Virtual Strategic Investment Conference 2020

Interview of Neil Howe by John Mauldin

Please note: Please forgive any typographic or grammatical errors.

I believe you’ll walk away with a number of insights from John Mauldin’s conversation with historian, economist, and author, Neil Howe, at this year’s Mauldin Economics Virtual Strategic Investment Conference 2020. Throughout his career, Neil Howe has been predicting a “fourth turning” – an event that would reshape societal norms and usher in a new generation of leaders. Each turning is different. There are four – each lasts 20-25 years. The last turning was in the 1930’s-1940’s. Howe’s turnings are based on his study of cycles or rhythms in history. We are in the fourth turning. Howe has long pointed to the decade of the 2020’s as being the most challenging period (the end of the fourth turning).

Following are my bullet point notes. I hope you enjoy the discussion.

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JOHN MAULDIN: We’re getting ready to go to one of the most fascinating conversations that I always have. Neil and I laugh at each other because we often start out with 30-minute conversations that end up two and a half, three hours later. My readers need absolutely no introduction to Neil. I have been writing about him for 15, 20 years, ever since I read The Fourth Turning and then Generations.

• How did you come to the whole generations, to the cycle thing, when you and your original partners were looking at that? How did that segue into The Fourth Turning? And then what is the Fourth Turning, which we’re coming into now, which is always the crisis period, if you will, and how will that segue way into the first turning and what that looks like on the other side? You know, what does that say for the role of government, the role of institutions, and so forth?

NEIL HOWE: We came about this idea of looking at cycles or rhythms in history, actually by accident. This was back in the late 1980s. Bill Strauss and I were actually very interested in looking at… both of us had been aware of how differently generations had acted in the post-World War II environment.

• You know, we belong to a generation that came of age with Woodstock. We had parents who came of age in WWII, you know, D-Day. They were building battleships. Our generation was finding itself. It’s just a real contrast.
• And at that time, in the late ‘80s, most discussion of generations had died down. It was a big issue back in the late ‘60s, early ‘70s. There was a generation gap. Everyone talked about the battle between generations back then. It was definitely a values clash. It was culture versus counterculture. But then it died down.
• But we were very interested in how different generations, as they grow older, provide a different kind of endowments for the future. I mean, some generations want to endow, you know, material institutions. They want to build bigger infrastructure.
• Other generations, focus on other things. How was this created? So we went back in history. We were actually… we were very impressed by a book at the time called Landon Jones, a kind of a history of the Baby Boomers up to that point. I think it was a book called Great Expectations.
• We went back in history, and we looked at different generations. And the more we looked and the more we read and the more we got just got obsessed with this (this is a period of about three years) the more we realized there was a lot more going on here than we thought. In fact, generations had always been different, and people were aware of these differences going back into the 17th century.
• And not only are generations different, these differences tend to recur in a certain order. Certain kinds of generations always follow other kinds of generations. And this order in generation, or what we call archetypes, is related and linked to a certain order in history itself, certainly American history. And this is something that’s often remarked on as some of the great turning points in our national history in terms of civic or political turning points have occurred about the length of a long human life apart or about 80 or 90 or so years.
• We went from the Glorious Revolution, the War of the Spanish Succession in the colonies, which is a big turning point in the development of America to about a century later, the American Revolution, a century later, or, you know, 90 years later, 80, 90 years later, to the Civil War and then to the Great Depression, World War II, and, John, here we are today.
• Roughly halfway in between these great civic turning points, we noticed, are what religious historians call the great awakenings of American history, but these are the great… what Anthony Wallace, the sociologist, called revitalization movements. These are times when we revitalized the culture. So you can kind of see a rhythm here halfway in between these great… these eras in which we reshape the outer world of politics, institution, our constitution, the economy, infrastructure.
• We have these periods in which we reshape the inner world of culture, art, religion, manners, values, as Boomers like to talk about being a values obsessed generation. Right? So this was a kind of an interest in yin and yang pattern, and it gave rise to a kind of a fourfold typology of types of generations.
• Again, we call these archetypes and also a fourfold typology of moods, which are basically seasonal and each mood or era, which lasts about the length of a social generation, sometime between 20 and 25 years long, each of these generations. Four of them together creates one of these total periods going from crisis to crisis or awakening to awakening. So you kind of get the idea.

