World-renowned demographer, Neil Howe, recently joined FS Insider to discuss a series of predictions he and co-author Bill Strauss made in the late 90s regarding a 'fourth turning' that would take place in America. He explains what role these turnings have played historically and how understanding them can help us grasp what's currently happening economically, politically and societally. Read below for excerpts from his interview with FS Insider. If you’re not already a subscriber, click here.
For audio, see Neil Howe on America's 'Fourth Turning.'
Can you explain to our listeners what this fourth turning is and why there’s such a renewed interest in it?
The Fourth Turning basically takes the paradigm of generations, from a somewhat different point of view. In the book, we start from generational biographies and by the end of the book, we end up almost inferring from this generational rhythm, what that implies for the actual rhythm of history itself.
In the Fourth Turning book, we reverse the order, we start out with a rhythm of history, and we explain it by generations. Fourth Turning basically takes the same idea we're outlining, which is that if you think of portends of four types of generations, you can think about four types of generational areas. We call them turnings—so they’re kind of like seasons of the year. If you have a you have an entire lifetime that's 80 or 90 years long, then each generation is 20 odd years long, right? As each generation is coming of age, or each generation is entering a new phase of life, you have a 20-year period while it's happening.
You can segment American history into these 20-year periods, and there's a certain seasonality about it. A first turning, which is sort of the spring season, is usually the post-crisis era. This is an era when institutions are strong, and individualism is weak. Americans are very optimistic about the future and there's a great sense of social cohesion.
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The second turning is sort of the summer season, it’s the awakening. Suddenly everyone's tired of all the social discipline, the sacrificing for the group and we want to rediscover ourselves and regain some sense of personal autonomy. These are very creative periods in the culture and in religion. The generation that spearheads this awakening is the new generation coming of age. They tend to be born right after the last crisis and certainly they want to throw out all the discipline and the severity of the establishment that was built by their parents. That's a repeating pattern throughout American history and we saw recently in American history with boomers coming of age. So, that's the second turning.
The third turning, we call an unraveling. It’s an unraveling where institutions are weakened and discredited. Individualism is strong and flourishing. The generation coming of age during an unraveling is a generation like Gen Xers— very much empowered as free agents, very distrusting of anything larger than themselves as individuals or maybe their families. This is an era when institutions become weak. But history suggests an unraveling always eventually leads into fourth turnings.
That's the era we're in now. We think this fourth turning started with the great financial crisis in 2008 and 2009. We think this turning will last all the way until the year 2030. So, we expect that the 2020s ahead of us are going to be a particularly climactic or pivotal point in this fourth turning and in this crisis era. We’re likely to engage in a huge amount of creative destruction of public institutions.
How do you see this particular fourth turning playing out over the next 10 years?
I don't think this is going to be a V-shaped recession. I think that's the narrative that's certainly been framing the equity market response, particularly the in the S&P 500. The narrative is that this is like a tsunami or Hurricane Katrina. Something where it's going to look really terrible, but don't pay any attention to the numbers because we'll bounce right back. I think that's the narrative right now and it's certainly shaping the equity response.
I think that it is shaped by this whole idea that COVID-19 is going to go away quickly and we'll just get back to everything the way it was. I disagree with almost every aspect of that narrative. First of all, every Thursday I do a COVID-19 call and we actually go over the numbers really carefully. We talk about certain antibody tests and about everything that's coming down the track. I see that we have not pursued a coherent strategy in this country. We could have pursued containment, which is first a huge suppression of new infections and then a massive policy of test and trace, which we just simply don't have the capacity to do. And we're no longer nearly low enough in the rate of new infections to begin that process.
The other option would be the idea of herd immunity. And this was originally approached by the U.K. and to some extent it's been kind of hinted at and halfway indicated by the Netherlands and Sweden, and Sweden has probably done the most to actually try and call it that. But even to do that, that you would have to exercise decisive authority.
You'd have to take all the people with pre-existing conditions and seniors and put them somewhere and you'd have to get all the millennials out to a chicken pox party or something. There would be a whole strategy to try to get through herd immunity quickly. I don't see us doing that either. What I see is us just twisting slowly in the wind, we're going to open parts of the economy until infections and deaths get worse and then we'll gradually close them down again. We're going to be in again and out again, and our economy will be going on maybe three out of six cylinders.
I'm afraid in the U.S. we’re going to see a rolling second wave happening in regions across this country. I think things will look generally good in May, because we did bring the infection rate way down. So, I think there will be some optimism in the bank but things are going to be really bad in June, because in June, everyone's going to realize this economy is not back anywhere where it was. You know, suddenly we’ll have infections again, that's how I see it.
I think there is about a three-week period between opening the economy and when you're going to see the caseload start going up. You can see that happening particularly in some of the more rural Midwestern and Southern states. We are nowhere near herd immunity. I veto the statistics on that. Most of the country is only testing 3% to 5% positive for antibodies. So if that's the hope, we're not going to get there anytime soon.
Other goals include a discovery the vaccine or 100% effective antiviral, but I think no one expects that for the next year or so. I think our effectiveness in handling this is going to be a real test of our civics—of our political system to function. Millennials are incredibly frustrated, and they would love to do something, but they feel that our whole attitude in America is you just stay home and placate fear.
I’ve talked with them and interestingly with New Zealanders and South Koreans, when they remark on this, they said the difference is, in South Korea, is that we think we can do something about this. We go out we go house to house and we actually test and trace we find out every single person. We ask everyone to find out who is infected, we identify them, we track them down and as a result, we can open up our economy again very safely. In America, it’s very passive, you just all stay at home and hope this goes away. And I find that is a real test of the efficacy of our political system.
Click here to listen to our full-length, 40 -minute interview with Neil Howe and hear more on his book, The Fourth Turning: What the Cycles of History Tell Us About America's Next Rendezvous with Destiny. If you're not already a subscriber to our FS Insider podcast where we interview book authors, strategists and industry experts from across the globe on all things economics, finance and markets...