Visual summary of operating lessons from Brad DeLong.

Lessons from Brad DeLong

Brad DeLong is an economic historian at UC Berkeley and a former U.S. Treasury official. He is best known for arguing that the technological leaps of 1870 created massive wealth but ultimately failed to cure basic human dissatisfaction. The material below gathers his writing on economic growth, the limits of pure markets, and the history of macroeconomic policy.

Part 1: The Long Twentieth Century

  1. On the long twentieth century: "The long 20th century—the first whose history was primarily economic, with the economy not painted scene-backdrop but rather revolutionizing humanity's life every single generation—taught humanity expensive lessons." — Source: [Slouching Towards Utopia]
  2. On the pace of progress: "Before 1870, technological progress was too slow to outpace population growth, leaving most of humanity in grinding, Malthusian poverty." — Source: [DeLong's Grasping Reality]
  3. On the failure to reach utopia: "Our ancestors believed that by now utopia would have been the inevitable result of such material wellbeing. Instead of arriving at utopia we are slouching towards it." — Source: [The Jim Rutt Show]
  4. On the nature of slouching: "The history of the long twentieth century cannot be told as a triumphal gallop, or a march, or even a walk of progress along the road that brings us closer to utopia. It is, rather, a slouch. At best." — Source: [Slouching Towards Utopia]
  5. On the end of the era: "The long twentieth century effectively ended around 2010, when the North Atlantic economies failed to restore their prior pace of growth in the aftermath of the Great Recession." — Source: [Milken Institute Review]
  6. On economic vs. political history: "Prior centuries were defined by the names of kings, wars, and empires, but the twentieth century was the first period where the shifting economic baseline was the primary driver of all other human affairs." — Source: [DeLong's Grasping Reality]
  7. On the definition of scarcity: "For the vast majority of human history, the central problem was that there simply was not enough food, shelter, and clothing to go around, dictating a society built on domination to control resources." — Source: [Conversations with Tyler]
  8. On the shift to abundance: "By the end of the long twentieth century, the problem of material scarcity had been technically solved, shifting the human struggle from production to distribution and meaning." — Source: [Project Syndicate]
  9. On ideological danger: "Before the twentieth century, ideology as opposed to religion did not kill people by the millions and tens of millions. The stakes were not thought to be worth it." — Source: [DeLong's Grasping Reality]
  10. On utopian faith: "Such enthusiasm for mass murder awaited the utopian faith of the twentieth century. Utopian faith is a helluva drug." — Source: [Slouching Towards Utopia]

Part 2: The Year 1870 and Engines of Growth

  1. On the 1870 watershed: "The year 1870 marks the most important hinge in human history, the moment when the rate of technological capability finally permanently outstripped human population growth." — Source: [The Overshoot]
  2. On the triple engine of growth: "The explosion of economic productivity was driven by a specific combination of the industrial research lab, the modern corporation, and rapid globalization." — Source: [Milken Institute Review]
  3. On the industrial research lab: "By institutionalizing the process of discovery, the research laboratory ensured that invention was no longer left to isolated tinkerers but became a predictable, organized output." — Source: [Slouching Towards Utopia]
  4. On the modern corporation: "The modern corporate structure allowed for the deployment of new technologies at a massive scale, organizing human labor and capital more efficiently than any previous institution." — Source: [Conversations with Tyler]
  5. On globalization: "Falling barriers and the collapse of transportation and communication costs allowed ideas and goods to flow freely, turning regional economic developments into a global transformation." — Source: [Project Syndicate]
  6. On the earlier Industrial Revolution: "The events of 1770 to 1870 were certainly important, but they were not sufficient to permanently free humanity from poverty; they merely set the stage for the true explosion that followed." — Source: [DeLong's Grasping Reality]
  7. On doubling capabilities: "After 1870, human technological capabilities began doubling every generation, a pace that completely rewired the physical and social environment for each new cohort." — Source: [The Jim Rutt Show]
  8. On the escape from Malthus: "The massive productivity gains post-1870 meant that for the first time, an increase in wealth did not simply lead to a corresponding increase in population that would eat up the surplus." — Source: [Slouching Towards Utopia]
  9. On the role of finance: "The shift of economic power away from Britain was heavily facilitated by German and American investment banking, which aggressively funded new industrial infrastructure." — Source: [Conversations with Tyler]
  10. On the transformation of daily life: "The changes triggered around 1870 meant that a person born in 1890 lived a life entirely alien to their grandparents, a phenomenon that had never occurred before." — Source: [DeLong's Grasping Reality]

