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"Winter"
refers to the metaphoric turning of the secular seasons, as described by
William Strauss and Neil Howe in the now-popular book The Fourth Turning.
This is one of my not-reviews: more like impressions generated from reading
their book, which came out in 1997. In it, they predicted a period of crisis
beginning around 2005, which happened to be the year the housing bubble
peaked. This period of crisis lasts about twenty years.
Strauss and Howe have a rather elaborate cyclical view of history. I think
their description is quite creative and even useful; it might even edge
towards being true. However, I am writing today not so much about this
multi-century cyclical hypothesis, but rather their concept of
"winter" as it applies to the present period.
In their view, U.S. history (going back to English history) consists of
cycles of about eighty years, or four twenty-year seaons. These are, roughly:
Spring: The "spring" season follows the previous
"winter," or crisis phase, and represents a time when a new order
is established and begins to flourish. This is a time of community focus, as
memories of the preceding crisis are fresh and much energy is devoted to the success
of the society in general. The most recent Spring was the 1945-1964 period.
Summer: This community focus becomes rather oppressive over time, which
prompts a backlash of experimentation and individuality. The basic community
order founded in the Spring is by now well estabilshed. Issues of basic
survival no longer seem relevant. The foundational prosperity of the society
allows the focus to turn towards the inner world. The most recent Summer was
the 1965-1985 period. (This does not coincide well with the economic reality,
which was of the stagflationary decline from 1970-1983. However, despite Wall
Street's concerns, the basic fabric and institutions of American life were
still reasonably healthy.)
Fall: By now, the issues of spiritual rebirth, moral protest and lifestyle
experimentation seem worn out. The focus turns toward personal success,
self-reliance, entrepreneurship. Civic structures that began in the Spring
period have decayed and become somewhat corrupt and ossified. This no longer
seems like an appropriate arena for the best talents, who instead gravitate
toward the private sector. This can be an enjoyable time for individuals, but
people are aware that the civic and community sphere is steadily worsening.
Winter: A Crisis emerges as previous issues that might have been ignored or
deferred now become dire. The previous order, established in the Spring,
crumbles and decays. The private sector no longer provides and adequate
refuge from the decay of the civic and community sphere. A new order begins to
emerge.
Obviously, we are in a winter period today. This is no mere
"downturn," or even a "secular bear market." The last
three Winter periods in American history, according to Strauss and Howe, were
the Great Depression/World War II, the Civil War, and the Revolutionary War.
The authors make the point that the eventual outcome of the Crisis period was
not at all obvious at the beginning of the Crisis period. It was hard to say,
in 1931 for example, that the world would be engulfed in all-out warfare ten years
later. At the time, it just seemed like a bad recession, which would surely
be looking better during the "second half recovery," as was always
the case in the past.
During the Winter period, the existing institutions and structures crumble
due to their internal decay. Strauss and Howe predict that during the present
Winter period (remember, this book was published in 1997), we might see:
1) A Great
Devaluation, or a severe drop in the market price of most financial and real
assets.
2) Higher taxes, leading to economic decline.
3) Disintegration of existing welfare institutions, specifically including
Medicare and Social Security. "Entitlement" will disappear, to be
replaced with a more direct form of immediate support for the neediest.
4) "public debt in defalt, entitlement trust funds in bankruptcy,
mounting poverty and unemployment, trade wars, collapsing financial markets,
and hyperinflation {or deflation)"
5) Ecological distress.
6) Political distress, including open tax revolts, institutional collapse,
constitutional change, new political parties, and secessionism.
7) A combination of a withdrawal from foreign engagements, as resources are
directed at domestic problems, combined with a tendency towards militarism,
which in an unfavorable outcome could trend toward fascism.
8) As the existing order collapses, people will come together for survival,
and a new civic and community focus will provide the impetus toward the
establishment of a new set of institutions, and the beginning of the following
Spring period.
The authors' description of this Winter period -- at the time of writing
still ten years away -- sounds a little familiar, no?
