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Thread: What the Cycles Predict







Post#1 at 09-18-2001 05:43 PM by Mikebert [at Kalamazoo MI joined Jul 2001 #posts 4,502]
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09-18-2001, 05:43 PM #1
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I am writing a book on four aligned cycles, one of which is the Strauss and Howe saeculum, with which all of you are familiar. Another is the Kondratiev economic cycle, with which some of you are familiar. A third cycle is a modified version of Modelski and Thompson's World Leadership cycle of International relations, with which I suppose very few of you are familiar. The fourth cycle is what I call the K-S cycle; it is my own invention. It is derived from the Kondratiev cycle (K-cycle) and is closely related to the both the saeculum.

Previously I have written of my prediction of a 15-20 year bear market that follows from my stock cycle (a subharmonic of the K-cycle). I have also described the liberal-conservative political cycle, which is an aspect of the K-S cycle. The political scientists Ruy Teixeira and Joel Rogers have given an explanation for the shift to the right over the last two decades in terms of two trends, one economic and one social/cultural. They do not describe where the trends come from, but I show (in my book) that the economic trend is a manifestation of the K-cycle and the social/cultural trend follows from the saeculum. Together, through their mechanism they produce the political trend that outlines the conservative swing of the political cycle in accordance with the K-S cycle. That is, they show how the action of the K-cycle and saeculum have produced the political aspect of the K-S cycle, without actually ever mentioning cycles at all (they never mention it nor imply that these processes are cyclic in the least).

Since the K-S cycle predicts a shift to liberalism over the next couple of decades, I attempt to give a mechanism for how this shift might come about. The mechanism involves the stock market. It is plausible but the shift could occur in lots of other ways, which would make the cycle correct, but my proposed mechanism wrong. Of course, the predicted shift may not occur and the cycle will then be wrong.

In the wake of 911 the leadership cycle becomes interesting (along with the political cycle). Our current position in the leadership cycle is the World Power phase (according to my modified scheme which follows from my unified cycles approach with the saeculum the unifying cycle today). This is the time of MAXIMUM hegemonic power, that is, the absolute WORST time for someone to try a stunt like 911 (from the terrorist point of view). Modelski and Thompson (the inventors of the leadership cycle) have us at the beginning of the Deconcentration Phase, a time of low and falling hegemonic power. That is, almost the BEST possible time for terrorists to try something like 911.

In this thread I would like to explore possible ways that the outcomes suggested by my cycle interpretation may or may not come to pass. My interpretation of the cycles suggests that President Bush will achieve victory over terrorism much faster than people think likely, that is it will not drag on for many years as many fear. In contrast, Modelski's view of the cycle has the war on terrorism dragging on for many years.

Also, in the process of doing so and in the years to come, the political environment will somehow become increasingly liberal. For example, it is suggested that Bush will beat the terrorists handily, yet somehow lose the election in 2004! How in the world can this happen?

911 pretty much invalidated my earlier scenario about how the shift to the left can happen. Can people suggest ways these seemingly incongruous could happen?







Post#2 at 09-18-2001 06:05 PM by Mikebert [at Kalamazoo MI joined Jul 2001 #posts 4,502]
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Please do not post on this thread, it is a copy of another.







Post#3 at 09-18-2001 06:12 PM by Virgil K. Saari [at '49er, north of the Mesabi Mountains joined Jun 2001 #posts 7,835]
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On 2001-09-18 16:05, Mike Alexander '59 wrote:
Please do not post on this thread, it is a copy of another.
Try the edit button and delete the duplicate. HTH

I see you tried...never mind. ISTDH

<font size=-1>[ This Message was edited by: Virgil K. Saari on 2001-09-18 16:15 ]</font>







Post#4 at 09-19-2001 10:34 PM by Crispy '59 [at joined Sep 2001 #posts 87]
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Where's the duplicate site?







Post#5 at 09-20-2001 01:05 PM by Mikebert [at Kalamazoo MI joined Jul 2001 #posts 4,502]
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Looks like they deleted the other thread so disregard my former post.







Post#6 at 09-20-2001 08:10 PM by Crispy '59 [at joined Sep 2001 #posts 87]
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I also agree that the political mood will shift to the left, especially in the economic arena. I think that the current stock market swoon is increasingly leading the public to believe that "free markets" sometimes make societally harmful decisions and that less resources should be devoted to them. OTOH, events such as terrorism expose the negligence of our public sector (intelligence), and the public's reaction will be to increase the resources directed towards governmental action. These offsetting effects will lead to more economic power in the hands of government and less in private individuals.

