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COMPETITIVE ADVANTAGE England led the Industrial Revolution and fed it with natural resources from its colonies. The pace of technological innovation was extraordinary and included the steam engine and the Bessemer steel converter. England produced more steel, locomotives and textiles than anyone else. Its economy grew fourfold from 1851 to 1911. Since the British pound was tied to gold, it was a global currency and helped make England the center of international banking.
WHAT KILLED THE BOOM Britain ultimately collapsed under the weight of defending the empire from colonial uprisings and imperial rivals. It lost its technological edge. Lastly, and most ghastly, the Great War bled it white.
1920-29 THE ROARING TWENTIES
Unemployment: Dropped from 12% to 3.2% Growth: A powerful 3.6% pace Inflation: Dropped below 1%
ECONOMIC BACKDROP This was the decade of Jay Gatsby, Florenz Ziegfeld, the rise of the American middle class and unbounded optimism. Following a postwar depression in 1920-21, the economy bounced back with a vengeance, growing a torrid 30% in the next two years. And money succeeded in holding its purchasing power as inflation averaged a less than 1% in the decade. The boom filled federal coffers. The 1920s was the last decade in this century when the federal budget ran a surplus every year. The national debt shrank from $24 billion to $16 billion. Taxes were reduced.
COMPETITIVE ADVANTAGE This expansion was electrically powered. As the decade began, about half of all factories were electric, the rest mostly using steam. But by decade's end, more than 80% were on electricity. Household earnings rose; unemployment averaged 4.7%. Car ownership grew from 8 million to 24 million. In 1928 Herbert Hoover declared, "We in America are nearer to the final triumph over poverty than ever before in the history of any land." Oops.
WHAT KILLED THE BOOM The '20s flamed out when unchecked speculation led to the stock-market crash of 1929. Bank failures, price deflation and ultimately the Great Depression followed.
1950S U.S.: BIRTH OF THE BOOM ERA
Unemployment: Averaged only 4.5%; jobs for nearly everyone Growth: Despite two recessions, the economy managed 4% a year Inflation: Just 2.1%
ECONOMIC BACKDROP Prior transitions from war to peace were accompanied by painful economic downturns. But the 1950s radically parted with that tradition as a result of massive federal intervention and the fact that the U.S. emerged physically unscathed, and rich, from history's most destructive war. Government helped: the Employment Act of 1946 (promoting maximum employment and production), the G.I. Bill (giving veterans financial aid to return to school) and the Federal Aid Highway Act (building highways everywhere) eased the transition to a peacetime economy.
COMPETITIVE ADVANTAGE A perfect market. Ex-soldiers got married, and their offspring, the baby-boom generation, swelled the population 18.4%, to 178 million. Everybody went shopping: consumer spending--adjusted for inflation--surged 38% in the decade. As families grew, demand for hospitals, schools and homes took off. All this activity lifted the average annual growth in real gross national product by 4.8% from 1947 to 1953, slowing to 2.5% for the rest of the decade. Globally, the U.S. economy ruled.