HOWE: What we call turnings in our 1997 book, The Fourth Turning, are basically seasonal eras.

• A first turning, which is the post-crisis era, is what we call a high, kind of like the American high, you know, from the late ‘40s, ‘50s, early ‘60s. And this is a period in which institutions are strong, individualism is weak, society feels like it’s more than the sum of its parts. We are very focused on the, kind of, social and ethic mainstream, not very much on minorities, and society has a very strong consensus about where it wants to go, collectively.
• History shows that these periods are typically followed by second turnings. This is where we move from the spring season, this is now kind of in the summer season, and this is…these are the awakenings. And these would be periods when people suddenly want to shed all that social discipline, all that civic responsibility. People want to find themselves. People are tired of all that conformity. And during these periods, a Boomer-like generation, what we call the prophet archetype, which is born just after the crisis, is always coming of age. So this is always a pattern. It’s always the post-crisis generation that comes of age in the awakening. And by the way, that same generation are always the elder leaders of the next crisis era.
• So you can kind of see how that works with the prophet archetype. That would be the generation, for example, of Ralph Waldo Emerson and Nathaniel Hawthorne and Abraham Lincoln, who ultimately took us to the Civil War. It would also be the post-Civil War generation of Franklin Delano Roosevelt and Stimpson and then Einstein and, you know, all that group that took us through the ‘30s and ‘40s.
• But this is a pattern. And what happens during the second turnings to kind of return out of the spring is we become a much more individualized society. And by the end of the awakening, we become a lightly governed society. We succeed in shedding a lot of these civic responsibilities.
• We all recall what happened in the late ‘60s and ‘70s. It started with a cultural revolution on college campuses against the manners and mores of the GI generation that raised us. And ultimately, and that ended up during the Reagan era with deregulation and tax cuts. I mean, across the board, no one wanted to be part of the system anymore.
• And so, as a result, we entered what we call the fall season. And this would be the period of the late 1980s, 1990s, early ‘00s. This is a period just much the opposite. When I’m talking about third turnings, what we call unravellings, these are much the opposite of first turnings. Individualism is celebrated. Institutions are despised and distrusted.
• The generation coming of age during third turnings is the children of the awakening, right. So these would be Generation X, who came of age during the late ‘80s and ‘90s, and their attitude is basically free agency, take on a lot of risk, only trust yourself, very distant from civic institutions or structures. I think a Gen Xer motto is just basically stay off the radar screen of government. And they just hope you get by without being noticed. And that’s where you’ll make your profit, cut your deals, and find out some little niche solution for yourself. This is characteristic. We’ve seen other generations like Gen Xers. We saw this in the lost generation that was born in the 1880s and ‘90s. We saw it in the gilded generation, born in the 1830s. I mean, you can go back. We saw it in the liberty generation of Patrick Henry and George Washington. But this is a certain kind of generational archetype.
• History shows, however, that these fourth turnings, these lightly governed eras of American history always culminate in fourth turnings, and that’s the winter season. That’s the crisis era. The crisis era is an era that lasts about a generation. So we expect this to last about, between 20 and 25 years.
• We think the crisis era, this fourth turning started… it was certainly foreshadowed by 9/11 but we think it really started with 2008 and ’09, with the GFC and the Great Recession, from which America never really entirely recovered economically for most of its citizens, and now we’re at it again in the kind of COVID lockdown crisis of 2020.
• This era will extend all the way until about the year 2030. And we always predicted that the 2020s would be the climactic decade. And that was even in our original book, Generations, back in 1991. We talked about the crisis of 2020 and we talked about the 2020s as being the climactic or culminating part of this fourth turning, when history, public history begins to move very quickly.
• Keep in mind that in each of these turnings or eras, a new generation is entering a new phase of life. And one of the reasons why we knew that around sometime between 2000 and 2010, probably right around the middle was when this fourth turning would start at the time the Millennial generation (who were protectively raised kids) would be coming of age into their careers. Gen Xers would be beginning to move into mid-life roles, and Boomers were beginning to move into their elder roles and beginning to retire.
• And that is always a marker for us. We always look at generational boundary points, and once these generations begin to realign and move into new phases of life, that’s always when you’re entering a new turning.
• And by the way, the fourth turning will end when Boomers, particularly the eldest Boomers, definitively move beyond the age of political leadership or are basically, sort of, retired from public life. Gen Xers begin to retire and move into the senior role. Millennials just begin to move into midlife and begin to take over society’s institutions. And this post-Millennial generation, we call them Homelanders, people sometimes call them Generation Z, we think they’re dating them a little wrong. We think Homelanders are a little bit younger, but they will be just beginning to come of age at that time.
• The best generational parallel for the Homeland generation is the Silent Generation. The generation that was born in the late ‘20s, 1930s, early ‘40s, that experienced the Great Depression and World War II as children. The best parallel for the Millennial generation is the GI generation that voted by 85 percent pluralities for FDR and the New Deal, who basically deputized government to embody a new sense of national community in America in 1932 and 1936. They were the WPA, you know, dam builders and tree planters and they went on to become the most uniformed generation per capita during World War Two.
• And the generation that is most like Gen Xers is the Lost Generation who experienced World War II. They gave us the Roaring Twenties. As young adults they were absolutely wiped out by the Great Depression, which hit them in mid-life, and they never really recovered from that. The Lost Generation tended to vote Republican all their lives.
• And interestingly, the Lost Generation as a whole never reconciled itself to the New Deal. And in 1964, when LBJ ran against Barry Goldwater, a slight majority of Americans over age 65, these would be people born before 1900, right? That was the Lost Generation, they were the World War I eligible kids. They were also the ones who tended to be hugely hit by the the Spanish influenza. And that’s become an interesting new topic, but anyway, that group voted by a slight majority for Goldwater, despite the fact that he had heavily promised to slice and dice Social Security. Isn’t that fascinating?
• The Lost Generation never wanted to be helped. They thought they could just do it on their own. They never wanted government to care for them. And they held that view even into old age. It was only later when the GI generation, the New Deal generation began to enter… you know, which is basically in the late ‘60s and early ‘70s, when the GI generation began to enter old age, that you had this huge new senior lobby voting for Social Security.
• They became the grey lobby. They all worked for unions, and then when they quit their unions to retire, they all joined AARP. And that became their reality by the 1980s, right, that you have a senior lobby which is foursquare in favor of these government benefits, which, by God, they earned, because of their… because of the civic behavior that they took back in the ‘30s and back during World War II. This is an example of generational replacement. We’re going to be seeing a lot of that in the era to come.