...this implosion
will strike financial markets -- and, with that, the economy. Aggressive
individualism [of the Autumn period], institutional decay, and long-term
pessimism can proceed only so far before a society loses the level of
dependability needed to sustain the division of labor and long-term promises
on which a market economy must rest. Through the Unraveling [Autumn period],
people will have preferred (or, at least, tolerated) the exciting if
bewildering trend toward social complexity. But as the Crisis mood congeals,
people will come to the jarring realization that they have grown helplessly
dependent on a teetering edifice of anonymous transactions and paper
guarantees. Many Americans won't know where their savings are, who their
employer is, what their pension is, or how their government works. The era
will have left the financial world arbitraged and tentacled: Debtors won't
know who holds their notes, homeowners who owns their mortgages, and
shareholders who runs their equities -- and vice versa.
Obviously, there's a lot of fun material in the book, so give it a whirl.
Let's move along to what I consider the most immediately applicable portion,
namely the characteristics of the Winter period, and how to approach it.
The thing about Winter is that it is three months long -- or twenty years in
this case. You can't skip it. You can't "fix" it. It is what it is
-- in Strauss and Howe's terms, the natural consequences of the preceeding
sixty years. It might be a little shorter, or a little longer, but not much.
Like the annual winter, this period can be tolerable, and even viewed as
enjoyable and necessary, if you recognize its basic characteristics. The
basic characteristic of the Winter period is that activity that is
appropriate for the Spring, Summer or Autumn is a complete failure during the
Winter. You don't try to grow crops in February. Nothing will grow. It is a
period where the corrupt and decaying institutions of the past finally
disintegrate down to compost.
The point being, this is the full-on full-on here. According to this
analysis, pretty much everything is going to crumble to dust, and there isn't
much point in trying to stop it -- or even desire, because it is so corrupt
that we don't really want to save it anyway. Charles Hugh Smith
(oftwominds.com) has taken a crack at trying to put into words what many of
us are intensely aware of these days:
http://www.oftwominds.com/blogaug10/why-nothing-changes08-10.html
Why Nothing
Changes (August 20, 2010)
The reasons why nothing has changed include institutional inertia and
self-preservation, the herd instinct and negative feedback loops. Bottom
line: the Savior State can not "save" itself, much less all of us.
In a way, the entire Survival+ critique is an attempt to explain why the
status quo is incapable of reform. This leads to the following conclusion:
the partnership of the U.S. Savior State/Global Empire and Global Neoliberal
Capitalism is incapable of "saving" us from the interconnected
crises which will dismantle the status quo.
We will have to "save" ourselves, hence the book's call for radical
self-reliance, reciprocity and localized, resilient, self-selected
"solutions" to global (and thus local) crises.
Yesterday I noted that the status quo has not changed in any meaningful
fashion, despite the global financial turmoil of the past few years.
...
In other words, the "reform" consists of tweaking some minor
parameters and feedbacks. The insurance cartels which control the system are
left firmly in charge, along with the Federal fiefdoms and other cartels (Big
Pharma, etc.)
The same pattern is played out in every major system. The "too big to
fail" banks remain too big to fail, systemic risk is left to run freely
off balance sheets (behind a few additional screens), etc. etc.--nothing has
changed. A few parameters were tweaked--the most grossly predatory fees banks
charged their hapless customers were trimmed--but the banks are nonetheless
being recapitalized at taxpayers expense.
...
Readers of Survival+ have asked why an organization--an enterprise, public
union, state or even Global Empire--would select a clearly self-destructive
path.
My answer is drawn from natural selection: the organization has prospered by
relentlessly expanding its income, influence and power, and by focusing much
of its energy on self-preservation. Any significant adaptation entails great
risk. Rather than accept that risk, the organization (i.e. an organism made
up of individual human beings) actively conserves what has worked in the
past.
...
This is the fatal flaw of organizational inertia and resistance to
tranformation: maintaining the status quo is increasingly risky when
conditions and the ecology are changing around you.
This is why organizations herd together as the ecology changes around them,
weeding out critics and reformers with increasingly harsh self-policing,
hardening their self-preservation strategy around the current status quo,
even as they are running straight toward a cliff and organizational suicide.
...
This is why nothing changes until the herd finds itself tumbling off the
cliff. Then it's too late. That is the future of the entire status quo.
