The Crisis Phase: The Fourth Turning Explained by Neil Howe

Renowned book author Neil Howe joins us on the channel for the first time to discuss his socio-economic theory and how it applies TODAY! The theory explores the cyclical nature of history and generational change, suggesting that society undergoes a recurring cycle of four “turnings” approximately every 80-100 years. We are now in THE FOURTH TURNING, the time of crisis.

#fourthturning #economy #crisis

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Guest: Neil Howe, Managing Director Demography
Company: @hedgeye

Recording date: April 8th, 2024

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bill and I predicted that we would be in this fourth turning come the late 2010s and going into the 2020s and early 2030s uh we are here right I mean just look around you look at the world uh we have uh mounting geopolitical crises which are usually uh coincident with the fourth turning and we also have internal political crisis uh in America uh roughly half of Americans think of Civil War is likely in the next few years 10 years ago we didn’t even ask that question hello and welcome back to sore financially where we discuss the macro to understand the micro my name is Kai Hoffman I’m thejr mining guy on Twitter and your host for this conversation I have invited Neil how he’s a demographer like really simply put but uh he’s got a wealth of knowledge of what’s going on globally on demography I think it’s a really interesting topic to discuss we had a guest on last week bill smme of smme capital and he said he’s an an optimist for the Economy based on demography so the timing is perfect to have Neil on and uh he’s an accomplished book author as well you might have come across his work the fourth turning he’s also famous for and known for terming or coining the phrase Millennial and millennial generation together with his co-author William Strauss who he’s written the book The Fourth turning with as well and really looking forward to this conversation because we can pack so much into into that and we’ve never really had a demography discussion so I might learn a lot here today so if you see me Googling while I’m chatting with Neil that means I’m learning I’m researching while we’re chatting that means I’m learning something which I hope you take away as well it’s it’s super it’s going to be super insightful I know that because I just had a chance to chat with Neil uh before hitting that record button before I switch over to my guest quick reminder hit that subscribe button it helps us out tremendously attracting fantastic guests like Neil onto the CH or inviting them onto the channel really appreciate that now without much further ado Neil it’s great to have you on the program thank you so much for making the time Kai great to be here really looking forward to this uh 45 minutes I promise you like we’ll pack a lot into it um but to set the sort of the the mindset and maybe the framework for this conversation no um since it’s the first time onore financially for you quickly introduce yourself in your work and maybe where where you’re coming from well uh you know since uh last year I think uh uh a lot of people know me uh for the fourth turning uh we we uh bill and I bill Strauss and I uh wrote a book called the fourth turning in American prophecy back in 1997 and last year in 2023 uh we wrote um or I should say I wrote U the fourth turning is here uh you know uh what the cycles of uh I should say what the rhythms of History will tell us about when and how this crisis will will end so that kind of gives you an introduction Kai as to what the book is talking about absolutely it’s talking about long rhythms of history and I should say you introduced me as a demographer but I will say that what bill and I I should preface this by saying William stles uh passed away about 10 years ago uh so I’ve you know gone on to you know work work without him benefiting from our long collaboration together uh we wrote actually book back in 1991 called Generations which is basically a generational biography of America kind of giving you know looking at at each American generation sort of providing a collective biography of each American generation from the early 17th century onwards all the way through to the 13th generation which would have been Generation X and then to the millennial generation which as you mentioned Kai we actually gave the name to in 1991 that was the 14th generation so and and believe it or not back in 1989 we could already tell that this generation of little kids was going to be different right sheltered protected confident special risk averse all of that stuff we could already tell uh and uh We’ve written a lot about all these subjects ever since but let me just say that one thing we’ve written about a lot which is really different from usual Dem demography and this is this is kind of the preface I wanted to say is that most demographers when you think about demography it’s people that talk about you know fertility mortality migration morbidity you know they just crunch the numbers and they look at uh you know where the whole population’s going net additions what the population will be 20 30 years from now that kind of stuff really interesting uh one of the very few things we know uh about the world 20 or 30 or 40 years from now Kai is how many people will be here and what ages they will be in why because they’ve already been born and and we can count them there is not much we can say about the world 20 to 30 years from now um you know but absent a um an alien invasion uh we we actually know their numbers pretty well and that actually says something about the society having said that uh the work which I’ve done with Bill on generational change is a little bit different than what demographers do it’s looking at the process by which Generations raised as kids uh as children and in their youth um are shaped by history and then later on in their adulthood as midlife parents and leaders go on to shape history right and this is what we noticed in the in the work we did back in the late 80s early 90s is that going back in American history we can see that people were always aware of generational differences right uh that a that a generation which comes of age during a war the Next Generation who were children during that war sees that event very differently and they draw very different lifelong lessons from that event right so uh and the contrast that we saw between the uh Collective self-perception and the the collective self-identity of different Generations between the ones just following them the ones just before them were not only very striking but they actually followed a pattern certain kinds of generations always follow other generation uh kinds of generations for example the Puritan generation which came to New England in the uh the early 17th century that the 1630s uh very idealistic very much opposed to the uh you know corrupt institutions of their parents that’s actually why they came over to New England um uh were followed by what was often called the Cavalier generation much more materialistic much more