Part 3: The Hayek-Polanyi Tension

  1. On Friedrich von Hayek: "Hayek was the thinker who most clearly understood that the market economy is an unparalleled mechanism for crowdsourcing solutions to the problem of production." — Source: [Niskanen Center]
  2. On Karl Polanyi: "Polanyi correctly recognized that a society organized solely around market logic will eventually destroy itself, because humans demand social rights that supersede pure property rights." — Source: [Slouching Towards Utopia]
  3. On the shotgun marriage: "Only a shotgun marriage of Friedrich von Hayek to Karl Polanyi, a marriage blessed by John Maynard Keynes, has humanity been able to even slouch towards utopia." — Source: [DeLong's Grasping Reality]
  4. On Keynes's blessing: "John Maynard Keynes provided the macroeconomic management tools necessary to keep the unstable compromise between market efficiency and social protection from collapsing." — Source: [Project Syndicate]
  5. On market fundamentalism: "Treating the market as the sole arbiter of human worth consistently leads to political backlashes, as people refuse to accept that their livelihoods should be destroyed by abstract economic forces." — Source: [Slouching Towards Utopia]
  6. On the failure of state control: "Attempts to entirely replace the market's crowdsourcing function with state planning failed miserably, demonstrating that Hayek's insight on the calculation problem was correct." — Source: [Conversations with Tyler]
  7. On property rights: "The market system only recognizes the rights of those who hold property; it is entirely deaf to the basic human needs of those who lack it." — Source: [DeLong's Grasping Reality]
  8. On social explosions: "When Polanyian demands for fairness and stability are ignored by political leaders, the result is usually a destructive populist revolt that threatens the entire system." — Source: [The Jim Rutt Show]
  9. On the sustainability of the compromise: "The Hayek-Polanyi marriage has frequently failed its own sustainability tests, leading to cyclical crises of governance throughout the twentieth century." — Source: [Slouching Towards Utopia]

Part 4: The Failure of Utopia and the Hedonic Treadmill

  1. On the hedonic treadmill: "We do not use our wealth to overmaster our wants. Rather, our wants use our wealth to continue to overmaster us." — Source: [DeLong's Grasping Reality]
  2. On persistent dissatisfaction: "This hedonic treadmill is the primary reason why, even in periods of massive economic growth and stability, humanity only slouched rather than galloped toward its ideals." — Source: [Slouching Towards Utopia]
  3. On the gap between technology and society: "Our scientific and technological competence exploded far faster than our ability to organize ourselves politically and sociologically." — Source: [Milken Institute Review]
  4. On fascism: "Fascism emerged as a violently Polanyian reaction to the insecurities of the market, offering a false promise of social cohesion through exclusion and domination." — Source: [Project Syndicate]
  5. On state socialism: "Twentieth-century communism was a tragic attempt to jump straight to utopia by eliminating the market entirely, which resulted in massive loss of life and economic stagnation." — Source: [DeLong's Grasping Reality]
  6. On the illusion of the end of history: "The belief in the 1990s that liberal democracy and market capitalism had permanently solved the problem of governance ignored the underlying fragility of the social contract." — Source: [The Jim Rutt Show]
  7. On inequality: "The failure to distribute the massive wealth of the twentieth century equitably is one of the clearest signs that our political economy has not caught up to our technological capacity." — Source: [Slouching Towards Utopia]
  8. On the cost of slouching: "While slouching is preferable to moving backward, the fitful nature of our progress has left billions of people vulnerable to entirely preventable economic shocks." — Source: [Conversations with Tyler]
  9. On material vs. spiritual wealth: "The assumption that ending material deprivation would automatically end social conflict was the great mistaken premise of nineteenth-century optimists." — Source: [DeLong's Grasping Reality]

Part 5: Macroeconomics and the Great Recession

  1. On recovery policy: "The United States, under left-of-center Franklin Roosevelt, did learn this first principal rule about recovery—spend money and buy things—and then applied it." — Source: [Reddit AMA]
  2. On austerity during downturns: "Slashing government budgets during an economic contraction is a fundamental error that prolongs suffering and damages long-term productive capacity." — Source: [Project Syndicate]
  3. On the 2008 financial crisis: "The tepid policy response to the 2008 crash effectively ended the period of reliable growth that characterized the long twentieth century." — Source: [Slouching Towards Utopia]
  4. On the Federal Reserve: "Central banks have often been too hesitant to tolerate brief periods of inflation, choosing instead to risk prolonged unemployment and economic stagnation." — Source: [DeLong's Grasping Reality]
  5. On Keynesian mechanics: "The basic logic of macroeconomics remains that when the private sector stops spending out of fear, the public sector must step in to maintain demand." — Source: [Milken Institute Review]
  6. On the Great Depression: "The length and depth of the Depression were not inevitable; they were policy choices made by leaders committed to a liquidationist view of economics." — Source: [Conversations with Tyler]
  7. On the limits of monetary policy: "Lowering interest rates is necessary but often insufficient during severe crises, at which point direct fiscal stimulus becomes the only effective lever." — Source: [Project Syndicate]
  8. On structural unemployment: "Allowing unemployment to persist for years turns a temporary cyclical downturn into a permanent reduction in the labor force's skill and participation." — Source: [DeLong's Grasping Reality]
  9. On inflation panic: "Policymakers frequently overestimate the danger of modest inflation while severely underestimating the social damage caused by mass unemployment." — Source: [The Jim Rutt Show]

