15 April 2009

Can Obama suceed? It's a question of generational dynamics in a waiting world

Our own Awakening (about 1965-84) was very liberal socially, but politically it marked the shift from the Democratic majority created by FDR to the new Republican one created by Nixon and solidified by Reagan. There has been no serious effort to reform the economy on behalf of the less well off since the 1960s in the United States. And as a result, President Obama, whose instincts seem to be very good, is relying upon an economic team led by Tim Geithner and Larry Summers, each of whom is deeply implicated in the economic changes of the last fifteen years or so, and neither of whom has shown much interest in fundamental reform. I am deeply troubled that the maverick economists that have kept older traditions alive--the Paul Krugmans, Joseph Stiglitzes, and James K. Galbraiths--unanimously feel that the Administration's rescue plans have not found the right path.

No President can move faster than history is ready for, and it may be, sadly, that further disasters will be necessary to discredit what has become the conventional wisdom. Both FDR and Lincoln frequently disappointed their more radical supporters in their first years in office. But sadly, the diseases of the last thity years have infected nearly our entire leadership class. The public is ready for a new one. The problem is to provide it.

History unfolding

"I think that this is a truly fascinating aspect of the world's geopolitical situation, but I disagree with Kissinger that this is the first time in history that it's happened. As I described last year in "The gathering storm in the Caucasus," it's precisely what happened in the leadup to World War I. During "La Belle Époque," the period before 1914, the world was at peace, international trade was at a peak, and life was great - at least for the élite.

It was a time in history where "every major power had simultaneously an interest in maintaining more or less the status quo," to use Henry Kissinger's words.

There were two major factors destroying the status quo:

The "interest in maintaining the status quo" may have been held by the leaders of every major power, but it was not the desire of the younger generations in these countries. World War I was triggered by a Serb high school student who, along with his friends, decided to assassinate Austrian Archduke Franz Ferdinand.

The war might have remained restricted to Eastern Europe, but it spread to other countries because of a mass of interlocking treaties that forced one country after another into the war, including Germany's invasion of France.

Both of these factors prevail today. Young, disaffected Islamist terrorists flew a plane into the World Trade Center, blew up London's subways, and are responsible for suicide bombings in countries around the world. Kids in Mexican drug cartels are killing and kidnapping thousands of people with reckless abandon. Young people in Taiwan increasingly want independence from China, but are held back by the threat of war from Beijing. Young Palestinians are ready to heed Iran's leadership to push Israel into the sea.

Today there are huge numbers of interlocking treaties. America alone has signed a large number of mutual defense treaties with other countries. These include agreements with Japan, South Korea, Israel, Taiwan, the ANZUS agreement with Australia and New Zealand, and the NATO agreement with all of Europe.

The worldwide fear of disturbing the status quo essentially means that nothing can get done, because anything non-trivial might disturb the status quo and trigger a war.

A waiting world

That's why this is a world waiting for something to happen. People anxiously grasp onto any straw of hope, wanting things to return to the Unraveling era of the 1990s, but not daring to disturb the equilibrium anywhere.

If Henry Kissinger understood generational theory, he would know that the current status quo cannot be maintained, and that sooner or later some crisis will irretrievably end the status quo.

That almost happened several times in the last year, with crises at Bear Stearns, Royal Bank of Scotland, Lehman Brothers, AIG, and others. In each case, officials rushed to restore the status quo. But the crises have been getting worse, and one of these times a crisis will be too large to patch up."


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