THE ZEITGEIST: FEBRUARY 28, 2017
The Fourth Turning Revisited
This essay was originally published in The Washington Post on Sunday, February 24.
The headlines this month have been alarming. “Steve Bannon’s obsession with a dark theory of history should be worrisome” (Business Insider). “Steve Bannon Believes The Apocalypse Is Coming And War Is Inevitable” (the Huffington Post). “Steve Bannon Wants To Start World War III” (the Nation). A common thread in these media reports is that President Trump’s chief strategist is an avid reader and that the book that most inspires his worldview is The Fourth Turning: An American Prophecy.
I wrote that book with William Strauss back in 1997.
It is true that Bannon is enthralled by it. In 2010, he released a documentary, “Generation Zero,” that is structured around our theory that history in America (and by extension, most other modern societies) unfolds in a recurring cycle of four generation-long eras. While this cycle does include a time of civic and political crisis — a Fourth Turning, in our parlance — the reporting on the book has been absurdly apocalyptic.
I don’t know Bannon well. I have worked with him on several film projects, including “Generation Zero,” over the years. I’ve been impressed by his cultural savvy. His politics, while unusual, never struck me as offensive. I was surprised when he took over the leadership of Breitbart and promoted the views espoused on that site. Like many people, I first learned about the alt-right (a far-right movement with links to Breitbart and a loosely defined white-nationalist agenda) from the mainstream media. Strauss, who died in 2007, and I never told Bannon what to say or think. But we did perhaps provide him with an insight — that populism, nationalism and state-run authoritarianism would soon be on the rise, not just in America but around the world.
Because we never attempted to write a political manifesto, we were surprised by the book’s popularity among certain crusaders on both the left and the right. When “The Fourth Turning” came out, our biggest partisan fans were Democrats, who saw in our description of an emerging “Millennial generation” (a term we coined) the sort of community-minded optimists who would pull America toward progressive ideals. Yet we’ve also had conservative fans, who were drawn to another lesson: that the new era would probably see the successful joining of left-wing economics with right-wing social values.
Beyond ideology, I think there’s another reason for the rising interest in our book. We reject the deep premise of modern Western historians that social time is either linear (continuous progress or decline) or chaotic (too complex to reveal any direction). Instead we adopt the insight of nearly all traditional societies: that social time is a recurring cycle in which events become meaningful only to the extent that they are what philosopher Mircea Eliade calls “reenactments.” In cyclical space, once you strip away the extraneous accidents and technology, you are left with only a limited number of social moods, which tend to recur in a fixed order.
Along this cycle, we can identify four “turnings” that each last about 20 years — the length of a generation. Think of these as recurring seasons, starting with spring and ending with winter. In every turning, a new generation is born and each older generation ages into its next phase of life.
The cycle begins with the First Turning… (click here for the entire article)
TRUMP'S FISCAL PLAN IN TROUBLE
At 9 pm EST tonight, President Trump will deliver his first joint-session address to Congress. After the last cadence of bold rhetoric has echoed through the chamber, financial media tea-leaf readers will be struggling to give us a better read on Trump's fiscal agenda.
As always, Trump will make it clearer than ever that he intends to do exactly what he has said he will do: boost defense spending (by around 10%); slash discretionary domestic spending by as much as 15% (to compensate for the defense boost); leave entitlements untouched; and cut tax rates. The Democrats will respond with outright hostility. The Republicans, after raucous applause, will be politely noncommittal.
My take? Trump's fiscal program has zero chance of being enacted in anything like its present form. Why? Because the Democrats won't give it a single vote in any event. And a whole lot of Republicans won't support it either unless it's close to budget neutral. And this isn't within light years of budget neutral. Let's see, you're looking at an extra $60 billion/year on defense and then an extra $300 to $600 billion/year lost (average over the next decade) in tax cuts.
The smaller tax number assumes that Trump would accept the Ryan Plan, which in turn assumes that he would accept the border-adjustment tax (BAT). But Trump apparently is cool to the BAT, as are many Republican Senators and most U.S. business leaders. And gee, I didn't even mention Trump's $20 billion Mexico wall or his $1 trillion infrastructure agenda.
The White House insists it will find huge savings by slashing domestic discretionary. But such slashing will never happen. Keep in mind that this already-shrinking corner of the budget (now only 11% of all outlays) represents the only federal money spent on actual domestic goods and services--weather, parks, environment, R&D, higher ed, space, the entire federal employee payroll. Defense is another 16%. The remaining 73% is all just checks in the mail, to individuals, creditors, and state and local governments. And Trump won't touch it. Repeal and replace ACA? Increasingly, the "replace" doesn't look like it's going to be much cheaper than the Obamacare original.
