I argue here that the 1990s should be seen as a postwar decade. This description helps to explain some characteristics of the decade and suggests some lessons for today. Charles Feinstein, Gianni Toniolo and I published a paper a decade ago (1994) along similar lines, focusing on three postwar decades. We looked ahead at the 1990s and asserted that it would be a postwar decade like those after the two world wars, coming as it did after the end of the Cold War. The question was whether it would resemble the prosperous aftermath of the Second World War or the parlous aftermath of the First. The 1990s have now passed into history, and I can answer some of the questions we posed a decade ago in anticipation.

I cannot yet answer them all. The 1990s had aspects of both the 1920s and the 1950s; it is hard to say unambiguously that it looked like one or the other. In three important ways, however, the 1990s recapitulate the 1920s in the United States: the unsustainable boom in stock prices, international capital flows, and income distribution. This similarity is worrisome, but not enough to predict the future. Even though the 1930s began with many unresolved problems, the Great Depression was not inevitable; it resulted from the mismanagement of these problems. The question for today is how well policymakers can deal with the problems we can foresee today.