The Same Stories, Again and Again

During the depths of the Great Depression in 1932 an Ohio lawyer named Benjamin Roth wrote in his diary:

People think if more money were printed business would be better. This is a false and vicious theory … I am personally very much concerned with the question of inflation and it seems to me there is a grave possibility it will come unless the government at once balances its budget. With an election coming this seems out of the question.

A few months later, he wrote:

There is also considerable discussion about the new science of “technography” which holds that new machinery has replaced many men in industry who will never find a job again.

When I first read those a decade ago I couldn’t believe how similar they were to what people said after the 2008 recession. Now they’re relevant again today. You can copy and paste those paragraphs into any current newspaper and they’d fit right in. Some things never change.

Roth felt similarly.

When writing his Great Depression diary he was struck by how similar the 1930s were to previous big recessions. “I have done considerable reading about the depressions of 1837 and 1873,” he wrote, “and I am amazed at the similarity to conditions today.”

A year later he researched the Depression of 1893 and wrote, “I am again struck by the similarity.” The way people responded to decline and how politicians behaved and how greed and fear controlled investment decisions seemed identical. Some things never change.

Anthropologist Franz Boas says, “Every culture has its own genius and should be judged in its own terms.”

Sure, but every culture and era also share universal characteristics that repeat again and again. The same attitudes, the same flaws, the same stories that show up all over the place. They’re reflections of how people’s heads work no matter where they live or when they were born.

Those common behaviors are what I find the most interesting from history because they’re not just trivia – you can be nearly assured that they’ll eventually impact your own life.

Social sciences get a bad rap because so many insights are hard or impossible to reproduce. I think the only solution is paying special attention to the few behaviors that have repeated themselves throughout history.

A few that stick out from economics:


1. No one knows how they’ll respond to risk and setback until they’re in the moment of terror.

Varlam Shalamov was a poet who spent 15 years imprisoned in the Gulag. He once wrote how quickly normal people can crack under stress and uncertainty. Take a good, honest, loving person and strip them of basic necessities and you’ll soon get an unrecognizable monster who’ll do anything to survive. Under high stress, “A man becomes a beast in three weeks,” Shalamov wrote.

That, he said, is why history is full of so many unspeakable acts. It doesn’t take much stress for people to abandon their beliefs and say, “Fine, let’s go this other way now.” So you never know what people are capable of believing or doing until they’re backed in a corner.

The stakes are lower and outcomes far different, but a similar thing happens when people find themselves trapped in economic stress and uncertainty. There’s a long history of countries embracing policies they would have found unthinkable until they’re hit with an economic shock, when fringe ideas are quickly embraced.

Social Security was roundly rejected for decades, with straggling supporters arrested in the U.S. Capitol during one push in the 1920s. Then the Great Depression hit, and boom… practically overnight it was widely popular. The Social Security Act of 1935 passed 372 to 33 in the House and 77 to 6 in the Senate.

Same with 94% tax rates after World War II. Low taxes were the most popular economic platform of the 1920s, and anyone suggesting a hike was pushed aside. Then everything broke with a dual Depression and war. In 1943 Franklin Roosevelt said: “I do not think that any American citizen should have a net income in excess of $25,000 per year after payment of taxes [roughly $375,000 adjusted for inflation].” He was reelected in a landslide the next year.

Same with the Reagan revolution. Almost 80% of Americans had high trust in the government in 1964. Then the 1970s happened. George Packer recently wrote:

After years of high inflation with high unemployment, gas shortages, chaos in liberal cities, and epic government corruption and incompetence, by 1980 a large audience of Americans was ready to listen when Milton and Rose Friedman blamed the country’s decline on business regulations and other government interventions in the market.

Same with stimulus packages of the last 18 months. Deficit reduction was such a big topic in the 2010s, even among Democrats. Then Covid hit, and the $2.2 trillion CARES Act passed the senate 96-0.

Time and again we see that preferences are fickle, and views that a big chunk of society would have thought unthinkable can be quickly embraced when the economy changes direction. So we really have no idea what policies we’ll be pushing for in, say, five or ten years. Hard times make people do and think things they’d never imagine when things are calm.

Your personal views fall for the same trap. In investing, saying “I will be greedy when others are fearful” is easier said than done, because people underestimate how much their views and goals can change when markets break.