Final verdict: Aside from some highly tweetable culture-war whacks (to National Public Radio or Planned Parenthood or the "climate change" division at EPA), there will be no fiscally significant savings in domestic discretionary.
Trump would be having an easier time right now if his approval ratings were higher or if the country were less polarized. (Hey, a couple of Democratic votes would help!) And the GOP in Congress might be giving Trump more near-term running room on deficit spending if he showed any willingness to support out-year savings in Social Security, Medicare, or Medicaid. But Trump apparently has no interest in such cost savings--despite the fact that they comprise the largest and fastest-growing budgetary real estate. Even in an optimal scenario, entitlement cuts are difficult. Without enthusiastic presidential leadership, they are well nigh impossible.
At best, unless Trump dramatically changes his offer, we are looking forward to extended budgetary gridlock. At worst, we might witness the eruption of open conflict within the GOP, especially once the debt ceiling begins to rear its ugly head next month. Many tea-party stalwarts are already donning their armor.
Is there any scenario in which Trump could get his fiscal agenda enacted? Yes, but as I have said before, that scenario is a market crash--something which the White House would never admit to favoring, of course, but which some observers may suspect the POTUS is encouraging, inadvertently or not, through its bull-in-the-China-shop behavior. The market gods, with their wonderful sense of humor, are punishing Trump with record-high valuations and record-low volatility.
Since the recent election, the stocks-up, bonds-down Trump Trade has been largely predicated on Trump's ability to push a major deficit-stimulus program through Congress. Now, week by week, that expectation is evaporating. In tandem, the dollar and the 10-year Treasury yield are easing off their earlier highs. The 10-year real yield, yesterday at 0.31%, is the lowest it has been since the election--and is less than half its post-election high (on December 16) of 0.74%.
Today, I suspect, we will see expectations ebb even further as the White House commits publicly to a program it cannot easily walk back. Sure, equities may still keep sailing for a while due to ongoing momentum in the U.S. economy. But as for staying long UUP and short TIP? You may want to be careful. It's an old story: Go one way on the rumor, reverse on the news. Tonight we get the news.
NEWSWIRE
- Fully 65% of the 55+ worry at least once a month about their adult children’s ability to afford desirable housing—over twice as many as those who worry about their own housing (30%). Thanks to the close relationships between Boomer parents and their Millennial children, housing affordability is now a multigenerational anxiety. (The NHP Foundation)
- Xer Joe Hadsall recently replayed Super Mario 64, prompting him to reflect on how far gaming has come in the past quarter-century. As he correctly notes, it’s Xers, not Millennials, who have been there for the entire journey: “[Millennials] witnessed the decoration of the throne room—they didn’t watch the entire castle get built, like we did.” (The Joplin Globe)
- Multi-layer security measures like panic rooms, bunkers, and surveillance systems are becoming hot commodities in luxury real estate. For survivalists who can afford it, these measures are a small price to pay to protect their family in the event of an emergency. (Mansion Global)
- Financial education expert Ted Beck argues that the public school system should use math to teach financial literacy—not just college preparation. For those who don’t think it’s possible, he puts forth the G.I. Generation as proof that the U.S. educational system can produce a generation of financially capable young adults. (The Wall Street Journal)
- Jerry Tan, a 31-year-old father in Singapore, switched careers so that he could spend more time with his family. In a trend that started with Xers and has continued with Millennials, more and more young fathers are doing whatever it takes to be a hands-on presence in their kids’ lives. (The Straits Times)
- Prompted by her parents’ 50th wedding anniversary, Xer Leah McFall reflects on her generation’s late start in finding love and a career. Unlike Millennials, who have been delayed on the road to adulthood by a bad economy, Xers like McFall “slouched toward proper jobs and relationships. We grudged ourselves there.” (Stuff.co.nz)
- As part of an ongoing brand overhaul, Abercrombie & Fitch is testing out fitting rooms that have light and music controls, phone charging stations, and small suites so friends can consult each other other about their selections. While A&F executives are doing all they can to give stores a more inclusive and friendly vibe, it’s uncertain if Millennials will take the bait. (Racked)
- Lego recently launched “Lego Life,” a social network for the 13 and under crowd. To protect Homelanders from any potential online threat (and ease the worries of their hyper-protective parents), Lego Life assigns randomly generated usernames, limits users to a range of carefully selected emojis for communication, and reviews every image uploaded to the site. (Wired)
- In a recent interview with Bill O’Reilly, President Trump said that the process of finding an ACA replacement could stretch into 2018. The delayed timeline illustrates the difficulty of finding a plan that would maintain the parts of the ACA that do work while still appealing to working-class Trump supporters. (Bloomberg Business)
