Episode 147 – The Cadence of Calamity – Tom Wheelwright & Neil Howe

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Tom Wheelwright:

Welcome to the WealthAbility Show, where we're always discovering how to make way more money and pay way less tax. Hi, this is Tom Wheelwright, your host, founder, and CEO of WealthAbility. So it has been a long time since we have been in this much upheaval in the world right now, and it's economic upheaval, it's political upheaval, we're like in crisis times. And I have memory. I'm old enough to remember the '60s and really the last time I felt like we were in this kind of a crisis, of course, that was back in Cold War. Plus we had all of the civil rights issues and all that going on, and we're in a new type of crisis.

We have an expert to discuss what's going to happen and why this is happening and how this is predictable. And this is my new friend Neil Howe, who wrote the book Generations, which I read many, many years ago, and wrote The Fourth Turning and now has a new book out in July. The Fourth Turning is here. What the seasons of history tell us about how and when the crisis will end. And I love your work, Neil. It's really a treat to have you on here. So thank you for coming. Would you give us, and I'm fascinated by this too, just a little of your background, how you started doing this research and why you started doing it?

Neil Howe:

Yeah, it's been a project to me for a long time. Sort of something, not necessarily my day job, but it's something that I've been working on for many years. Bill Strauss and I first started writing a book called Generations, which I think you read. It came out in 1991, a long time ago. We started writing it in the late '80s. And we were intrigued by something that we noticed about generational differences. One thing we were very aware is that boomers were growing. There were still sort of young adults in the 1980s, and we were aware that we were growing up and growing older so much differently than our parents.

Our parents were the World War II generation, the GI generation, and the same age that they were founding families and building battleships and doing, remaking the world. We were keeping our lives on hold, taking voyages inside ourselves. They had D-Day, we had Woodstock. I mean, you get the idea, right? They're just completely different generational trajectory. And it wasn't obviously just us, it was everyone our age felt this difference. And we wanted to look at how these generational differences had recurred in the past.

And we went back and looked historically and we're struck by something that really interested us and that as we read more and more and looked back all the way back to the nation's founding and actually before we were a nation, back in a colonial period in the 17th century, we found that Americans had always been aware of generational differences. They always talked about them. And that these generational differences came in a certain order. Certain kinds of generations always followed that other generations. After you have a boomer generation, which is filled with high idealism and sort of radical defiance of their parents, you always got kind of a Gen X generation, kind of a pragmatic, show me the bottom line, don't give me all that [inaudible 00:04:03] pretension. You know what I mean? A very different kind of generation, almost a reaction to that. And we noticed other patterns as well. They're just certain kinds of sequences.

We thought this was fascinating and we found that it was linked to a rhythm in American history that historians have always been familiar with, but they've never really been able to explain. And that is why the great nation redefining moments to our history, these great periods of civic upheaval when we remake our outer world of politics and economics, when we go through these great conflicts and crises, and I'm thinking about the American Revolution, or you can go back even further to the Glorious Revolution and the colonies where the colonies all rebelled against their governors. But then you move forward to the Civil War, you move forward to the Great Depression World War II, and all of these are separated from each other by the length of a long human life, about 80 or 90 years. And they were very definite kind of cadence.

And here we are again, Tom, another human life that's kind of where we all are. And we noticed something else as well, is that halfway in between these periods of sort of outer world upheaval, we experienced these world, these episodes of inner world upheaval. Do you think about, you were talking about growing up in the '60s, right? That was what we call an awakening. And in fact, these awakenings have been so regular. Historians numbered them. They called them the first grade awakening, the second grade awakening ,the third grade. And many people called it the '60s and '70's America's fourth or fifth grade awakening, depending on what you start your first count with John Winthrop or with Jonathan Edwards in the 1600 or the 1700.

Well, that's interesting, isn't it? And each of these periods shapes a generation coming of age and each of it is sort of superintendent by an older generation that's running the country. And so there's this interesting mix. Well, we found that the similar kinds of generations are all sort of in the same phases of life every time one of these kinds of events happen. And right now, really since the GFC since 2008 and moving into the 2010s and now 2020s, we are in the crisis configuration generationally.

