The Coming Crisis

History does not repeat itself, but it sometimes rhymes.

Attributed to Mark Twain

Eighty years ago, our nation’s armies and the world were being savaged by World War II’s dogs of war. Eighty years before that, the country was in the midst of our Civil War. Eighty years before that – almost exactly 240 years ago – the Treaty of Paris ending our Revolutionary War was signed. Do you see a disturbing pattern here?

Mark Twain’s “rhymes” are the patterns that prophets use to foretell the future. Over the last few months, John Mauldin has collated predictions based on historical patterns that indicate that the next ten years may well be more tumultuous than any of us have seen before in our lives. These come from three very different perspectives: one demographic, one geopolitical and the other historical. Independently, William White has observed that we are passing from an Age of Plenty to an Age of Scarcity. A crisis is coming, with potentially profound impacts on our communities. In this post, I’ll look at the patterns that point to crisis. In the next, I’ll offer two different possible futures that the coming crisis might lead to. I’ll also offer some thoughts on how the coming crisis might impact our communities.

Neil Howe focuses on generations and their characteristics. He sees a cycle of 80 years, roughly corresponding to the human life span. A generation of Nomads is followed by Heroes, then Artists and Prophets. Each generation is born during a 20-year period; each dominates affairs in their later middle age (40-60), and then begins yielding to the next generation. This change from one generation to the next is called a Turning.

Heroes must deal with the great crises of their times. They are the ones who fought and won our Nation’s independence from Great Britain. They are the ones who preserved the Union and ended slavery. They are the Greatest Generation who won World War II. Artists watched their Hero-parents struggle through crisis, but are powerless to act. As a result, they are risk-averse conformists. Their times tend to be relatively calm and crisis-free. Prophets reap the advantages – and the disadvantages – of never knowing a real crisis. They tend to be focused on cultural and moral issues (e.g., the ‘60s), and – most importantly – set the stage for the next crisis. They are followed by the Nomads, pragmatists who are suspicious of bureaucracies of any form. Because they have few connections and trust only themselves, crises brought on by the Prophets tend to fester when Nomads are in power. It is up to the next generation of Heroes to resolve them.

According to Howe, we are now in the Fourth Turning – Gen X (Nomads) giving way to the Millenials (Heroes). It started with the Great Recession, and should reach its culmination around 2030. Going back to the 15th century, Fourth Turnings have been times of crisis and upheaval. They were often violent, but more importantly, have each resulted in social upheaval. To quote Mauldin, “This major upheaval doesn’t have to include war, or at least the calamitous shooting wars of past cycles. Hopefully. But anyone who thinks the current cultural antagonisms, rabid partisanship, unrealistic expectations, geopolitical turmoil, and the staggering accumulation of debt will end with a whimper isn’t paying attention.”

George Friedman, one of the preeminent observers of the geopolitical scene, has observed an 80-year institutional cycle and a 50-year socioeconomic cycle in our nation’s history, starting in 1783. A crisis occurred at the peak of each cycle; for the first time, those peaks coincide. That implies the coming crisis will be both an institutional and a socio-economic one. Again, to quote Mauldin, “it seems likely we will face social crisis, economic breakdown, and structural political change—all at the same time.”

Friedman sees our increased longevity and reduced reproduction as fueling the crisis. We have an increasing number of elderly consumers, spending their own savings (and pensions – in some cases) as well as their Social Security benefits, and Medicare for health care. In principle, Social Security and Medicare are supported by taxes on workers, but fewer births means that the number of workers supporting each older American has almost halved – falling from 6 in 1980 to slightly more than 3 now. And the ratio is continuing to decrease – this is not sustainable!

Friedman points out that the last institutional crisis – dealing with the post-World War II world – was solved by transitioning to “government by experts.” In the post-war world, our experts were truly heroes. George Marshall shepherding Europe’s economic recovery. Lewis Strauss forming the “Atoms for Peace” program. Eisenhower championing the Interstate Highway System, and many others.

However, we currently are awash in “experts” seemingly more adept at bureaucratic gamesmanship than solving our problems. As I’ve previously noted, the economists at the Federal Reserve are largely responsible for the widening gulf between rich and poor. It is clear that the masking and lockdown “guidance” from the “experts” at the Centers for Disease Control and Prevention was, at the least, misguided. And the remote learning foisted upon us by the “experts” in the educational establishment will continue to wreak havoc on the futures of our disadvantaged youth, perhaps for generations.

Peter Turchin is a Ph.D. zoologist, who founded the field of cliodynamics. He and his colleagues have focused on the study of state formation and collapse, compiling a database that spans virtually all of recorded history. Using mathematical models to test trends, he concluded that

“when a state, such as the United States, has stagnating or declining real wages (wages in inflation-adjusted dollars), a growing gap between rich and poor, overproduction of young graduates with advanced degrees, declining public trust, and exploding public debt, these seemingly disparate social indicators are actually related to each other dynamically. Historically, such developments have served as leading indicators of looming political instability. In the United States, all of these factors started to take an ominous turn in the 1970s. The data pointed to the years around 2020 when the confluence of these trends was expected to trigger a spike in political instability.”

Turchin has noted that as societies age, they naturally evolve into a state of inequality. An elite forms, based on wealth and education, which directs the actions of the commoners. Turchin sees this as a power imbalance. Over time, the gap between the two widens leading to the commoners becoming what Turchin calls “immiserated,” no longer able to work to achieve the advantages of being in the elite. As an aside, before the pandemic, data indicated that social mobility – the rate of socio-economic “churn” – had significantly slowed, consistent with Turchin’s slowly building crisis. The decreasing life expectancy of lower middle class white men is also in line with Turchin’s view of immiseration.

According to Turchin, over time the elites over-produce – a group of educated potential elites, who are without power, and in danger of slipping into immiseration. It is at this point that the crisis arises as there is a competition between the elites and these counter-elites. As Turchin points out, the crisis often turns violent and rarely turns out well for the society as a whole.

One more negative pointer – William White sees the global economy moving from an Age of Plenty” to an “Age of Scarcity.” He believes that its systemic instability (high public and private debt, geopolitical turbulence, declining workforce worldwide, restricted energy supplies due to fears of climate change, …) are leading to political instability, that is being exacerbated by the distrust in established institutions.

To add my personal viewpoint, this omni-directional distrust seems to be the one “belief” that currently unites Americans of all political persuasions. A Turchin might point to the CDC’s botched handling of the pandemic. A Friedman might point to Biden’s timid attempts to prevent the Russo-Ukrainian War. A White might point to the Fed’s fiddling with the economy that has exacerbated the wealth gap between rich and poor. But universal distrust in our institutions has become the hallmark of our age.

None of us can predict how all of this will play out. we can only postulate a range of futures. It may be my own personal idealism, but I believe that our future path will depend on how we resolve this lack of trust in our institutions and ourselves. In the next post, I’ll spin out two scenarios of how these crises might be resolved, and their impacts on our communities.