I have intended for some time to read this book. Reading it, I could not help but consider parallels between now and the 1920s. We have experienced tariffs in this second term of Donald Trump, and tariffs played a significant role leading up to the Great Depression. The United States, after the First World War, emerged as a world power and its economy through most of the 1920s was roaring, just as our economy, at least before Trump took office, though not roaring, was in great shape. [The Economist, 11/6/24, Simon Rabinovitch writes of the American economy as the “envy of the world.”]
Inequality was rampant then; inequality is close to what is was then, and growing. In 1929, the top 1% of the population owned about 46% of the country’s wealth. Today, that number is about 32%. The concentration of wealth at the very top (.01%) is also similar. In 1929, the top .01% (1600 households) owned about 25% of the nation’s wealth, while today that group (136,000 households) owns about 15% of all wealth. To put all of this in current perspective, in an autumn 2025 Redfin article it was stated that the richest 1% of Americans hold enough wealth to buy every home in America. For those of us who struggled throughout careers bemoaning the lack of government funding for affordable housing, at least it is clear where that money resides.
There are other similarities, but differences as well. One seeming comparison that is actually a contrast – In the 1920s, the working class was introduced to credit for the purchase of automobiles, appliances, and shares of stock, which were bought for as little as ten cents on the dollar, and were callable at any time. The availability of credit, the popular accessibility of new convenience consumer items, the availability of amortizing mortgages, and the optimism for an ever-expanding economy gave working class workers the impression of real progress. Today, consumer credit is consuming Americans who are about 19 trillion dollars in debt. The difference is that there is no illusion of our debt-laden populace substituting for the (now eviscerated) middle class of the immediate post war period.
But the big difference seems to be that there was conscious separation between private enterprise and the government in the 1920s. The country was effectively run by the “captains of industry” and finance. The role of government was to promote commerce, protect property, preserve national integrity, prevent foreign incursions, print money, prosecute those who violated norms and laws, expand boundaries, and repress uprisings. And as long as government stayed within its lane, government had the support of the elite possessors of wealth.
Now, not only is the country still run by monied interests, but the government is also largely controlled by those same interests. Corporations and corporate political action committees spend enormous amounts of money to buy elections. Corporations are considered persons. Money is considered free speech. We have seen a progression from the “governmentalization of the lobby,” to the “revolving door strategy,” to “regulatory capture,” to many government and elected officials simply taking instructions from, adopting regulatory and legislative language provided by, and being rewarded with lucrative employment, status, and other benefits from, institutions funded by corporate interests.
And yet, given the parallels, particularly the rise in inequality that has alarmed even those benefitting from it, why is there not more action to tamp it down and “spread the wealth?” Tell an industrial agricultural mogul we need to be concerned with climate change, and that person will tell you they are not worried. For them, technology will overcome any such natural impediments to mass production and profit. Tell an industrialist that workers must be paid more to avert disruption of production and social unrest, and that person will tell you not to worry. There is labor somewhere in this country or in this world where he can produce and maintain his profit margins and any social unrest is the government’s problem. Tell a banker that interest rates are too high, credit is overextended, investments instruments are based upon illusory value and the economy is overheated and becoming frothy, and that person will tell you that financial institutions are too big to fail and banks can rely on government to bail them out. Tell an elected official, whose lifeline to reelection is funded by corporate interests, that there are problems on the ground that could potentially bubble up and impact the economy as a whole, and that politician will tell you they understand, do nothing, and then deny there was anyone who could have known there was a problem, once it occurs.
So why are elites not concerned? In the 1971 Lewis Powell memo to the Chamber of Commerce, he wrote, “…the time has come -indeed, it is long overdue for the wisdom, ingenuity and resources of American business to be marshaled against those who would destroy it.” The “it” Powell mentioned was not democracy, but the dominance of capital in all aspects of our lives. That goal has been achieved, but its realization is only an invitation to continue to amass more wealth, regardless of the cost. Those who “own the country” (as John Jay wished) now run it. They are not concerned about inequality because they control the levers of power; they know what will happen before it happens; their assets will be protected; they are covered.
Some random reactions to the book:
- Churchill is quoted as characterizing the 1920s American economy as “High wages, enough leisure to spend them in, and better times for all; all the masses follow, confident that in one way or the other they will all win through.” This may be a theme generated by corporate propaganda, but work conditions were grueling during that period, characterized by low wages, long hours and unsafe conditions. And just like the working class wage stagnation in the United States since the early 1970s, when productivity gains have been captured by corporate executives and reflected in the value of stocks, in the 1920s, there was a similar dynamic at work. Sorkin does not make any mention of this.
- In another section, Sorkin discusses how tariffs resulted in an immediate deflation in grain prices, leaving the impression (at least for me) that tariffs resulted in deflation overall. This seems somewhat counter-intuitive to me, but it is possible, based upon retaliation of governments of former export markets resulting in a glut of goods at home. This can result in deflation. Deflation and unsold inventory reduces need for labor, making labor cheaper, but it also dis-incentivizes production itself, as by the time goods get to market, the going price has fallen below the cost of production. Perhaps this is the case, but I would have appreciated an explanation from Sorkin.
- Sorkin’s treatment of Irving Fisher reminded me of Alan Greenspan before the 2008 Great Recession. Greenspan’s lauding of the innovation of derivatives like Collateralized Debt Obligations compares to Fisher’s praise of investment trusts.
- There are two quotes at the end of the book I find particularly telling. The first speaks to human nature, and how we just cannot let go of wanting or needing more. Despite obvious warning signs, we will “dress up hope as certainty.” The second is a warning – “The greater the heights of our certainty, the longer and harder we fall.”
This book reads like an economic Netflix series. Even though the book is almost 500 pages in length, the chapters are short, chronological, easy to follow and comprehensive. The characters are painstakingly developed. We get to know each of these titans of industry and finance intimately. For anyone who ponders how we create our own disasters, while deluding ourselves that “this time is different,” or “of no concern because we have conquered to business cycle,” this book will make you think, as it did me. Something we need more of right now.