Tom Wheelwright:

Okay. So if you would can you… You talk about four within a bigger cycle, that 80 to 90 year cycle, you're talking about basically 20 to 30 year cycles, right? So-

Neil Howe:

Yeah, I'd say 20 to 25 year generational periods, yes.

Tom Wheelwright:

Okay. Can you just, for our listeners, just walk through the first three real quickly and then we'll talk about, we'll focus on the four.

Neil Howe:

Well, let's talk first about eras and because you can talk about four turnings, which is sort of eras of history. And then you can talk about four kinds of generations that coming along at each one of those, right? And I think the eras of history, when we think of our first turning, we're thinking of a period like what many Americans can recall the, well, many older Americans can recall. And that is the American high after World War II. This is the period, late '40s, early '60s, maybe the presidencies of Truman and Eisenhower and John Kennedy. It was a period in which institutions were perceived as strong. Individualism was weak. There was a strong incentive to conform and a great sense that these institutions we built were built with blood. I mean, we went through World War II to get there. We went through the Great Depression. We never wanted to go back into it. So there was a real public conviction that this conformity and this kind of gathering our wagons and forming a better world, materially, physically with these strong institutions was really something vital and important.

That was the first turning. This is what we call in our saeculum, which is this 80, 90 year period. This long period is sort of the spring season. You think of this is seasonal. The summer season is sort of this summer equinox is the awakening. So suddenly you have now this new generation who were grown up after the war, after the crisis, has no memory of the crisis. They come of age and they lead all generations in sort of a rebellion resistance against all the social conformity, all the social discipline. Why do we have to restrain our needs and wants? Let's get rid of the pure and ethic. [inaudible 00:09:09] at that time was… Why don't we spend more and save less? Walter Heller and a lot of the Keynesian economist who testified in Congress at that time, and certainly the kids on campus were saying the same thing. Why can't we indulge ourselves today? Live for today. I think many of pop culture songs-

Tom Wheelwright:

Yep, for sure.

Neil Howe:

… had that refrain and they led us through this rebellion from norms and traditions and conventions against the authority of the family, of authority of parents against inherited gender roles. I mean, you name it. And it started in the culture, but it finally spread all the way to the economy. By the 1970s, we had tax revolts, we had the resistance against regulation. And I often remind people that in their own way, both the left and the right, you could say, both liberals and conservatives joined in with this shedding of all these restraints. Why can't we leave the nation more of just individuals rather than being regimented into this kind of community? So they were successful, and by the time Reagan came into the White House, it was a big controversy, but he finally said, “It was okay, we'll invite the Beach Boys to the White House.”

I remember that. That was a big deal. [inaudible 00:10:33] actually comes into the highest levels of government. I mean, today, it would just seem… I mean, Beach Boys are on music, right? They're on every single [inaudible 00:10:43] we go into today. But at that time, I don't know if you recall that time, these things were big deals back then, and Clinton always used to have to hedge about did he inhale or not. These were still big. Anyway, we went on into really after Reagan take over, particularly his second election, which is really kind of a mood changer, boomers are finally okay with the GI generation president so long as he let people kind of run their own lives, different strokes for different folks and all that. And that led to then the next really declining of the awakening and it led to a new season, the fall season.

We call that the unraveling. And we always have an unraveling after an awakening. That's a period which is much the opposite of a high, the first turning. Just as the fall is the opposite of the spring. We no longer invest, we consume, and this is a time when institutions feel weak and individualism feels strong. I mean, one of the things you can go into, and this is particularly big still about 10 or 15 years ago, you go into a bookstore and all the most upbeat books are about me, myself, and I. I can do anything. I can remake the world, but everything about our social life or community life is all downbeat at the end of the family, the end of government, the end of… You know what I'm talking about. That sort of sense that who we are together is, I don't even want to think about that because that's all dysfunctional.

Well, ultimately, these periods of individualism, high individualism, weak civic authority like we experienced in the 1990s, but we've had decades like that in our past. And a lot of what we do in our work is looking at decades that rhyme with each other going into the past. So one period that's very much like the 1990s was that cynicism and bad manners and just not caring too much about the nation or about government was the 1920s. It was rum runners and gangs and barnstormers. No one cared about government and the people that led the country didn't really care too much about government. And then you go back to the 1850s, a period when America practically was tearing itself apart before the Civil War, and then you go back to the 1760s and so on. Anyway, you have these periods that remind us of that. And then of course, every unraveling ends with a crisis.

