Guest post by Ted Lamade, Managing Director at The Carnegie Institution for Science
A few weeks ago, Morgan recommended a documentary titled An American Experience: New York, which is a seven-part series exploring the city’s history as the “premier laboratory of modern life.”
The conclusion is simple. Over the past century-and-a-half New York became the world’s most dynamic city. Yet, like the financial markets that are inextricably linked to its fate, the Big Apples’s ascent has been anything but smooth or predictable. Instead, it has been full of booms and busts, catalyzed by equally volatile levels of confidence.
In the seventh and final part of the series, an architecture critic named Paul Goldberger characterized the city during one of the more severe periods of misplaced confidence – the mid-1960s.
“America has always believed in bigness. We particularly believed this in the 1960s when the World Trade Center was conceived. Americans wanted bigger American things — They believed bigger doses of American power were going to solve anything. It was the age when all cars were gargantuan and had fins, the age when we were sending troops to Vietnam, the age of going to the moon. The Twin Towers were the architectural equivalent of this notion of bigness.”
During this period, the original plan for rejuvenating Lower Manhattan was centered around the construction of a 60-story office building. However, in a pursuit of “bigness”, these plans morphed into the construction of not one, but two 100-story buildings* *that would end up oversupplying the city’s office market for years to come.
So, how did this happen?
In short, city planners threw caution to the wind due to the fact that believing the impossible was unachievable was considered a sign of weakness. In this era of bigness, the future was limitless. Acting as if it wasn’t was un-American.
After two decades of unprecedented prosperity and growth, skyscrapers were just the beginning. Americans became convinced they could build highways that covered the entire country, corporate conglomerates that knew no bounds, and shuttles capable of reaching the outer parts of space. They also thought the country could win any war, end poverty, and save the environment, all at the same time.
As we now know with hindsight, this ambition stretched too far. In pursuit of bigness, Americans had lost their discipline. The United States was ripe for a humbling. Economically, interest rates had remained too low for too long and too much money had chased too few productive assets.
The result?
In the decade that followed, nearly every investment tethered to this concept of “bigness” suffered — large swaths of office space went un-leased, ove
