At any given time, there is a dominant line of argument about the great issues that face America. When it comes to the economy, that line is most often delivered by Federal Reserve Chairman Alan Greenspan.
By last summer, with the country nearly four years into its post-bubble experience, Greenspan had settled on his latest and still-current line, one that seems suffused with modesty about our powers to predict the future and pregnant with the suggestion that the nation might best avoid sweeping conclusions (or perhaps any conclusions at all) about our immediate past.
Asked by a congressional committee how working Americans will fare amid the continuing rush of technological and global change, the Fed chairman offered this Delphic assessment: "Innovation, by its nature, is unforecastable." But, he added helpfully, history suggests that if we remain "sufficiently flexible" and keep our economic institutions in order, "it will happen ... jobs will be created."
Such a position is maddening because it overlooks the fact that, only a few years ago, Greenspan regularly engaged in the most sweeping of pronouncements as Pied Piper of the productivity revolution. It seems a little self-serving, given that a critical look-back might implicate the Fed chairman in the ballooning of the stock bubble. And it could be dead wrong. Economic and technological changes may not always work out for the best. Good things such as job creation -- or only good things -- may not, after all, simply "happen."
So what can be drawn from the events of the last dozen years? What is the punch line of the "Fabulous Decade," the "Roaring Nineties"?
Taken together, the eight books under review offer a tour d'horizon of the era. Among other things, they suggest that our decade-long love of stocks went unrequited, our hope that economic growth would lift all bottoms was probably overdone and our wild enthusiasm for all things technological may have been misplaced. Instead, the books hint at a darker, more ambiguous future.
Any assessment of the 1990s must start with the stock market. Over the decade, the market slipped the bounds of mere finance to become something much grander -- a reality show more engrossing than any yet devised by the networks, the embodiment of our wildest hopes for a new, democratized (and fabulously wealthy) future.
To pick just one of the thousands of anecdotes that fill these books, consider this story -- recounted in former Barron's writer Maggie Mahar's "Bull!" -- about San Jose resident Kathy Rubino. Rubino learned how deeply the market's influence had penetrated American society when she awoke one morning, popped on CNBC and received an obscene phone call. As the caller panted lurid remarks, the network's Joe Kernen warned of falling stock prices. "Suddenly," Mahar writes, "the obscene caller interrupted himself: 'Is that Kernen ... ?' he asked.
"Rubino, stunned, off balance -- and still groggy -- found herself answering him: 'The market has taken a plunge....' 'Jesus,' the anonymous caller responded, 'any word on Cisco...?' "
What was behind a tale like this, what allowed the stock market to so rivet American attention during the decade, was more than the drama of moneymaking. It was an unusual consensus that reached full flower in the 1990s and swept the field clear of objectors. On one side stood the claims of economic theory, conservative ideology and Wall Street self-interest that the stock (and bond and derivatives) market is the most -- indeed, the only -- efficient means of steering the nation's savings to their best use. On the other were social theorists and public policymakers. Since at least the Great Depression, these people had distrusted the market as prone to unfairness and self-destruction. But as the century came to a close, they allowed themselves to be convinced otherwise. They came to view the market as America's best hope of escaping a series of excruciating economic binds, especially the anticipated baby boom retirement crunch of the 21st century.
Mahar's book and Roger Lowenstein's "Origins of the Crash" can be read as briefs against the first strut of the 1990s consensus. In piling one financial perversion upon another, from Sunbeam to WorldCom to Enron, they ask, in effect, "What efficiency?" But their corruption case is not the strongest one that can be made against the stock mania of the decade. Instead, it's the mounting evidence against the other strut of the 1990s consensus: the assumption that, left to their own devices, most Americans can invest their way to security, especially retirement security.