Around here at New World Economics global headquarters, we don't put much
effort into trying to fix today's problems, or even prop up the existing institutions.
Best to keep your head down while this steaming pile of dogshit finally
begins to crumble.
The fact of the matter is, nobody would listen. All of their effort is
presently directed at supporting the existing status quo by using the
same old methods -- whether that be Keynesian easy-money tricks, or
attempting to reinflate the housing bubble one last time with easy credit, or
issuing more derivatives to further fictionalize already fictional balance
sheets (even the government of Greece got in on the game), or throwing a lot
of government money at "stimulus," which is really a fancy name for
political cronies. Or that ever-popular solution: just lying about it, as if
a problem is solved if you just say that it is solved.
I have suggested, for example, that the U.S. might do well with a state-run
healthcare system like that of Hong Kong. Hong Kong's universal healthcare
system works great, and doesn't interfere with Hong Kong's otherwise
libertarian approach. Maybe the time for that will come. However, I don't
think that any new institution could be established today. The decay
is simply too great. Whatever system might be set up -- a healthcare system,
a high-speed rail system, or what have you -- would simply end up being
another channel by which 90%+ of the resources are stolen, while no
meaningful services are provided. That is the present pattern for everything,
and it is not until that pattern arrives at its natural conclusion
(implosion) that people will begin to behave differently.
September 25, 2009: Does Hong Kong Have the
World's Best Health Care System?
Strauss and Howe say the same thing:
Prepare
institutions: Clear out debris and find out what works, but don't
try building anything big.
Prepare politics: Define challenges bluntly and stress duties over
rights, but don't attempt reforms that can't now be accomplished.
Prepare society: Require community teamwork to solve local problems,
but don't try this on a national scale. ...
Prepare elders: Tell future elders they will need to be more
self-sufficient, but don't attempt deep cuts in benefits to current elders
[in 1997]
See
what I mean? You can't grow things in Winter. Don't even try.
For example, I could easily see how the total collapse of the existing
healthcare system -- no more Medicare checks as the government is no longer
able to issue debt and uses current revenue to pay the military, and the
consequent bankruptcy and liquidation of established hospitals and insurers
-- would lead local governments or civic associations to attempt to provide
basic health services on the community level, with the help of now-unemployed
doctors and nurses. This initial crisis-response could eventually lead to a
new local institution, which, if it works, could soon be copied by other
localities in the region.
As it is, we still need to have a long discussion as to exactly what these
new institutions -- a gold standard, some sort of healthcare system, perhaps
another sort of retirement system, a solution to the problems of Suburban
Hell -- should look like. We couldn't really accomplish any of that today,
because there isn't a workable consensus on what to do. It will take another
fifteen years or so of dealing with the Crisis for these ideas, which are now
in their early stages, to ripen and spread.
I am mostly in the "planting seeds" business around here -- seeds
which will not sprout into real-world institutions until the following Spring
period. Until then, they quietly germinate in the imagination. That is why I
always say that you should imagine things that are different than they
are today, and of course, much better. If we don't start imagining things
that are worthwhile and successful, we might start imagining something that
is rather more dangerous. Adolph Hitler got the whole German people to imagine
conquering all of Europe. Didn't go so well. Be careful what you imagine.
We saw earlier, for example, that people in the 1920s or 1940s imagined
chemical factory food -- and they got exactly what they imagined,
whether they liked it or not!
November 8, 2009: The Future Stinks
In the economics sphere, people in the 1930s imagined that they could
create a single institution that could solve all conceivable economic
problems through the magic of funny money. They are also going to get it,
good and hard, until they learn to imagine something more productive.
Nathan
Lewis
Nathan
Lewis was formerly the chief international economist of a leading economic
forecasting firm. He now works in asset management. Lewis has written for the
Financial Times, the Wall Street Journal Asia, the Japan Times, Pravda, and
other publications. He has appeared on financial television in the United
States, Japan, and the Middle East. About the Book: Gold: The Once and Future
Money (Wiley, 2007, ISBN: 978-0-470-04766-8, $27.95) is available at
bookstores nationwide, from all major online booksellers, and direct from the
publisher at www.wileyfinance.com or 800-225-5945. In Canada, call 800-567-4797.
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