Louis Hyman: The New Deal You Don't Know

Historian Louis Hyman's work focuses on the history of American capitalism. In his book _[Borrow: The American Way of Debt](https://www.amazon.com/Borrow-American-Debt-Vintage-Original/dp/0307741680/)_ , he examines in detail how the evolution of personal debt has not only changed the economics of this country but the culture itself. Capitalism in the short term appears dominant and inevitable. The machinations of markets and capitalist fortunes seem like they always have been; but that's very much not the case. Before examining a forgotten stumble of capitalism during the New Deal Era, Hyman gave us a multi-millennial economic viewpoint to put things in context. In fact capitalism is an anomaly in the history of civilization: for millennia our world was accurately characterized by the idea of Malthusian Stasis: world GDP per capita essentially did not change in the pre-industrial age. Only these few centuries has the dynamism of capitalism spiked the hockey stick of economic growth. As such, maybe it's not surprising that a relatively young system like capitalism will stumble every few decades as happened in the Great Depression. And as Hyman says is happening again today. Capitalism stalls when capitalists hold on to their money rather than putting it to work. And when banks and businesses are not being brave, not risking their money to make more money, the government can play a key role and fiscally encourage that potentially high-reward "risky" investment. Discussing the New Deal era, Hyman introduces us to key figures behind the scenes and to agencies, three-letter acronyms that you may not have learned about in US History class, that played pivotal roles in invigorating the economy during those years. He also draws comparisons with the current economic situation. One missed lesson goes back to Hyman's area of expertise: consumer debt. Today's banks have loaned much more money to individuals than to businesses. Securitized consumer debt has become their main business rather than loaning money to new, risky, high reward businesses. As Hyman explains, "Those are supposed to be flip-flopped. That's how economies grow. They don't grow through consumer debt." The banks' money is sitting in the vault; it isn't out working in the world. $2.4 trillion is sitting in US banks that could be funding businesses. There are also lessons to be learned from post-Depression technology investment. Specifically we need to find a new leading sector and break out of a technologically incrementalist era which Hyman says has gone on now for decades. He calls for crazy ideas--tech that sounds as far out as a self-driving car did a decade ago. Space elevators and “rocket boots” are what we need to jumpstart capitalism, get the money flowing, and move that graph further up and to the right.