History Always Seems To Come Full Circle

 

One of the easiest but most dangerous traps a society can fall into is recency bias, a memory prejudice that allows us to believe the way the things have been in the recent past is pretty close to the way things always have been.  The mindset gives us a false sense of security that the dragons we've slayed in the past are likely to remain stowed away, but unfortunately the patterns of history tend to rhyme as time goes along, and we're seeing that on three fronts currently.....inflation, crime, and fighting Russians.

For most of my childhood, it was the post-World War II middle class that was the victim of recency bias.  The combination of US industrial consolidation in the global economy, newly efficient communication systems (electrification of rural enclaves) and transportation systems (interstate highways), and a string of collective bargaining successes among ascendant labor unions gave birth to the American middle class.  A generation after the Great Depression, American workers with no postsecondary educations could afford a lifestyle their parents could only dream of having.  And for another generation or so, it was taken for granted that labor's gains would be irreversible.  But they weren't.

America's global competitors, most of whose infrastructure was blown to pieces in World War II, would rise again, applying market competition that either exported middle-class jobs or bid down wages at home.  While the American working class' way of life hasn't fully reverted to where it was before World War II, the halcyon days are clearly over as is clear by decimated real-time wages and benefits for what's left of the American working class, and decaying carcasses of former industrial centers dotting the landscape of Middle America.   After a generation of ascendancy following World War II, Americans were distracted by recency bias and lacked the clarity to realize that their choices as consumers and as voters would lead to an unraveling of the blue-collar middle class.  Yet here we are.

And progressing into the third decade of the new century, the soft arrogance of recency bias seems to have blinded us to the incoming threat of three additional demons resurrected from the historical graveyard.  The risk of inflation was one largely under my radar since I had barely started elementary school the last time America had an inflation problem.  Republicans were repeatedly decrying the risk of inflation during the Fed's quantitative easement era in the aftermath of the financial crisis, but it was easy to shrug off because the vacuum of financial capital following the housing collapse meant the economy's problem was that there was too little demand, not too much.  But as we learned this past year, even those who constantly cry wolf are at some point gonna foretell an actual wolf knocking at the door.

Of course the irony is that most of the Republicans warning about inflation resulting from economic stimulus during the Obama era were mostly supportive of vastly more stimulative fiscal and monetary policy when Trump was President.  To be fair, it was hard to predict just how much of an economic body blow would be incurred by COVID and the ensuing lockdowns that came with it, but the willingness to reverse course on federal stimulus nonetheless exposed the hypocrisy of the GOP.  Still, one wonders if history will decide the Republican inflation hawks were correct when they drew the line on further stimulus when the time came for Biden's American Rescue Plan Act in the spring of 2021.  Perhaps the Republicans stumbled into the right answer with their obstructionism for once, but I suspect if they had it do over again, policymakers of both parties might balk at the massive infusion of stimulus into an already fast-recovering economy and choose not to proceed with ARPA last year.

The stimulus doesn't represent the entirety of the current concerning inflationary cycle, but it represents the likeliest catalyst to setting it in motion, and as was the case for more than a decade through the 70s and into the 80s, inflationary cycles are very difficult to work out of.  Had the memory of 70s-era inflation been fresh on the minds of policymakers and the public, perhaps they'd have taken a pause before proceeding with passing ARPA into law, but recency bias prevented them from fully connecting the dots of overloading the economy with demand leading to inflation.  Passing stimulative economic policy while avoiding the inflation trap was a tightrope walk that very few present-day lawmakers have ever had to deal with, leading them to underestimate the risk of this demon rising from the ashes.  They're gonna get their chance now, as subsequent geopolitical developments seem poised to turn the 2020s into a decade comparable to the 1970s in terms of figuring out how to slay an inflation beast that won't go away.

A much more predictable enemy of the past to resurface of late was rising crime rates....and resurface they have.  It's reasonable to believe that peaks and valleys in criminal activity will always come in cycles, with public attitudes leading to tougher approaches in times of rising crime rates, and then subsequently moving to roll back some of these excesses when crime rates decline.  In the US, crime rates surged for 30 years from the mid-1960s to the mid-1990s, and it was blamed on everything from lead in the water to the strength in numbers of young men, the demographic most likely to commit crimes, coming of age in the Baby Boom era.  But starting in the second half of the 1990s, crime rates began dropping.....and they just kept dropping almost uninterruptedly for the next two decades.  Naturally, policymakers became comfortable with the idea that this would continue and they let their guard down....right up until the point where crime rates abruptly quit falling.

Just as the fallout from COVID played a large part in bringing inflation back from the grave, COVID deserves its share of the blame for rising crime as well.  The old adage is that idle hands are the devil's handiwork, and that very much proved to be the case with a population of young people who no longer had any commitments to school or work for a year or more.  Couple that with the backdrop of social justice protests, the weakening of bail laws, prosecutors electing to dismiss cases they were likely to prosecute in the past, a void of commerce in city centers where most workers spent the pandemic working from home, and prisons letting inmates out early due to COVID-related overcrowding fears and you had a perfect storm of escalating tempers and diminishing mental health.  I suspect crime would be vastly higher right now than it was five years ago even if we hadn't had an extended pandemic, but COVID without question compounded all the preexisting trend lines.

And now here we are, heading into an election year with crime rates unlike anything most Americans under 35 have any memory of and with many young people considering the police to be a bigger menace to civilized society than conventional criminals.  Just as it's hard to know when and how inflation will be contained, it's impossible to predict when the surge in crime will begin to ebb.  But it's naive to think we're likely to snap back to the crime rates of 2017 organically.  Once the skids are greased for the conditions that foment rising crime, be they escalating turf wars between gangs or streets full of drug addicts or mentally ill homeless, we're not gonna be able to flip a switch and make it go away.  It will require a patchwork of trial-and-error policies, some of which will likely overreach and others that will disrupt the current national obsession with equity and antiracism.  Whatever the case, the problem is unlikely to disappear on its own as, one way or another, people will not sit idly by and tolerate a society where they don't feel safe.

And then there's this situation in Russia.  Ten short years ago, Mitt Romney was something of a national punchline when he stated that Russia was "our biggest geopolitical foe".  Turns out it was the one thing Mitt Romney was right about in his 2012 Presidential campaign, and it's rather astonishing that only a generation removed from the Cold War that we allowed ourselves to get comfortable with the idea that the country with the largest nuclear weapon arsenal in the world that's led by a ruthless KGB strongman was no longer a serious threat to global stability.  Fast forward to February 2022 and the clearly unstable Putin has awakened us to the reality that Russia poses a more serious threat to us today than at any point in at least the last 50 years.  Once again, what's new is old again, and it's impossible to overstate how unsettled the current debacle in Eastern Europe could get in the weeks, months, and even years ahead.

And how crazy is it that just about all of these ghosts of policy past have returned to haunt us in large part due to the first global pandemic in a century?  Could we possibly get a starker set of reminders of the vulnerability of civilized society as we know it?  One would think the demonstrated fragility of so many aspects of life that we've taken for granted for so long would soften the edges of our sharp ideological elbows and convince more people that maybe we don't have everything all figured out.  Instead, it's only tightened the grip of polarization on our collective throats.  At this point, I can only commit to being a spectator to see where this Tilt-a-Whirl spins us next, waiting with bated breath to find out which mistakes of history will require the next round of painful reeducation.