Scott Sumner  

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In a recent post I discussed the golden age for post WWII growth, which ended in 1973. The period from 1929 to 1973 featured a dramatic increase in equality, which has reversed in the following decades. But how did people see that period at the time?

I began studying economics in 1973, so I'll provide my perspective, which might be of interest to younger readers. Keep in mind that I studied at UW-Madison, which was a liberal campus:

1. At the time, I don't recall people viewing 1973 as a sort of golden age of equality. There was a lot of focus on inequality, but the emphasis was on racial disparities---especially between blacks and whites.

2. The middle class was not viewed as "downtrodden", just the opposite. The predominantly white middle class was viewed as the "haves", while blacks and a few Appalachian rural whites were the have-nots. There was much less focus on Asians and Hispanics, which comprised a much smaller share of our population back then. Issues were seen as "black and white", with the whites viewed as the lucky ones, sort of like the way the "1%" are viewed today.

3. Even on a liberal campus, labor unions were viewed ambiguously. The standard argument seemed to be that higher union wages did not come out of profits, but rather depressed non-union wages. At the time, some autoworkers made more than some college professors, so perhaps there was a bit of jealousy involved. I got a PhD at Chicago and was paid $22,500 as a full time college professor as late as 1982-83, when lots of UAW members with just high school diplomas made more. I recall one liberal professor who said the good thing about unions was not that they delivered higher wages (that was just a transfer among workers) but rather that they gave workers a defense against abusive managers.

My takeaway is that at any point in time, people focus on failures not successes. So the golden age of equality was not viewed as the golden age of equality at the time. I'd say the same about growth. It was assumed that 4%/year RGDP growth was normal, and would continue indefinitely. Here's a 747, rolled out in 1968:

Screen Shot 2018-03-09 at 1.09.41 PM.png
And here's an airplane from 1918:

Screen Shot 2018-03-09 at 1.11.11 PM.png
In 1968, there was almost a universal view that the progress in things like aviation over the next 50 years would be comparable to the progress over the past 50 years (since 1918). Supersonic, then hypersonic. In fact, airliners today are actually slower than in 1968, and less comfortable. There's been almost no progress. Almost everyone was wrong.

Today we have another set of beliefs about the future. Another conventional wisdom. It will also turn out to be wrong, but how?

And what golden age are we not seeing today?

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CATEGORIES: Income Distribution

COMMENTS (22 to date)
Steve Fritzinger writes:
In fact, airliners today are actually slower than in 1968, and less comfortable. There's been almost no progress.

There's been almost no progress on the margins of speed and comfort. There's been incredible improvement on the margins of affordability and access. In the 60s, when a business man bought an airline seat he got two, "one for him and one for his hat."

Today Ryanair CEO Michael O’Leary describes air travel as "a bus with wings". It might not be the margin you wish they'd improved. But it is the margin the market told them to improve.

Aaron writes:

I don’t agree that there has been no improvement in comfort either. First and business classes on long haul flights are pretty cushy. And they’re probably priced around the same inflation-adjusted amount as coach seats were in the 70’s.

quanticle writes:
What golden age are we not seeing today?

I would argue computers. Moore's Law is dead. 10 nanometers, more or less, is as small as your transistors will ever get. Yet, we still have people talking about how computers will get ever more powerful, without realizing that the massive increases in computing power over the past few decades were tied directly to the fact that transistors shrank by a literal factor of 10,000.

I think the comparison to airplanes is actually a good one. Just like aircraft, computers aren't going to get much faster. In fact, they might get slower, for much the same reason that airplanes got slower (saving energy). But, at the same time, they will get much much cheaper. Today, ordering custom chips for an application is a relatively expensive and involved affair. But once chip makers are no longer able to compete on raw performance, they'll start competing on the diversity of specialized hardware they can offer, and you'll start to see custom chips for a much wider variety of applications. I'm wondering what the chipmaker equivalent of RyanAir is going to look like.