cynical much more into the bottom line they often wondered why the H their parents ever left England lot easier to get rich in England right um but how did you get that kind of following following the transcendental generation this was a generation of um of of you know Emerson and throw and Abraham Lincoln and Jefferson Davis a generation of idealists a generation of poets and feminists and commune founders they were followed famously by the Gilded generation right who actually fought the Civil War uh a generation of metal and muscle they didn’t talk much but they got big painful things done and and interestingly after a a wild cynical generation they’re often followed by a much more protective generation for instance the uh after The Lost Generation coming the very protected GI generation born in the early 20th century who later became the uh what Americans call the greatest Generation who fought World War II very high degree of social trust High degree of uh of uh uh propensity for Collective Behavior I mean this is the uh this is the generation that really founded superpower America during World War II and in the American high that followed uh and then following the uh gen xers we see the Millennials coming along well okay let’s back up a little bit what do we get from these patterns right well Bill and I noticed that there’s an interesting Rhythm through American history and that is that America has endured these huge uh Civic crisis about once every human lifetime about 80 to 100 years we have these uh the late 17th century we had the bacon Rebellion uh we had that King Philips War the the Glorious Revolution we had these enormous upheavals in the colonies nothing else like it during the colonial era and roughly a uh 90 years later uh we had the American Revolution obviously giving rise to the Republic of the United States and roughly a lifetime later we have the Civil War and a lifetime later we had the Great Depression in World War II and a lifetime later H Kai here we are today right and and these are huge upheavals in our outer Civic world this is when we reformed at our political constitutions our infrastructure our economy uh how we kind of collectively live together and rebuild the outer world and roughly halfway in between these events uh we have the great Awakenings of American History these are very different these are focused much more on the inner world of values religion and very conveniently in American history we we label we we number these we call them the first Great Awakening the Second Great Awakening third grade awakening and this is when the more you know Puritan or what we call profit archetype generation comes of age so a very Civic oriented generation comes of age during the outer World crisis and a much more inner focused generation like Boomers for example Baby Boomers famously born after World War II came of age during the late 60s and 70s uh a period which many historians uh Call America’s fourth or fifth great awaken depending on when you want to start your count so I think this is a good introduction Kai for you a basic rhythm of outer World crisis and inner World crisis both uh shaping Generations who grew up in them and yet giving rise to Generations who then go on to actually trigger these events do you see what I mean and that has given rise to our writing and most recently this writing uh well most recently this book called uh uh the fourth turning is here because Bill and I predicted that we would be in this fourth turning come the late 2010s and going into the 2020s and early 2030s uh we are here right I mean just look around you look at the world uh we have uh mounting geopolitical crisis which are usually uh coincident with the fourth turning and we also have internal political crisis uh in America roughly half of Americans think a civil war is likely in the next few years 10 years ago we didn’t even ask that question it never even came up on the radar screen right the tremendous tribalization polarization of politics in America so this is characteristic of fourth turnings in American history both internally an enormous tribalization polarization and externally an increasingly us versus them uh attitude about who we are in the world and and you know who’s going to Prevail in the end fantastic introduction de I’ve taken a lot of notes but uh lot lots to follow up on of course as well but I think we need to just back up a little bit because I think we need to explain the term fourth turning a little bit and what what it means like what’s the first turning third by the way let’s start with the first and then of course we’ll try to project a little bit as well like where’s this headed and how does it all fit together right so think think of these you know I talked about a Long human lifetime between crises well think of that long human lifetime as four as divided into four pieces and each one of them is about the length of a phase of Life about the time takes you to be born and come fully of age as an adult maybe in the early 20s right so does that help so that way we’re dealing with the uh uh a Long human lifetime is a bunch of Seasons right so think of history as a whole as seasonal and think of uh think of the first turning we’ll call this the spring season Kai um coming after the crisis and that is a period in which um institutions are strong individualism is weak conformism is valued uh everyone has given a role what to do uh Society feels very efficacious about what it can do collectively but it feels very frustrated or I should say you know stifled by the prevailing Conformity right personally stifled um and this really was is a good is a good um characterization of the American high after World War I just to give you a most recent example of this right this would have been the presidencies of Truman and Eisenhower and and John Kennedy in America um and I think though that there were corlet of that there similar kinds of U experiences in other countries too and I I I should say Kai that this is not just an American thing uh the Great Depression World War II were obviously Global events I mean obviously all of East Asia South Asia obviously Europe and the entire English-speaking world so I think that in many ways we’re on very similar Cycles but that period was um was the first turning uh Society supplies a lot of order and Society wants a lot of order the both the supply and demand for order are high okay um the second turning which we’ll call the uh the summer season um uh this is the Awakening remember I talked about the great Awakenings well that happens in the second turning and that is when the children born after the great crisis begin coming of age they are always they always trigger an Awakening Cai this is an interesting pattern right you consider I talked about the transcendental generation these were the kids born after the founding of the American Republic right after the Constitution was put into action uh they came of age in the 18 1920s and 1830s an enormous period of uh of cultural ferment uh in America well um okay so what happens there well obviously we Tire of the social Conformity everyone wants to