ED HARRISON: Ed Harrison here for Real Vision. I'm going to change it up a little bit here because I've actually already interviewed Neil Howe, the managing director for demography at Hedgeye, who is the presentation that you're about to hear. I can tell you that it's a great interview. He's very thought provoking. He gives an amazing overview, not just of demography in terms of retirement crisis, but the demography of the future of the United States and of the global economy. I really enjoyed talking to him, and I hope that you enjoy the interview.
NEIL HOWE: Demography is like a giant supertanker ship. You start revving up fertility, it's going to take 20 years before those people can even enter the workplace. It doesn't change very fast. Even going all the way back to the 17th century, the first old world migrants to the new world, we found that generations had very different collective personalities, we found not only are people very aware of generational differences, but types of generations, what we later call archetypes, tend to recur in the same order historically.
ED HARRISON: Neil Howe, you've been introduced me as the foremost demographer of our time. I'm pretty excited about this.
NEIL HOWE: Let's just tone down expectations.
ED HARRISON: You and I, we were talking on the telephone earlier. One of the things that you had said is that really, it's never as good as the first time so we tried to cap the conversation as much as possible before we got into it. This conversation that we're going to have is going to be all about demographics in retirement, not just demographics but in the context of your fourth turning idea, that framework. First, let's just start out with the framework, The Fourth Turning, tell us how does that relate to demographics and retirement.
NEIL HOWE: Well, a lot of what I do is demography. People usually define demography pretty narrowly as people who study fertility, mortality, morbidity, migration. They just put down the numbers in a population. One of the interesting things about demography is that when you specify all these things, and a lot of them are known pretty well, they don't change very fast, you can be pretty certain about numbers in the population going way out.
It's one of the very few certain things you can tell about the future. I think that's the one claim to fame of demographers, or at least one strength of the way they study populations, is this great forecasting capability because, and demography is like a giant supertanker ship. You start revving up fertility, it's going to take 20 years before those people can even enter the workplace. It doesn't change very fast.
This is the one of the great strengths of demography. Obviously, when you're studying issues, such as old age dependency ratios, how much is it going to cost to pay for the old relative to the number of working, demography is just central to that. That what was we live for, calculating those [indiscernible] and spitting out that timeline and everything. That's where we shine. I will say that one thing that demography does not pay much attention to, it's really not part of their field, but it is something that it's my other field that I've invented, you might say, is to look at populations, not just in terms of numbers and how many are in each age bracket, but also to look at how people are shaped in their attitudes and behaviors by their childhood and coming of age experiences and how those attitudes and behaviors age with those cohorts through life.
These are what we call generations. Each generation reshapes every phase of life they move through. That adds a whole new dimension, the demography. It like adds, it's like making chess three-dimensional. Because now, you don't have just numbers. You have qualitative shifts, and each of these groups as moving through what I like to call the generational diagonal, and so as I haven't explained to people, if you have age on the Y axis and time on an X axis, we all live a diagonal line.
A generation is a group of diagonal lines. A single event is a vertical line through all those diagonal lines. It hits people at different age. What most people do is that they study these vertical lines. They study events, or they may study a phase of life, they study old age over time. They're looking at a horizontal line.
The problem with that is that when you're studying a phase of life as just I'm studying midlife, I studied [indiscernible], I study youth. You see, there are a lot of histories out there. Histories of youth in America, histories of old age in America. A typical history book has a history of midlife people. Because all the leaders, they're like the presidents and the congressmen so they're all between age 45 and 70 or something. You're basically looking at one age bracket.
What I set out to do, these many years ago, a long time now because I guess late '80s has been a long time, is to look at history from a different perspective. I was amazed that-- Bill Strauss and I were the ones who wrote a lot of these books originally, we were amazed to discover that no one actually looked at the diagonal lines. Everyone just looked at phases of life or period. If you read the history of America, it's goes like, what was everyone doing in 1851? What was everyone doing in 1861, 1871? It's just all these people.
What about the experience of each group of people over time? That's what we did in our original book, Generations, we did that and we looked at these generations, what we found is that even going all the way back to the 17th century, the first old world migrants to the new world, we found that generations had very different collective personalities. The older generation had very different attitudes of how the young generation is growing up, all kinds of worries apprehensions because even back then, they knew generational differences, and they knew that it wasn't just that they were older, younger, they were never like them.
These new kids were just not the same. That's not all we found, we found not only are people very aware of generational differences, but types of generations, what we later called archetypes tend to recur in the same order historically.
ED HARRISON: It's almost like a curve of--
NEIL HOWE: Well, it's a wave. When you look at their impact on history, it's a wave. The actual generations for instance, a generation that are heroic, history making, changing generation that takes the country through great wars and founds all kinds of new institutions. Typically, it's followed by a rather timid risk averse generation. They were the children during the war. They're careful not to upset everything that was just created. Everyone just lost all these lives on their behalf. Whoa.