Bush is philosophically stuck in the 3T, and no matter how good a politician he is, will not adapt quickly enough to be reelected. He will, I believe, fight terrorism in a 3T manner i.e. overwhelming force but a quick exit. Terrorism may be defeated (at least in the 3T manner of eliminating bin Laden, the symbol of terrorism), but that may reinforce the belief in the efficacy of collective action. After all, this war with its domestic civiliation casualties will bring people together in a way that the Gulf War with its spectator like feel never did. This belief may spark an increase in all spheres of collective action, including notably the economic one. Thus the new coalition in '04 will need to stand for strength in all areas of public action: military, economic and cultural.

<font size=-1>[ This Message was edited by: Crispy '59 on 2001-09-20 20:00 ]</font>







Post#7 at 09-23-2001 09:44 PM by Crispy '59 [at joined Sep 2001 #posts 87]
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Mike, How does 911 invalidate your mechanism for a shift to the left? I thought your mechanism was the declining value of equities.







Post#8 at 09-25-2001 10:30 AM by Mikebert [at Kalamazoo MI joined Jul 2001 #posts 4,502]
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[Crispy:] Mike, How does 911 invalidate your mechanism for a shift to the left? I thought your mechanism was the declining value of equities.

[Mike:] It may well deep six it. Cycle analysis only indicates the direction and rough timing of changes in trends. It says nothing about the events/mechanisms that bring them about.

The political cycle predicts a shift to the left. The saeculum suggests it would be primarily economic. Neither cycle says *how* this will be accomplished.

Last time is was 25% unemployment and a critcial election that caused the shift. By analogy I though the same thing could happen this time except I believed that a secular bear market would stand in for the 25% unemployment. That is the stock bear market would produce the political momentum needed to put in the liberal economic policies that would prevent the development of 25% unemployment.

Now that there is a war it is possible that the shift to the left could be accomplished by a series of hawkish national security policies that have unavoidable liberal economic side effects. That is, the shift could be initiated by Mr. Bush himself, or by another Republican, in the name of national security.







Post#9 at 09-25-2001 01:24 PM by Crispy '59 [at joined Sep 2001 #posts 87]
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I see that 911 (not the bear market) could be the crisis that sparks collective action, but what do you mean by initiating unadvoidable liberal policies? Couldn't Bush simply continue to reiterate Reagan's policies i.e. fiscal stimulus through high defense spending and (relatively unprogressive) tax cuts?

Also, if the war is won quickly and decisively as you predict, why couldn't the bear market again resume its importance as a mechanism for the shift to the left?







Post#10 at 09-25-2001 07:31 PM by Mikebert [at Kalamazoo MI joined Jul 2001 #posts 4,502]
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All Reagan had to do to win the final phase of the Cold War was spend lots of money, say provocative things and watch the Soviet Union implode.

Bush faces an enemy who has already hit the US on its home front harder than anyone else has since 1814. He cannot just sit and spend money like Reagan. If he does and terrorists start killing Americans on a semi-regular basis Bush will lose to a Democrat and the liberal policies will get in this way.

So he has to protect his country from attack. Direct protection would require preventing terrorist entrance into the country. This would also sharply reduce illegal immigration and probably legal immigration as well. It would also hamper Mexican-American trade. All of these would serve to boost American wages, an unintended liberal economic effect.

The whole idea of globalization was that the US could ship jobs overseas and import the low-cost products back. That is, replace expensive American labor with cheap foreign labor. Essentially, third-world folks would make cheap stuff for Americans, now working at low-paid service jobs, can still afford to buy. The primary beneficiaries are corporate leadership who reaped huge incomes and shareholders.

This system requires that American opinion makers don't launch attacks on pro-corporate economic policies like globalization and free trade. With the drop in stock values opinion makers (who are likely to have substantial investments in retirement accounts and such) no longer benefit from pro-corporate policies like free trade. They are now free to critcize. [Originally I had thought that domestic criticism of conservative economic policies would bring about the shift to liberal policies.]

But this system also requires the acquiescence of third world leaders who must behave like good capitalists and increase oil sales when prices are high. They must look out for the interests of corporations who have facilities on their soil and they must subject their populations to harsh austerity measures whenever there is a downward currency market fluctuation so foreign investors don't lose confidence.

Such behavior is politically dangerous for third world leaders with restive populations. With 911 it has become dangerous for American citizens too.

To effectively combat terrorism w/o closing our borders, it may become necessary to roll back globalization and reduce the overwhelming presence of American corporations in countries where this creates the intense resentment that breeds terrorists. A rollback of globalization is a gain to American labor, i.e. a shift to the left economically.

