13 thoughts on “The Roaring Twenties, Revisited”

  1. David, I think I referred to this era and made some of these points in my Coolidge posts.

    I compared the 1920s to the 1990s. I think that is a valid comparison. We will see what happens in the future, or I will see some of it.

  2. Tipping Point #3 is “Automation or Evolution?” I think it’s highly questionable whether today’s automation efforts will really have a productivity impact exceeding that of the technological improvements that took place in the 1920s: the proliferation of engine-powered vehicles, the expansion of assembly lines and other then-advanced technologies throughout manufacturing, the electrification of the country and of much of the economy, the emergence of recorded music and of radio to replace local orchestras in movie theaters and elsewhere, dial telephony’s displacement of telephone operators, etc. See my post here from the “job-killing robots” series:


    Also, the Tipping Points post states (as do most posts & articles on the subject of automation) that “Less educated workers will be most vulnerable to these changes and will be at risk of having manual and routine tasks replaced by machines.” But actually, automation often results in the *deskilling* of processes rather than their upskilling.

  3. Here is my “summing up” post on Coolidge with some discussion of the 1920s.

    Based on my reading, I see Coolidge as the last president who did not turn to government as the response to any problem. Hoover was a progressive and there is no discernible difference between his policies and those of Roosevelt in his first two or three years. There have been objections that the federal government was much smaller and so Hoover’s attempts at stimulus were minuscule compared to Roosevelt, or especially those of Obama. That is true in a way but the dollar has depreciated so enormously since Coolidge that comparisons are difficult. An ounce of gold in 1924 was worth $20. It is now 80 times that, meaning the dollar is worth slightly more than one 1924 cent. Gross domestic product was much smaller, in real and in inflated dollars. But look at Hoover’s spending in graphic terms. Contrary to Paul Krugman, he doubled spending.

    That is more about why the 1929 panic was followed by Depression, unlike the 1920-21 panic.

  4. One rather illuminating look was amity schlaes Coolidge bio, which illustrated his good government progressive roots, till he shut down the boston police strike, then he became persona non grata,

  5. Interesting that a writer who thinks he has his finger on the pulse could put out an article about future trends without mentioning the most important one — the looming inability of governments to pay their bills, which eventually will force them (however reluctantly) to start living within their means. We are approaching “Peak Government” — women & minorities hardest hit.

    While the writer clearly kisses the globalist ring, there are alarm bells ringing now. How many of us knew before the current coronavirus problem that over-regulation had driven most drug manufacturing and much medical equipment manufacturing out of the US to China? The US can’t even make penicillin any more! We are beginning to see the costs of globalization. In a rational world, that would trigger some big changes!

  6. Gavin, I’m not so sure about your “Peak Government” thesis, to be honest.

    If the underpinnings you base that on were true and correct, then I think we should have seen problems manifest long before now–And, they mostly haven’t.

    The house of cards that is our economy/tax structure/everything else unsustainable? It should have collapsed a long time ago. It really should have–But, it hasn’t. So far.

    What I suspect is that we’re out in entirely unexplored territory, here. No other historical period, nation, or set of nations has managed what we have. Look at the agricultural sector–For most of human existence, the idea that you’d have under five percent of your population engaged in feeding the rest would have been ludicrous. Yet, we’re managing it. How? Increased technology, better techniques, better knowledge spread out across the workforce engaged in that work.

    So… How does that sort of thing play out, under an economic system predicated upon scarcity? Intrinsically, it’s all a damn game, anyway–The same facts underlie everything in a depression or recession, it’s just that the exchange mechanism has gotten fuxored. Where does that leave you, when the whole thing is based on imaginary fiat money? What’s really changed, if tomorrow they repudiate the debt? Most if it is entirely imaginary, based on nothing more than consumer confidence. It’s not backed by any resource, or defined by anything like a unit of labor, so what really happens if they just decide to write it off, declare a Federal jubilee?

    The iron laws of resource constraint used to be just that–Iron. Now? What is going to happen once someone brings back an asteroid full of rare earth ores, or even precious metals? Commodity prices go through the floor, for those things. Then what?

    I think that we’re in new territory, unexplored, unexperienced by any economy to date. We may be headed for economic disaster, or we might not. The whole thing is contrary to any expectations I’ve ever had, based on my reading and observation–I thought we should have already crashed and burned circa about 1995, but here we are. I’m starting to wonder if the “Long Boom” speculations might not actually be somewhat true, TBH.

  7. Kirk — Agreed, this is relatively unexplored economic territory. Japan might be a straw in the wind. Their financial economy has cratered — remember those heady days when the land occupied by the Royal Palace in Tokyo was worth more than all of Canada? But the productive economy has kept on ticking, generating exports and tax revenues. But what will happen in those other parts of the world where the productive economy has been offshored to China?

    The big issue for Western economies is the unfunded liabilities — the pensions that can’t be paid, the promised health care that cannot be delivered. When those issues really hit as populations age, it seems that governments will have two choices: One is the Communist choice, where the government ends up with 100% of a much smaller economy. The other is throwing in the towel, where government ends up with a smaller share of a larger economy. Either way, “Peak Government” (in absolute terms) is looming.