Bill Seidman, who used to run the FDIC, once said, “You never know what the American public is going to do, but you know that they will do it all at once.” The same story, again and again.


2. Declines occur because many people’s entire goal is to become so successful that they can relax, and relaxing leads to complacency that breeds decline.

A recent profile of Eliud Kipchoge, the best marathon runner in the world, writes:

He has a thing about celebrating, Kipchoge. Sees it as something sinister, something dangerous, a self-indulgent act that might derail his mindset, make him think, somewhere in his subconscious, that he has arrived, the inference being he has nowhere left to go.

“I’m a believer that if you climb to one branch,” he says, “then you reach for the next branch.”

It’s a great story because it’s so rare. And it’s rare because it’s most people’s definition of career hell.

“What’s the point of working hard if you’re never going to celebrate, if there’s never any reward?” is such a reasonable philosophy, and I think it’s what most people embrace. Their career goal is to work hard so they can stop working hard one day.

Whole industries fall into this bucket. In a story a few years ago about why so many Chinese restaurants are shutting down, The New York Times wrote: “These people came to cook so their children wouldn’t have to, and now their children don’t have to.” The whole purpose of opening the restaurant was to one day be able to shut it down.

I can admire that ethos, especially at the individual level. But it’s easy to see what happens when it’s simultaneously embraced by enough people, across industries, who decide it’s time to relax and celebrate after years of hard work.

The 1930s book Since Yesterday writes about the conditions that sparked the gambling mentality of the 1920s. Getting through World War I required so much sacrifice that when the skies cleared the whole nation felt obligated to party:

The temper of the aftermath of war was at last giving way to the temper of peace.

Like an overworked businessman beginning his vacation, the country had had to go through a period of restlessness and irritability, but was finally learning how to relax and amuse itself once more. A sense of disillusionment remained; like the suddenly liberated vacationist, the country felt that it ought to be enjoying itself more than it was, and that life was futile and nothing mattered much. But in the meantime it might as well play – following the crowd, take up the new toys that were amusing the crowd, go in for the new fads, savor the amusing scandals and trivialities of life. By 1921 the new toys and fads and scandals were forthcoming, and the country seized upon them feverishly.

Bubble in the Sun, a book on the Florida real estate bubble of the 1920s, tells the same story:

The nation, having fought and won a traumatic war, was eager to have some fun, and an exotic new American Riviera beckoned … As the new live-in-the-moment spirit took hold, a natural response to the recent dour war years, Americans began to spend and borrow more freely than ever before.

By 1927 this mentality led to the era’s popular song:

Blue skies smiling at me

Nothing but blue skies do I see

Blue birds singing a song

Nothing but blue skies from now on

Never saw the sun shining so bright

Never saw things going so right

Hard times justifiably – completely reasonably – made people want to relax, and relaxation compounded into complacency. From one extreme to the next.

In hindsight we view bubbles as periods when people lose their minds, tempted with dumb decisions and overconfidence. That’s partly true. But there’s another cause: People who spend their whole careers working hard amid uncertainty view the new era of prosperity as their deserved reward, the entire point of putting in years of long hours to begin with. So rather than a warning sign, the bubble is seen as crossing the finish line and being patted on the back after a long journey. George W. Bush portrayed the booming housing market as a sign the middle class could finally enjoy dignified housing stability. Maybe the same thing is happening now, with a generation who graduated into a broken economy buried in student loans and priced out of the housing market view the gains from meme stocks as their rightful compensation.

The same thing happens at individual companies. Becoming successful requires years of long, arduous work, away from your family, with everything on the line. It’s understandable that once a certain level of success is achieved some leaders feel justified to slow down, pull back, and let their guard down – especially when they’re being told how special they are and congratulated for their success. Scott Galloway says “If you tell a 30-year-old man he is Jesus Christ, he is inclined to believe you.”

When most people require a break from arduous and uncertain times, we should not be surprised when once a decade or so everyone casts prudence aside. We are not like Kipchoge. We like to celebrate, regardless of its eventual cost. The same story, again and again.


3. Innovation is hard to predict and easy to underestimate because so much occurs by accident, when several boring discoveries compound into something extraordinary.

A common story through history is that past innovation was magnificent, but future innovation must be limited because we’ve picked all the low-hanging fruit.

