Managing America -Charting Upwave Economic Trends

In London during the 70’s-80’s, Robert Beckman was a radio financial pundit, who regularly shared his views on the outlook for the stock market and British economy -don't remember any of his advice, but he was a topic at several dinners at Sir Anthony’s home.

Fast forward forty years and the number of financial pundits and prognosticators on the US TV have mushroomed.

But has the quality of forecasting improved in the meantime?

Hardly.

In fact, today’s economic disasters suggests that business decision makers might be better off asking undergraduates or the man on the street for their views on the likely outcome of  business trends.

All the recent uncertainty over stock markets, the sub-prime market, credit card debt, the dollar, oil and commodity price spikes has unleashed a flurry of forecasts and projections based on ignorance. I suggest they should have read the book “The Downwave-Surviving the Second Great Depression” by Robert Beckman. 

They could have used the “Big Picture” information on how to manage their business and economic trend cycles, thus heeded the warning not use debt paper to create wealth or business growth and need the federal government (I should say American people) to bail them out rather than producing products consumers want or capital markets who invest in good business practices such as return in investment.

Mr. Beckman, what’s wrong with the current economic ideas today?

Robert Beckman: “Modern economic theorists revel in the trivia of contemporary history. They treat any economic event before World War II as if it was prehistoric, thus “To understand and use the patterns in the long wave, you do not need an IBM 1264 with 2,000 megabytes and a daisy-wheel printer, or to understand alphas, betas, sigmas and differential calculus.”

“The principle is simple enough.”

“It is based on the idea that there is a strong interaction between political and social developments, wars and the long term price cycle, all of which come to a peak at 50-60 year intervals. The complete economic sequence involves four basic components: first an upwave, then a recession. Then there is secondary prosperity, and finally, secondary depression. The cycle then starts all over again.” 

Mr. Beckman, What’s your upwave economic ideas today?

Robert Beckman: “The historic 'star' of the upwave is inflation, but several other characters play extremely important supporting roles. Inflation is certainly not confined to raw material, wholesale and retail prices. It includes interest rates, wages, foreign trade, music, fashion, and the production of industrial bell-weather resources like coal, pig iron, steel and lead. All of these appear related to, or dominated by, overriding natural economic forces within the long waves of economic and social life in industrialized societies.”

Political Trends during the Upwave

Beckman writes; “There is a distinct interaction between political trends and the long wave pattern of economic behavior. At the beginning of the upwave there is usually a shift from right wing to left wing politics. At the end of the upwave, there is a shift back to the right, before a period of political disarray and uncertainty. This has led to the demolition of the democratic processes in some societies during the downwave.”

“During the upwave, the correlations between political preferences and prices appear unreliable. During the latter stages of the upwave, there is a distinct tendency toward left wing politics. At the end of the upwave, the left is ousted and a right wing government usually takes over. The first major socio-political shock during the early stages of the upwave is the outbreak of war. There is a rapid pick-up in economic activity and employment as the economy moves into wartime production. Expectations begin to rise as the economy becomes more prosperous, and then even more prosperous when there is a conversion to peacetime economic activity.”

Mr. Beckman, what about government’s role with the current economic ideas and the effect on people?

Robert Beckman: “The government we get is the government we deserve, because it is the government we ask for. That has become a hackneyed cliche. Nevertheless there is a distinct relationship between the change in personal values and our choice of leaders during the sequences of economic life in industrialized societies.”

“Economic hardship will produce an emotive response. When people experience pain or hardship they often become subdued, retrench, and seek some type of solace to avoid further discomfort. When people see their friends and relatives suffer a depression, and see the world as a risky place to live, they feel helpless. Individuals lose faith in their own powers. Most people believe they are in complete control of their own destinies, but during periods of severe economic dislocation, this belief is openly challenged.”

“People become cautious, introspective, and unwilling to accept risk. They attempt to shelter themselves from uncertainty wherever possible. Their feelings run counter to the principles of individualistic capitalism where the risk-taker reaps the greatest rewards.”

Mr. Beckman: What about historic social and cultural upwave trends and the effect on people?

Robert Beckman: “The central cultural characteristic of the final stages of the upwave is the consumer mentality. During the upwaves of the eighteenth and nineteenth centuries, the West rejected two kinds of authority: the authority of the king to tell us what to do, and the authority of the church to tell us how to think. Freedom came to be understood as the absence of external constraint. In the 1920s, the Freudian gospel appeared, interpreted to mean that repression was harmful to the individual. Not only external constraints, but also internal constraints with their inherent moral codes, were seen as illicit restrictions upon personal freedom.”

“The latter stages of the upwave, society becomes so preoccupied with consumption that even religion becomes a commodity to be ruled by the whims of shoppers in a religious marketplace. Alternative religions spring up like weeds, since the repressive status of the traditional religions, which can cope with the social mores of the early stages of the upwave, are incompatible with the freedoms required during the later stages of the upwave.”

“Fashion, music, literature, theatre and dance all fall under the influence of the upwave. The years of rising excitement can be heard clearly in the increasing excitability of the music. The 1950s and 1960s gave birth to rock music. “

“It grew, slowly at first, but ultimately captured the entire 'pop' idiom. Rock became progressively more frenetic, reaching the epitome of musical discord with 'punk rock' in the late 1970s. Rock symbolized the mood of the final stages of the upwave in the 1970s, just as jazz symbolized the period of increasing affluence prior to World War I, and continued into the 'secondary prosperity' of the 1920s. The pre-World War I jazz, and the 1950s rock were joyful, a unique release from the traditions of the early stages of the upwave. But they were totally inappropriate for the heightened excitability later in the upwave. Action music is a product of the final stages of prosperity, relieving the tensions generated at a time of mass excitability in many areas.” 

Mr. Beckman: What is your opinion of business and government in regards to current economic or non-economic ideas?

Robert Beckman: ‘In the beginning God made morons. He did that for practice. Then He got down to the serious task of making total imbeciles. And on the dawn of creation, He placed a group of people upon this planet who shared the profound belief that wealth could be created in a vacuum, and who went forth among the populace, entrusted with the task of such wealth creation.’

Peter Drucker believed that the trend in today’s society is suffering what he called "the sickness of government." Drucker made ostensibly non-ideological claims that government is unable or unwilling to provide new services that people need or want - though he seemed to believe that this condition is not inherent to democracy.  This trend has continued the past seventy years and unlike business, government has not addressed the issues of the growth in entitlements or cut government spending based on future demands or need of individuals.

In short, has business and government state, local, and federal adjusted to the changes or trends in serving the needs of all the people?

Mr. Martin Chekel, a noted international businessman and author of the thought provoking “Managing America” six book series and the retrospective eight book series “The Diary of American Foreign Policy 1938 – 1945” that laid the foundation for US foreign policy the past seventy-four years.