Timesizing® Associates
©1998,1999 Phil Hyde, The Timesizing Wire, Box 622, Cambridge MA 02140 USA (617) 623-8080

Differences between the 1920s and the '90s

Phil Hyde's list -

  1. The economy is much bigger now. How much bigger? We don't really have any consistent measures, but judging from the number of mergers and acquisitions then and now, at least six times bigger. That means that it has a lot more momentum, i.e., inherent stability, and so the concentration of spending power without spending will have to progress to much higher levels in the 20-00s than back in the 19-20s before triggering an undeniable contraction.

  2. The economy has more money-centrifuging mechanisms now, albeit weak and peripheral relative to the kind of powerful, central employment-sharing design that advanced economies will have by 2100. (How many more centrifuging mechanisms now than 1929?? How measure??) Although we have constructed and then dismantled many of them, such as steeply graduated income taxes (dismantling started under JFK in 1963), the economy still has many left, certainly more than in 1929. That again means there will have to be much more uncontrolled centripetal force than it took to trigger the contraction in 1929. However, we do now have some powerful new centripetal (money-concentrating) mechanisms, such as taxes on circulation (sales taxes and value-added taxes or VATs) and state-sponsored lotteries.

  3. Stock-price ratcheting practices are more widespread now, e.g., automatic payroll deductions for 401k contributions, many of which go into mutual funds. This has led to estimates that nearly half of American households own some stock, although as the ecological age sets in and we witness the atomization of the family (and the household) as human reproduction loses its overwhelming priority, the more valid figure on individual stock ownership would probably reveal that no more than 25% of Americans own some stock, and that stock ownership is astronomically concentrated. Compare Rob Firmin's point #2 below on protections against stock market collapse.

Rob Firmin's list -

  1. Output is more real [hard to say because there were no GNP statistics in the '20s, let alone slightly more 'real' GDP stats]
  2. Protections against stock market collapse exist now, such as stop-trading mechanisms and limits on margin accounts, although "margin requirements" were relaxed by the Fed in the 1970s and remain relaxed despite many pleas to the Fed to re-raise them in the light of market volatility at the turn of the millennium
  3. The FDIC protects bank savings [but Congress has succeeded in loosening a lot of the protective bank regulations of the 1930s such as the Glass-Steagall Act, under the guise of "modernizing" banking]
  4. Active ongoing monetary policy under the Fed helps to stabilize the economy more now than in the '20s when it was left to the private efforts of tycoons like J. P. Morgan
  5. Counter-cyclical programs which did not exist in 1929, such as unemployment insurance and social security, maintain spending to some extent [see Phil Hyde's point #2 about centrifuging mechanisms above]
For more details, see our social software manual Timesizing, Not Downsizing, which is available online from *Amazon.com and at bookstores in Harvard and Porter Squares, Cambridge, Mass.

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