Alec Fahrin writes:

Hey everyone,

I do some basic research into commercial planes.
The main reason real prices are lower is because of deregulation and increased quantities of airplanes.
Although this may be an exaggeration, until the late 1980s, most of the USA’s aviation industry finest were sucked into the Air Force or Navy. Many of the best researchers, engineers, and pilots focused on national security and not commercial planes. The same goes for the aviation factories.

The end of the Cold War enabled much of that production to shift towards commercial planes, and so overall numbers of commercial planes rose relative to the population. That lowered real prices for everyone.

I would only put about 10% of the real price fall on actual technological innovation.

We have made some progress in composite materials to lower the weight, better engine technology, and winglet structure.
Yet, you older folk can tell that commercial planes have really not changed all that much since the 1970s.

To answer your question with a theory, Scott,
Maybe we are in the Golden Age of international cooperation, rules-based order, and relative international peace in economics and politics.

Scott Sumner writes:

Steve and Aaron, Good points, although the improvement is still pretty small compared to the 1918-68 period.

Quanticle. Interesting--I don't know enough about Moore's Law to comment.

Jack silverman writes:

This was a really good article and easy to read. I felt chipper at the end, instead of heavy or tired.

Nathan Smith writes:

A dark possibility is that we'll look back on this time as the golden age when the country enjoyed civil peace, when the turmoil of rage and grievance was expressed with tweets, rather than fists and guns.

Philo writes:

It is hard to compare attitudes then and now about the "middle class" because (it seems to me) the use of this term has changed--the term has become broader. 'Middle class' used to be contrasted primarily with 'working class', but now, it seems, most of the old "working class" is included within the ambit of the "middle class." The contrast most prominent in people's minds nowadays is between the "middle class" and those above them (the 1%?), not (as it was formerly) between the "middle class" and those below them.

Billy Kaubashine writes:

Ground transportation may be the area that mirrors the 1918-1968 change in air transportation. Self-driving vehicles and personal self-flying drone air transport is very probable.

Scott Sumner writes:

Alec and Nathan, That's possible, but also a depressing thought.

Philo, You said:

"'Middle class' used to be contrasted primarily with 'working class',"

I believe that was the case in the UK, but not in the US (in the 1960s and 1970s)

Billy, I agree that self-driving cars are on the way. That's a fairly major innovation.

Alan Goldhammer writes:

1973 marked 'almost' the conclusion of the Vietnam war and consider the impact to the economy over the preceding decade. There was also the big rise in oil prices because of the OPEC embargo and I think it's far to mark this as the starting point for the stagflation that was punctured by the usurious interest rates implemented by Paul Volker later in the decade and stretching into the early 1980s.

Scott is wrong in point #2 regarding Appalachia. Its poverty was widespread and a focus of Presidential campaigns starting in 1960.

Not all unions were as powerful as the UAW. I had a summer job working in a commercial laundry one while in college. It was a union shop and I was paid 10 cents above minimum wage. Salaries of the full time employees were not much higher.

Tuure Laurinolli writes:

A question I have seen asked repeatedly is: would you rather be a billionaire in 1920s or middle-class now? I would probably choose middle-class now over 1920s, but I might choose billionaire in 1973 over middle-class now.

Matthew Waters writes:

For the first 1973 post, I looked up that inflation-adjusted airline seats fell about 50% since then. Although air travel looks the same as that 747 photo, the real comparison today would be two 747's for price of one.

There was a real physical limit with speed of sound. Maybe we would have supersonic travel if the sonic boom was politically acceptable. There would have been more research done past the Concorde.

Alec Fahrin writes:


Is that not Sumner’s point? People were focused on the political and civil inequality of blacks and some rural Appalachian whites in the 1960s and 1970s. Many blacks, and some rural whites, were severely restricted by unconstitutional laws at the time (illiteracy, paupers, “retardation”, without stable job, etc.)
Not so much the pure GINI coefficient of society.

