An Extraordinary Time: The End of the Postwar Boom and the Return of the Ordinary Economy

Levinson explains how the world economies in the "Gold Age," from the World War II to the Oil Shock, had well performed with high economic growth rate, low inflation rate and low unemployment rate. Such a good performance of the world economies significantly contributed for the improvement of human well-being in major advanced countries on the one hand, while the politicians, policy makers as well as ordinary nationals in these advanced countries, all became to take for granted that economy could be controllable so as to grow at high rate with continuous improvement of human well-being on the other hand.After the world faced the Oil Shock in 1973, all the underlining economic conditions changed drastically, i.e., turned into being troubled with low economic growth rate, high inflation rate and high unemployment rate. In spite of efforts to challenge these economic bad conditions, such as the Thatcherism and the Reaganomics which promoted deregulation and privatization, the economies of major advanced countries have remained low growth rate and high unemployment rate, and widened income gap between rich and poor as a result of the liberalization of economies.After reviewed postwar world economic history, Levinson concluded as below;“The Golden Age was an extraordinary time, and the generation that lived through it enjoyed extraordinary opportunity. But as economist John Fernald observed after delving deeply into American productivity data, “It is the exceptional growth that appears unusual.” The same applies to every other country in the world. Economic miracles do happen, but in most times and most places, economics grow slowly, bringing a gradual improvement in living standards punctuated by sudden bursts of euphoria and by recessions that throw unneeded workers on the street. Neither market-oriented economic policies, such as those championed by Margaret Thatcher and Ronald Reagan, nor statist reforms, such as those initially undertaken by François Mitterrand, have proven able to alter that reality. In Japan and Korea, massive state-guided investment booms, once the objects of breathless admiration around the world, brought explosive economic growth followed by rapid improvements in living standards---again, for a while. But those economies, too, eventually fell from orbit, their political leaders no longer able to deliver miracles.”Levinson successfully described the dynamics of the world economies, and the "Golden Age" was mere extraordinary period which derived from such historical conditions, (a) the restoration of the advanced countries from ruins after the World War II, (b) the rise of communism that resulted in Cold War, and (c) the implementation of the Marshall Plan to support economic restoration of the advanced countries as an urgent response of US against the rise of communism.I highly recommend this book if you are interested in postwar world economic history, and want to understand why the advanced countries currently face difficulties in their economies.

The author is a poor analyst of economic trends. This is the type of subject whereby an author should support any of his arguments with facts including tables and many graphs. This book has absolutely none of that. Instead, the author cherry picks the data to make his point that pre 1973 was a magic golden age associated with rapid economic growth due to rapid labor productivity increase and post 1973 just the opposite occurred. And, that no economic policy of the right (tax cuts, deregulation, economic reform) or the left (fiscal stimulus in infrastructure, research, education, environment) helped at all. Although, obviously his narrative has an element of truth, there are problems with his arguments.The author’s golden age is ill defined. At times it is vaguely defined as post WWII to 1973, at other times it is precisely 1950-1973, at others it is 1960-1973. And, there are many iterations throughout the book I am not mentioning. Invariably, this is to support that whatever economic metric he is looking at was “so much faster” in the pre 1973 period vs. the post one. But, you can’t do that in rigorous economic analysis. You have to segment your time series in consistent segmentation across all the macroeconomics variables you are looking at. Otherwise, you end up with essentially meaningless, cherry picked, obfuscating misinformation.Just a word back to the failure of policies, while the author advances vague narratives that are correct some of the time, you can also find long and material exceptions when growth was pretty robust during the post 1973 era. This is the case with the US under Reagan’s two terms in the 1980s (with policies of the right, tax cuts) and the following two terms of Clinton in the 1990s (with policies of the left, increase in taxes). Also, in the post 1973 era both China and India have achieved historically staggering rate of economic growth. It is only recently that China has supposedly hit a wall and is now growing at “only” 6% a year. That’s a rate of economic growth that would be considered ridiculously high for any other major country let alone one with 1.5 billion people. India with about the same population is still continuing to grow at 7% per year.When you look at the data, focusing on the US, the actual visual information is less dramatic than the author suggests. Labor productivity in the post 1973 period is lower than in the pre period. This is in good part because we experienced a decade of the Great Recession and its hallowed recovery. However, when you look at a ranking of the top 10 years for annual productivity 4 of those come in from the post 1973 era (close to a 50/50 split between pre and post 1973 eras). Focusing on overall real GDP growth parallels very much the findings of labor productivity. Meaning the difference between the two eras is not as dramatic as the author suggests.Labor productivity, economic growth, and GDP per capita are all bound to eventually slow down anyway on a Global basis. This is true for a couple of reasons.The first one is the aging of the worldwide population associated with the prospective or already prevalent shrinkage of the labor forces in countries.The second and main reason is because from a simple arithmetic standpoint it is inevitable. Take the well-known rule of 72 that allows you to figure how long does it take for a value to double when growing at a specified compound rate. So, let’s assume one thinks we could really maintain an increase in labor productivity of 2% per year (a bit less than in pre 73 era and more than in post 73 era). This would translate into a doubling of our actual output per worker every 36 years (calculated as 72/2). This entails that output per worker would increase by a multiple of nearly 8 times every century! Is this even plausible? No it is not. Even if this staggering level of production is undertaken by robots (which would remove any labor input constraints), you would need a gargantuan demand side from individuals to match this gargantuan supply side. We won’t ever need 8 homes, 16 cars, and 5 proprietary cloud-computing networks per individual. It just does not make sense. The demand is not and will never be there to accommodate such an absurd world. This simple math can readily tell you that. You don’t need to read an obfuscating 300 page economic treaty to figure that out.

