How Economic Narratives Recur
The mutations that cause the recurrence of narratives can be random accidents,
but more likely creative people, including professional marketing experts,
politicians, phishers, and just plain social media enthusiasts, have been involved
in some element of their design. The creative types know that the older
narratives proved their potential by going viral long ago but are no longer
contagious. The celebrity attached to the original narrative may be forgotten or
discredited. The narrative may have been co-epidemic with another lost
narrative. Thus the creative people must try to link it to some extant epidemic.
Recurrent economic narratives tend to have an international scope, partly
because people in the news media long ago learned that they should observe the
news in foreign countries, for what is viral in one country can often be made
contagious in another. But like contagious disease epidemics, at any given time
the narrative epidemics tend to be stronger in some countries than in others. In
addition, narrative epidemics are more similar in countries that share a language
or borders. The examples in this book come mostly from the United States, the
country in which I have lived my life and the country about which I have the
best intuition and knowledge. Also, the United States has long documented its
business cycle history. The National Bureau of Economic Research (NBER)
maintains a chronicle of business cycle expansions and contractions back to the
year 1854.
Some critics might argue that institutional changes in the United States have
been so profound and transformative that there is practically nothing useful to be
learned from distant history. However, the events and reactions of 50, 100, and
150 years ago are surprisingly similar to what we see and experience today. In
today’s narratives, we see the echoes of these historical periods. Remember the
story about the huckster who offers a coin toss bet with the words “Heads I win,
tails you lose” and the sucker who took the bet? That little gem of a narrative has
been in circulation since 1847 (and perhaps earlier). At that time, it was
sometimes attached to stories of the Whig Party, Zachary Taylor (twelfth
president of the United States), or Richard Cobden, the foremost nineteenth-
century advocate of free markets, whom we are unlikely to think about today. In
the mid-nineteenth century, people weren’t telling exactly the same stories with
the same interpretations that we see today, but the themes are surprisingly similar

over time.

Big Economic Events, Big Narrative Lessons
The biggest economic events in the United States since 1854 as defined by the
NBER include the following. We return to these events frequently in later
chapters.
A depression from 1857 to 1859, followed by the secession of southern
states in 1860–61 and the US Civil War (1861–65). The Civil War was the
most lethal war in US history, responsible for more US fatalities than all
other US wars combined.2
A depression from 1873 to 1879 that led to the publication of the best-
selling economics book of all time in the United States, Henry George’s
Progress and Poverty (1879), which accused the unrestrained free-market
system of producing worsening inequality.
A depression in the 1890s comprising two NBER contractions, 1893–94
and 1895–97. The extended depression, during which unemployment
always exceeded 8%, ran from 1893 to 1899. This depression coincided
with an aggressive phase in US history, with the United States launching
the Spanish-American War and the Philippine War.
A series of three short contractions from 1907 to 1914, starting with the
Panic of 1907, which ended only with the heroic advances made by J. P.
Morgan and other bankers. These events led to the creation of the Federal
Reserve System to prevent such banking crises in the future. These
contractions were followed by World War I, which began in 1914.
A brief but extreme depression from 1920 to 1921 that included the sharpest
deflation ever experienced in the United States.
The Great Depression after the 1929 stock market crash, which morphed
into a worldwide depression. In the United States the extended depression
ran from 1930 to 1941, with unemployment uniformly exceeding 8%. The
Great Depression took its name from the 1934 Lionel Robbins book with
that title. It comprised two NBER contractions, 1929–33 and 1937–38. The
worldwide depression immediately preceded World War II.
A severe recession in 1973–75, associated with a war in the Middle East
and an oil embargo. Economist Otto Eckstein called this period the “Great
Recession” in his 1978 book with that title, inviting comparison with the