refine their inpersonal authenticity they want to throw off social obligation uh they they no longer want to do all these things for the good of the community for the good of their parents the good of their family uh they want to be self-actualizing individuals and I think you can say that through an Awakening we’ become fundamentally a more individualistic Society both in the culture and the economy and it’s worthwhile to remember in the uh in the 1970s toward the end of the last Awakening we had where a period of deregulation and tax cuts so both conservatives and liberals you know both join this movement um the third turning is The Fall season the Autumn season and it’s much the opposite of the high individualism flourishes right uh uh uh Civic institutions are disrespected uh people lose trust in them and I think that’s really what we experienced from the late 1980s all the way through to the GFC it was a period when um unlike the high uh where a lot of order was provided and a lot of the public wanted a lot of order uh the uh during The Awakening people no longer wanted order which gave rise to a lot of the arguments right because institutions were still supplying order but during The Fall season Society doesn’t Supply much order and people don’t want it either right so there’s a certain um um there’s a certain consensus that a um uh a more individualized World actually works better for everyone I I think the a light motif of that era might have been Francis fukuyama’s book called The End Of History uh which basically said we’re going to live in this globalized individual istic World governments would sort of fade away and we’d all be just transactional Market participants right going into a Starbucks and typing on our computer and transacting with people all over the world and and and that was I don’t know kai that was that was our vision of the future right um all those big bad institutions were GNA fade away and by the way the microchip was going to overthrow dictators everywhere do you remember that all the autocrats would be overthrown because of course they would never survive this new Maelstrom well that didn’t turn out did it um that’s because the next season is the winter season and in the winter season Society continues not to supply order that here’s the difference Kai people begin to want order ah there we go and that creates the cold front coming in and by the way it’s always the youth generation that’s at the Forefront of this and when you go around the world now looking at countries and I don’t care whether you’re looking at the Philippines or China uh or India or much of Europe you see that the people often voting most for these powerful autocrats these ethnocentric autocrats are younger people who uh actually want a world in which you know we can actually create public things which is sort of impossible after the fall season right we’ve given up on all these Civic institu tions um and and that’s what we’re in that’s what we’re in today Kai um a lot of the book is about forth turnings historically how we move through them what stages are they when do we reach the climax and particularly I talk a lot about the uh The Rebirth of community Through conflict I mean that’s how it happens sociologists have been telling this ever since you know vber and durine back in the late 19th century it’s through conflict that we create tight Community bonds uh it might be great if it didn’t happen that way but history says that’s how it does happen right H you wonder how America became such a community oriented Society in the 50s well it was after experience of Total War right uh and I don’t think you get there without that um all of the Total Wars in American history have occurred during fourth turnings and um fourth turnings have always had a total war so now that’s the that’s the sobering part right the great part is is that if we can navigate it successfully we get the fourth turn we get the first turning on the other side which is renewed optimism about the long-term future a much greater sense of community greater economic equality both in terms of income and assets a greater ethos of public participation um um you know experts that you know when people when the experts tell people to do things things they actually do them you know I this is my what I always often tell people on the Blue Zone I mean think of that um and um and also a more conventional culture people feel much better about themselves as a community and people reconnect with other people people in their day-to-day lives the single biggest malady that people have today is this feeling of complete disconnection right uh everyone’s everyone’s lonely everyone experiences the pathology of living in a completely disconnected a world of markets in which no one has that Community uh they may have some they may have connection with their family and I think definitely family closeness is coming back I mean an unprecedented share of young adults are living with their family today uh but nonetheless the Family itself is powerless right and I think the the the the yearning to rebuild community is giving rise to these great political tribes right that we see that are so intense um uh you know the Red Zone and the Blue Zone in America for instance um uh and but the history of forth turning says is that sooner or later one tribe wins you know sometimes having to compromise obviously with the other side but but it it it it it becomes a conflict which either both sides come together in some greater struggle somewhere else or the struggle itself is between the two sides we’ve seen plenty of examples of both happening sometimes simultaneously over American history and I think the the interesting question about internal versus external struggle is probably something I highlighted most in the book because it’s one of the most interesting stories of chrisis eras in America we forget for example that just before America went into World War II supposedly as a completely United Nation U we were among the most divided Nations we’ve ever been in our history during the New Deal we had two groups of Americans one group thought it was the red decade the other thought it was the fascist decade right um it seemed as though liberal capitalism had no future uh during the 1930s uh and in fact given the number of dictators that were taking over the world in the 1930s that seemed a good bet it was either you know Marxism or or fascism was going to win is led to a very divided public um and tremendous U uh uh animosity even violence uh even in America during the 1930s in terms of Labor violence and so on so it’s interesting right that unexpectedly the nation came to together uh over the war when no one would have predicted that we’re of course Very isolationist at the time no one would have predicted that but but figuring out those puzzles is one of the most fascinating part of actually looking at these fourth turning periods again these are generational periods we’re talking about periods of more than 20 years long that that were you know the arena for Action here no Neil like this this is like amazing history lesson like I could