An intriguing paradox of the 1990s is that it isn't called a decade of greed. Only the 1980s have acquired that stigma, even though the advance of individual wealth, the explosion of personal fortunes and the obsession with money in this decade all rival or exceed what happened in the last.
Does anyone doubt that more Americans are more transfixed with the stock market now than a decade ago -- and why not? In 1980, households owned about $1.1 trillion in stocks either directly or through mutual funds, pensions or trust accounts, says the Federal Reserve. In 1989 this had nearly tripled to $2.7 trillion. But by 1998, stock values had quadrupled again to almost $11 trillion.
The story is similar with huge personal fortunes. In the 1980s the number of millionaires -- people whose assets exceed their liabilities by at least $1 million -- rose modestly from about 2.8 million to 3.2 million, according to estimates by economist Edward N. Wolff of New York University. By 1998 the number had jumped about a quarter to 4 million. Forbes magazine is predicting that its next list of the 400 richest Americans will include 250 billionaires, up 60 from last year. By Wolff's estimate, wealth became dramatically more unequal in the 1980s and slightly more so in the 1990s.
As the money decade, the 1990s dwarf the 1980s. The two decades are depicted differently. In the 1990s, some of the super-rich -- Bill Gates and Warren Buffett -- have become folk heroes. This wasn't true in the 1980s, when Michael Milken and other Wall Street types were portrayed as symbols of greed. Selfishness seemed to taint the entire boom. "Trickle down" economics reigned; social programs for the poor were cut; the savings and loan crisis erupted; "hostile" takeovers multiplied. There were "excesses" galore.
Or so we were told. In the 1990s, we've heard a different tale. There's less greed-driven growth and "trickle down" economics. Prosperity reflects "the new economy." Computers, the Internet and entrepreneurs are driving America forward. Everything seems less soiled and more uplifting. What explains the contrast?
Well, maybe it's genuine: The 1990s' economy is morally superior, with fewer excesses. Be skeptical.
Consider the IPO boom. These are the "initial public offerings" now extensively used by Internet firms. They sell stock to public investors at prices that seem wildly inflated, because the companies usually have no profits or prospect of profits. Original investors can cash out; public investors speculate wildly. There are real ethical questions here. Is it moral to sell overpriced securities, even if people will buy them? But regardless of morality, the IPO boom reeks of excess. And if the broader stock market reflects a speculative "bubble" (as many think), its collapse could overshadow anything that occurred in the 1980s.
Perhaps Americans have become more accepting of great wealth? This, too, is doubtful. Americans are probably no more or less hostile than a decade ago. There's long been a grudging tolerance of vast differences in wealth, because most Americans would like to become rich themselves. Surveys periodically ask whether government should limit how much people can earn. By big margins, Americans say "no": 79 percent in 1980, and 74 percent in 1994.
What mainly explains why the two decades are treated so differently is intellectual and political fashion. The scribbling and chattering class -- reporters, editors, commentators, academics and other arbiters of public taste -- generally disparaged the 1980s and have embraced the 1990s. Their disdain and enthusiasm color popular perceptions.
Their biases may partly reflect personal experience. The press and academia are middle- and upper-middle class institutions, many of whose members have doubtlessly profited handsomely from the stock market boom. Having discovered their own inner greed, they may condemn it less in others. There's also the high-tech factor. Wealth from computers seems more respectable -- less dirty and more progressive -- than from real estate or oil. (Of course, the distinction is dubious, considering that you can't live in a computer or ride one to work.)
The main source of bias, though, is political. By and large, reporters and editors are liberal and Democratic -- a reality revealed by many surveys. So, too, is much of academia. The notion that the country turned "greedy" in the 1980s fit their world view. In 1980 and 1984, Americans elected Ronald Reagan. As a Republican, he was (by definition) indifferent to the poor and beholden to business. That Americans anointed him meant they had become more selfish. This helped explain anything that seemed undesirable about the 1980s economy -- from allegedly starved social programs to the S&L crisis.
By a similar logic, Clinton's election implied the country had tired of the 1980s "excesses." People were turning less selfish. All these connections, of course, are more imagined than real. For starters, they exaggerate political change. In the 1980s, Democrats never lost the House (Republicans controlled the Senate for six years); programs for the poor weren't savaged, in part because Congress restrained Reagan. In the 1990s, Republicans captured Congress. The 1996 welfare reform -- for which both Clinton and Republicans claim credit -- matched any of Reagan's cuts for the poor.
The larger sin is explaining economic events with political slogans. Consider. Most economic growth is "trickle down," because the richest 40 percent of Americans represent about 70 percent of income and purchasing power. Although the S&L crisis erupted in the 1980s, it originated in the late 1970s, when high inflation bankrupted many savings associations. (Rising interest rates on short-term deposits exhausted earnings from long-term mortgages with lower rates.) "Hostile" takeovers weren't pretty, but they often dislodged bad managers and made companies more efficient. And the computer boom predated the 1990s.
Greed is an attack word. Its overuse in the 1980s aimed to discredit. But human nature is less flighty than political fashion. Americans have long been ambitious and enterprising. These strivings energize the economy but can slip into greed. That was true in the 1980s -- and still is.