- Scott Gilmore rips into Boomers in a satirical op-ed entitled “The One Group We Can Teach Our Children to Loathe.” The over-the-top piece contains some germs of truth: Like any generation, Boomers have their fair share of vices (for example, their penchant for culture wars and their runaway consumerism). (Macleans.ca)
- In the wake of Mary Tyler Moore’s death, Boomer Lauren Stiller Rikleen reflects on Moore’s importance to Boomer women. Though not a Boomer herself, Moore served as a relatable onscreen feminine icon during the Boomers’ formative counterculture years. (Forbes)
- Payment company CEO Kalpesh Kapadia argues that in the wake of the Wells Fargo scandal, Millennials deserve a disruptive alternative banking option. Given the recent success of robo-advising services like Wealthfront and Betterment, Millennials clearly agree. (Re/code)
- Finance writer Dan Caplinger writes that Xers should prepare for the possibility that Social Security will be significantly drained by the time they retire. He’s right: While much of the discussion today is centered on whether there will be any Social Security left for Millennials, SS payouts are projected to be slashed by 2034—just as many Xers start hitting age 65. (The Motley Fool)
- Fully 114 of the 242 S&P 500 companies that held investor events in January referenced Donald Trump—with many executives preaching patience and optimism. Though companies and investors remain sold on the “Trump rally,” beware: Full-on “Trumponomics” still has significant hurdles in its way. (The Wall Street Journal)
- Although most Xers say they could be doing a better job of adopting healthy habits, nearly half (45%) have not had an annual physical exam in the past five years, compared to 28% of Boomers. Nearing old age, Xers should act on their desire to live healthy before it’s too late. (Ipsos)
- Contributor Jasmyne Cannick outlines why she believes that her late grandfathers would have voted for Donald Trump. She maintains that her patriotic grandfathers would have looked past “what many of us saw as Trump’s elitist, racist, and misogynistic rhetoric on the campaign trail” in support of Trump’s biggest platform: bringing jobs back to America. (LA Progressive)
- Dollar General recently unveiled DGX, a Nashville-based small-format dollar store aimed at urban Millennials. The more upmarket, focused selection could be a hit among Millennial shoppers who want affordability and convenience. (Food Dive)
- New Congressional Budget Office projections indicate that the U.S. federal deficit will more than double to $1.4 trillion by 2027, in part due to the retirement of Boomers. This aging generation is poised to put an ever-greater strain on an already overburdened Social Security and health care system. (MarketWatch)
- “Subpremium” beer is making a comeback: AB-InBev is readying its first-ever Super Bowl ad for Busch, while MillerCoors has been pushing sales of its economy brands through marketing and promotions. While the emphasis has yielded early results, Big Beer will be hard-pressed to win back consumers who have switched to premium options. (The Wall Street Journal)
- Boomer Jim Whiddon has started a $249 boot camp, dubbed the “Old School,” aimed at teaching Millennials marketable interpersonal skills. However, the notion that this already social generation would pony up that kind of cash to learn about the value of maintaining eye contact is tenuous at best. (CBS DFW)
DID YOU KNOW?
Reevaluating Performance Evaluations. Employers are struggling to deploy a performance review process that satisfies everyone: According to a recent survey by Willis Towers Watson, fewer than half of 31,000 employees said that evaluations improve performance or correlate to compensation. And many managers consider the process time-consuming, ineffective in boosting performance, and unrelated to business results. This frustration has companies ditching their longstanding practices. Goldman Sachs, Morgan Stanley, and Kimberly-Clark have replaced annual rankings for more frequent feedback, which ranges from biannual to daily. But this transition has had unintended consequences, including a decline in worker performance and the rise of “shadow rankings” (murky rankings based on unofficial conversations). Other firms are buying online systems like ReviewSnap that promise to “fix” the process—but having too many interactive features often deters employees from participating. Employers are just going to have to accept a future of constant feedback: Achievement-oriented Millennials expect to be regularly told if they’re “on track” in the workplace.
Financially Insecure Adulthood. The latest report from Young Invincibles finds that Millennials are significantly less financially secure than Boomers were at the same age. In terms of income, Millennials (defined as 25- to 34-year-olds in 2013) currently earn 20 percent less than Boomers did at the same age in 1989. When it comes to overall financial health, the story is just as dire. Millennials have only half the net wealth, own half as many assets, and are less likely to own a home than their Boomer predecessors. Though rising student debt levels certainly have hurt Millennials’ financial prospects (see: “Another Day Younger and Deeper in Debt”), higher education is more valuable than ever to this generation’s financial standing. College-educated young adults, for example, are more likely to own a home than their Boomer equivalents. Despite the grim findings, this risk-averse generation isn’t taking any chances in the long term. Approximately 40 percent of Millennials are saving for retirement—compared to only 16 percent of Boomers.