listen to you all day just I don’t even want to stop you there but um really really curious the impact of technology on on all of this as well and uh whether it’s sort of playing out as you’ve predicted back in 1991 when the internet wasn’t really a thing AI wasn’t a thing so I’m curious how that is factoring in how is that messing with the circle and the the Cycles here not the circles the Cycles well they the the lesson we put out in the book is that I think we talked too much about how technology shap Apes us uh because that’s a very passive relationship s technology is sort of accidental you know we invent the microchip we invent the social media we invent the cell phone and it sort of shapes us passively I think the much more interesting question and in some way the more more consequential question is how do we shape technology How does each generation how do how do we shape technology differently in each turning there’s a question right so you know you might look at the American high so had you know what was computer technology Kai during the American hi you remember it was a huge Mainframe computer at the top of an A-frame organization pyramid right that was the uh that was the GI generation right everything had to be a big institution and all the data went to the top and the computer you know put out all the answers and everyone got their marching orders you know that was that was how the DI generation thought about things you know Kennedy Dean Rusk you know General Westmorland you kids go to Vietnam you know that that’s the answer to that question and uh the Rand Rand did a a study in 1960 uh seven how many computers would the world need and their answer was seven seven well you know uh Westinghouse would need one the the Pentagon would need one I mean get the idea right these these so who came along and introduced the idea of the personal computer well was it just accidental that happened during the Awakening and it were two Boomers right Steve Jobs and Bill Gates why not individually why not have a separate computer on everyone’s desktop my point Kai is that this was not technology that was barring it it was a different way of looking at the whole purpose of Technology you s we’re going with this yeah um and then and then of course once we had an individualized technology that’s when you know Reagan and Clinton and Obama and everyone was arguing well individualize it’s over through all the dictators everywhere in the world until we moved into another turning right and that was when we moved into the fourth turning and suddenly all these dictators and all their electorates were delighted by this new technology because the dictators could orchestrate vience on social media they could Monitor and surveil their citizens I mean suddenly we love the microchip but you see here’s our problem we think that the the internet or the microchip or the cell phone is a thing which has its own volition no it’s just an instrument that we shape to invite in a certain way into our lives and I would say that the the internet during the 1990s was an agent of individualism because that’s where our head was at that’s what we wanted today everyone searching for Community this is why the internet is now the servant of autocrats does that make sense oh absolutely absolutely no I think that Community aspect is really interesting and you mentioned common enemy uh as well like when Japan entered the war in ATT Tech P Harbor that really United the US and the they move together and I feel like we’re seeing something very similar with Russia and China right now you need to give the the the public a common enemy to unite them right we’re not quite there yet because it hasn’t been as drastic as back Pearl Harbor right the US hasn’t been attacked but I I see it headed that way personally and uh so so that sense of community and uh moving together like is is that something you see as well is that the you know I’m I’m quoting from your Twitter feed here um but when will it end and what will bring to a close is that a possible closing scenario for the fourth turning well the the the community is when you really start getting serious about uh about acting as as a national Community that’s when you mobilize that’s when you do big things right that’s not the end that’s the climax right but we’re not there yet we’re no we’re not there but remember this is an era which is not going to come to an end until the early 2030s right right so you know keep the timing in mind here uh but if you if you wanted to ask are we en rout toward that I would say yeah we we seem to be moving in that direction uh one one aspect too about these fourth turnings is that they always include a realigning election when the political constituencies fundamentally shift uh every um forth turning and every Awakening has had one of these in fact they’ve was occurred during an Awakening or a fourth turning and I think what we’ve what we’ve seen during the uh the I should just say you know kind of the Trump era is a is again one of these reshufflings of political alignments in in American politics and uh the last one by the way occurred during The Awakening it was basically the movement of uh of Southern Democrats into the Republican party uh the earlier one was during FDR right that was the the New Deal coalition right which its own huge shifts of the electorate but what’s the Trump shift it’s the movement of non-oled workingclass Democrats into the Republican party and Suburban more affluent professionals uh into the Democratic party right so that’s the shift fundamental shift and and I should say already political scientists are calling this the seventh you know political realignment in American history I think we’re seeing it it always comes in an Awakening in a in a in a in a crisis era and and I think we’re we’ve already seen the one happening here and it’s creating a really new interesting edge of volatility into American politics right to see suddenly this very populist uh Republican party I mean no one would have expected that 15 years ago it’s like what I thought this was the party of mint Romney you know a guy who’s a I don’t know hedge fund manager you know what I mean it’s just a very kind of party right Neil like I don’t even know where to take this conversation because there’s so many like routes and avenues we can go down on right now like maybe the most pressing one just based on on context as well the millennial generation we all have our prejudices for the Millennials but I’m curious if the M millennial generation turned out the way you sort of predicted in your book in 1991 um and anything that stood out from you that may be vastly different than you expected it to be we know I I think a lot of the thing uh you know pretty closely tracked where they came out I mean it’s interesting because I just wrote this new book uh and and within the book I talk about each of these Generations sort of their life story and uh when I talk about Millennials I think a lot of the things I I talked about that shaped them when growing up are very much the same things that bill and I talked about back in our first book right uh and I