    Of course, I could be entirely wrong.

  8. Gavin, I don’t think anyone, to include the professional economists, really have a damn clue. The whole thing is like the proverbial “man with no visible means of support”, and I don’t think any of us down at our level have a chance of figuring it out.

  9. Domestic penicillin manufacture was extinguished a long time ago. My first job out of college in 1974 was as a research synthetic organic chemist for
    E. R. Squibb & Sons (now Bristol-Myers Squibb) in Princeton, N.J. Penicillin production scale up and manufacture was largely funded by the US Gov. around 1940, with the funding directed
    at Squibb and Eli Lilly in Indianapolis. Penicillin manufacture is a bulk fermentation process, think brewing beer, followed by precipitation and purification steps.
    I have forgotten what it sold for in bulk, but PotPenG was relatively cheap- dollars per kilogram. Even back then, much domestic drug production had first been outsourced to Puerto Rico
    and later Ireland due to favorable tax incentives. After 4 years in the Princeton headquarters/research facilities, I transferred to the New Brunswick pilot plant
    and production facility. I wanted to work in the pilot plant as I was concurrently taking classes at night at Drexel U. for a degree in Chemical Engineering. When I
    got my Ch.E. degree in 1980 I was offered a job as a production foreman for the Potassium Penicillin G division. I declined, I could see the writing on the wall. I learned
    about 5 years later that all manufacturing at that location had terminated, except for the preparation of injectables in a new facility built there. I should mention that
    most penicillin is produced as a raw material for a class of antibiotics referred to as semi-synthetic penicillins. Think ampicillin. There are a lot of them.

    There used to be a lot of fine chemicals/pharmaceuticals production in the US. I’ve been out of it for 40 years, but there may not any now. Outsourced to China (mostly) and
    India. Sort of like China with 1.2 billion tons of annual steel capacity. Not very prudent if a global war ever breaks out.

  10. I have forgotten what it sold for in bulk, but PotPenG was relatively cheap- dollars per kilogram. Even back then, much domestic drug production had first been outsourced to Puerto Rico

    I worked in a warehouse summers in high school. At the time, injectable penicillin was cheaper than sterile water injectable.

    Some of the outsourcing to China, I read, is that regulations drove it away. That is not a reassuring thought.

  11. Kirk, Gavin:
    When does a Ponzi scheme go bust? Of course we’d all agree something that cannot continue won’t. And maybe we’d all additionally marvel at how (ultimately exponential) growth curves haven’t passed some point such that they skyrocket. (Long, verbiage-filled asides possible here, with ideas like “knee of curve”, finite resources, how past doomsday predictions have essentially all failed to reckon with change wrought by human ingenuity.) And what about the reality that it’s all fiat money? (I remember the crash of the late 1980s. Overnight the stock of the company for which I was an engineer fell by something on the order of a half. I walked out onto the production floor the next day and looked around. Same building. Same machinery. Same computers. Tho with a day’s in and out changes, same inventory. Although slightly improved by an additional day’s work, same number of flight simulators at various stages of completion, each with millions of dollars invested. Same personnel. Where did half the value go? Told my wife that I wished we had some liquid capital so that I could buy company stock. Expected economic recovery and recovery of that stock. Both happened. What about a Dow DJIA that has typical daily fluctuations many of which have a number approaching half of the total Dow when I was a kid?)

    Maybe that line of musing leads inescapably to your comment, Kirk, about no clue and no way to figure it out. But I tend to trust math. It predicts sudden, great changes. Population demographics, in particular, lead me to think Gavin’s concern valid. On the one hand, the growth required for unfunded liabilities is actual, calculable. On the other, the population to make possible even a credible shot at meeting those liabilities won’t be there. Roe will collide with OASDI. What will come out of that train wreck?

  12. Mike,

    In the early years of the fine chemical/pharmaceuticals outsourcing, the motivation was tax savings and lower cost labor savings. When China and India became suitable foreign supply sources,
    an increasingly stringent environmental regulatory regime was a huge motivator. A large amount of many different organic solvents are used in the chemical reactions employed in fine chemical
    production and in the purification of fine chemicals. In the manufacture of PotPenG, the fermentation broth is diluted with large volumes of acetone which causes the product to precipitate out.
    That crystalline material is further purified with additional steps involving organic solvents. The diluted fermentation broth with the acetone in it (filtrate) is then stripped to recover the
    acetone for reuse. The EPA and state environmental agencies have clamped down hard of Volatile Organic Compound (VOC) emissions. Combined with waste disposal, odor emissions and such, NIMBYs
    and the government have pretty much chased it all away. Now the Greens are hoping to shut down fracking. That way they can shut down our enormous petrochemicals industry. Utter madness.

    At least with China’s dominance in fine chemicals, they can produce large quantities of Fentanyl cheaply to help advance American suicide.

Comments are closed.