Winter is Here

Winter is Here
August 29, 2010

“Winter” refers to the metaphoric turning of the secular seasons, as described by William Strauss and Neil Howe in the now-popular book The Fourth Turning. This is one of my not-reviews: more like impressions generated from reading their book, which came out in 1997. In it, they predicted a period of crisis beginning around 2005, which happened to be the year the housing bubble peaked. This period of crisis lasts about twenty years.

Strauss and Howe have a rather elaborate cyclical view of history. I think their description is quite creative and even useful; it might even edge towards being true. However, I am writing today not so much about this multi-century cyclical hypothesis, but rather their concept of “winter” as it applies to the present period.

In their view, U.S. history (going back to English history) consists of cycles of about eighty years, or four twenty-year seaons. These are, roughly:

Spring: The “spring” season follows the previous “winter,” or crisis phase, and represents a time when a new order is established and begins to flourish. This is a time of community focus, as memories of the preceding crisis are fresh and much energy is devoted to the success of the society in general. The most recent Spring was the 1945-1964 period.

Summer: This community focus becomes rather oppressive over time, which prompts a backlash of experimentation and individuality. The basic community order founded in the Spring is by now well estabilshed. Issues of basic survival no longer seem relevant. The foundational prosperity of the society allows the focus to turn towards the inner world. The most recent Summer was the 1965-1985 period. (This does not coincide well with the economic reality, which was of the stagflationary decline from 1970-1983. However, despite Wall Street’s concerns, the basic fabric and institutions of American life were still reasonably healthy.)

Fall: By now, the issues of spiritual rebirth, moral protest and lifestyle experimentation seem worn out. The focus turns toward personal success, self-reliance, entrepreneurship. Civic structures that began in the Spring period have decayed and become somewhat corrupt and ossified. This no longer seems like an appropriate arena for the best talents, who instead gravitate toward the private sector. This can be an enjoyable time for individuals, but people are aware that the civic and community sphere is steadily worsening.

Winter: A Crisis emerges as previous issues that might have been ignored or deferred now become dire. The previous order, established in the Spring, crumbles and decays. The private sector no longer provides and adequate refuge from the decay of the civic and community sphere. A new order begins to emerge.

Obviously, we are in a winter period today. This is no mere “downturn,” or even a “secular bear market.” The last three Winter periods in American history, according to Strauss and Howe, were the Great Depression/World War II, the Civil War, and the Revolutionary War. The authors make the point that the eventual outcome of the Crisis period was not at all obvious at the beginning of the Crisis period. It was hard to say, in 1931 for example, that the world would be engulfed in all-out warfare ten years later. At the time, it just seemed like a bad recession, which would surely be looking better during the “second half recovery,” as was always the case in the past.

During the Winter period, the existing institutions and structures crumble due to their internal decay. Strauss and Howe predict that during the present Winter period (remember, this book was published in 1997), we might see:

1) A Great Devaluation, or a severe drop in the market price of most financial and real assets.

2) Higher taxes, leading to economic decline.

3) Disintegration of existing welfare institutions, specifically including Medicare and Social Security. “Entitlement” will disappear, to be replaced with a more direct form of immediate support for the neediest.

4) “public debt in defalt, entitlement trust funds in bankruptcy, mounting poverty and unemployment, trade wars, collapsing financial markets, and hyperinflation {or deflation)”

5) Ecological distress.

6) Political distress, including open tax revolts, institutional collapse, constitutional change, new political parties, and secessionism.

7) A combination of a withdrawal from foreign engagements, as resources are directed at domestic problems, combined with a tendency towards militarism, which in an unfavorable outcome could trend toward fascism.

8) As the existing order collapses, people will come together for survival, and a new civic and community focus will provide the impetus toward the establishment of a new set of institutions, and the beginning of the following Spring period.

The authors’ description of this Winter period — at the time of writing still ten years away — sounds a little familiar, no?

…this implosion will strike financial markets — and, with that, the economy. Aggressive individualism [of the Autumn period], institutional decay, and long-term pessimism can proceed only so far before a society loses the level of dependability needed to sustain the division of labor and long-term promises on which a market economy must rest. Through the Unraveling [Autumn period], people will have preferred (or, at least, tolerated) the exciting if bewildering trend toward social complexity. But as the Crisis mood congeals, people will come to the jarring realization that they have grown helplessly dependent on a teetering edifice of anonymous transactions and paper guarantees. Many Americans won’t know where their savings are, who their employer is, what their pension is, or how their government works. The era will have left the financial world arbitraged and tentacled: Debtors won’t know who holds their notes, homeowners who owns their mortgages, and shareholders who runs their equities — and vice versa.

Obviously, there’s a lot of fun material in the book, so give it a whirl. Let’s move along to what I consider the most immediately applicable portion, namely the characteristics of the Winter period, and how to approach it.

The thing about Winter is that it is three months long — or twenty years in this case. You can’t skip it. You can’t “fix” it. It is what it is — in Strauss and Howe’s terms, the natural consequences of the preceeding sixty years. It might be a little shorter, or a little longer, but not much.

Like the annual winter, this period can be tolerable, and even viewed as enjoyable and necessary, if you recognize its basic characteristics. The basic characteristic of the Winter period is that activity that is appropriate for the Spring, Summer or Autumn is a complete failure during the Winter. You don’t try to grow crops in February. Nothing will grow. It is a period where the corrupt and decaying institutions of the past finally disintegrate down to compost.

The point being, this is the full-on full-on here. According to this analysis, pretty much everything is going to crumble to dust, and there isn’t much point in trying to stop it — or even desire, because it is so corrupt that we don’t really want to save it anyway. Charles Hugh Smith ( has taken a crack at trying to put into words what many of us are intensely aware of these days:

Why Nothing Changes   (August 20, 2010)

The reasons why nothing has changed include institutional inertia and self-preservation, the herd instinct and negative feedback loops. Bottom line: the Savior State can not “save” itself, much less all of us.