think I mentioned them earlier uh when they came along they were protected andp special you know suddenly there was a huge moral panic over the the the ill treatment of children everyone thought suddenly they’re safe uh parents went out and bought minivans especially designed for kids with five different special you know seat belts to put them in their seats uh we had uh suddenly child safety became a big issue Across America fathers uh were present at the birth of their children a lot of this we’ve seen before I think what what bill and I had the advantage of seeing the same dynamic in earlier Generations in American history we were able to recognize it and we also recognized what kind of generation that would that would eventually result it would result in a increasingly better behaved generation that is to say you know lower crime rate lower lower uh uh rates of sort of social pathology we’ve certainly seen that you know relative to Gen X uh we would see a um a a great New U uh interest in credential achievement and you just look at this generation you know doing everything to pass exams and and get higher education credentials particularly the women of this generation uh risk aversion person you know aversion to personal risk-taking um closeness to parents uh I think we already talked about what large share of this generation is still living with their parents or living near them um and S just to jump in like one thought that popped in my head when you mentioned that is is that e for economic reasons or is that really to feel close partly for economic reasons but I think partly it’s you interview there been a lot of interviews right um lenni feel good about their parents I mean they really do personally now politically they a lot of them think their Boomer parents are you know completely you know ought to be just you know just forcibly taken out of leadership positions uh uh because they can’t Oran themselves out of a shoe box you know boomers are just hopeless as political leaders but personally um Millennials for instance are expert in uh in the kind of the uh Beatles to Eagles discography you all of their great classic hits I mean Millennials worship all of the great artistic creations of of Boomers um I know most of them I talk to no know more about the music of that era than even I do you know and I live through it Kai um so this is a great contrast right I’ll tell you Boomers when they were young we couldn’t care less about what our parents created in the culture it was like you know I don’t I don’t know what it was Benny Goodman big band music I couldn’t care less none of us cared about it right Millennials are very respectful of that this is characteristic of these two types of generations in other words drawn to Boomers for values but uh very much not drawn to Boomers but their actual practical skills at actually running big institutions I think that most Boomers looked up at older people we had the opposite impression our parents are really good at running big things but culturally they were a non entity right it was like the Ed Sullivan Show I mean it was just you didn’t even want to talk about it it was just so unspeakably bad right this this is what’s really interesting generational archetypes right is that they we don’t all grow old the same way we grow old according to our own generational archetype when we were born in that cycle really shapes what role we play in history boomers are going to play a very different role uh than than than their parents played and uh we what we do find by the way is that throughout their lives um uh Millennials have stayed very much in touch with their parents they rely on their advice it’s not just that they’re dependent on them for financial support Kai uh they they you know they they text them every day they you know partly it’s the risk aversion right am I doing the right thing mom Dad you know that kind of thing it’s not just money it’s it’s please help me guide me through life it’s kind of dangerous out here one one point one I just wanted to emphasize about Millennials too was it was this point I made earlier and that is that that boomers are essentially an order um uh uh destroying generation we thought that they the world had been organized institutionally Too Well by our parents uh institutions are too strong I think and this is an interesting point but I do want to make it that Millennials are fundamentally an order seeking generation right they seek more order in public Institutions and the way our society is organized um when it comes for instance let me give an example uh a middle class a strong middle class right with with houses made out of ticky tacky remember that Kai it was they were all identical licking little houses and and Boomers hated that right in the late 1960s income inequality in America approached its 20th century low point right uh all Americans seem to be joining the middle class there wasn’t a lot of Distinction uh in terms of different Americans and we thought that Boomers thought that everyone had been homogenized in America we desperately hated the middle class it was like Pleasant Valley Sunday charcoal burning everywhere we thought it was hateful and we thought that we’d be better off if Different Strokes for different folks all the individuals would go off doing different things I think the Boomers over their lifetime have been very indulgent and accepting of Greater income inequality I don’t think it’s a really a problem for Boomers it was it was the great nightmare of an orwellian identical you know styrofoam America that we all be identical what’s interesting Kai is that Millennials they look at the suburbs and they say that sounds really great you know there’s little different colored houses we could all like live you know we’d be and what happened to that you know middle class how do I join up and I have to tell them no Boomers we got rid of it we thought it was a bad idea that’s how I mean to understand that Millennials aren’t order seeking generation they thought that idea was actually pretty good dad why did you get rid of it no it’s it’s interesting like I’m an elder Millennial and uh my thought now is like to continue that you know maybe that going down that rabbit hole on the millennial generation like do you see a bifurcation there and like the topic I’m thinking of is wokeism right like it seems like there there’s a bifurcation happening even within the millennial Society I guess like do do you see that or is that even the right assumption or is that too narrow like narrow-minded maybe it’s like is that too narrow focused what’s more order seeking than wokeism I mean think of that to mandate how what you how you can say things make sure you don’t offend anyone I mean think about this Boomers love offending people it was the favorite thing we did when they’re coming of age you know I was like up yours dad you know um I think think the whole emphasis on toning down the passions of the debate making sure that no one is offended is an extreme you could even say a pathological example of Millennials wanting to bring calmness rationality and Order uh to unbridled passions