And that's when we have to rediscover how to rebuild community institutions that work, rebuild our institutional life and rebuild a sense of social solidarity. One of the biggest problems now that Americans face is the feeling of being alone, not really knowing how they fit into a broader community today. And it's painfully felt by young people today. I talk to millennials all the time. I talk to people in their 20s and 30s and it's their biggest problem. They just don't understand who we are as a country, and it doesn't really matter whether they're think of themselves as on the left or the right, and they're losing trust in democracy. They're giving up in democracy. They think democracy is something that older people have invented. So we talk about everything, but then you always find a way that nothing changes. You have governmental process or lawsuits or whatever, and nothing changes.

And [inaudible 00:14:20] get to keep what they have. And we see declining business dynamism, declining ability for anything to change. And this is leading young people to really give up on that and think about broad new structural resets like a huge reset button. This is a sign that we're really in the crisis. Now, we've had some huge economic upheavals, the great recession after the GFC and then obviously during the pandemic. We've had a recent huge downdraft in markets. We'll see what happens to that. We've had now a huge new episode of inflation we're dealing with. Economic and volatility is something we always experienced during crisis periods. I often ask people, what was the second worst recession of the 20th century? And people don't know and tell them it was 1937. What? What was 1937? Well, the stock market went down by more than 50%, and GDP went down by almost 10% again, and people don't even know about that because there was already such a horrible period.

We had a huge coming back from the Great Depression. We went down again. It's a period of enormous volatility even by 1940, bond rates were the lowest they'd been historically ever in American history until very recently we had fears of deflation was still there. America felt like it was still in the Great Depression, and this was a more than a decade after Black Thursday. So it was a terrible decade. The decade of the 1780s after the American Revolution was over, it was a horrible time. It was probably the 30% decline in national income. Of course, all the professionals and everyone who knew anything about how to run commercial life, that they were mostly Tories, they all left. And many of Americans were moving back into the countryside to raise food because the cities could no longer provide for them. There was a reason why we gathered to actually create a new national constitution at the end of the 1780s. This nation felt like it was completely falling apart and in miserable poverty.

In our book, and this is a way of a rambling way of getting you into the whole themes that we present. In the next book we did, which was called The Fourth Turning, which came out in 1997. And at that time, of course, we were still in the unraveling. We were still in the Clinton era. Monica Lewinsky was still on the horizon, hadn't happened yet. So that's kind of where we were back then. We foresaw that The Fourth Turning was about a decade or a decade and a half away, 10, 15 years away. And in fact, we did have the GFC later on and we foresaw that we were going to enter a crisis period. And I think this is why we've had such an amazing readership around The Fourth Turning and why I finally was persuaded by many people, many readers to come out with this new book called The Fourth Turning is here.

And in this book, we focused much more on these crisis eras. When Bill and I wrote The Fourth Turning back in 1997, it was still way out there. We didn't know who our adversaries would be. We didn't know what the conflicts would be about. Red zone, blue zone had not yet been invented. It was way out there. Now it's here. We know what's going on. We saw Trump versus Clinton in 2016, and that sort of political regeneracy, which happened at that time causing suddenly voter participation to rise in this country. And suddenly total contrast to before where no one thought the government mattered. Now everyone knows it matters. Everyone knows it's vitally important who gets elected.

So this is the first sign that we're in the fourth turning. Everyone gets refocused on who we are as a national community because we sense this enormous vacuum. Something has to replace it. Right now, we remain a bitterly divided country on that issue, but that is always resolved by the time the fourth turning is over. And we expect that to happen by the end of the 2020s, the very early 2030s. That will be the end of it. This is an historical pattern and it does sort of govern the direction and tempo of our social life in the long term.

Tom Wheelwright:

Hey, if you like financial education the way I do, you're going to love Buck Joffrey's podcast. Buck's a friend of mine, he's a client of mine, he's a former board certified surgeon and he's turned into a real estate professional. So he has this podcast that is geared towards high paid professionals. That's who he's geared towards. So if you're a high paid professional, you're going, “Look, I'd like to do something different with my money than what I'm doing. I'd like to get financially educated. I'd like to take control of my money and my life and my taxes.”

