A few years before his death, maverick economist Thorstein Veblen had done something oddly out of character - he had taken a plunge in the stock market.... He made a little money at first, but...no sooner had the stock gone up than it was cited in the current oil scandals [and] eventually became worthless.If stocks had never made such a dramatic move, would anyone have ever realized the situation? That is the question for us at the turn of the century and the millennium. We at The Timesizing Wire want there to be at least one easily accessible source of accumulated warning signs, even if that source has to be us. In the 1920s, there were very few who weren't taken in by the superficial prosperity.
...Veblen himself had fallen victim to the same dazzling lure that blinded America. When the most disenchanted of of its observers could be tempted to swallow a draught, is there any wonder that the country was drunk with the elixir of prosperity?
Certainly signs of prosperity were everywhere. America in the late 1920s had found jobs for 45 million of its citizens to whom it paid some $77 billion in wages, rents, profits, and interest - a flood of income comparable to nothing the world had ever seen. When Herbert Hoover said with earnest simplicity, "We shall soon with the help of God be within sight of the day when poverty will be banished from the nation,"...he rested his case on the incontrovertible fact that the average American family lived better, ate better, dressed better, and enjoyed more of the amenities of life than any average family in the history of the world.
The nation was possessed of a new vision.... John Raskob, chairman of the Democratic party, gave it precise expression in the title of an article he wrote for the Ladies' Home Journal: "Everybody Ought to Be Rich." "If a man saves $15 a [month! per Raskob's grandson in 6/04/2004 email - Heilbroner misquoted as] week," he wrote, "and invests in good common stocks, at the end of 20 years he will have at least $80,000 and an income from investments of around $400 a month. He will be rich." That bit of arithmetic merely presupposed the reinvestment of dividends, figured at about 6% a year.
But there was an even more alluring road to riches. Had a follower of Raskob's method even spent his dividends and let his money grow with the trend of stock prices, he would have become rich just as rapidly and a lot less painfully. Suppose he had bought stock in 1921 with the (15x52=) $780 he would have saved at $15 a week. By 1922, his money would be worth $1,092. If he then added another $780 yearly, he would be worth $4800 in 1925, $6900 a year later, $8800 in 1927, and an incredible $16,000 in 1928.
Incredible? By May 1929, he would have figured his worldly wealth at over $21,000 (twelve times that in 1990s values). When the Great Bull Market of the '20s had gone on for nearly half a generation in an almost uninterrupted rise [today it has gone on for a whole generation], who could be blamed for thinking it would go on forever, and this was the royal road to riches? Barber or shoeshine boy, banker or businessman, all gambled and won, and the only question in most people's minds was why they never thought of it before.
Then in the awful last week of October 1929, the stock market collapsed.... In two insane months, the market lost all the ground it had gained in two manic years: $40 billion of value simply disappeared. By the end of three years, our investor's paper wealth of $21,000 had lost 80% of its worth.... The vision of Everybody Ought to Be Rich had been exposed as a mirage.
In retrospect, there were warning signs. The stock market had been built on a scaffolding of loans that could bear just so much strain and no more. Moreover, there were shaky timbers and rotten wood in the foundation which propped up the dazzling display of prosperity. Chairman Raskob's formula for retirement was mathematically accurate, but it never raised the question of how an average man could save $15 a week - he'd have to be saving half his weekly pay of $30!
The $77 billion national flood of income was certainly awesome in scale, but when one traced its sources to its millions of tiny rivulets, it was apparent that the nation as a whole benefited very unevenly from its flow. A round 24,000 families at the peak of the social pyramid received a flood of income three times that of 6,000,000 families squashed at the bottom. The average family income at the top was 630 times that at the bottom.
Other problems too had been overlooked in the fever of "limitless prosperity." Forty-five million found jobs but two million were still out of work. And behind their marble facades, banks had been quietly failing at the rate of two a day for six years before the crash. And the average American had mortgaged himself up to his neck, leveraged his resources precariously by installment buying, and borrowed yet more to buy fantastic quantities of stock - an estimated 300 million shares - on margin.
The imminent Depression was far from visible at the time. Few newsdays failed to announce some famous figure assuring the nation of its basic health. Even eminent economists like Yale's Irving Fisher were lulled by the signs of prosperity on every hand into declaring that we had reached a "permanently high plateau" - a metaphor rendered macabre by the fact that one week to the day after he uttered it, stocks fell off the brink.
Secondly, we at The Timesizing Wire sense that we're in pursuit of a scientific revolution in economic theory, a new paradigm, a perceptual shift, along the lines described in Thomas Kuhn's transcendent essay *The Structure of Scientific Revolutions (1962). We feel standard economists are missing a number of central and glaringly obvious realities and we're dedicated to uncovering these "BGOs" = blinding glimpses of the obvious. We're still working it out. If you bookmark timesizing.com, over days and weeks you'll see it happen before your eyes.
We feel we're on the shores of a vast new continent of faster, more pervasive human progress. It's all in the sophistication, intuitiveness and flexibility of our technology of sharing.
We sense we need to rewire our cerebral cortexes in some basic and fundamental ways that are holding up real and substantial human progress. Better and better technology and worse and worse lives? This is nuts. It's a stain on our escutcheon, a clot in our creamcrock. It's an insult to our vaunted intelligence, from Bill Gates to Rosanna D'Anna. And worse than that, it's BORING. When are we gonna be able to get onto some new problems at a more refined level without feeling like heartless creeps who would justly be blown away by violent revolution? When are we gonna lose poverty and its modern "entry ramp," marginalized workers ( and their "entry ramp," fixed workweeks and lack of on-the-job training)?
This website is dedicated to rewiring our cerebral cortexes in those basic and fundamental ways that are needed for real human progress and not just more techie whizbang. What do we mean? We mean we're bored with the entire category of TV science fiction - Star Trek and its whole family, Star Wars and its whole set of sequels and prequels - the whole 9 yards - because 99% of it is the same stupid economic arrangements of the present - primitive, war-dependent and violence rife - relabelled "future" with added techie whizbang and technobabble - the Alvin Toffler syndrome, where you proclaim yourself a great prophet of the future and come up with ABSOLUTELY NOTHING NEW. "Future Shock" indeed! With videogames, school shootings, Yugoslavians and Idi Amin's and Argentinian generals living among us, we've got enough SHOCK in the present, thankyouverymuch. What we need is gentleness and variety.
The cerebral rewiring process is harder than "operating on our own retinas". It cannot be rushed. It is done with words and probably best done by a linguist. It's a matter of connecting up the right words and phrases, so we see how unnecessarily stupid we're being. With all our miraculous technology, we should ALL be living in heaven by now and we are far far from that. Why?! We at The Timesizing Wire are "mad as hell and we aren't gonna take it any more!"
If you've seen the PBS Nova program on Longitude (after *the book by Dava Sobel), carpenter Harrington had to invent dozens of new elements to come up with an accurate and stable enough timepiece to tell longitude on ships at sea. So it is with (identifying and) redesigning the core of our economic structure for automatic stability at much smoother levels than today - to smoothe the current extreme sine wave of boom and bust. "Knowing the time accurately is vital to knowing where you are," says the program. However, mainstream economists today have major disagreements about where we are on the Kondratief curve and on what to do if we're heading down, and anyway, their entire menu of remedies is superficial (infected with Chesterton's pan-utopian flaw) or downright destructive, as the repeated failure of the World Bank and the IMF to mitigate or even just contain the Asian economic "contagion" amply demonstrates.
For more details, our laypersons' guide Timesizing, Not Downsizing is available at Porter Square Books in Porter Square, Cambridge, Mass. or from *Amazon.com online.