of Boomers and xers I I also think Kyle it’s interesting K it’s interesting that Boomers Millennials are a generation of trans I mean the the early wave Millennials are a little bit more like hexers you know they remember the kind of the the the wide open Freer range childhood and all that I think as you get to late Millennials you see much more the uh the the uh sheltered you know risk averse Millennials I I think it’s definitely a generation of trend from uh less less ordered less protected upbringing to more protected uh uh at the at the younger end of this generation um but but that’s the way it is with Generations Generations often are a generation of transs moving first wave to last Super interesting Neil like we we could I could continue this conversation forever but I I do want to make the Segway also like how it fits together with the economy of course right I mentioned Bill SME he mentioned in interview that he’s an economic Optimist based on the demography just of the US for example like over 50% of the population 180 million people roughly is below the age of 40 in the US so that that hasn’t really optimistic and uh let’s really tie together the fourth turning and economic development what are we looking at here and uh what what does the history tell you about maybe future economic Trends well demography now when you’re looking at just age structure of the population pushing economic growth you’re you’re dealing with a much a very long time frame obviously you know uh I will say it’s exciting though because we’ve seen such rapid changes in birth rates around the world I would say that one Trend we’ve certainly seen the last seven or eight years is the birth rates around the world uh particularly in East Asia and U even in Europe are falling faster than we would have thought right it may well be Kai this is historic that right now as we speak the uh what’s called the total fertility rate of the world is uh at the replacement rate 2.1 right so that’s as you know that you measure total fertility rate how many wom would a you know how many children would women need over a lifetime uh 2.1 uh is the is the number needed to replace the population it’s unbelievable that we’ve arrived here so quickly um most people in the world are definitely living in countries with a uh fertility rate below the replacement rate uh virtually all of Europe of course uh including Russia and uh um most of the populace Far East uh certainly the United States uh most of Latin America you know go around the world really the high fertility regions left if you’re really looking at at at even moderately high fertility three and above right total fertility rate of three and above you’re really looking only at a at a few countries in southern Asia and Subs Africa that’s amazing it we wouldn’t have predicted that even 10 or 15 years ago that we would see this decline so rapid um now among these uh um you know higher income countries which tend to All Be Low fertility uh America is uh used to be a little bit higher we we’re now kind of I don’t know what are we relative to Europe we’re we’re beneath France uh we’re beneath a few other high fertility um European countries we’re definitely above Germany we’re certainly above all of the Mediterranean countries um we look we look pretty good uh demographically we’re obviously a very large country L leai this is probably if you really want recent breaking demographic news I think the the big news recently last three years has been all about the enormous increase in the immigration rate into America right that’s increased it used to be around three or four per thousand it’s now around 10 per thousand right uh we’re up at the levels of uh you know even approaching the levels of Canada Australia uh English-speaking countries historically have always have always welcomed immigration uh it’s always been a feature of sort of the English-speaking Colonial countries around the world but these rates are very high and um almost predictably they’re triggering a backlash I would say the the the crisis and disorder on the borders and the high rate of immigration and the broken system of uh of uh uh Asylum uh is Donald Trump’s biggest single issue you know going into the the economy is also a really good one for Trump and I think foreign policy is a good one for him right now but immigration number one so I do think that this is uh obviously going to be prone to possibly sudden policy changes but right now that’s the single biggest new thing happening uh to America demographically not so much uh fertility rise our fertility rate continues to decline now post uh post pandemic we’re down I think uh most recent count is I believe if if 2003 comes in is scheduled we’re going to be down at around 1.63 1.62 uh that’s a lot lower than it was uh even 10 years ago so so what are the implications there maybe on a global scale for for the economy like coming back to Bill SM he said he’s an economic Optimist based on that like what what does that really mean and what are the advantages maybe let’s work that out the first thing you have to understand is this is that the entire High income and Emerging Market World by the late 2020s will for the first time in history and I’m including China I’m including you know all of your bricks you know I’m including all those things uh that they’re working age population let’s just say age 20 to 60 age 20 to 65 will actually start shrinking that’s unbelievable ever since Adam Smith the whole idea of the modern economy was growing numbers of people over time I mean that was part of the whole Paradigm and growth has its own qualitative Dimension because it always means that you’re you’re doing Capital broadening you’re always building new factories new houses and and and you’re learning by doing is you invest more it always means you’re opening new markets it always means there new possibilities you don’t have to cut back in real terms in one industry to expand in another um a population zero growth world is one which unless you have extremely high productivity rates right it’s one where you actually have to cut in real terms uh the income from one industry to expand another you you understand Kai how the psychology of that is very different we’re we’re much more averse to losing than we are to gaining a little bit more or less right and I think that is the that’s the single biggest issue about we experienced that by the way in the 1930s when when a similar thing happened the entire growth of the Western World economically came down and also the birth rate came down there was a lot of worry about this uh how how could you um how could you invent new products in a world where where companies are actually Lo losing markets you know everyone was losing market share everyone was losing and and and people when they’re losing uh sales they tend to in they tend to uh they tend to go into cartels right they want government policy to stabilize their Market they want industrial policy they want to divide up their market so that they’re at least sure that they get this people are much more willing to be um engage in Zero Sum Psy I should say positive