Kurt Anderson, the co-founder of Spy (one of my favorite magazines ever) and the host of the smart public radio program Studio 360, has written a pithy, inspired, and inspiring book called Reset: How This Crisis Can Restore Our Values and Renew America.
In 96 pages, Anderson describes the United States' previous boom and bust cycles and explains why the bust cycles are essential for innovation and improvement of living standards for everyone. Times of crisis, he says, open new opportunities for making positive changes.
From the beginning of the 1980s through 2007, the share of disposable income that each household spent paying off its mortgage and consumer debt increased by 35 percent. Back in 1982, the average American household saved 11 percent of its disposable income, but then the percentage steadily dropped, to less than 1 percent in 2007.
Not coincidentally, it was during this same period that state-sanctioned and state-run gambling became ubiquitous in America. Until the late 1980s, only Nevada and New Jersey had casinos, but now twelve states do, and forty-eight of the fifty have some form of legalized betting. It's as if we decided that Mardi Gras and Christmas are so much fun we ought to make them year-round ways of life. We started living large literally as well as figuratively. From the beginning to the end of the long boom, the size of the average new American house increased by half, even as the average family became smaller. During the two decades ending 2007, the average new American car got 29 percent heavier, 89 percent more powerful, and 2 percent less efficient. Meanwhile, the average American gained about a pound a year, so that an adult of a given age is now at least twenty pounds heavier than someone of the same age during the 1970s. Back in the late 1970s, 15 percent of Americans were obese; more than a third of us are now.
It's as if the Roaring Twenties, instead of crashing to a halt in 1929, had lasted all the way until 1945, uninterrupted by a depression or world war. Despite the recession of 1990 . . . and the popped bubble in technology stocks in 2000 . . . and then another recession . . . and the terrorist attacks in 2001 . . . despite all of it, the 1980s spirit endured, like an awesome winning streak in Las Vegas or a multigenerational rave that went on and on and on. The Soviet Union collapsed: yes! American-style capitalism triumphed and spread: hooray! So what if every year since the turn of the twenty- first century the U.S. economy was growing much more slowly than the global economy? The (Chinese-made) stuff we were all buying at Walmart and Costco and H&M stayed supercheap-as did money itself, which our new best friends, the Chinese, obligingly supplied to us by the low-interest-rate trillion. The fresh technological miracles and wonders just kept on coming, reinforcing our sense that progress was on the march and magic was in the air. Even 9/11 and our resulting Iraqi debacle, after a while, came to seem like mere bumps in the road.
Deep down we had an inkling at least that the spiral of over- leverage and overspending and the prices of stocks and houses bubbling ever higher were unsustainable, just as everyone figured that the unprecedented performances of baseball players like Barry Bonds and Roger Clemens couldn't be kosher, but . . . no one wanted to be a buzz kill. From 1982 until 2008, we partied like it was 1999.