MAULDIN: I think you did a wonderful job of setting it up. And let’s go just real quick to my iPad and see what questions are showing up. Jeff Harbaugh and a number of people have asked, in a fourth turning, can a pandemic substitute for a war? In the past, I’ve heard you said there’s never been a fourth turning without a war. But can the COVID virus, in essence, be our war? Which is something that you and I have talked about offline.

HOWE: Yes. The answer is, I just don’t know. You know, that’s going beyond the ken of anything I could know. I will say this, that fourth turnings tend to take all problems that are out there and tend to gather them up in one huge problem.

• One thing we noticed in the 1930s, is going on now. We had all kinds of problems by the mid 1930s. Obviously, the economy was going to hell, and we didn’t know what kind of monetary system we had. And the whole world was being taken over by fascist authoritarians, and we didn’t know how the household would reshape itself. You had all these kids living at home. Just basically all kinds of things were going wrong in America.
• And gradually, by stages, by the late 1930s and then especially during World War II, it all came together into one giant single problem. Solve this one problem, that is to say, galvanize government, mobilize the economy, regiment America, and defeat the fascist enemies around the world, and we can set up a whole new world which would solve all these problems.
• So by the end of World War II, you suddenly had the IMF and the World Bank and Bretton Woods. You had the gold dollar exchange standard. You had a whole new concert of global powers. This time it would be more powerful than it was after World War I. And we solved the problem at home, too. We had this business union accord in the late 1940s. We had the Pax Americana. We had this sort of government supervised progress coming out of World War II. And so we solved all the problems or at least all the problems that we saw at the time in this very organized way, in this very top-down way.
• I think that is the future I see. So in other words, problems which we now see, growing animosity, for example, between the United States and China, could eventually become contested in some kind of kinetic way? I’m not wishing that. I’m just saying that that’s the kind of thing that happens when people are suddenly trying to draw lines and solve problems that build up over long periods of time.
• The one thing I want to emphasize here is that, this is the fascinating thing about fourth turnings. Everyone just thinks, you know, it’s crisis and gloom and doom and a lot of pain and, you know, what purpose do they serve? Could we, like, rewire history so we avoid them?
  • The one thing I often emphasize about fourth turnings is they turn out to be institutionally extremely creative times.
  • And this is a little bit counterintuitive, because we often think, why in the world would you solve long-term problems in the midst of a crisis, right? That just sounds… why wouldn’t you solve long-term problems on a bright, sunny day when everyone is prosperous and happy? I mean, that would sound logical, right? Well, now we have time that we can all sit down and solve our long-term problems. That’s maybe the way we would like history to happen.
  • That, in fact, is just not the way history happens. We passed the Social Security Act, which has 23 titles or 32 titles in it, which basically gave birth to the entire post-World War welfare state, we passed that in 1935 at the depths of the Great Depression.
  • And my point is that very often societies actually make their long-term choices, their most committed decisions, not on bright, sunny days, but when their back’s against the wall and there’s a hurricane outside and that’s when they come together.
  • And I’m just observing the way history works.