sum transactions when everyone’s growing when things are shrinking everyone has a zero some mentality right I don’t want to lose anything right that that’s the first thing right I don’t want to lose uh and I think that to me is the biggest problem it’s the psychology of shrinking markets I think is going to be a huge challenge for Progressive Democratic societies and I I will say there’s a an economist Ben fredman he talks about the the moral consequences of demographic growth a very interesting book he wrote and I think he’s really on to something he says whenever we think of liberal democracy and liberal values you emphasizing individualism and sort of free open-ended uh uh uh development of uh of individuals and societies we’re always talking historically about economies that are experiencing High rates of economic growth he said there really are no exceptions to that right so that’s what I would think to think about Kai what is it in a world where we don’t experiencing that how will these Progressive liberal Democratic Values continue to be Prevail to Foster what how will our psychology change I think this basic shift between um zero some versus positive sum thinking which we actually find I mean if you do uh surveys you actually find it’s it’s going down now among younger younger people today among Millennials it’s much more zero zero sum thinking whereas older people are much more positive some thinking I think that that idea that we need to ensure outcomes that’s that’s what you start thinking of in zero some right I need to ensure the outcome I I’m not I’m not comfortable with this open-ended outcome business right that’s that’s exactly what we’re seeing right now it’s protectionism tariffs you know oning all over the world like I was think border fences border fences everything right I mean it we are totally entering into that world I fourth turning is all about that again I come back to this idea of order seeking right what does that mean in every dimension of our lives and I was interested because the the European Union and the last big election we’re talking about in June you know we’re g to have that no you know European Parliament again but in the last election um uh uh I believe when was that 2019 I think five years ago right I think it was 2019 um the the uh the the all of the major parties like slogans was um uh Europe that protects right uh a Europe that protects think about that a Europe that you know what are we protecting yeah what are you protecting but just think of the whole psychology of that that is what that is a great slogan when you’re trying to deal with zero some mentality and a and a an emerging generation which is actually becoming more risk averse this is what I’m talking about a Europe that protects imagine 20 years ago Europe I remember back in the 19 early 1990s Europe was all about breaking down new barriers you know do you remember that it was all about you know going Beyond and above and you just creating I don’t know one world and doing very but now it’s like maybe we can hang on to something here I I’m interested in your view Kai about that this this sense of protecting the sense that we we’re trying to hang on to something where does that go that that is a very good question I think Europe is falling apart slowly but surely um and the idea of the European Union as well like it’s too diverse it doesn’t make any sense like in terms of like cultural what do you call it like cultural Trends even like you get the north you got the South it’s too diverse like we’re not pulling in one string anymore and that’s changing right so and we’ve been shown that uh IDE ideology especially of the wealthier Nations is not helpful like it’s it’s actually hurting the unity or the Union right so that’s what’s breaking it apart that’s just my two cents on it and we G we gave up on our strengths as well like we sacrificed our strengths for actually I don’t know what we sacrificed it for honestly like I look at Germany like being German with our energy costs and everything we’re sacrificing our industry our Market Advantage we used to be a Powerhouse for some reason we’re still number three in the world in terms of global GDP and output but it’s it’s declining and shrinking you know one one problem Germany has is that you’re in hugely export oriented country in a world which is moving toward industrial policy what the hell do you do with that I mean China’s idea of getting out of this current Funk that it’s in is to cut prices and just try to expand I mean you know it’s the old formula and they’re they’re doing it and and so you’ve got the US Treasury secretary you know going to China and saying hey don’t do that into our country well they’re gonna try to do it in your country guy but my point is is that is that everyone is this is again the 30s all over again by the way the last time we had a fourth turning was the 1930s and I see all of these Trends we’re seeing right toward autocracy uh we’re seeing toward you know kids living with their parents because you know there’s a limited supply of homes we’re seeing the growing uh interest in sort of uh uh uh zero negative some thinking and obviously the increasingly stormy geopolitical Outlook to say nothing of the fact that the uh you know after a a great financial crisis a little bit like 2008 we’re kind of living in the shadow of that I see a lot of similarities with where America is that was the last time we were all on a fourth turning and I do think it’s helpful to make to make that connection um we often think that uh uh you know we we you know our lives might not replicate uh those of our parents but it might be our grandparents or great-grandparents parents we might be looking for parallels right and and not so much what they did but the challenges they faced and the options they faced right you brought up the 1930s and that’s maybe my second to last question here Neil because you know we we’re getting almost to an hour here but um you brought up the 1930s and my question is maybe Europe seems very undecided like in what it wants to do it’s losing competitiveness is it based on our history from the 1930s would you if you like is that having an impact and I’m curious because it seems like it’s hanging like the our history is hanging like a democ sword over us and we can’t get away from it is that a true statement you know look the future is always open uh the mood I think recurs and I think the types of decisions you’re given the hand the hand your doubt that can recur how will you play your hand that’s that’s your choice yeah um but I do think one thing that’s very similar to the 1930s obviously is the um the the uh fear and indecision uh of the West um you know the the uh the West Was profoundly divided it had been so scarred by World War I uh first and then obviously the Great Depression uh that it was it it it acted with no common voice it had the League of Nations which promptly you know all the major players left or played no interest in so it was I mean right that is the history uh you had when when it came to for instance to the to the to the rise of Germany uh and and the rise of Hitler