I would love to recommend Buck Joffrey's podcast, which is called Wealth Formula Podcast with Buck Joffrey. I hope you joined Buck on this adventure of a lifetime. So let me ask you the obvious question, not to be too obvious, but all right, we're in 2023, you're saying this is maybe another seven to 10 years. In the last crisis period, we had a World War. So do you see that coming? I mean, do you see World War coming? Do you see… I mean, we've got Russia starting, we've got Russia, we've got China on the brink. Where do you think it goes?

Neil Howe:

And we have roughly half of Americans believe that Civil War is imminent.

Tom Wheelwright:

Yeah, we do.

Neil Howe:

I don't know how many polls that we've done [inaudible 00:20:37] on that, right? And that's the question. Fourth turnings always require a sense, at their climax, a sense of total urgency and public mobilization, and everyone suddenly gravitates toward a complete commitment to one side. Now, occasionally it's complete commitment to two warring communities within the same nation. And when we saw that during the Civil War, we've actually seen that in many fourth turnings in the past, even in sort of Anglo-American history going all the way back, which we cover in some detail. And all fourth turnings involved that to some extent. Remember that before World War II, this country was bitterly divided over the new deal.

If you were a conservative, you called the President Franklin Stalino Roosevelt, you were on the left and you called it the red decade of the '30s. But if you're on the left, you called it the fascist decade because fascists were taking over democracies in many places around the world, right? So we forget that… And this is actually one of the lessons that I bring up in the book, is that the question of whether the conflict, and it is always an organized conflict because it has to bring out that sense of urgency. Very few things do that, Tom.

One of the things I point out is that historically, it's often very unclear whether the crisis is mainly internal or external until late in the crisis. A lot of people think of the American Revolution as an external crisis. It was the colonists against the British, but most of the killing was colonist on colonists, right? I mean, the loyalties it was… And people at the time refer to it as a Civil War, not so much as a revolution. So we have to get out of the idea that generally these are external conflicts. They always involve a strong internal dimension.

On the other hand, in a Civil War, one side, usually the side that perceives itself as losing always calls upon foreign powers to help it. So Civil Wars always turn into external war. After all the American Patriots brought in the French, if they hadn't brought in the French, we wouldn't have won at Yorktown in the Civil War. The South were trying desperately to get France and Britain to come in on their side, you can go back. Every crisis involves that, other players coming in. And I spell out one of the scenarios in the book, which is what happens if you have a civil conflict in this country that actually breaks out into an open war that causes our military to stand down around the world?

First of all, imagine what that would do to the world. Imagine what would happen around the world if US power was not there. We can just go through some of the scenarios, but also imagine what if one side invited in other players to help. You can imagine, I suppose the worst case scenario would be a world war in which the US itself was not a major participant. And some of those global powers are actually fighting on US soil. I mean, you can imagine some very, very nasty things if you, for your mind, inclines you to take you in that direction.

On the other hand, we see growing threats abroad, obviously, and that's no news. I think it's most useful to see it not so much as carnage or a crisis in that sense of just horrible things happening, as rather a need to refine community in a realistic way at which history accomplishes that task. And I remain in the book agnostic about whether or not a war is necessary. I simply observed that every fourth turning in America's past has had a total war. And total wars have only occurred during fourth turnings. So you can draw from that what you will, huh?

Tom Wheelwright:

Well, and then the other thing, as you talk about these periods, one of the obvious results has been you've had strong leaders emerge. You've added George Washington, Thomas Jefferson, then you had Abraham Lincoln, then you had FDR, whether you like or not, he was a strong leader and you had strong leaders emerge. And right now we're in this political era where we've got really potentially two weak leaders. You have Donald Trump and Joe Biden, neither one of which the majority of the population wants for president. So-

Neil Howe:

[inaudible 00:25:40]-

Tom Wheelwright:

… so what do you expect to come out of that? Do you expect a new leader to emerge later on? What do you expect will happen?