MAULDIN: It may be the old… as my father would say, that necessity becomes the mother of invention. The crisis that you’re facing becomes the driver for innovation. If things are going along well, we don’t have to think up something new to do. When things begin to come together, as they did in previous fourth turnings, all of these problems that were building for the last 40 years come to this head and something has to happen. I mean, you and I have talked about what I call the Great Reset. We’re building up this debt. We’re building up this political divide. We’re building up the cold war between China, and I’m… when we talk about a kinetic war, I’m… there are other people that have talked about it at the conference and that… rather than a kinetic war, the next war may be fought in cyber and we’re not really using bullets and planes, we’re using technology.

HOWE: Taiwan is scrambling its jets about every other day now. You know, China is using this period to put the heat on the South China Sea. So, these things sometimes just give way. And China is, by the way, also experiencing a fourth turning, I believe. They have the same generational configuration. They have a Red Guard generation that gave us the Cultural Revolution. They are now the senior generation, you know, Xi Jinping comes from that. And they’re trying to live down the legacy of the original Long March generation, right? Do they have a society? Are they really finally going to rectify the century of humiliation? And are they going to bring about this new revised, try and imagine the loss of face if they don’t achieve that? And China is also under pressure, particularly from its people, particularly from its younger people, who think that China should be more vigorous and aggressive.

• So, it’s not us, it’s everyone. It’s the world. And there’s this new trend, by the way, toward their authoritarian populist leaders around the world. We particularly see this in South Asia and East Asia. From Narendra Modi and Duterte and Shinzo Abe. Just look Myanmar now and it’s all oriented around some, some cultural ethnic majority, right? It’s all focused around, you know, Hindus or the Buddhists or the great Han Chinese or the ancestral Japan, so you see the resurgence of this.
• And here’s what’s fascinating, John. These leaders are more popular among younger citizens than among older. And this whole question of when do you know you’re moving from a post-crisis era to a pre-crisis era, really involves that age bracket inversion when suddenly you don’t recognize the different attitudes of the different age brackets.
• And I’ll give you one fascinating example that’s come up recently. Millennials by double digits are more in support of a national policy. And Boomers are most in support of letting states go their own way. Millennials most support strict stay-at-home orders that could actually make containment work. Older generations are more in support of eye-to-eye and let’s open up, save our economy.
• What’s interesting, John, is that Millennials have least to gain from strict containments.They’re the least likely to get sick or die. And they’re the most likely to have been thrown out of work by this recent implosion in the economy we’ve experienced.
• So they’re voting against their own interests. They’re opting against their own interests, in supporting this top-down national policy. And again, I always ask, do you notice the age bracket inversion? John, I ask you, back in the late 1970s, had we experienced COVID-19, who would be supporting a national top-down solution? You know who it would have been. It would have been the GI generation of leaders, right, who would have said, get on your uniforms, right? We’re going to have… you can just imagine it. And what would Boomers have been saying back in the late 1970s? They would have been saying, kiss my ass, right?

