There is a theory of history by Neil Howe and the late William Strauss that says that since there are four periods of a person's life (childhood, young adulthood, midlife, and elderhood) and four types of generations (Prophet [Boomer], Nomad [Gen X], Hero [Greatest Generation, Millennials] and Adaptive [Silent]), there are four types of periods of history, called the First, Second, Third, and Fourth Turning. The First Turning is a societal high, wherein everything works well and people supported the community. The Second Turning is a time of social turmoil, wherein the Prophet generation challenges the precepts of those in power, causing social changes (for example, civil rights legislation). The Third Turning results from this and constitutes a period where the individual is prominent and society falls apart. The Fourth Turning is one of crisis when people restore the order and one way of life dies and another is born.
The latest First Turning was the 1950s and early 1960s, culminating in John F. Kennedy's Camelot. The latest Second Turning was the youth rebellion of the 1960s and 1970s, when youth protested the Vietnam War and how the Greatest Generation was handling things. It also was a period of financial turmoil, when two gas crises occurred and a period of lagging stock prices prevailed. The latest Third Turning was the Culture Wars of the 1980s, 1990s, and early 2000s, when people did their own things, building credit card debt, obtaining subprime mortgages, and driving gas-hungry SUVs. The question is when the next Fourth Turning will occur.
Such a turning starts with a catalyst that causes a crisis. The 9/11 attacks were not such a catalyst. It was instead a heralding event, similar to the Boston Massacre, the Dred Scott Decision, and the sinking of the Lusitania. Katrina was not such a catalyst. But the present financial crisis may be such a catalyst. It started on 2007 February 27, with the collapse of the mortgage market, leading to a buyout of Countrywide Financial. The crisis simmered for a while, causing a downturn which caused oil prices to slide back. It then broke out in full force in the week of September 15-19 with the bankruptcy of Lehman Brothers, the buyout of Merrill Lynch, and the government rescue of AIG.
This is somewhat surprising. I thought for sure that peak oil would be the catalyst, but it's possible the mortgage crisis was caused by peak oil. In any case, it appears to have come. The mortgages were the "spark" (Strauss and Howe) that turned into a Crisis. They say that it will be a long time with us, another sign that this is it.
If this is the Fourth Turning, then how will it proceed? The last one started with a Great Depression. That was caused by the laissez-faire, let the market resolve it attitude of the Republicans of that time, including Herbert Hoover. Once FD Roosevelt got into power, he used the powers of the government to turn this country around. We all have knowledge of this Depression now, although you have to be at least 75 years old to have felt the effect of it. In this day and age, if you are at the retirement age of 62, you have absolutely no experience of what things were like during the Great Depression.
However, knowledge of the Depression is affecting events, and my feeling is that this will not be a Great Depression, at least not in the way that the 1930s was. That is why all the bailouts. Every time something that will crash the economy and cause a big Depression threatens (e.g., the failure of AIG), the Government comes in and bails it out. This is one way of handling it. Will it work?
The problem is that for the past few years, with reckless Third Turning abandon, we have been living off money that does not exist; for example, high credit card debts and unpaid mortgages. This present crisis is now people and the system recognizing this fact. The problem is how to fairly distribute the non-money so that it does not cause trouble. Repeated government bailouts will spread it out among all of us by increasing the federal deficit. This will be made up by higher taxes, reduced benefits, or more likely by the Government simply printing more money. This means inflation is headed up, meaning that a serious hyperinflation may be headed our way. The "Mother of all Depressions" may resemble Germany in 1923 more than it does the US in 1932.
In the near future, this crisis will gradually get resolved, and another boom may occur next year. People will feel better about themselves and the market, and once again prosperity will occur. That's when Peak Oil will confront us. The new prosperity will undoubtedly increase oil prices, and may cause them to increase dramatically. Sooner or later we will have to deal with the problem of declining oil supplies. We will need to conserve in the years ahead, even if we get all these alternative sources to work.
4 comments:
Yes, we are in the Fourth Turning. The crisis has arrived. One major aspect of the 4T theory you missed is the boomer polarity--idealists from both right and left, both prone to extremism. During the crisis, this Prophet generation is held in check by the Artist and Nomad generations that precede and follow, respectively, the Prophet cohort. Both McCain and Obama represent these trends--see how they both represent either "working across the aisle" or "change you can believe in." We can get out of the crisis by drop kicking the Boomer false prophets and speeding up the change by focusing on redeveloping the economy from the ground up in a way that is environmentally sustainable and addresses inequality. A major focus on the green economy is the only way out. We need Artist money married to Nomad resourcefulness and a Millenial vision for a green future--all combined with good old American Common Sense. Boomers can join in, but they can not be trusted to run the show.
Hooray for the first Nomad president...it means that the crisis has not come too early... were we to have another boomer president we would be in a world of hurt. All of a sudden, there's a bunch of talk about working toward building new infrastructure....is the regeneracy that close?
A year and a half on, it's pretty clear that some things are clearly similar to, and some clearly different from, the Great Depression.
Similarities: Credit crisis prompted by bad Federal Reserve monetary policy in the previous turning, just like loose monetary policy in the 1920s blew a bubble that popped catastrophically.
And, now we know that Obama isn't FDR, he's Hoover. Their policies are virtually identical.
Differences: the US government is now backstopping the entire US economy, so when it goes into failure overdrive in the next couple of years, the government will go bankrupt with it. That's new.
Hoover was a "Hoover" (my term is Nero President - see http://home.comcast.net/~jimvb/presipage.htm ) President, because he insisted on frugal policies that were driving us further into Depression. FDR started spending and stimulating, and that got us out. Obama is trying the same thing. But that won't work, either, just as much as frugalism didn't work for Hoover. We need something new. We need to develop alternative energy, but also we need to cut back on our consuming lifestyle and realize that growth is over. I just hope Obama does something about this and become a Crisis President; else he may indeed turn into a second Nero (after Bush).
Post a Comment