On January 12th, 1908, the Washington Post ran a full-page spread called “America’s Thinking Men Forecast the Wonders of the Future.”

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Among the “thinking men” buried in the fine print was Thomas Edison.

Edison had already changed the world at this point, becoming the Steve Jobs of his time.

The Post editors asked: “Is the age of invention passing?”

Edison’s answer was predictable:

“Passing?” he repeated, in apparent astonishment that such a question should be asked.

“Why, it hasn’t started yet. That ought to answer your question. Do you want anything else?”

“You believe, then, that the next 50 years will see as great a mechanical and scientific development as the past half century?” the Post asked Edison.

“Greater. Much greater,” he replied.

“Along what lines do you expect this development?” they asked him.

“Along all lines.”

This wasn’t just blind optimism. Edison was successful because he understood the process of scientific discovery. Big innovations don’t come at once, but rather are built up slowly when several small innovations are combined over time. Edison wasn’t a grand planner. He was a prolific tinkerer, combining parts in ways he didn’t quite understand, confident that little discoveries along the way would be combined and leveraged into more meaningful inventions.

Edison, for example, did not invent the first lightbulb; he just greatly improved upon what others had already built. In 1802 – three-quarters of a century before Edison’s lightbulb – a British inventor named Humphry Davy created an electric light called an arc lamp, using charcoal rods as a filament. It worked like Edison’s lightbulb, but it was impractically bright – you’d nearly go blind looking at it – and could only stay lit for a few moments before burning out, so it was rarely used. Edison’s contribution was moderating the bulb’s brightness and longevity. That was an enormous breakthrough. But it was built on the back of dozens of previous breakthroughs, none of which seemed meaningful in their own right.

That was why Edison was so optimistic about innovation.

He explained:

You can never tell what apparently small discovery will lead to. Somebody discovers something and immediately a host of experimenters and inventors are playing all the variations upon it.

He gave some examples:

Take Faraday’s experiments with copper disks. Looked like a scientific plaything, didn’t it? Well, it eventually gave us the trolly car. Or take Crooke’s tubes; looked like an academic discovery, but we got the X-ray from it. A whole host of experimenters are at work today; what great things their discoveries will lead to, no one can foretell.

“You’re asking if the age of invention is over?” Edison asked. “Why, we don’t know anything yet.”

This, of course, is exactly what happened.

When the airplane came into practical use in the early 1900s, one of the first tasks was trying to foresee what benefits would come from it. A few obvious ones were mail delivery and sky racing.

No one predicted nuclear power plants. But they wouldn’t have been possible without the plane. Without the plane we wouldn’t have had the aerial bomb. Without the aerial bomb we wouldn’t have had the nuclear bomb. And without the nuclear bomb we wouldn’t have discovered the peaceful use of nuclear power.

Same thing today. Google Maps, TurboTax, and Instagram wouldn’t be possible without ARPANET, a 1960s Department of Defense project linking computers to manage Cold War secrets that became the foundation for the Internet. That’s how you go from the threat of nuclear war to filing your taxes from your couch – a link that was unthinkable 50 years ago, but there it is. Facebook began as a way for college students to share pictures of their drunk weekends and within a decade was the most powerful lever in global politics. Again, it’s just hard to connect those dots with foresight. And that’s why all innovation is hard to predict and easy to underestimate. The path from A to Z can be so complex and end up at such a strange point that it’s nearly impossible to look at today’s tools and extrapolate what they might become.

There’s a theory in evolutionary biology called Fisher’s Fundamental Theorem of Natural Selection. It’s the idea that variance equals strength, because the more diverse a population is the more chances it has to come up with new traits that can be selected for. No one can know what traits will be useful; that’s not how evolution works. But if you create a lot of traits, the useful one – whatever it is – will be in there somewhere.

It’s the same thing with innovation. At any given moment it’s easy to look around at what startups are building or what scientists are discovering and think that what we’re working on is maybe neat – at best – but pales in comparison to what we did yesterday. Since we never know how multiple innovations will collide, the path of least resistance is to conclude that our best days are behind us while ignoring the potential of what we’re working on.

On January 12th, 1908 – the same day the Post ran their column with Edison – the first long-distance wireless message was sent in France.

No one could foresee the inventions it eventually seeded, including helping you read this article 113 years later.

The same story, again and again.

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