MAULDIN: Yes, something less polite. To me, it’s a surprise, looking at your models and so I’m going to ask if it’s a surprise to you that we end up with two septuagenarians running against each other. I mean, early Boomers, it’s not even late Boomers. It’s not Gen Xers. Now we’ve got late Boomers running for president. That’s the choice, and as one person is writing in to ask, does this mean that we get an even darker winter?

HOWE: Huh, well, right now, we’ve had, I think you could say, a very limited menu of leaders to choose from. I am always very slow to judge leaders because I think often leaders grow into the mood of the era and sometimes the leaders you would have least expected… I’ve often made the point that both Abraham Lincoln and Franklin Delano Roosevelt would never have been chosen before those crises came to ever have been a great leader. Right? Or even been a president at all. I mean, maybe Franklin Delano Roosevelt, but unlike his uncle, no one thought he was a man of great ability. And so I often, you know, have stayed back.

• However, I will say that Donald Trump has not stepped into the role of a fourth turning leader in any way. He’s stuck back in the third turning. He’s still sort of, you know, he’s out there every week trying to pump the economy, very short-term perspective, and he can’t seem to adopt the persona of what we talk about in our books, the gray champion, the elder leader of stern and yielding values who galvanizes younger people to act. I think you have to admit this is not Donald Trump, right? But it is a persona that comes back historically. We have seen that persona come back. And what do we get? What’s the alternative to Donald Trump right now? Well, it’s sleepy Joe. You know, it’s sleepy Joe Biden who wants to kind of pretend that Trump never happened and go back to the Obama years. I can tell you Democrats are totally united against Biden for one reason only, and he’s not Trump. Very few Democrats are excited about Biden as a choice. Millennials are foursquare, united, they’re all going to vote for Biden. None of them particularly like him.
• I think the interesting question for Biden, given his age and given the limitations of what’s going to go on, is his vice president. And I think that actually could be, given what’s likely to happen in 2020, and just looking at the scenarios to happen afterwards, I think that could be a very interesting choice.
• But I think the ultimate leader, if one arises and I should just mention parenthetically, that the outcome of a fourth turning as being successful is not a foregone conclusion. They haven’t been successfully resolved earlier in American history. We can’t always assume that that will happen. But if we do have a successful resolution, we are going to see the emergence of a leader who can galvanize particularly millennials and also galvanize sufficient support by older generations to take us through that. I tend to feel that we have no idea yet who that leader is going to be.

MAULDIN: Okay. Two questions. Where is Europe? You talked about China and Japan,where’s Europe in their cycle? I’m not going to ask a leading question. Where are they?

HOWE: Same place. I mean, all of the English-speaking world, Europe, including Russia and East Asia, much of South Asia is on this cycle because the Great Depression and World War II were global events that encompassed all of these societies. They all had awakenings in the ‘60s and ‘70s. You know, China had its cultural revolution. Europe had its, you know, 68ers, you know, the ~ACHTUNG ZEITZIGERS, the ~SWAZONWETWA– it was all over Europe. The Baader-Meinhof Gang, the Red Brigade. They had a lot more youth violence in Europe, actually, than we had in America with the Weathermen.

• But you have that. And so you see the same generational transitions taking place. I would say that the problem with Europe now, particularly since the Great Financial Crisis, is that the generation that was most responsible for setting up the European Union and that was people like Helmut Schmidt and Jacques Delors,all of those people, they were all children of World War II. They were all the European equivalent to the American Silent Generation. In Germany, they called this the builder generation. Right? They all believed in flowcharts. They all believed in comity and committees and above all, more than anything else, making sure that Europe would never again have a war between its members. And if you were a child growing up amidst, you know, the firebombing of Dresden or something like that, you can imagine what a desire that would be.
• And so they created the European Union, which was just all these interlocking committees. That’s the style of the Silent Generation we’ve come to know and love, it’s still actually a style that you can see a little bit in Joe Biden. You know, it’s a very complex view of government and a lot of credentialed experts with lots of flowcharts. But they are disappearing, right? They’re no longer in the picture.
• Even the Boomer generation, you have Angela Merkel, you have a number of people, is beginning to fade. And you now see the emergence of Gen X leaders and this younger tier of leaders, whether you’re talking about Alternative for Deutschland, or the Vox Party in Spain, or you’re talking about UKIP and recently in the UK, these are all younger leaders. These are all Gen X leaders. They’re about a half generation younger than the bureaucrats in Brussels and Strasbourg.
• So I think you see, this is where the strains are going to hit. And I think this could be fatal. I don’t think there’s much that can be done to reconcile the interests of the frugal Nordic countries and particularly, the Netherlands and Germany and Finland and so on, with the necessity of southern Europe, particularly Spain and Italy coming out of this disaster that they’ve recently experienced.
• And I don’t think the younger generations in these countries can take another hit like this. All the young people living at home, which, by the way, just increased the spread of COVID-19 among elderly, you can imagine how that worked.

