s hard to overstate how big this surge was. Commercial car and truck manufacturing virtually ceased from 1942 to 1945. Then 21.4 million cars were sold from 1945 to 1949. Another 37 million were sold by 1955. 1.9 million homes were built from 1940 to 1945. Then 7 million were built from 1945 to 1950. Another 8 million were built by 1955. Pent-up demand for stuff, and our newfound ability to make stuff, created the jobs that put returning GIs back to work. And they were good jobs, too. Mix that with consumer credit, and America’s capacity for spending exploded. The Federal Reserve wrote to President Truman in 1951: “By 1950, total consumer expenditures, together with residential construction, amounted to about 203 billion dollars, or in the neighborhood of 40 percent above the 1944 level.” The answer to the question, “What are all these GIs going to do after the war?” was now obvious. They were going to buy stuff, with money earned from their jobs making new stuff, helped by cheap borrowed money to buy even more stuff. 4. Gains are shared more equally than ever before. The defining characteristic of economics in the 1950s is that the country got rich by making the poor less poor. Average wages doubled from 1940 to 1948, then doubled again by 1963. And those gains focused on those who had been left behind for decades before. The gap between rich and poor narrowed by an extraordinary amount. Lewis Allan wrote in 1955: The enormous lead of the well-to-do in the economic race has been considerably reduced. It is the industrial workers who as a group have done best – people such as a steelworker’s family who used to live on $2,500 and now are getting $4,500, or the highly skilled machine-tool operator’s family who used to have $3,000 and now can spend an annual $5,500 or more. As

Mass tragedies sometimes have unexpected consequences.