Was It Really So Bad?
At 1:45 on the morning of Sept. 15, 2008, the 164-year-old investment bank Lehman Brothers filed for bankruptcy in the Southern District of New York. Ghoulish camera crews parked outside the firm's headquarters — just down the block from TIME's offices, so we had a ringside seat — to interview employees scurrying out with a few belongings stuffed into cardboard boxes. There was more to come. The next day, the federal government agreed to rescue AIG, one of the world's largest insurers. (Merrill Lynch, the giant brokerage house, had already been forced into a shotgun marriage with Bank of America, hours before Lehman went down.) Then, as money markets ground to a halt, Goldman Sachs and Morgan Stanley, the world's two most imperious investment banks, were saved only by a change in their legal status that let them be protected by the Federal Reserve.
And we know what came next, after the dazed masters of the universe stumbled home to Greenwich, Conn., Park Avenue and Westchester County: the world economy entered its steepest decline since the 1930s. In October 2010 the U.S. unemployment rate was 9.6%; in January 2000 it had been just 4%. Middle-class incomes have barely risen in a decade. At the top of the income scale, there has been little to complain about — Emmanuel Saez, professor of economics at the University of California, Berkeley, calculates that from 2002 to 2007 the richest 1% of American families accounted for 65% of all income growth. Meanwhile, those in the middle class worried that their children would be the first generation of Americans not to live better than their parents did.
But the raw statistics weren't the half of it. The noughts were the years when American capitalism — cowboy capitalism, as some Europeans labeled it — came to look crooked, ugly and just plain mean. The period started in the shadow of the Y2K hype, when billions were burned fixing nonexistent problems with computer programs that were supposed to blow up when the new millennium began. What blew up instead was the dotcom bubble. A market that had soared on ridiculous valuations of Internet stocks crashed to earth. Then came the phony-corporate-profit scams — Enron, WorldCom and Tyco — followed by the subprime-mortgage mess and the associated collapse of house prices, the Wall Street meltdown and Bernie Madoff's multibillion-dollar fraud. "The decade from hell," we called it on a November 2009 cover. Got a problem with that?
The Sparkling Decade
Well, yes, actually. artists know that the familiar can be made to look unexpected if you change your vantage point, and maybe the same is true of economic history. I was initially startled when Marissa Mayer, a veteran vice president at Google, recently tagged 2010 as a year of "innovation and optimism." But she has a point. In fact, there are plenty of reasons to extend that judgment to the whole decade.
Why? Start with stuff. In the spring of 2001, a TIME editorial meeting was interrupted — for the first time, it was said — by the ringing of a mobile phone. (It was mine. Oh, the shame.) I thought that Nokia 8850 was the coolest thing ever, but in terms of what it could do, its relationship to the smart phones of today is like that of a Model T to a Prius. Look around and you'll see plenty of other examples of things that are simply better than they were, from cars to televisions to computers. Many of these things are much cheaper — in real if not actual dollars — than they were a decade ago.
There's no secret as to why this is so. The twin forces of technological advancement and globalization — especially the development of China as the world's workshop — have combined to enhance the quality of products while driving down their price. But there's much more going on. Information technologies and ubiquitous access to the Internet have linked us as never before, creating the possibility of new ways of sharing insights and giving rise to what Clay Shirky of New York University calls a massive "cognitive surplus" whose wealth-creating potential can as yet only be guessed at.
This sunny view of the decade, to be sure, is hard to discern through the gloom that pervades those many American industries that have been battered by creative destruction. But if you shift your frame of reference, the world looks quite different. In the past decade, nations that were once marginal, such as China and India, have become vital parts of the global economy. Brazil is becoming a breadbasket to half the world. Perhaps most dramatically — I mention this because it always gets overlooked — Africa has had its most successful decade since the end of colonialism. Fueled by buoyant demand for its commodities and new technologies like mobile telecommunications, it is growing at twice the speed it did in the 1980s and '90s.
The cumulative effect of all this is that hundreds of millions of individuals have been lifted out of poverty. Though the Great Recession hurt trade and commodity prices, the U.N. was able to report this year that the world was on track to reach the Millennium Development Goal of halving the proportion of people who live in dire poverty over the 25 years from 1990 to 2015.
That's nothing but good news — for everyone. In the U.S., there is a depressing willingness to believe that the economic success of other nations must be at the expense of Americans. In the aggregate, that is nonsense on stilts. As Chinese and Indians grow richer, they will increasingly consume goods and services from older economies, like that of the U.S. If you don't believe me, ask college presidents. In 2000 there were 114,000 students in the U.S. from India and China; this year there are 233,000. They don't live on air.
I know, when unemployment is stubbornly high and family budgets tight, it's hard to cheer others doing well. But in our interconnected world, we should — and look forward to the day when the collapse of Lehman Brothers appears an insignificant blip in a decade when millions of people started to live the sort of lives we have long taken for granted. If 2010 was a year of innovation and optimism, can we look forward to more of the same? You bet.