I should say there was absolutely no commonality at all no common cause uh between the Czechs the French the the the British the the Russians um everyone sort of went their own way right there was maximal confusion and maximal confusion always plays into the hands of autocrats right because autocrats know very well what they want to do uh and I think I think we’re in a similar mood today uh you know yeah well AB absolutely um you brought up the depression I I just want to get the conversation one with the last question back to the economy do you see that happening hyper inflation depression is that something it’ll replicate is that just a trend that we’ll have to face you know a lot of that’s going to depend on you know I I I think a lot about markets I think how markets are changing uh I’m actually doing a piece right now on the rise of passive investing which I think is actually beginning to transform markets in a in a kind of a momentum driven way right um increasingly Equity prices are being shaped by just more and more money pushed into all of these uh equities Pro right I mean U who’s actually doing the valuation task anymore in markets do you wonder about that Kai I mean well it’s the computers the AI like I hear fund managers laid off left and right everyone just assumes that someone else is valuing the individual stocks but increasingly the active investor saying I’m not getting in front of this locomotive and as a result this thing just kind of turns on its own I do worry about that I will say that in the context of the fourth turning uh economic volatility is typically very high uh when it finally comes to climax in terms of I talked about organized conflict Kai and in that context obviously there’s no such thing as a uh recession or a depression uh you know the public is mobilized uh anything necessary to liquefy the economy I don’t care how much inflation goes into place right inflation is also a good way of uh of uh uh uh you know paying off your debts if you’re the public sector uh I think we’re going to see all of that we always do uh late in fourth turnings so inflation is definitely on my calling card if you were to ask me yeah like but the question is like how severe will it get like we’re looking at 3.2% right now we were at 9% in the US so the question is like how severe is it going to get are we going to see 40% yeah it look we don’t know um it used to be are we gonna have a hard Landing then it was a soft landing and the big new uh dialogue now in in you know our circles here is no landing at all you know it’s gonna start accelerating again we never actually touch the runway so uh we’re going from you know six rate Cuts in 24 down to three down to two down to it might be down to zero and here’s the thing as inflation gets faster if it does get faster it’s been reaccelerating the core core rate on the CPI has definitely been reaccelerating over the past six months as it gets faster the real interest rate actually begins to lower right I mean the FED sticks there at at 5.25 the real interest rate gets less and less pretty soon they may have to start hiking I don’t think people are talking about that it is a possibility though um it’s on a knife edge uh it could obviously if employment suddenly drops which is something we’re certainly looking for uh than than you know which is you know ever since we saw yield Curves in BT and all the other long-term signals go uh then that’s going to be a downturn in the economy it’s going to be a downturn to markets if it starts going up inflation will go up but the kind of inflation I’m talking about which is comes with public mobilization is completely different that’s engineered inflation that’s inflation where um uh you are basically saying everyone go out and borrow uh bonds at 5% because we have a national crisis and uh we don’t care if inflation is 15% you know what I mean um it’s basically another form of Taxation right this is called Financial repression and every time we have a fourth turning it always appears particularly appears light in a fourth turning Neil this was absolutely fantastic I could have gone on for a couple more hours to be quite honest like there’s so many aspects like I still want to you know follow up on we we’ll do that maybe next time but great appreciate of your time where where can we find more of your work where can we follow you um we have a substack called demography unplugged uh a lot of that is actual demography Believe It or Not uh but I also write uh pieces on all kinds of other subjects as as I think I mentioned I am doing a piece on passive investing uh but I’ve I’ve done all kinds of a lot of eclectic topics including politics in the United States a recent piece on demography in in Israel if you really want to take a look at an interesting case of a Dem graphic anomaly uh and a lot of other subjects too kind oh fantastic like by the way I’m totally against passive investing because I’m coming from the the mining space and I think passive investing is hurting mining in particular like money is not flowing into the right companies and the ETFs are buying the wrong companies in my opinion so if that’s just my two cents on that topic I I I I respect your opinion absolutely Neil thank you so much for coming on like truly appreciate your time it was a great pleasure and we I hope to do this again very soon and see how the fourth turning is really playing out maybe in half year’s time I think be a good time frame to see where we’re at a little closer to the elections because uh right before the elections actually so great get exciting so absolutely fantastic everybody else I really appreciate your time again a bit of a longer episode a very different episode again as well we we were flying at 35,000 feet looking at a lot of different macro Trends and I think it’s really good to do that from time to time um I was thinking about a a SWAT analysis spreadsheet at one Point like where we could put and categorize each event uh based on like the fourth turning characteristics like where does it fit in and how do you characterize that it’s really good to zoom out like the topic of order is a really interesting one and that resonated gave me a lot of food for thought here um it seem yes we are seeking order there’s a lot of chaos there’s a lot how would say cha like unorganized I don’t know if that’s even a word um in in our world right now and uh making order of it it’s it’s a really interesting characteristic of of what Neil mentioned so I hope you found this conversation insightful I tremendously did uh I’ll definitely be following up I have yet to buy Neil’s book I have to admit but it’s very high on my list now I’ll probably jump on Amazon right now and and buy it for myself and and read it over the coming weeks uh definitely link to it down below if you enjoyed this conversation please leave us a comment um we’d love to invite invite guests like Neil back so please subscribe to the channel it helps us tremendously leave a like if you enjoyed this conversation it helps us thank you so much we’ll be back with lots more here on S 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