In a way, the entire Survival+ critique is an attempt to explain why the status quo is incapable of reform. This leads to the following conclusion: the partnership of the U.S. Savior State/Global Empire and Global Neoliberal Capitalism is incapable of “saving” us from the interconnected crises which will dismantle the status quo.

We will have to “save” ourselves, hence the book’s call for radical self-reliance, reciprocity and localized, resilient, self-selected “solutions” to global (and thus local) crises.

Yesterday I noted that the status quo has not changed in any meaningful fashion, despite the global financial turmoil of the past few years.

In other words, the “reform” consists of tweaking some minor parameters and feedbacks. The insurance cartels which control the system are left firmly in charge, along with the Federal fiefdoms and other cartels (Big Pharma, etc.)

The same pattern is played out in every major system. The “too big to fail” banks remain too big to fail, systemic risk is left to run freely off balance sheets (behind a few additional screens), etc. etc.–nothing has changed. A few parameters were tweaked–the most grossly predatory fees banks charged their hapless customers were trimmed–but the banks are nonetheless being recapitalized at taxpayers expense.

Readers of Survival+ have asked why an organization–an enterprise, public union, state or even Global Empire–would select a clearly self-destructive path.

My answer is drawn from natural selection: the organization has prospered by relentlessly expanding its income, influence and power, and by focusing much of its energy on self-preservation. Any significant adaptation entails great risk. Rather than accept that risk, the organization (i.e. an organism made up of individual human beings) actively conserves what has worked in the past.

This is the fatal flaw of organizational inertia and resistance to tranformation: maintaining the status quo is increasingly risky when conditions and the ecology are changing around you.

This is why organizations herd together as the ecology changes around them, weeding out critics and reformers with increasingly harsh self-policing, hardening their self-preservation strategy around the current status quo, even as they are running straight toward a cliff and organizational suicide.

This is why nothing changes until the herd finds itself tumbling off the cliff. Then it’s too late. That is the future of the entire status quo.

Around here at New World Economics global headquarters, we don’t put much effort into trying to fix today’s problems, or even prop up the existing institutions. Best to keep your head down while this steaming pile of dogshit finally begins to crumble.

The fact of the matter is, nobody would listen. All of their effort is presently directed at supporting the existing status quo by using the same old methods — whether that be Keynesian easy-money tricks, or attempting to reinflate the housing bubble one last time with easy credit, or issuing more derivatives to further fictionalize already fictional balance sheets (even the government of Greece got in on the game), or throwing a lot of government money at “stimulus,” which is really a fancy name for political cronies. Or that ever-popular solution: just lying about it, as if a problem is solved if you just say that it is solved.

I have suggested, for example, that the U.S. might do well with a state-run healthcare system like that of Hong Kong. Hong Kong’s universal healthcare system works great, and doesn’t interfere with Hong Kong’s otherwise libertarian approach. Maybe the time for that will come. However, I don’t think that any new institution could be established today. The decay is simply too great. Whatever system might be set up — a healthcare system, a high-speed rail system, or what have you — would simply end up being another channel by which 90%+ of the resources are stolen, while no meaningful services are provided. That is the present pattern for everything, and it is not until that pattern arrives at its natural conclusion (implosion) that people will begin to behave differently.

September 25, 2009: Does Hong Kong Have the World’s Best Health Care System?

Strauss and Howe say the same thing:

Prepare institutions: Clear out debris and find out what works, but don’t try building anything big.
Prepare politics: Define challenges bluntly and stress duties over rights, but don’t attempt reforms that can’t now be accomplished.
Prepare society: Require community teamwork to solve local problems, but don’t try this on a national scale. …
Prepare elders: Tell future elders they will need to be more self-sufficient, but don’t attempt deep cuts in benefits to current elders [in 1997]

See what I mean? You can’t grow things in Winter. Don’t even try.

For example, I could easily see how the total collapse of the existing healthcare system — no more Medicare checks as the government is no longer able to issue debt and uses current revenue to pay the military, and the consequent bankruptcy and liquidation of established hospitals and insurers — would lead local governments or civic associations to attempt to provide basic health services on the community level, with the help of now-unemployed doctors and nurses. This initial crisis-response could eventually lead to a new local institution, which, if it works, could soon be copied by other localities in the region.

As it is, we still need to have a long discussion as to exactly what these new institutions — a gold standard, some sort of healthcare system, perhaps another sort of retirement system, a solution to the problems of Suburban Hell — should look like. We couldn’t really accomplish any of that today, because there isn’t a workable consensus on what to do. It will take another fifteen years or so of dealing with the Crisis for these ideas, which are now in their early stages, to ripen and spread.

I am mostly in the “planting seeds” business around here — seeds which will not sprout into real-world institutions until the following Spring period. Until then, they quietly germinate in the imagination. That is why I always say that you should imagine things that are different than they are today, and of course, much better. If we don’t start imagining things that are worthwhile and successful, we might start imagining something that is rather more dangerous. Adolph Hitler got the whole German people to imagine conquering all of Europe. Didn’t go so well. Be careful what you imagine. We saw earlier, for example, that people in the 1920s or 1940s imagined chemical factory food — and they got exactly what they imagined, whether they liked it or not!

November 8, 2009: The Future Stinks

In the economics sphere, people in the 1930s imagined that they could create a single institution that could solve all conceivable economic problems through the magic of funny money. They are also going to get it, good and hard, until they learn to imagine something more productive.

April 26, 2009: Two Monetary Paradigms