Lol. This breathless report from Axios is just so perfect:
Inflation is on everyone’s mind, as prices for goods and services have jumped over the last few months. But many of the market participants and company executives who are talking about inflation are also admitting that it may not be that big of a deal.
Hookay.
Here’s Krugman from his newsletter today:
Leisure suits went out of fashion more than 40 years ago. High inflation stopped being a problem only a few years later. Yet while you rarely see warnings about the imminent return of disco style, hardly a year goes by without dire predictions that ’70s-type stagflation is coming back. Today’s column is about how the case for fearing runaway inflation has collapsed over the past few weeks.
But I didn’t have space to talk about why such fears have received widespread publicity, even though they were always on very shaky ground. Of course, one reason people are talking about inflation is that some prices have shot up in the past few months. But I don’t have the sense that inflation worriers are really arguing that soaring prices of used cars and lumber are harbingers of a return to double-digit inflation. Instead, they’re treating the background of price hikes as a kind of Greek chorus to reinforce their claim that we’re repeating the mistakes of the 1970s. The question is why invoking the specter of the 1970s evokes such terror.
Not that the ’70s were a good time economically. The great post World War II boom ended circa 1973, introducing a long period of sluggish gains and often declines in median income. But the ’70s don’t stand out as worse in that respect than several other periods. Real income growth under Jimmy Carter was better than it was under George Bush the elder; the Gerald Ford and Carter era as a whole was better than the reign of George Bush the younger. And none of the economic travails of the period matched the suffering of the 2008 financial crisis and its aftermath.
True, there was that inflation, although incomes by and large kept up. Still, by the numbers, it’s hard to see why we still scare children by telling them that if they’re bad, they’ll end up back in the 1970s. What’s all that about? Part of the answer is that the economic troubles of the ’70s came along with other bad news. Crime was still on the rise; inner cities were decaying; we lost the war in Vietnam. These were pretty much entirely separate stories both from one another and from the economic malaise, but they tend to merge in historical memory.
But here’s the thing about historical memory: It tends to be selective, and what gets remembered often reflects elite agendas. To take an infinitely more important subject than mere economics, how many white Americans were ever taught about the 1921 Tulsa massacre? I know I wasn’t. And so it is with economic history. You very rarely hear about the bleak economic mood of the early 1990s, a time of falling incomes, deindustrialization and widespread fear that the United States was losing out to foreign competitors. Somehow that episode got dropped from the curriculum even though Bill Clinton got elected by campaigning against the Bush economy.
But harping on the troubles of the 1970s serves a political purpose. To this day, I keep reading declarations that Carter-era stagflation is an object lesson in the terrible things that happen if taxes and spending are too high. There’s actually no evidence that big government had anything to do with the economic problems of the time; soaring oil prices caused by wars and revolutions in the Middle East were probably the biggest factor, plus irresponsible monetary policy (undertaken in part to help Richard Nixon win re-election).
Still, the legend of ’70s stagflation as the market’s way of punishing America for being too liberal lives on; for influential forces in our political discourse, it remains a story too good to check. The relevance to our current discourse is obvious. Democrats with a progressive agenda have taken control of the White House and, barely, Congress. Of course, there are widespread declarations that we’re about to relive (cue scary music) the … 1970s. Well, I’m not scared. Unless there’s a real possibility of a return to disco-era fashion, which would be terrifying.
I was a young person during the 70s so I experienced it as a time of being young and poor (as most people do) and basically, sex and drugs and rock and roll. Politically, is was a cynical, dark time but it was a helluva lot better than today. Krugman adds this, which made me laugh:
Hardly anyone talks about the lessons of the ’80s, which aren’t what you think.
German selective memory is even worse: Everyone knows about the hyperinflation of 1923, but nobody knows about the disastrous deflationary policies that actually destroyed democracy.
The ’70s were economically troubled but culturally innovative.
The ’70s economy was better than portrayed, but the food was as bad as you remember.
I can vouch for that last one. And my God was it bad in the UK. Horrible.