'The Fourth Turning': Why This Crisis Was Inevitable 27 comments
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Take a minute to think about your view of human history, and our continued progression as a species.
Do you believe human history is linear, always getting better, onward and upwards to a better existence?
Is it chaotic, stuff happens, people react, then more stuff happens, but there's no pattern to it?
Or, is human history cyclical...with those who neglect history destined to repeat it?
Most of the Western world subscribes to the linear school of thought. Things are always moving in a general direction - sometimes good, sometimes bad, but always moving. And I'd assume that most people believe the general trend of progress is up.
Your individual opinion may depend on your generation. Old timers are often pining for the "good old days" when morals and values "meant" something in America, you could go to the movies for a nickel, etc.
On the other hand, today's youth wants nothing to do with their parents' or grandparents' generational values and culture. I'm 27 years old and the thought of growing up in a 1950s Leave It To Beaver household isn't too alluring for me.
For the longest time, I held a predominantly linear view of history's progression. This very well may be based on my own personal experiences. I run a software startup by day, and blog and trade online as a hobby - none of which would have been possible 10+ years ago. What the heck would I have done then?
On our Honeymoon a couple of years ago, my wife and I were staying in a remote hotel in Costa Rica. Very limited TV, no internet for 3 whole days. By the time we got to a modern hotel, I was soaking up as much CNBC Europe as I possibly could. My wife asked why we had to spend our evenings with Larry Kudlow, but hey, I'm just not going to sit outside under a coconut tree and chill out. Not my thing. I like being plugged in.
So in my eyes there's no doubt about the progression of the world. I wouldn't want to live at any other time - there are more plugs today than ever before after all, and I'm always excited what the next 5-10 years will bring.
But are there setbacks in human progress? I mean, the world did basically nothing from 500 - 1500 except hang out in castles, work the land, pray, and tithe. That's 1000 years.
How can that happen? How can the world stop moving forward for that long?
And there are more recent examples of setbacks and stalls. The Great Depression wasn't really that long ago. From 1929-1945, the US was in a major depression, then a world war. Not fun.
Can history repeat or as Mark Twain said, rhyme? Are we "beyond" these setbacks or are we arrogant to think so?
The Fourth Turning (published in 1998, now available in paperback) by Neil Howe and William Strauss, is a fantastic book that explores US history, drawing definite cyclical patterns that date all the way back to the War of the Roses. Here's the crux of it.
A human life lasts roughly 80 years. Even though humans are living longer on average today, a full life has always been about 80 years. Averages were skewed downwards in earlier times, because there were more premature deaths, but a "full life" has always been about 80 years.
At any given time, you've got about 4 generations of people inhabiting the US, separated by about 20 years each. These generations are shaped by their shared experiences so their beliefs, their actions, etc, are really a function of the country they grow up and live in.
Now here's where it gets interesting - roughly every 20 years, going back to The War of the Roses in England, and carrying through to the Glorious Revolution in the New World, all the way to the present day, a new era dawns in America.
These eras fit into one of four categories which always repeat in the same successive order. Sounds wild, I couldn't picture it until reading the book, but here are the four eras that Howe and Strauss define:
- Crisis - Often defined by a major war, calamity, depression, etc. Think Revolutionary War, Civil War, and Great Depression/WWII.
- High - What follows the Crisis. Hey, we got through it, now things are looking up, up, and up. I think this is what Jim Rogers says he sees in Sri Lanka - the war is almost over, Crisis phase nearing an end, what a great time to invest. In the US, the post WWII baby boom, suburban migration, and Leave it to Beaver would make up the High. We can go to the moon, we can do anything we put our minds to.
- Awakening - A younger generation comes of age, and resents all the rules set by The Man during the High period. Since Highs follow Crises, they are characterized by rules and structure. Think 60s America as the resistance to this - Woodstock, Tie Dye, and Free Love.
- Unraveling - The Awakening uprising is integrated into mainstream culture, and society starts to split apart at the seams, hence the name Unraveling. The individual rules the day. It's "me first." Old timers lament the lack of virtue and civic spirit. Prime time for Wall Street and Las Vegas.
