In 1973, when Barbra Streisand starred with Robert Redford in The Way We Were, she sang longingly about “misty watercolor memories.” In retrospect, 1973 itself was a year to remember. It was the end of a golden era—a period of rapid growth in productivity and living standards that had no predecessor and hasn’t been repeated.
In An Extraordinary Time, economist and journalist Marc Levinson says the good times are over for good, or at least for the foreseeable future. The boom from 1948 to ’73 was extraordinary. What we have now, his subtitle asserts, is “the return of the ordinary economy.”
An Extraordinary Time (Basic Books, $27.99) won’t sit well with people who believe that removing various obstacles to growth would bring back the way we were. The U.S. economy has been grinding out 2 percent growth since 2009. Donald Trump said in the third presidential debate, “I actually think we can go higher than 4 percent. I think you can go to 5 percent or 6 percent.”
Levinson cites prominent economists to make the case that this Trumpian hyperbole is misplaced. One is Northwestern University’s Robert Gordon, author of last year’s The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War. In 762 pages, Gordon argues that inventions since 1970, including the internet, don’t live up to the innovations that powered growth from 1870 to 1970, such as refrigerators, cars, telephones, and aircraft. Levinson quotes productivity expert John Fernald of the Federal Reserve Bank of San Francisco, who says, “It is the exceptional growth,” not the slowdown since, “that appears unusual.”
Economists’ regression analyses are all well and good, but you can’t understand history without the folks who made it. There’s Karl Schiller, a onetime Nazi Party member who became a key planner of West Germany’s postwar miracle; Ahmed Zaki Yamani, the skiing, opera-loving former Saudi oil minister; and William Simon, the deregulation-happy energy czar who was exasperated by the interventionist tendencies of his boss, Richard Nixon. Levinson recounts episodes that reveal the mindset of a different time. In 1973 in Japan, people filled their tiny homes with rolls of toilet paper after rumors spread in Osaka that the country was running out.
Levinson holds a doctorate in economics, but he has a journalist’s appreciation for the power of on-the-ground observation. (He’s written for Time, Newsweek, the Economist, Bloomberg.com, the Wall Street Journal, and others.) His authorial technique is to tell a big story by telling a small one. Previous books were about an object (The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger) and a company (The Great A&P and the Struggle for Small Business in America); this time he’s focused on a period, and within that a year, and within that a day: Nov. 4, 1973, when the Netherlands declared a car-free Sunday to cope with the Arab oil embargo, and 64-year-old Queen Juliana “cheerfully hopped on a bicycle to visit her grandchildren.”
The oil price shocks of 1973 and ’79 probably contributed to the end of the postwar boom, Levinson writes. Beyond that, he acknowledges, the story is muddled. Did overregulation and overtaxation impede growth? Maybe, but productivity didn’t get back to its boom trajectory after the small-government revolutions of Ronald Reagan and Margaret Thatcher. Was high inflation the growth killer? Maybe. But as he observes, inflation is exceptionally low now, and strong growth hasn’t resumed.
Levinson finishes on an elegiac note by quoting Paul Samuelson, the great American economist, who wrote: “The third quarter of the Twentieth Century was a golden age of economic progress. It surpassed any reasoned expectations. And we are not likely to see its equivalent soon again.” We’re living in an age of diminished expectations; it’s fair to say the adjustment has been painful.