Neil Howe:

Yes, yes, yes. I mean, we're talking about something that could well be in play until the very early 2030s when we talk about 2032, '33 is sort of a terminal point, but history suggests that fourth turning leaders are made not born. You know what I mean? You have Abraham Lincoln had zero leadership. I mean, he was a lawyer. He's a very successful, fairly successful lawyer in Illinois. But he had one term in Congress and not a very successful term back during the Mexican-American War.

And as for Franklin, Eleanor Roosevelt, no one thought much of him. They thought him kind of a lightweight, no one can. Everyone thought he was light years away from his incredibly dynamic uncle. A couple generations removed Theodore, everyone knew Theodore. It was a born leader, a titan, intellectually in terms of an author. And his just stamina, his leadership. No one thought that about Franklin Roosevelt. They thought he was just sort of a people pleaser, sort of an amiable guy. He pulled something very different from within himself and in response to what America was going through. And I think the American people when he died in April of 1945, mourned him as they had no president since Abraham Lincoln. I mean, that was the defining moment.

That is a lesson in fourth turnings. Leaders are made not born, and the public mood looks for that kind of leader. I think the one thing that's impressive about Trump versus Biden is that American people, when you poll them, are universally unhappy about that choice. You know what I mean? No one likes really that the fact that… And that suggests is a real instability about what's going on now. I expected it'd be very likely that we may not face either of those two candidates in 2024 just due to things that may happen.

Tom Wheelwright:

Interesting. And so let's kind of turn to that… You talk a lot about economics, I mean, your profession. My profession is in the economic world. So what happens typically during that crisis period, from an economic standpoint? Obviously there's a lot of personal hardship that's going on right now, but what are you expecting to have happen over the next 10 years from an economic standpoint?

Neil Howe:

Creative destruction of inherited public policies. That's what happens. There's a sense of sclerosis. By the end of the saeculum right after the first turning, second turning, third turning, nothing's been remade. You have this great sense of accretion. And finally you have all of these policies which basically allow enormous economic rents by incumbents in every industry. I mean, you look around today and we pride ourselves on our high tech innovation and it's true little things. This is the fruit really of our third turning the 1990s. All these little things that show up on our apps, things that we consume as individuals, we've gotten very good at. And we can paper our walls with flat screen TVs, I mean, that kind of thing we show high productivity, but in all things that we consume that make life what it is from a more social or public point of view, where we live, what kind of community we live in, how we educate our kids, how we get our healthcare.

Let me go through you [inaudible 00:29:44], Tom, just as a share of GDP. Take healthcare, first of all, 18, 19% of GDP already just there. And then let's add on housing and sort of community development. So that whole industry then let's add in education, K through 12, but also university education. And then let's just add in social services and a bunch. We're easily up to 50% of GDP, that those sectors which involve our public space, I would argue have zero and possibly been negative productivity growth over the past 25 years. I mean, healthcare, I think is quite evidently negative productivity. It costs us more every year to pay for healthcare and life expectancy has been declining since 2014. I'm a demographer, I showed this stuff. And it's not just COVID, this is lamentable. And why do we allow this system that allows a patient and a doctor or hospital to agree with each other on some service that some third party is going to pay for?

I mean, that's our system. And we call it a market oriented system. I say, are you kidding? This was designed by some evil demon and that's what we call healthcare. If some drug comes out and someone says that it's has some modicum improvements, that we should spend a trillion dollars more on it. That's what everyone's going to recommend. And no one feels like they're going to pay for it. Who designed this system and why is it allowed to keep going? Well, the only way you change it historically is when suddenly you have to come up with new resources. Right?

Tom Wheelwright:

Interesting. So this is really interesting because I just returned from Europe a little while back and I'd lived in Europe in the '70s and I found that their healthcare has been much improved since I lived there. Much, much improved, but I don't feel that way. Just like you say, I don't feel that way about the US. Ours is very expensive. It's hard to get a doctor. It's hard to actually do the basics now, and it's extraordinarily expensive compared to what we've complained about in other countries being socialized medicine. So what-

Neil Howe:

But a lot of this-

Tom Wheelwright:

… what's going on there,

Neil Howe:

… but a lot of this is just capture, you got these enormous hospitals, say you got all these doctors but we're the only country in the world that leaves all of the standards of care in the perfections themselves. I mean, if you're back surgery, you get to say what constitutes a viable health improvement. No one else goes to look at it. You just get this desire, and again, you're going to decide with a patient, with someone else's money to spend $150,000 going in and doing whatever they do. This is crazy. How did we get here and why is it that we don't do it the right way?

