DOES HISTORY REPEAT OR RHYME?
In 1929, the stock market crashed. Many were wiped out, banks closed, mortgage loans went into foreclosure, the financial system worldwide was disrupted, and a Great long Depression followed. In the aftermath, the Pecora Commission investigated the collapse and from it arose convictions for some of the culprits and new laws to keep it from happening again.
Fast forward 80 years. The housing industry collapsed. Many homeowners were wiped out as loans went into foreclosure. Banks closed. The financial system worldwide was disrupted, and a long Great Recession continues. In the aftermath, the FDIC is investigating the collapse and from it arose (fill in the blanks).
We have yet to see culprits behind bars or new laws with teeth. But if we are lucky, the results will parallel the past. Or will it? My money is betting that there will be jail-birds, new laws, and a whole new attitude about banks, money lending and money games, and capitalism. But it will not happen as fast as I would like it.
A New Compass? I think I have found a new compass. It is a book titled “the Fourth Turning” by William Strauss and Neil Howe. I cannot suggest it strongly enough. What follows is an example of why the book can offer so much insight as to our understanding of the world we live in.
There is a curious change in future expectations as surveyed by the Economic Conference Board, which date back four decades. They reported, “Since 1967, Americans have for the most part, remained more optimistic than pessimistic about their own futures. This was true even when their expectations for the overall economy were negative. But that optimism disappeared during the 2007-09 downturn. A majority of folks began to expect their own financial situation would get worse- versus those expecting better personal times ahead.”
The above quote hits the nail on the head when it comes to interpreting generation cycles as set forth by Strauss and Howe in The Fourth Turning. If we recall, the late 1970s was a time of high inflation and the term “inflation psychology” came into vogue. It was the whole mindset of the nation that prices would continue to rise, so buy now before it costs more in the future. This attitude did indeed drive up prices as irrational demand drove people to purchase rather than save. The exact opposite has revealed itself recently as people have held off buying real estate because of falling prices. Why buy a house today when tomorrow it might be even cheaper? These are just two examples of how a mood can grip a nation. But both these examples are basically economic in nature. There is nothing socially or politically motivating these buying decisions. It just illustrates how a mood can invade the psyche of a whole nation.
Likewise, I believe that a whole nation takes on the attributes of an individual human being. Since the whole world is made up of humans, its characteristics also have to parallel what is unique to a single being. For that reason, it is not farfetched to imagine that entire groups-clans, tribes, states, nations, or generations-can exhibit the same mood collectively.
For example, an individual can be depressed. He can also be elated. Why then cannot a whole nation consisting of many generations’ exhibit depression or elation as a group? That just about sums up the book The Fourth Turning is all about. As the generational turnings evolve, they parallel what happens to a human being as he moves from childhood to adulthood to old age. The individual changes in mood are exhibited by the group as through it were a single person. As one grows up, one is optimistic and hopeful about the future. As one settles into mid-life, one becomes more conservative and perhaps pessimistic. Thus society as a whole goes through the various psychological changes as it moves through it generational cycles.
Think about where we are now. We are entering old age. We as a nation are conservative, more pessimistic, looking to blame someone else for our problems, believing that the younger folks are ruining the country, that the government is meddling too much in our business, and that we don’t need to pay for things now because tomorrow we won’t be around to pay the piper. With this national attitude is it any wonder that we are entering a Crisis era? Knowing where we are can help us detect what might be in store for us down the road so we can adapt and not be surprised.
So how can we apply this knowledge? The aforementioned quote tells us that people are less optimistic about the future that they sense we are moving downward economically. They can’t quite verbalize what they feel because they have not experienced it before. But as a nation, we have gone through it many times before. Call it the fourth turning, an economic winter, a crisis era, a deep depression, or whatever term explains what happened 80 years ago-the equivalent of a human lifetime-when the stock market crashed and the country slipped into the Great Depression. We have read about it, been told first-hand stories about it by the elderly relatives, but we as the generations alive today do not have memories of it. To the majority in this country, the event was not something conscious. But based on theories of generational cycles, we are in the same type of distressful period that we have gone through many times.
The Fourth Turning does not focus on economics exclusively and the Crisis era we are now in was not predicted exactly to the date. However, Strauss and Howe laid out a broad theory that shines a light on what the trends and moods would be as we repeat a portion of history that has recurred many times before. Because of their theoretical approach, I suspect that many of their readers did not find such a lack of exactness to be as useful as someone prediction the Dow going to 50,000 or the meltdown of the world financial markets next year as some authors might portray. Strauss and Howe handed us an excellent compass-a timeless one at that. With it we can draw a reasonably predictable map far into the future.
Philip Hamilton is a long time contributing writer for CBN. You may contact him by writing: phamilton@bendcable.com, cell: 541-480-7580, or his office: 235 SE Yew Lane, Suite 210, Bend, OR 97702.
