Blog Post

AEIdeas

Were the 1990s really the best decade ever? Kurt Andersen makes the case in the New York Times, citing everything from economic stats to political cooperation in Washington to better TV shows to the emergence of the consumer digital age. If Hillary Clinton does run for president, we’ll probably hear a lot more about the prosperous ’90s. And if Americans think of a Hillary presidency as a continuation of hubby Bill’s that would probably be OK with her campaign team. Andersen, for one, disagrees with Jeb Bush’s statement that “if someone wants to run a campaign about ’90s nostalgia, it’s not going to be very successful.” Well, that doesn’t have to be the whole of her message, of course. It does set a good foundation, yes? Better than 2000s nostalgia at least.

Anyway, here is his rundown of the 1990s economy:

The United States economy grew by an average of 4 percent per year between 1992 and 1999. (Since 2001, it’s never grown by as much as 4 percent, and since 2005 not even by 3 percent for a whole year.) An average of 1.7 million jobs a year were added to the American work force, versus around 850,000 a year during this century so far. The unemployment rate dropped from nearly 8 percent in 1992 to 4 percent — that is, effectively zero — at the end of the decade. … From 1990 to 1999, the median American household income grew by 10 percent; since 2000 it’s shrunk by nearly 9 percent. The poverty rate peaked at over 15 percent in 1993, then fell to nearly 11 percent in 2000, more or less its postwar low. During the ’90s, stocks quadrupled in value — the Dow Jones industrial average increased by 309 percent. You could still buy a beautiful Brooklyn townhouse for $500,000 or less. And so on.

1.) I could pick at those numbers, I suppose. For instance: GDP growth over the decade wasn’t quite 4%. From 1990 through 1999, annual growth averaged 3.2%. Or, alternately, from 1991 through 2000, growth averaged 3.4% — pretty much the post war average. But during the fat years, as Andersen notes, growth was spectacular with four-consecutive years of 4% or faster growth for the first time since the 1960s.

2.) With so many stats, strange that Andersen fails to offer even a single one about rising inequality. The top 1% US income share in 1992 — which Andersen cites as the start of the good times — was 13.5%, according to the World Top Income Data Base. When Bill Clinton left office in 2000, the share had risen to 16.5%. Actually, high-end inequality rose more during the Clinton presidency, 3.01 percentage points, than during the Bush presidency, 1.4 percentage points. Goes to show you that if all the boats are rising — unlike today — no one cares how the yachts are doing.

3.) But to get back to GDP growth, why was it so strong? My take:

The US economy entered the 1990s after undergoing a huge revamp in the 1980s: marginal tax rates were lowered from 70% to 28%, the inflation menace slayed, regulations reduced, and Corporate America got restructured. Then in the 1990s, government spending and debt were reduced, investment taxes cut, and — this is massive, of course — a technological revolution kicked into high gear. Oil prices fell by a third. Wal-Mart. A compliant Fed. Plus the Soviet Empire collapsed and the cloud of possible nuclear holocaust was lifted. Market capitalism was on the march. People were optimistic as heck about the future. Recall that The Matrix came out in 1999 and called the era “the peak” of human civilization.

Did I miss anything?