According to The Fourth Turning, each generation is shaped by the era it was born in. I grew up during an Unraveling, so according to Howe and Strauss, that has shaped my beliefs. The only world I know is one of relative peace and prosperity. Depressions and major wars are things I've only read about.
So the theory goes that the farther you get away from a Crisis, the more likely you are to repeat it because the younger generations don't actually believe it can happen again. They think the ills of the past have been fixed, and often very limited knowledge of the last Crisis in the first place, so in fact, they have the perfect personality for causing the next crisis.
Remind you of today's economists spouting off about why we can divert depressions this day in age?
Unfortunately for us, the timer's starting to tick down, and the next batch of crisis cookies are about due out of the oven here in America.
- 1773 - 1794: American Revolution
- 1860 - 1865: American Civil War
- 1929 - 1946: Great Depression leading to WWII
- 2007 - ??? : Credit Crisis, leading to recession, leading to?
About every 80 years, America is really put to the test. And remember, history is not predetermined. There was a genuine threat to our nation during each of these preceding crises.
Strauss and Howe believe that these crises are not only unavoidable, but that they are also necessary - to cleanse society, shake out the excesses that have built up over the past three eras, and set everything on a new course going forward.
For further reading on this topic, I'd highly recommend you check out Doug Casey's essay Foundations of Crisis. Doug is one of my absolutely favorite writers and speculators, and he does a great job at breaking down the generational roles referred to in The Fourth Turning.
It's well worth a read - an interesting, well thought out hypothesis, backed up by historical anecdotes and stories. As an investor, it's important to understand potential cycles, so that you don't get blindsided. Protect yourself and your investments, and pick up a copy.
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This article has 27 comments:
Jason: Are you a fan of nanotech as well? Curious, as I know many believe nanotech will have similar revolutionary effects like the ones your mentioning.
You're still married ? How's that work ?
"I'm 27 years old and the thought of growing up in a 1950s Leave It To Beaver household isn't too alluring for me."
I believe that. All too human for someone who misses the internet on their honeymoon.
To each his own !
I was born in 1950 - guess that means I'm moving from unraveled to crisis.
Swell, what a great way to face my golden years.
wpdragon: Thank you, and ah yeah...maybe you can root for a "short" Crisis, like the Civil War period (they had that one as only 7-8 years in length if my memory serves correct).
A totally Euro-centric view. During that time the rest of the world WAS moving. Not always forward, but mostly.
On the other hand, this is pretty much true: "So the theory goes that the farther you get away from a Crisis, the more likely you are to repeat it because the younger generations don't actually believe it can happen again. They think the ills of the past have been fixed, and often very limited knowledge of the last Crisis in the first place, so in fact, they have the perfect personality for causing the next crisis..."
I saw this in spades just before the dot com bust and the more recent housing bubble. When a 28 year old "investment manager" told me in 2007 that housing prices would keep going up for the next 10 years, I knew it was time to get out of the market. The funny thing is, when I told him I thought it was a big bubble, his exact words were "it's different this time" - well he was right about that, but probably not like he thought.
The great depression was the reason for WW2 ? Do americans have so little knowledge of european history ? That is simply untrue, it was a catalyst, nothing more and nothing less. Even if you take one country as one system with this "80 year crisis clock" then today more then ever it's interlinked to that of countless others and just like the world time, they all show different times so it's not that simple after all.
Concerning the current bubble, there certainly are elements that make it "different" for example that the internet has allowed a lot more market participants to gather a lot more information very quickly and make rapid decisions. Of course it's not different concerning the economic cycle it just adds new components. Real estate in particular is not even an quiant bubble it was an essential part of all the modern post ww 2 crisis. Though I think one can draw a difference between tech bubbles that are born out of a technical innovation and simply shooting over the top such as the dot com or the rail way speculation. Housing however is quite innovation resistant, especially private real estate because it is a non interest paying asset that produces nothing. Housing can only move along with the overall economy, for example after a war when a lot of reconstruction is needed, but as far as I can think whenever housing has been the so called "driver" of growth it always ended in desaster.