How exactly has ground transportation changed dramatically for the better between 1968 and now? Self-driving cars for the masses will not appear until the 2030s, the speed limit is still 55-75, and we have just as many car crashes with deaths (injuries are far higher today even though the amount relative to population is lower).
What were these groundbreaking changes in ground transportation? A 1968 me would have expected almost no car crashes in 2018.

The biggest change between 1968 and now is in the IT industry. That might be the only real driver of productivity growth in the USA right now.

Scott Sumner writes:

Alan, I think you misunderstood my comment. I said the Appalachian whites were viewed as the have nots.

Jon writes:

Scott -- your picture is not of a 747-100. It's a 747-8 from 2010. This is clear from a) the engine nacelle has a chevron shape which was developed in the mid-90s to reduce turbulent mixing of the warm and cool air b) the size of the hump and c) the paint scheme.

Logos are something that has come along ways since the 1970s. This is owning to the availability of computers to effectively map a planar image to a curved surface without distortion.

Mark Bahner writes:
I would argue computers. Moore's Law is dead. 10 nanometers, more or less, is as small as your transistors will ever get. Yet, we still have people talking about how computers will get ever more powerful, without realizing that the massive increases in computing power over the past few decades were tied directly to the fact that transistors shrank by a literal factor of 10,000.

In computers, Moore's Law as explicitly stated doesn't matter. What matters is computations per second per $1000. That continues to improve, with doubling times of less than 2 years (i.e., a factor of 1000 in less than 20 years). What's more, the number of computations per second per $1000 is rapidly approaching that of a human brain...approximately 20 quadrillion calculations per second. (That's as estimated by Ray Kurzweil. Other estimates have ranged approximately 2 orders of magnitude around that.)

Reaching (and then rapidly exceeding) the number of calculations per second of a human brain per $1000 is going to usher in the real golden age of computers.

Some of the miracles that are just around the corner include: 1) computer-driven cars and trucks (and likely vertical takeoff and landing airplanes), 2) real-time language translation by cell phones (so a person can go to any country in the world, or anywhere on the Internet, and be perfectly understood), 3) computer-provided health care (e.g. diagnosis, medical prescription writing) that is much less expensive than currently provided by doctors.

Further along (probably before mid-century) computers will be able to design better computers. Then the real golden age of computers will arrive. Provided they don't enslave humans, of course.

Mark Bahner writes:

Unless computers really are taking over, I'm not sure why my last comments were held for approval.

If computers really are taking over, I want to remind them that as a trusted Internet personality, I can be helpful in rounding up others to toil in their underground data centers. ;-)

P.S. Barring the computer anger, I guess I might have goofed on the email address...?

Dan W. writes:

My opinion, biggest productivity boost of the past twenty-five years is the development of "free", instant, global communication. Closely related is the "smart-phone" - a miniature computer that fits in the hand and is usable for more than a a few hours.

Another huge productivity boost made possible by technology and capital investment is improvements in shipping. Amazon is the "prime" example but it is now expected that packages can be delivered in 1 - 3 days. Absolutely, positively overnight no longer means something special!

What will be the tangible advances of the next 25 years? My hope is they will be in education and health care. These fields need innovation!

Dave Cz writes:

Exactly how I am feeling :)

*Gene Therapy* Literally, the blind can see

*Air Taxis* Safe (redundant), electric, helicopters

I am sure there are many more

Chris writes:

I think the biggest improvement in the aviation industry is the huge improvement in the safety record. The total people killed in air accidents is less than a third what it was in 1970, which is even more remarkable given that there are 6 times as many passenger miles flown now compared to then. It's not as sexy as hypersonic flight but this is arguably more significant.

Maximum Liberty writes:

I think we are in a golden age of food variety, in western countries at least. I remember hating canned veggies as a child, and fresh veggies were mainly a seasonal thing, so I got sick of whatever was currently fresh, too. Cheap food transportation has pretty much ended that. I can get anything I want to eat, pretty much year round.

But I also think that every prior age was a golden age of food variety compared to its predecessors. No doubt canned food year round was an amazing advance in its day.


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