Four years into a seemingly never-ending financial crisis, it is worth considering the deep roots of this calamity. In her 2011 Pulitzer prize-winning novel, A Visit from the Goon Squad, Jennifer Egan asks how we got here. Jeff Madrick attempts to answer her question in his Age of Greed. The subtitle says it all: “The Triumph of Finance and the Decline of America, 1970 to the Present.”
Most histories of the crisis start in September 2008 or August 2007; some begin with the housing bubble of 2003 to 2006 or, perhaps, if they are especially thoughtful, they go back to Alan Greenspan’s decision to cut interest rates in March 2000 after the dotcom bust. Madrick, an economics columnist for the New York Review of Books, takes a longer view. He recognises that we are suffering the consequences of a thirty-year debt-fuelled bubble. Age of Greed tells the story of the rise of finance and its destruction of the New Deal compact, which had brought America the greatest period of sustained economic growth in its history.
It is worth remembering, now that we are in the depths of the bust, that the boom itself wasn’t that great. Between 1950 and 1970, in America the median worker’s real wage more than doubled. Since 1970, it has barely gone up at all. Men’s wages have actually declined in real terms. The growth of finance has brought great fortunes to a few, but that prosperity has not trickled down to the rest of us.
Madrick begins Age of Greed in 1970, at the tail end of what economic historians call the golden age: the high point of American liberalism, the high point of American productivity growth, the high point of American prosperity, when the now-omnipresent worship of free markets and denigration of government was still the province of loons, reactionaries, and a handful of bankers. Richard Nixon, remember, proposed domestic policies far to the left of any backed by Barack Obama. Madrick reminds us how much our world has changed.
He tells his tale chronologically, through a series of portraits of the businessmen, politicians, and academics who transformed our era. It emerges that in this trio the businessmen wanted fewer regulations, the academics…