The Best and the Worst of Times

The decade of the teens has been one of the most remarkable in US history in terms of contrasts. Charles Dickens, in his Tale of Two Cities describes it remarkably well:

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.”

It is no longer hyperbole to say that we are more divided as a country than at any time since the Civil War. Long-held values, practices, systems, and policies have been turned on their heads by political leaders, omnipresent media, the entertainment complex and creative destruction from high-tech to basic manufacturing. On most any political, social, economic or religious subject, half of Americans would argue these are the worst of times and the other half, the best. 

Civility, common sense, and wisdom have been sacrificed on the altar of political expediency on both sides. We have become disillusioned and callused by the things we hear from and see done by our elected leaders at every level of government. President Trump often speaks to the lowest of our human instincts. Democrats, still stinging from Trump’s victory, united in animus against him, have turned out a record (since 1972) 25 contenders, at its peak, to challenge him in the 2020 general election.  To stand apart, their rhetoric has shattered traditional norms and conventions, frightening many, even in their own party. The idea that Socialism could be so enthusiastically embraced by so many in the most affluent nation of all time, amidst one or its strongest economies, indeed marks this time as an ‘epoch of incredulity and age of foolishness’ 

Stocks set record highs in record numbers in 2019. The S&P 500 is up 31.2%, The Dow, 25% and the CRSP US Total Market 30.5% this year. The NASDAQ, home to most of the nation’s leading tech firms, hit 9,000 for the first time ever and is up 35% for the year. The S&P set 34 new highs and the NASDAQ 10 new highs for the year, it’s longest streak since July 1997, according to the WSJ. 

The current bull market in stocks is the longest-running in US history, started in March of 2009. However, it remains second in returns of 330%, compared to 417% for the bull market of the 1990’s, according to Investopedia. More than a trillion dollars of corporate funds has come back to be invested in the United States from foreign subsidiaries, prompted by Trump tax cuts which put American companies on an equal tax footing with global competitors. 

Yet, as stock market averages boast an economy envied by the world, many criticize it for worsening the divide between rich and poor. This often-used refrain from capitalism’s detractors seems true on the surface because wealth creation appears to happen faster for capital investors than it does for those working in the jobs created by that investment. But no reasonable study of history or honest look at human nature can argue that capitalism, despite its flaws, has not bested all other forms of economy and government in lifestyle improvement and democratization of the human creative spirit and ability.

We are in the best job market since the late 1990’s. This decade has delivered 110 straight months of job creation. Unemployment is as low as it was when we put men on the moon in the late 60’s. And unemployment rates for African Americans, Hispanics, Asians, and high-school dropouts are all at the lowest levels since the Labor Department began keeping track, according to the Washington Post

‘Worst of times’ economic detractors embrace the disparity in wage growth between now and the last boom. But their arguments ignore the significant factors driving those differences. The 90’s experienced considerably higher inflation than what we have experienced in the teens – an average 3.08% compared to 1.8%. Higher wage increases were required to better higher inflation in order to maintain lifestyle improvements. The economy of the 90’s was electric with innovation made possible by the Internet and dot com booms. Whole new industries exploded onto the scene creating millions of higher-paying jobs. 

Today, President Trump’s policies are aimed at maintaining high-tech growth to compete with the Chinese, while re-building America’s manufacturing base. Manufacturing jobs are mostly lower skilled and paid, but critical to putting millions of the US population back to work and increasing the resiliency of our economy. Baby Boomers were still working in large numbers and investing heavily in the innovation mania. Today the Boomers, our country’s largest demographic, are more focused on saving than spending, helping to keep a lid on inflation. 

The great divide of perceptions among Americans seems destined to continue as we officially enter a the presidential election year that really hasn’t stopped since the last one. Presidential races used to disrupt our lives no more than a few months every four years, but today’s discontent and distrust have destroyed peace and common ground once enjoyed between them. Today’s America is not Dickens’ French Revolution, but the rhetoric and policy talk scare us and threaten damage to our Republic, just the same.

Hopefully, the strength of our economy will endure long enough to bridge us to a point of increasing love and respect for one another. Dickens’ vision for post-revolution Paris expresses that hope:

“I see a beautiful city and a brilliant people rising from this abyss, and, in their struggles to be truly free, in their triumphs and defeats, through long years to come, I see the evil of this time and of the previous time of which this is the natural birth, gradually making expiation for itself and wearing out.”

We look forward to 2020 and to looking forward with you.

Peace and Happy New Year.