It's interesting. Mancur Olson did a book called The Rise and Fall of Nations, and he wrote this back in the '80s. He asked the question, “Why was it that Germany and Japan after the war leapfrogged ahead of so many of the democracies that won in terms of productivity?” And he's pointing to exactly what I'm talking about now. Their crises completely wiped out everything that was there before so they could construct a new system, a fresh system which allowed everyone to compete and actually pursue efficiencies. You see what I mean? They started fresh. And I will say this about the fourth turning.

You look at nature, you need forests, need wildfires occasionally, right? Rivers need floods. We need these catastrophic events occasionally for nature to work properly. Society is the same way, and I'm just observing this. I'm not saying it's good or bad. We constantly talk about is this good or bad or is this moral anymore? I'm just saying this is what's required. That's all I'm saying. I'm saying I observe this. I'm an historian. I take a very analytical point of view. I'm not really into being a champion of the blue zone or the red zone. That's just not what my writing is about.

What I'm doing is trying to give a very objective description of how society works. This does seem to be how society works and what you do is you're able to then clear out what doesn't work and suddenly now create an opportunity to create new institutions to really invest in the future and actually tilt back the playing field toward the young. And I think that's what our world really needs. I see all around America today, our budget is completely crowded out as by senior entitlements. I mean, we have all these budget deals and so on that are dealing with the 15% of the federal budget, which isn't already grabbed by payments to creditors or payments by entitled recipients. We have this tiny little share left that goes to national parks and oceanographic institute and everything, and we keep clamping down on that because we can't bring ourselves to touch the rest.

The fourth turning will be the reason why we touch the rest, because we need it to survive as a country. If you see where I'm going with this, Tom, you need something that really grabs the public's attention and this is what does it. And we saw that in the Great Depression, which actually I would argue was really a great prequel for what the nation had to go through to get to actually tool up for World War II. It was actually almost great that we had the Great Depression before World War II because suddenly we got very good at having a single national authority start organizing the country into producing a lot quickly from the top down. And anyone familiar with our record production of capital ships and [inaudible 00:36:03]-

Tom Wheelwright:

Right. Unbelievable.

Neil Howe:

It was incredible. We outproduced by several times all of the access powers combined. No one thought that was possible, but we did it because someone cleared away the playing field and we're able to move ahead.

Tom Wheelwright:

Got it. Got it.

Neil Howe:

It's just-

Tom Wheelwright:

So-

Neil Howe:

Yeah, go ahead.

Tom Wheelwright:

… so my question is, so we've been talking about a lot of macro, which is really kind of the focus, but from a micro standpoint then if you look at, okay, so what do I do? So how do we cope individually? How do you cope as a business? How do you cope as an investor over the next 10 years of crisis?

Neil Howe:

The obvious, diversification, looking less toward things that have worked in the past, which is high beta momentum and high volatility stuff and stuff that has no relationship to the community, the public sector that only exists in an environment in which the community is ineffective. A great example of all those things would be crypto, which is one of the reasons why crypto I think is crashing because in this environment for just the reasons I specified, it makes no sense. Look instead for things that the country will need longer term, and obviously I'm looking toward longer what we today [inaudible 00:37:30] investment world, longer term strategies, two sectors which have recently been shunned. I would say manufacturing and materials look really good to me, right? Manufacturing among the other things because the entire world is now rearming, and I'm just not talking about the United States, I'm talking about the entire… Look at Japan is going up to 2% of GDP.

Poland is going up to 4%. The entire world is rearming. You look at China, you look at everybody. So this is the exact opposite from the '90s when the world was de-arming or disarming after the fall of Soviet Union. I think energy is going to be another great bet because we've sort of disarmed ourselves on the energy front and now we're going to have to retool ourselves. I mean, energy is the great multiplier of human mechanical power for so much of the world. Energy is not mainly a story of the United States and Europe. It's a story of the rest of the world and we all know what they're going to want. I think the things to avoid are nominally denominated assets. I'm talking about treasury bonds and bonds in general, things that are denominated as a percent of a nominal coupon that you get because we are headed for a period of higher inflation overall.

