Ten Years Ago…

30Nov08

Here’s some more stuff by Matthew Ygelsias and Ezra Klein about the time sensitive nature of being a successful blogger that I discussed earlier.

Basically the conclusion is that, in line with Malcolm Gladwell’s Outliers, that time is often an important factor in success. Bill Gates had tremendously unique access to information about computers from a young age. 20% of history’s richest people were born in the same 10 year span. I figured I’d go over some things that have changed in the last ten years that would presumably influence the potential success of young people living and working in Washington DC/East Coast generally during that time.

Housing
Nobody wanted to live in Washington DC in 1998. There were apartments in the Dupont Circle area on the market for $700 a month. I don’t have a source, but I don’t think it’s exaggeration to say that prices have doubled in a ten year period in many neighborhoods. Obviously incomes haven’t doubled.

Similarly if you were able to buy a house in any of the neighborhoods targeted for development between 1998-2004 you probably made a bundle. Housing prices didn’t collapse in DC’s urban areas much. On the flip side home ownership requires considerably more income for new buyers.

Jobs
In 1998 accounting firms were offering jobs (and bonuses) to junior accounting majors at my college. By 2002 Arthur Anderson was laying off their entire staff.

Overall it’s hard to say how much advantage being an earlier graduate would have been helpful, but I had graduated with an account degree in 2002 I probably would have been competing for jobs with many laid off people, with a couple years experience. I imagine many industries experienced similar patterns. Overall employment numbers haven’t experienced huge swings, but I think were the change would be evident would be people trying enter new fields and start careers.

You also have folks like Mark Warner, Mark Cuban and Daniel Snyders that got into technological industries just as they were exploding. In Mark Cuban’s case it seemed like he had two solid business ideas, one in 1990 that made him 2 millions dollars, and one in 1995 that eventually made him over two billion dollars. I don’t think it’s controversial to say that it would have been a lot harder to make a billion dollars out of a million in the 1980s.

Education
States were flush with funding, and universities’ endowments were soaring in the stock market in 1998, and I’m sure it was way easier to get into elite schools and especially state schools in 1998, then it was a few years later.

None of these things are easy to predict, you certainly can’t change the year you were born. I remember reading about how people in Russia were having fewer children because of bleak economic prospects in the late 90s. Maybe bucking the trend would have put their children in a less crowded cohort.

When you start talking about the circumstances of financial success, it basically leads to the case for progressive taxation. If society sets people up for success, then it would be natural to expect some degree of higher taxation on successful people. Warren Buffet will point out that all his financial prowess doesn’t mean much if he was born in a poor village in a third world country.

Which is part of why this type of analysis is criticized as a field. Unlike Warren Buffet, many rich people aren’t supportive of higher taxation. (Also it’s frustratingly probabilistic and speculative.)

I’ve read some polling that says most people will say they expect their children to have lower quality of life then they experienced. It’s certainly possible, but it’s pretty rare in modern history to see a generation take a step back. Of course, it was rare to see the stock market not making money over a seven year period as well, and that just happened.

It’s probably true that you can’t see the full implications of any particular moment until decades later, but I think this type of long term trend analysis needs to be more part of the national dialogue.

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Tags: Dot.coms, Ezra Klein, Generational Success, Malcom Gladwell, Matthew Yglesias, Outliers