Levinson has written some excellent histories, usually in the format of using one particular major change (the rise of containerized shipping in "The Box", the A&P store chain in "The Great A&P") as a way of discussing how it changed the economic landscape of the country - and in the process, providing an excellent economic history for lay readers on particular periods of time. "An Extraordinary Time" takes a broader approach (although it is ostensibly focused on productivity), but it continues in the vein of providing an excellent, supremely readable account of the economic transformation that countries across the world went through with the end of the Postwar Era (1945-1970s) and the rise of a new one.He starts off by setting the framework in the 1970s, as economic growth reached its peak in the rich countries as they (unknowingly at the time) neared the pinnacle of their economic growth and frequently productivity growth (although the latter had already started to slow in several countries). Levinson then goes into great and fascinating detail about various countries' responses to this, from the rise of Thatcher in Great Britain to the shift towards new industries in Japan as the old "smokestack" export industries declined. Throughout it all, he poses a question - "Why did economic growth and productivity drastically slow down worldwide after the early 1970s?" There are no easy answers, and Levinson goes into great detail examining each potential reason why it might have occurred.All of the above might make this book seem more dry than it is. It is not a dry book at all - as mentioned above, one of Levinson's great strengths is that he can make this all incredibly interesting and very readable. I strongly recommend this to anyone who might be curious about what has happened in the world's economy since the 1970s.

An intensive look at the major economic and political trends before, during, and after the 1970s. The point of the book is to contrast the extraordinary nature of productivity and growth post World War II (1946 -- 1970), as opposed to what happened during the 1970s (when economic activity underwent a dramatic decrease), as opposed to what happened post-1980 (economic activity remained, and still remains, much lower than the 1946-1970 time period). In Levinson's opinion, the underlying story is really about productivity, which underwent a big slow down in the 1970s, and has continued to slow further since that time. There are many contributors to the unusually high productivity in the 1946-1970 time period, at least some of which (like movement from the farm to industrialized cities) are one time changes that will not be repeated. He also points out that politics and politicians were ineffective in reversing the productivity slowdown irrespective of what country they were running, or which political philosophy (right wing, left wing, or other) they espoused. Mr. Levinson obviously wanted to nail his pre- versus post- thesis into the wall -- which he does rather excessively with example after example after example after example. Really, he could have readily shortened this book by 100 pages and not taken anything away from the productivity punch line. But, nevertheless, a good book for your economics library.

This is a general discussion of the several factors that happened to coincide from around 1947 to the mid 1970s, resulting in the greatest period of economic growth the world has ever seen. It hadn't happened before, isn't happening now, and (according to the author) probably will never happen again.Since the economic boom slowed in the 1970s and 1980s (depending on the country in which you lived or the industry in which you worked), politicians of all political and ideological convictions have tried to restore the glamour. Alas, neither right-wing free marketeers nor left-wing state socialists have been able to bring back the glory days. Electorates in reasonably democratic countries have responded with frustration.One of the autnor's comments on page 267 perhaps summarizes it best: "... Rising anger at the state's inability to deliver average citizens the prosperity it had promised manifested itself in uncomfortable ways: resentment of immigrants blamed for taking supposedly scarce jobs; vociferous opposition to paying taxes to maintain roads and public buildings; relentless criticsm of public services that had once been treated as proud achievements, such as schools and health programs." Anybody reading this recognize what country this statement describes?There are no charts or graphs in the book to demonstrate the author's assertions about long-term trends. The book is, however, heavily foot-noted. If you are interested in more detailed analysis, you should read the cited books and articles. Just glancing at their titles, many of them appear to be pretty dense reading. I didn't find the absence of heavy economic analysis to be an issue. In fact, I thought it made the book more enjoyable to read.