MAULDIN: One of the questions that comes up is, and I don’t want to lead you on your answer, but it’s popped up into the queue here. Do we end up with an even larger government after the fourth turning than we have now? And I’m going to preface that with a conversation that you and I’ve had offline is that we think we have a large government today. Well, what we really have is a larger government than we had, but a government that is really organized around Social Security and Medicare benefits for the Boomer generation, and then, the Boomers and many others would say, well, Social Security and Medicare are not large government debts but those are rights that I’m entitled to.

HOWE: I know.

MAULDIN: They don’t see that as an intrusive, large government. But do we end up with a more intrusive, larger government after the fourth turning? That’s the question.

HOWE: Well, if there is one absolute rule of history which admits of almost no exception, and that is governments always become larger, more intrusive, more dictatorial, and more authoritarian in eras of crisis. And that was true even before, you know, countercyclical, stimulus and all of the things we like to talk about as Keynesians, right?

• And yes, the answer is absolutely yes. And I think you raised a really important point. I wrote a book with Pete Peterson back in 1988 or ‘89, called On Borrowed Time.
• And I coined in that book the term “libertarian welfare state”, because what we have now in America is a large government (measured in terms of outlays or to some extent even taxes as a share of GDP). It looks pretty big relative to history. But most of that government, as you just pointed out, John, is quasi-contractual deals made between government and individuals, right? It’s kind of like government bonds, right? I mean, you know, Medicare and Social Security and all my pension rights and all that. It’s sort of like, you owe it to me.
• So we have a large government today, but we actually have a very small government today when you talk about government spending, which actually serves a civic purpose or community purpose, like when Congress actually debates something like where are we going to spend discretionary money that’s going to be good for the whole community? Congress hardly does that at all anymore. And increasingly, states don’t do that anymore. It’s all money that comes through your taxes and is shunted either to creditors or entitled beneficiaries. That’s where all the money goes.
• So the question is, do we really have a large government, or do we have a large switchboard of spending, most of which is claimed by individuals? And I would suggest we have more of the latter today, and one big transformation we’re going to see in this new period… particularly, I think you’re going to see Millennials are preaching it, is to defund some of those individual promises that we never put away enough money, you know, we never put away any money to fund and actually make room for more genuinely community-oriented stuff where we all sit down and say this is actually in the best interest of the future of the country, like we used to.
• And I think that is coming, and I would say that’s the biggest difference, by the way. And it actually makes what we face now more challenging than what the G.I. Generation faced coming into the late ‘30s, ‘40s and ‘50s. The G.I. Generation inherited a government that was very small fiscally. So there was enormous room to expand.
• Millennials, there’s no room to expand. There’s not nearly as much room to expand in the United States because we already have a crowded fiscal space.
• So they’re gonna have to simultaneously cut back or find ways to default on a lot of those individual promises to older generations, one way or another.
• They can’t do it through inflation because everything’s indexed—but that’s the way we did it, by the way, during World War II. People don’t remember that, you know. Social Security back then was not indexed. So inflation just basically was a way of defunding those promises. We’re going to have to do it explicitly.

MAULDIN: That’s going to create the problem, because while we now have a 25 trillion actual on the books we borrowed money. We’ve got another, depending on which expert you want to listen to, between 80 trillion to 140 trillion of promises that will have to be funded in the next 20 to 25 years of unfunded Social Security and Medicare and pension liabilities, not even to mention the state and local pension liabilities. All of that’s unfunded. And when you come to a Boomer, when you come to somebody that’s a retiree and say what the millennials do:We can’t pay for that anymore. We’re going to take that away from you. Now, that’s a crisis.