A good example of that would be the GI generation went through World War II, and the so-called silent generation, where the kids of worldwide joined the Great Depression. They were famous for, I don't want anything to go on my permanent record and they were very cautious. They were very risk averse. They all dressed in three-piece suits in their early 20s, they play by the rules. Ultimately, they did very well economically. They got rewarded by the rules. This is the generation that's today, in their late 70s, and 80s and they're all getting defined benefit pension plans, they're all doing really well and for a variety of reasons, they've done very well economically.
Then you have other generations which have different locations in history and different characteristic orders. For instance, following a generation like boomers, which come of age during these periods that periodically happen in American history. These great awakenings, these great upheavals in the culture. When we reinvent origin and literature and dynamics between races and ethnicities and just reinvent the culture, that's what happens during awakenings and religion, typically too in our history.
Those things happen during awakenings. Following these generations, you usually have a left alone generation, we call the Nomad archetype. This would be like Generation X. These are the left alone kids. These are the kids had no one had time for because everyone was finding themselves. Gen Xers--
ED HARRISON: By the way, as you say, though, I'm thinking about Macaulay Culkin.
NEIL HOWE: There we go, home alone. What's interesting and fascinating though is that Gen Xers is not the first of this generation. The lost generation had that same, the gilded generation. These are all bad boy generations and not just by their names, lost, gilded, cavaliers is another one going back to the 17th century. Those are fascinating archetypes, but they come in certain characteristic orders.
Now, that order is connected to, and not only in American history, but we think in many other countries around the world, is connected to another fascinating pattern, which many people have noticed, particularly in American history. That is what's often called the long cycle in politics. In fact, Ed, we have major civic crises that redefine who we are as a nation politically, institutionally in very fundamental ways, about once every long human life, about 80 or 90 years.
You look at the worst span of succession, it was probably the first great global war in European history, which happened way back around 1700, there was the Glorious Revolution in England, but it was a huge event in the colonies. Then about a lifetime after that, you had the American Revolution, lifetime after Civil War, lifetime after that, the Great Depression and World War II and a lifetime after that, you're here with us today. Here we are.
Roughly halfway in between those great outer world events, you have the great inner world events and these are the awakenings, which we just talked about. In terms of American history, these have typically been characterized as awakenings in religion. That's what we call them, the first great awakening, the second awakening, now, we number them and many people call the '60s and '70s, America's fourth or fifth grade awakening, depending on how you want to start your counting. You can start it with Jonathan Edwards in the 1700s or with John Winthrop and the 1600s.
Here's my point, is that when you look at these mood shifts that are very characteristic, you see how they're driven by the generational change, and this is what creates a closed system. History creates generations by creating these moods. Then these generations grow up, become mid-life parents and leaders and create history. You see how that works? History creates generations, generations later create history. This is the dynamic.
ED HARRISON: As you say that, the immediate thought that I have and this goes back to the conversation that you and I were having on the telephone yesterday, is about where we are right now. Because the sense that I'm getting is that the particular, and this isn't just in the US, but globally in developed economies, that particular social economic ideology, the prevailing ideology, let's call it neoliberalism as an example, which is very much in the Gen X form.
NEIL HOWE: And boomers. Boomer and Gen Xers, yeah, absolutely.
ED HARRISON: It's breaking down. People are not believing in it in the way they used to.
NEIL HOWE: That's what I attribute of what we call this hero archetype of the civic generation. That is the strong belief of wanting to gravitate toward community. We're seeing that all around the world. By the way, these generations aren't just the United States. This is in much of the world today, we see everyone assuming a similar generational pattern because a lot of the world had the 60s in the '60s, and much of the world has the World War II and the Great Depression. We're all on a similar schedule.
You look at this new populism, which basically believes in the power of ordinary people and community plus authority. Those two things together, authority and populism. People have to remember that historically, populism always means authoritarianism. These two things go together ever since-- the word populism, by the way, interestingly, was first used to describe Julius Caesar. He was head of the popularis, not the optimists. They were the good people. They were the senators. Julius Caesar was the authoritarian side of the populism.
It has been true ever since. You have Viktor Orban in Hungary, you've got Vladimir Putin, you've gotten to Narendra Modi, you got Xi Jinping, you got them all over the world now, you got Rodrigo Duterte in the Philippines, I could just go down all these new leaders we're seeing today, and you know what they're appealing to? Two things really interesting that we didn't see in these leaders 30 years ago. They're appealing to the mainstream of their community. They don't give a damn about the minorities.
Narendra Modi cares about the Hindus and that's his group. Everyone else can go to hell. Xi