Negative population growth, coupled with rising populism and deglobalisation, clouds the horizon for long-term investments. How those clouds may part is the subject of intense scholarly debate. Author and demographer Neil Howe sees the world entering a fourth turning, the fourth and final phase of recurring 80-to-100-year historical cycles. This period is characterised by crisis, an unravelling of institutions, a rise in youth activism and ultimately a reset, with the emergence of a new social order and the restoration of market-friendly stability.

Howe, who is managing director of demography at Hedgeye Risk Management, LLC and senior advisor to both the Center for Strategic and International Studies and the Global Aging Institute, recently joined Double Take to discuss what a fourth turning could mean for assets and balance sheets. Co-author of the seminal 1997 book ‘The Fourth Turning’, Howe believes that the global financial crisis (GFC) of 2008 set in motion a turning of economic and demographic tides that put us in the current moment.

We saw that many trends started shifting direction after the GFC. One was a loss of performance and functionality of our economy to lift all boats. And I think the problem of inequality and the erosion in the middle class became a huge issue really starting with 2008. We saw the shift from globalisation to deglobalisation really occurred right around then – 2008, 2007. Really it was the peak of global trading goods and services relative to global product. That’s been a declining trend ever since. We’ve seen the breakup of the world more recently into regional autocracy, and that’s going to have certain impacts for commodities. That’s something we saw in the 1930s. That’s something we’ve seen in earlier fourth turnings.

Neil Howe, managing director of demography at Hedgeye Risk Management, LLC

Since the GFC, Howe said, the world has become increasingly less democratic and less liberal, with a new kind of authoritarian populism rising across North America, Latin America, Southern Europe, South Asia and East Asia. It smacks of the 1930s, he said, during which faith in democracy worldwide had deteriorated.

According to Howe, during fourth turnings a disillusionment sets in among young people over the ability of democratic institutions to foster necessary change. Howe explains that this tends to result in the creative destruction of public institutions, which tips the playing field away from the old and the privileged, toward the young and the unprivileged.

This, coupled with the aging of the population – median population ages are at all-time highs across the globe, has burdened social welfare systems, to the extent that they may need to be recalibrated to incentivise young people to raise families, Howe said.

In many of the community-oriented sectors of our economy, we are experiencing negative productivity growth…I’m talking about health care, education, K-12 plus college, construction, neighbourhood and urban development, social welfare and probably financial institutions. And with that, I’m probably up to about 50% of GDP. So, we’re faced with Baumol’s cost paradox, which is that those unproductive parts of our economy gradually comprise a greater and greater share of GDP. So, it doesn’t matter how productive we are in tech, no one really cares about that. You can paper your walls with flat-screen TVs, but you’re still going to feel like you’re losing ground, because what can you afford? You ask most American households, ‘what can’t they afford?’. They can’t afford to educate their kids; they can’t afford where they live and they can’t afford health care.

Neil Howe

Howe added that governments in fourth turnings tend to use inflation to extricate themselves from public liabilities, and that infrastructure spending and commodity scarcity tend to rise.  

To hear more from Howe, subscribe to ‘Double Take’ on your podcast app of choice or view the Demography in the fourth turning episode page to listen in your browser.


Jack Encarnacao

Jack Encarnacao

Research analyst, investigative, Specialist Research team

Raphael J. Lewis

Raphael J. Lewis

Head of specialist research

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