Now you’ve gone from being a politician. Now you’re meddling in my personal life. And that’s going to set up, I think, a particular generational war. And if there’s a potential for having a crisis build of unsolved problems as we go into this Great Reset era, that’s something that gets us into… as we get into the late ‘20s, that’s a problem, and it isn’t clear to me, how do we resolve that?

HOWE: I’ll tell you the way it works itself out. The federal government decides finally to go in and backstop these states. But quid pro quo, we’re going to actually make big haircuts in all your promises. There will be some default, de facto default through inflation. I think, starting about two, three years from now, we’re going to see serious stagflation in this country, and I think there will be a little haircut on the world as 39 or 40 percent of our debt is now owned by foreigners. And it’s also a great populist measure, right? I mean, even domestic creditors are mostly rich people and poor people are mainly debtors.

• So you can easily see how that’s going to work into it. And I do think to some extent we’re going to see some sort of re-indexation of benefits to create. And it will be at a time when there won’t seem to be many options. And I actually disagree. I don’t think that Boomers will be nearly as concerted or organized in their opposition as the G.I. Generation was to any cuts in their Social Security.
• And the reason is, is that Boomers, being an individualistic generation now, are not organized like the G.I. generation was, and secondly, they have no… Boomers have no more of a claim to it. The G.I. generation, John, you remember, they had a moral claim to it, right? I mean, they lost buddies on the beaches of Iwo Jima and D-Day and, you know, Boomers could play hell with the culture and, you know, ruin the culture, but when it came to getting my marbles back, you know what I mean? When it came to getting my material reward for the sacrifices we had made, very difficult for Boomers to touch that agreement. It’s not going to be nearly as hard for Xers and particularly Millennials, to just look at Boomers and say, ‘hey boomer,’ we can’t afford this – full stop.

MAULDIN: How does the lengthening of life span play into your generations? I notice that when you wrote your book, it was roughly in ‘97 and in ‘91, you were getting about 20-years per cycle. And lately you started seeing 20 to 25 for a turning. Is that to do with the lengthening of lifespan at all?

HOWE: That’s an interesting question, and an open question. When you see leaders in their 80s hang around, you begin to wonder about length of phases of life. You know, recently a typical social generation has lasted about 22 years in length. That’s kind of why I say 20 to 25. But there may be some lengthening, in which case, you could see a… I would say slight, probably undramatic lengthening in the total cycle.

• I still look for the 2020s to be a really decisive decade. I mean, we’re going to bring back all of these big, you know, things that these, these big… we’re going to introduce new trends into America that we’ve thought were very counterintuitive from the perspective of 10 years ago.
• Things like community, authority, equality, borders, durability, convention.
• I see a lot of big changes. I even see, and this is going to compound the economic problem, John, but we see this accelerated growth of household size.
• We saw this throughout the last decade, even during the recovery. Older Millennials are continuing to live more and more with their parents. Well, that has just redoubled over the last couple of months. And I think one thing we’re going to see actually is the contraction of the share of activities which people will actually transact in the marketplace. You know, people talk a lot about the blow-dry economy, right? I mean, I pay you to blow dry my hair and you pay me to blow dry your hair. And you’d have to say that in this very individualistic world, the last 40 years, a lot of GDP has been sort of make-believe. It’s almost play money. We’re basically doing things that we used to do for ourselves, and we do it for each other, and we pay each other, and we call it GDP.
• I think that is actually going to contract. I think when you see larger households living together, we’re going to be doing more things like we’re doing now. We’re going to be making our own food. We’re going to be paying people less to do things that we can do more in extended families. So I see something a little bit primal. But I think we’re going to go back to new definitions of stronger community, both at the household level as well as at the local and national level.

MAULDIN: Okay, we’re going to finish up because I’m looking at our time. First of all, you have a newsletter that you put out, Hedgeye Demographics, must read.

HOWE: Demography Unplugged, that’s right. That’s what we put out.

MAULDIN: Yeah, I get it. I started reading it and you do a lot of podcasts as well. But I’m sure that Ed will make sure that there’ll be a link somewhere in your presentation to where people can get to your newsletter. I don’t know if you want to give them a freeletter. We haven’t discussed this or whatever. But Neil is absolutely somebody that you’ve got to read.