Finally if Bush chooses full scale, sustained military response (in order to avoid closing the border or rolling back globalization) this will require increasing taxes on those most able to afford it, and this is also economically liberal.

<font size=-1>[ This Message was edited by: Mike Alexander '59 on 2001-09-25 17:46 ]</font>







Post#11 at 09-25-2001 07:50 PM by Mikebert [at Kalamazoo MI joined Jul 2001 #posts 4,502]
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In answer to your other question, yes if Bush manages to quickly defeat the Taliban and bin Laden the bear market mechanism could reassert itself.

Personally, this is what I'd like to see. I'd love to see Bush squash these guys like a bug.







Post#12 at 09-26-2001 07:59 AM by Tim Walker '56 [at joined Jun 2001 #posts 24]
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Concerning Mike Alexanders alternative scenarios-I don't know if Dubya has given any thought to impact on globalization. But his advisors have probably given thought about alternative responses to terrorism. Politically, sealing the borders would be an obvious response for Dubya. The public knows that the terrorists came here and hit us hard at home-hence the new office of homeland defence. Dubya may find his national security imperative going against his economic leanings. Also, if he didn't already know about the Soviet experience in Afghanastan he probably does now. Perhaps someone has asked him this question: would it be more effective to send troops to Afghanastan, or send assassins after terrorists who are traveling outside the Middle East?

<font size=-1>[ This Message was edited by: Tim Walker on 2001-09-26 06:00 ]</font>







Post#13 at 09-26-2001 10:34 AM by Crispy '59 [at joined Sep 2001 #posts 87]
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Mike, do I understand your arguments correctly? If 911 doesn't happen, Bush continues his free market/globalization policies in the face of economic decline and loses in '04. Because of 911, however, Bush responds to the immediate crisis and unintentionally becomes a domestic liberal, but realigns the Republican party and wins in '04.

In terms of reelection, Bush is lucky that a national security crisis heretofore never experienced has occurred that forces him to alter his paradigm. If this crisis passes, it may be that he reverts to his old paradigm, and thus he would be better off politically with an extended (though not botched) war.

I guess your scenario would lead to a low-growth, low inflation period in which equities underperform cash (like a recent book predicts :smile: )

I would add that it is unlikely that a replay of prior crises will be instructive as to the exact mechanism in place. When the Crisis hits, institutions are set up to deal with that particular Crisis, and remain in the collective institutional memory when the next Crisis hits. The likely weak points in our institutions are in areas that have never entered national attention before such as terrorism.







Post#14 at 09-26-2001 11:07 AM by Mikebert [at Kalamazoo MI joined Jul 2001 #posts 4,502]
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[Crispy:] Mike, do I understand your arguments correctly? If 911 doesn't happen, Bush continues his free market/globalization policies in the face of economic decline and loses in '04. Because of 911, however, Bush responds to the immediate crisis and unintentionally becomes a domestic liberal, but realigns the Republican party and wins in '04.

[Mike:] These are just scenarios. All I was doing was giving a variety of ways that a declining stock market or 911 could factor into a drift to the left economically. I am not predicting anything other than the drift to the economic left will happen somehow.

What I will say is I cannot see how we can keep the drift toward libertarianism (i.e. greater economic conservatism) of the 1990's in the face of 911 and a declining stock market. Anyone have any ideas on how this could happen?







Post#15 at 03-04-2010 08:11 PM by Mikebert [at Kalamazoo MI joined Jul 2001 #posts 4,502]
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Attention prince of cats

Prince of cats asked me to bring this thread back up after 8 1/2 years. I'll start with this post.

Quote Originally Posted by princeofcats67 View Post
But then after the Summer of Love, something changed. You said it: You watched "The dream" fade. I've asked before and I will again. What happened? IYO, how do you define "The Dream" and why did it fade? No Politics or Ideology if you don't mind, just the real ground-level ideas. I'm VERY interested in this FWIW.

