The Economic Policies That Worked so Spectacularly in the 20th Century Are Failing Most Americans in the 21st Century

Between 1900 and 2000, a few related, wonderful things happened.

For one, the nature of work and what it meant to be a human changed. Machines provided force and humans provided knowledge. The portion of teenagers in school rose from 10% in 1900 to 90% by 2000. In 1900, the men and women who were used like machines died – on average – by 47. By 2000, men and women who used machines lived until 77. This gain of 30 years was as if every day Americans gained 7 more hours of life. For a century. Your little brother born 3 years after you could expect his life to be a year longer than yours.

Not only did people live longer but the workweek was shorter, dropping from about 60 to about 40 hours. The average American worked about 20 hours a week less but made 8 times as much. On top of that, they got to enjoy a fabulous invention that too rarely gets mentioned among the 20th century’s great breakthroughs: retirement. When you die at 47, you die working. FDR signed social security to begin providing retirement income at 65, which would give a person who lived to 77 a dozen years of retirement.

Intellectual and industrial capital – education and machinery – made Americans more productive. In 2000, incomes were about 8X what they were in 1900. So, every week 20 more hours of free time in 2000 than they’d had in 1900, each life with 12 years of retirement instead of zero and Americans made as much in one hour as they’d previously made in 8.

In no other century in history had life changed more for the average person. Ever. This was simply extraordinary.

The extraordinary policies of the 20th century seem less effective in this new, 21st century. At least for the majority of Americans.

Since 2000, this magic of more education translating into more income and more years of life continued. For the roughly one-third of Americans who got a BA. For the rest, incomes and life expectancy had begun to fall by about 1990.

Measuring expected years of life between 25 and 75, “by 2018, Americans with a BA could expect 48.2 years out of a possible 50, compared with 45.1 years for those without a BA.” At 25, Americans with a BA would probably enjoy 3 more years up to the age of 75. And while the data is less definitive beyond that, the gap seems to widen after 75. COVID seems to have widened it even further.

In the 20th century, everyone gained – particularly those with college degrees. In the 21st century, the gains mostly accrue to those with college degrees.

Angus Deaton and Anne Case have chronicled what they refer to as Deaths of Despair – lives shortened by suicides or drug and alcohol abuse. These deaths rise in regions where factories have closed and jobs have been lost to globalization and automation and where the workforce hasn’t a college degree to use to transition into new fields. But it is not just suicide that truncates life. People who lose jobs, who lose careers, report more pain, less vitality and – finally – die sooner.

As those without degrees experience lives more nasty, brutish and short than what they’d come to expect, it is little wonder that a man as perpetually outraged and aggrieved as Trump would sound to them like their voice, their president. It’s less remarkable that they might be ready to blow things up.

Our model of continued reliance upon a steady increase in knowledge workers and their knowledge is creating a new generation of haves and have nots.

For most Americans – specifically the two-thirds without a college degree – the positive trends of the last century have stagnated and reversed. An information economy that assumes perpetual increases in levels of education and gigabytes of information as a means to more prosperity and longer lives has seemed to hit its limits. Until we develop a new economy that finds a new way to put us back on a path of widespread, increasing prosperity, those who are missing out on the benefits of this information economy will only grow more bitter, resentful, and willing to blowup up a system that seems to ignore their reality rather than change it.

For a fascinating conversation between Chris Hayes, Angus Deaton and Anne Case, listen to Chris Hayes "Why is This Happening" podcast, the episode from 20 June 2023. They don't talk about the 20th century but they do explore these deaths of despair and how our economy is failing those without a BA.

A piece by Case and Deaton is here:
https://www.pnas.org/doi/10.1073/pnas.2024777118?fbclid=IwAR1ZwVfadj-KnHs-Gls_c4ma0AHmRmAEzjGY89rmdsGLuFC2ZmP4uUQ8vMo