I think Jerome Powell is very serious about getting inflation under control, but once it then speed up, that's going to supersede what he wants. And I do think that inflation is a longer term bet is one way that we can get out from under, it's one way we've pursued very often in the past to get out from under a crushing level of government indebtedness in the United States [inaudible 00:39:17]. From the beginning of the GFC to today, we have amassed more debt as a share of public policy than we did during World War II. And it's amazing. We're back up at the same level, just a little bit over a hundred percent of GDP. And we didn't fight a war, right? But here we are. And the question is, is you look ahead, it's even going to get worse because of all the claims that we have.

We have an aging society. Fewer children are coming along and you have this enormous bow wave of boomers that retiring, they're going to get older. They require enormous amounts of healthcare. And then you just tie that into the dysfunction we already see in our healthcare system. So if you look at projections, and I do this every year for my clients. I walk people through the CBO 30-year projection and they're completely out of alignment, Tom, I mean, there's no way we can get this back together again, particularly if interest rates start going up around the world, inflation is one way to ease the burden. I think it's also require cutting back, obviously, it's going to require less spending, more revenue, all of that.

By the way, during the time of crisis, all that happens, we spend less on ourselves and we start confiscating revenue. And that's something for upper end people to think about. I mean, I hate to say it, but every crisis that happens, we find ways of financial repression. You're locked into certain assets you wish you could get out of, but you can't. And you find taxes are suddenly springing up. So this is something, if you're thinking about a fourth turning scenario, that's definitely something you have to think about.

I would say one last thing is that people often ask me about advice, financial advice, and people are thinking ahead, and particularly for younger people, people in their 30s and 40s, “What should I invest in? How should I look at my future?” I would say one thing to think about very hard is two things. One is what I do [inaudible 00:41:24] in a world of much more parts of money is public benefits? I mean, if that were cut off, how would I do? But the other is this, people as they get older, one thing they need more than anything else is care, right? We talk a lot about long-term care insurance. There's never going to be a good market for a long-term care insurance. I mean, I don't care. I followed this debate for a long time. There's too much moral hazard. You know what I mean?

And there's too much negotiating asymmetry between the purchaser and the seller. There's never going to be a good market for long-term care insurance. And I come back to this, the only good long-term care insurance out there is really close relationships with your family. And I often tell people, if you really want to think about your future, think about your relationships with your family. That's ultimately going to mean a lot more than God knows how much wealth you can accumulate. And I mean that in a variety of ways. Partly, I mean it just purely in a material sense, who is going to take care of you?

Tom Wheelwright:

I love it. I love it. This has been fantastic. Thank you so much, Neil. Any final words for our listeners and our viewers? Any tidbits of advice or thoughts?

Neil Howe:

I would just say again, my last word would simply be this. When people think about the idea of a fourth turning, as being a stressful time, a dangerous time, a perilous time, we live in a nuclear armed bureau after all, I think, what are we, nine nuclear armed powers, probably when Iran goes, that'll be 10. It's a very dangerous world and it's a very dangerous time and it will be stressful and it will be something that will mobilize us as a nation. But I will say on the other hand, it is a vast opportunity. It's an opportunity for America to remake itself as a community, be reborn as a people. And most of all, it gives young people a chance to rebuild the world again. And when I talk to young people, that would be just an enormous difference in their lives, something that challenged them.

I think they need the challenge. And I think the challenge of creating a new sense of community in American community that works, actually works is would be good for them and good for the country. Every one of the great, when you think about the golden ages in American history, they all always follow crisis. So if you're looking forward to a golden age, America looking through a great gate of history to a golden age, well, the crisis is a toll you pay. But on the other side could be a period that we could all take a great sense of accomplishment.

Tom Wheelwright:

I love it. So again, the book is The Fourth Turning is here, out in July. Our guest has been Neil Howe, the author, and so appreciate it, Neil. And just remember that we looked at a big macro view today, but that macro is important to understand what we do from a micro level. And when we get this broader view of things, then we always end up with way more money and way less tax and a lot less stress. I'll add that too. So thanks a lot, Neil, and thanks everyone. We'll see you next time.

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