PoC67

PS: For Scientific Study's sake, with all due repect in this criticism, I find the usage of the word "Corporatist" as problematic for the reason that it describes the belief in a Top-Down Model for an Organization. I'm pretty sure that definition isn't the one that you want to convey. I've been over this with Brian Rush already, because I'm looking for some Non-partisan answers and you all are the only ones who Experienced the "Birth and Awakening of the Dream". I have my own sources, but they pale in their understanding of the Turnings compared to you. If you could help me out on these questions, I'd very much appreciate it. If not, I understand and that's OK too.(feel free to use Corporatist as it "sounds" correct; It just has a different definition across other Areas of study).
What happened was the Awakening. From my 2002 article:
By the late 1960's "self-expression" and the rise of the individualistic ethic (coming with the arrival of a new generation of Prophets) encouraged deficit spending, tax revolts and speculation. Strauss and Howe call such periods Awakenings. They are times when "people stop believing that social progress requires social discipline" and develop "a high tolerance for risk-prone lifestyles". People disdain the prosperity and security of a High, though covertly they are taken for granted. The development of the Awakening mirrored a political shift from conservative to liberal as well as an erosion in financial rectitude. Taxes were cut in the early 1960's and the decision to finance the Vietnam war through deficit-spending rather than increased taxes contributed to an inflationary environment that would make speculation more attractive in the 1970's. War stimulus was probably responsible for extension the 1960's expansion beyond 1966, when it should have ended according to SMECT.

Kondratiev spring ended in 1966, just two years after the beginning of the Awakening, as indicated by the beginning of a secular bear market. Yet economic good times continued until 1973. The credit crunch in 1966 failed to bring on a recession; economic conditions remained favorable for the first half of Kondratiev summer. On the other hand, the 1966 bear market signaled a shift to a highly speculative era seeing first the "go-go years" of the late 1960's and the "nifty-fifty" era of the early 1970's. This same period saw the re-emergence of a full-blown Kuznets cycle. The persistence of good times over the 1966-1973 period reflected the efforts of government policy makers to maintain full employment using Keynesian stimulus in the face of Kondratiev summer. It worked for a while, but the inevitable result was stagflation. The experience of stagflation did not lead to an abandonment of government economic management, but rather to a change in style, from liberal Keynesian fiscal methods to conservative supply-side monetary methods. This shift mirrored a political shift from liberal to conservative. This shift was called the Reagan revolution, but another interpretation of this era is what Strauss and Howe call an Unraveling. The Unraveling "begins as a society-wide embrace of the liberating cultural forces set loose by the Awakening". People "vigorously assert an ethos of pragmatism, self-reliance, laissez faire, and national (or sectional or ethnic) chauvinism".

In the early 1980's, the Federal Reserve, under its new monetarist focus, hiked interest rates to their highest level in the history of the United State, breaking the back of inflation. Taxes were cut substantially again, especially those for capital gains, and as inflation subsided, a great bull market in stocks ensued. This policy had the same effect as that during the early 1920's when the decline of WW I inflation, a capital gains tax cut, and a belief that the Fed had made financial panics a thing of the past unleashed speculative forces. The 1920-29 boom is cycle-equivalent to the 1982-2000 boom. The speculative spirit reborn in the Awakening became sanctioned by official policy during the Unraveling. For example, the 1987 stock market crash was met by copious liquidity, which allowed the market to recover its losses in just two years, resulting in extension of the already-long 1980's expansion to the next Kitchen cycle. In 1997, Congress passed a capital gains tax cut in order to stimulate further stock price rises in an already overvalued market, and the Fed executed a well-timed surprise rate cut in 1998, which ignited an explosive stock rise, even more extreme than the late 1920's blow-off. Both of these policies served to extend the already long 1990's business cycle to three Kitchens, and as a result Kondratiev fall was extended well beyond its length in previous cycles. The net result of these various interventions has been to subtly increase the length of the K-cycle from the 64-year length called for by SMECT to a 72 year length fully aligned with the saeculum.
For more background read the whole article. The awakening had both a right and left version. Both are libertarian/libertine in nature--reactions against duty, reflecting the creation of a Freedom (Boomer) paradigm in opposition to the restrictions of the old Progressive (GI) paradigm.

The Right's awakening started was the Kennedy-Johnson tax cuts, which were not rescinded when the Vietnam War started. A serious deficit had developed by 1968, and in that year a 10% tax surcharge was passed, which gave a budget surplus in the next year. The new Republican president did not continue the surtax, inaugurating three decades of deficits. Here we see a Republican politician, (Eisenhower's VP no less) abandoning Eisenhower-style fiscal discipline. The awakening continued with Proposition 13, the predictable result of which you now see in California's bankruptcy, and culminated with the Reagan tax cuts and enormous deficits thereafter. As a result of the awakening, deficit spending became a Republican trademark.

The Left's awakening started a bit later, in response to the draft for the war. Boomers were not as willing to go to war as their fathers were, just as the GIs were not willing to pay for the war as their fathers were. The success of the 1T Civil Rights movement spawned the women's movement and the gay movement, both of which challenged established norms. A whole alternative culture sprang up, starting around the Summer of Love .

The Awakening ethos was expressed politically and culturally on the Left, and financially on the Right.
Last edited by Mikebert; 03-04-2010 at 10:00 PM.
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