Now, I want to come to the last question. You’ve been writing a lot lately on COVID-19. What do you think the crisis, the pandemic’s effect is going to have on society and the cycles, and what do you see in the generations? And then we’re going to close with that.

HOWE: Okay, well, we just talked about one of them. This huge re-strengthening of the household economy, the nonmarket household economy. We saw something similar, by the way, in the 1930s, with basically the erosion and disappearance of servants. You know, it’s interesting. People forget that a century ago, John, back in, say, 1920, every adult woman either had a servant or was one.

MAULDIN: Well, you know, that goes back… in 1900, the number one job in Chicago by percentage of people, was household servant.

HOWE: Right, and we forget that was the Victorian ideal.

MAULDIN: That’s because we didn’t have washing machines. We didn’t have dishwashers. We didn’t have vacuum cleaners. We didn’t have all of the things that we have today. We had to have somebody take care of the horses if we were going to travel.

HOWE: They were hugely introduced during the 1930s and ‘40s. That became the… by the 1930s is when we introduced the big white refrigerator. We went from like under 10 percent of the population to about half of the population having a refrigerator. Do you have any idea what a difference that makes? And then we had all kinds of household electric appliances and so on, so people could start making their own food. They didn’t need servants. It was timesaving. And it was interesting, that was in the context of an excess supply of labor out there, right? This is not… this kind of goes against the usual economist’s model when it’s high price of labor forces you into these labor- saving devices. I think it was much more of a social trend. People wanted to go back to doing things themselves. And by the way, I just think in terms of our health, preparing ýour own food is absolutely a healthy trend in America today.

• I will say one other thing when it comes to the timing of pandemics. People ask me, do you need a pandemic to have a fourth turning? And obviously the answer is no. But I will say this, and this is something, there’s a wonderful book. You can see a little bit of this in Jared Diamond’s book, Guns, Germs and Steel. But there was actually an earlier book by William McNeal called Plagues and Peoples. And he pointed out that if you go back over 3000 years of history, great pandemics hit after periods of great openness. If you look at the plague of the Antonine. This would have been in the late second century, and the Roman Empire, it was after Roman, you know, Rome just increased free and easy, effortless transportation. You can go from London all the way to India with, no problem at all, speaking maybe one or two languages all the way.
• If you look at the great bubonic plague which hit Europe and in 1347-1350, it came after the Mongols had opened up the Great Steppes and enabled free communication between Venice and, well, as Marco Polo showed and Cathay and Beijing.
• So the point is, these became infection vectors. And you saw the same thing with regard to the Spanish influenza after the great period of openness in the period just prior to and including World War I, where people were moving all over the world.
• You suddenly saw the Spanish influenza, and in each case, this great pandemic brought an end and reinforced the end to openness. And I would argue that the Spanish influenza hugely shaped the whole cultural mood of the 1920s, which was opposed to Wilson, opposed to globalism, very isolationist, very xenophobic, and that created ultimately the new mood which took us into the 1930s.
• I do think that pandemics, although obviously to some extent random, are not completely random in the kinds of periods when they show up. Remember this, John, that periods of globalism and openness are great for encouraging innovation among peoples and businesses and firms and technologies. But they are also great for encouraging innovation among pathogens, right? And they all mutate, and they recombine in very creative ways. So we’re beginning to relearn that lesson as well.

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Biography of Neil Howe

Neil Howe is a historian, economist, and demographer who writes and speaks frequently on generations, the economy, and social change. He is the nation’s leading thinker on who today’s generations are, what motivates them, and how they will shape America’s future. He is president and co-founder of LifeCourse Associates, a marketing, HR, and strategic planning consultancy serving corporate, government, and nonprofit clients. He has authored nine books on American generations, mostly co-authored with William Strauss, including Generations (1991), The Fourth Turning (1997), Millennials Rising (2000), and, most recently, Millennials in the Workplace (2010). He has also authored numerous books and policy reports on demographics, most recently The Graying of the Great Powers (2008). Howe is the managing director of demography at Hedgeye and president of Saeculum Research. He is also a senior associate at the Center for Strategic and International Studies, where he helps lead the Global Aging Initiative. He holds graduate degrees in history and economics from Yale University. He lives in Great Falls, Virginia.

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