Do you honestly believe that? Perfection must be achieved from within, on a much more subtle level involving thoughts and feelings, not through a laboratory and certainly not through social engineering of any kind. I am thinking here of socialism, "tolerance" training and so on. Look at all of the highly intelligent and well meaning people who have harmed the world
theburningplatform.com...
By no means does it insure how we will behave in the future. Already people are living longer and reproducing less in the developed world. So theoretically speaking, if you take the book's logic, perhaps the cycles should be attenuating.
Anyway, any read that makes you think is a good read.
Also, from a Leave it to Beaver kind of guy, what you choose to do on your honeymoon seems a private matter not subject to comment or analysis by strangers, at least to me. That, I think, is a real human deterioration that represents the contrast between generations. The issue of absence of respect -
Do the authors of the "The Fourth Turning" acknowledge Joshua Goldstein's "Long Cycles: Prosperity and War in the Modern Age" in their bibliography or talk about Kondratiev waves?
It seems that we're also doomed to hear about history being cyclical as a new idea every 50 - 60 years as well.
Help! I'm stuck in the Matrix!
And if you realy want to be "plugged in" i would avoid Kudlow for starters. Your on the right track IMO, but you have your leads plugged into the wrong power outlet!
Keep up the good work.
On Jun 07 09:15 AM maxe wrote:
> Well i must give credit where credit is due (on CNBC), Rick Santelli
> is worth a listen as is Art Cashman, that makes 15 minutes a day
> out of 24 hours of "noise".
>
> Keep up the good work.
The alphabet corporate channels and their Kudlows are not! A recent article about GE/NBC 86ing a Neilsen publication comes to mind. They had dared challenge GE's order to its media units demanding that they be be less critical of President Obama and his policies.
Interesting enough the front runner beat out by Immelt was Jack Welch who immediately resigned and now, get this, runs the 86ed Hollywood Reporter (that Neilsen company publication). They were savaged for daring to stand up to the GE giant.
Well over a year ago I made inquiries on financial boards as to the best strategy given the eventuality of the dollar dropped as the world's reserve currency and the likely fallout to come as a result. I was assured and lectured that it was koo-koo to even worry of such a thing. Further, that I was a dunderhead to question the longevity of the all mighty Bucky. A year later following TARPs and bailouts these alphabet channels are preparing the masses for exactly that. See Williams opinion on "The Things to Come" - to play off H. G. Wells prophecy
(Wells was a Round Table giant and Fabian).
www.shadowstats.com/ar...
Kronos455, we are all stuck in it. Only waking up and having breakfast together will change that.
I have heard them both mentioned in the same sentence...I believe on the Financial Sense Newshour (excellent podcast for those not familiar).
I believe we live linear by default, the bumps and shocks and "black swan" of history are just action and reaction to knowledge, egos and ideas.
Cycles must follow age cycles. Great ideas come from great minds, usually individually (commitees can't get it or do it That's probably why many are sitting around waiting for a Savior or the return of one, or something. Maybe just another stiff drink))
Great refrences and a good synopsis... to much to comment on.
Even if we take a Eurocentric view, the development of the first sustained urban cities, progress in science and technology (however crude it may seem to you now), and the emergence of the seeds of modern European states, not to mention survival through the Black Plague are hardly what I'd call "nothing."
Progress should not simply be measured as massive differentiation in technology. Some progress can be measured as survival against terrible odds. Think of it like spitting into a windstorm: If those are the conditions you're given, forward progress of any kind might be much more of an achievement than dynamic change in easy times.
That is not "nothing." The appearances of progress we've seen in the last generation or so merely show how technique can be rapidly distributed when resistance is low. However this also tends to produce unexpected changes and reframes old problems... and that's the kind of "progress" that the current generation seems least capable of seeing before their very eyes (much less having any ability to resist).