Part 6: Public Policy and the Clinton Years

  1. On NAFTA: "The argument for NAFTA within the Clinton administration was heavily based on the idea that binding Mexico to the U.S. economy would promote long-term political stability in North America." — Source: [DeLong's Grasping Reality]
  2. On neoliberalism: "The core premise of center-left neoliberalism was that markets should be used to generate wealth, which the state should then heavily redistribute to ensure fairness." — Source: [Niskanen Center]
  3. On the failure of neoliberal redistribution: "The great flaw of the neoliberal era was that while the market generated the expected wealth, the political system ultimately failed to execute the necessary redistribution." — Source: [Project Syndicate]
  4. On government in innovation: "The state has always played a necessary role in funding basic research and absorbing initial risks before the private market takes over." — Source: [Slouching Towards Utopia]
  5. On deregulation: "Removing market constraints only works if the underlying rules still prevent monopolies and ensure that negative externalities are priced accurately." — Source: [Conversations with Tyler]
  6. On the political economy of reform: "Sound economic policy often fails because economists ignore the political reality that voters care more about their relative status than absolute gains." — Source: [DeLong's Grasping Reality]
  7. On wealth taxation: "A system that allows vast fortunes to compound over generations inevitably distorts political power and undermines the democratic process." — Source: [Milken Institute Review]
  8. On the Clinton administration's record: "The economic success of the 1990s was real, but it relied on a delicate balance of deficit reduction and tech-driven investment that proved difficult to replicate." — Source: [Project Syndicate]
  9. On industrial policy: "Reluctance to engage in explicit industrial policy left the United States vulnerable when other nations actively subsidized their own strategic sectors." — Source: [The Jim Rutt Show]

Part 7: The Economics Blogosphere and Public Discourse

  1. On Value Above Replacement: "I try to write things where my Value Above Replacement is high—where my specific background provides clarity that a generalist commentator cannot offer." — Source: [DeLong's Grasping Reality]
  2. On teaching economics: "The standard curriculum often does a disservice to students by teaching bloodless mathematical models without the messy, essential context of historical events." — Source: [Conversations with Tyler]
  3. On readable history: "I may well get kicked out of the economists' union for writing a very readable book." — Source: [The Jim Rutt Show]
  4. On the Malthusian night: "To understand modern economics, one must first deeply grasp how stagnant and miserable human existence was before the year 1870." — Source: [Slouching Towards Utopia]
  5. On political mendacity: "Much of modern political-economic discourse is merely performance art, where rhetoric serves useful narrative purposes rather than reflecting economic reality." — Source: [DeLong's Grasping Reality]
  6. On the purpose of blogging: "The original promise of the economics blogosphere was to create a decentralized intellectual salon that could bypass traditional gatekeepers and rapidly critique bad policy." — Source: [Project Syndicate]
  7. On analytical lenses: "The role of the public intellectual is to provide frameworks that help readers filter through the daily noise and identify the underlying structural drivers of events." — Source: [Niskanen Center]
  8. On historical rhyming: "I bet that humans are such the same that the future resonates if not reflects the past." — Source: [DeLong's Grasping Reality]
  9. On interdisciplinary study: "Economics fails when it attempts to isolate itself from sociology and political science; human behavior cannot be neatly compartmentalized." — Source: [Conversations with Tyler]

Part 8: Historical Parallels and the Future

  1. On the next hinge in history: "The transition away from carbon-based energy and the rise of artificial intelligence likely mark the end of the long twentieth century and the beginning of a new economic paradigm." — Source: [DeLong's Grasping Reality]
  2. On climate change: "The failure to rapidly price carbon and transition to green energy represents a breakdown of both market signals and political foresight." — Source: [Project Syndicate]
  3. On AI and growth: "If artificial intelligence can organize information as effectively as the modern corporation organized labor, it may trigger another massive leap in baseline productivity." — Source: [The Jim Rutt Show]
  4. On the rise of populism: "Recent populist movements are a predictable Polanyian response to decades of wage stagnation and the perceived indifference of political elites." — Source: [Slouching Towards Utopia]
  5. On shifting economic power: "Much like the center of economic gravity shifted from Britain to the United States around 1870, the twenty-first century is defined by the rapid re-emergence of Asia." — Source: [Conversations with Tyler]
  6. On American vs. European growth: "The U.S. historically maintained higher growth through aggressive technology adoption and market scale, while Europe prioritized social stability and leisure, reflecting different societal values." — Source: [DeLong's Grasping Reality]
  7. On China's economic rise: "China's ability to pull hundreds of millions out of poverty by integrating into the global market is the most significant economic event of the late twentieth century." — Source: [Milken Institute Review]
  8. On the importance of institutions: "Wealth is ultimately determined by the quality of the institutions a society builds to govern its resources and technology." — Source: [Project Syndicate]
  9. On optimism vs. pessimism: "Despite the political failures of the present, the baseline level of human competence and technological capacity provides grounds for a measured optimism." — Source: [Niskanen Center]
  10. On the ultimate goal: "The core task of political economy remains unsolved: how to equitably manage the abundance we have already created so that humanity can finally stop slouching and arrive." — Source: [Slouching Towards Utopia]