BOOMER DESTINY: LEADING THE U.S. THROUGH THE WORST CRISIS SINCE THE GREAT DEPRESSION Tom Osenton
BOOMER DESTINY: LEADING THE U.S. THROUGH THE WORST CRISIS SINCE THE GREAT DEPRESSION Tom Osenton
Library of Congress Cataloging-in-Publication Data Osenton, Tom. Boomer destiny : leading the U.S. through the worst crisis since the Great Depression / Tom Osenton. p. cm. Includes bibliographical references and index. ISBN 978-0-313-35604-9 (alk. paper) 1. Financial crises—United States. 2. United States—Economic conditions—21st century. 3. Baby boom generation—United States—Economic conditions. I. Title. HB3722.O84 2009 330.973’092—dc22 2008045516 British Library Cataloguing in Publication Data is available. Copyright © 2009 by Tom Osenton All rights reserved. No portion of this book may be reproduced, by any process or technique, without the express written consent of the publisher. Library of Congress Catalog Card Number: ISBN: 978–0–313–35604–9 ISSN: 2008045516 First published in 2009 Praeger Publishers, 88 Post Road West, Westport, CT 06881 An imprint of Greenwood Publishing Group, Inc. www.praeger.com Printed in the United States of America
The paper used in this book complies with the Permanent Paper Standard issued by the National Information Standards Organization (Z39.48–1984). 10 9 8 7 6 5 4 3 2 1
To Curran and Matt—my own Gen Xer and Millennial—who inspire me to want to make a difference every day.
Contents Introduction 1. A Legacy Not Yet Written
vii 1
2. Repeating Cycles in American History
21
3. The Gathering Storm
37
4. Boomer Spring: 1946 to 1964
57
5. Boomer Summer: 1965 to 1984
71
6. Boomer Autumn: 1985 to 2004
87
7. Boomer Winter: The Next American Crisis—2005 to 2024
107
8. The New New Deal
123
9. Rising to the Occasion
141
10. The Boomer Grid
161
11. Boomers’ Will
177
12. Boomer Legacy
189
Notes
193
Index
203
Introduction Life grants nothing to us mortals without hard work. —Horace
As I was finishing this book during the summer of 2008, I honestly felt as though I was drafting an early-warning about a looming secular crisis somewhere out there on a three to six year timeline. Virtually all of the social and economic components that I researched—the sub-prime mortgage crisis, the oil shocks of 2005 and beyond, the Dow’s unsustainable ride to 14000, the further maturation of an already mature U.S. economy—suggested that the underlying fundamentals of the patient’s health were indeed NOT strong. Like a comprehensive history and physical performed by the good folks at the Mayo Clinic or Massachusetts General or Johns Hopkins, all the symptoms were there foretelling a difficult stretch ahead. What surprised and unnerved me most was the speed at which conditions metastasized. Suddenly, instead of writing about a future crisis, I was writing about a here-and-now crisis. That’s the bad news. The good news—if there is any—may very well lay in the fact that if the crisis arrived faster, we may pass through it faster. Like the cold and dark days of winter, the faster we get through them, the faster we get on to the hopeful spring thaw. Over the course of about a year while writing this book, I experienced at least four power outages due to a variety of natural and unnatural reasons that simply stopped me dead in my tracks. One particular severe thunderstorm knocked out electrical power for two days in the neighborhood. Although that might not sound like much of a hardship, the experience reminded me just how dependent we are on electricity as a resource central to our lives. After just four hours without power, I was essentially transported
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back to 1860, lacking all of the modern conveniences that we take for granted today. As dusk approached and my batteries ran out, I was unable to use my laptop, my cell phone, my Kindle, or my iPod. I was unable to call anyone, email anyone, text anyone, or use instant messaging (IM) to contact anyone. As the sun went down, I lit candles and realized that I couldn’t cook dinner with my electric stove or microwave, and besides, almost everything in the refrigerator was already ruined. No television, no movies, no music—just candle light, books, pen and paper. All that was missing was the log cabin. By Day 2, I started to realize just how much we rely on electricity, how much we take it for granted, how angry we get when it goes out, and how angry we get when we call the power company demanding to know exactly when power will be restored. In my house, I couldn’t even make that call because the telephone runs on electricity. And now I was beginning to smell, because I couldn’t take a shower: the hot water heater ran on—yes— electricity. Even driving downtown to get coffee and a bagel was not an option because the stores didn’t have power either. Life as I knew it had stopped—just as in the sci-fi cult classic The Day the Earth Stood Still when a flying saucer lands in Washington, D.C., and neutralizes all electricity. That scared me as a 10-year old, but it scares me even more now. When the electricity finally came back on after more than 48 hours, the first thing I did was take a shower. Then I cleaned out the refrigerator before getting back to work on the computer, something that many of us rely on every day for work and play. What became clear to me during those 48 hours was that we live each day incredibly close to the edge of a world that is very different from the one in which we grew up. This is a world of shortages, not excesses; a world of limited choices, not unlimited choices. A world of less, not more. In the words of cartoonist Walt Kelly’s comic strip character Pogo: “We have seen the enemy and he is us.” That comic strip ran almost 40 years ago and it’s still true today. Now it is up to us to change that to help save the American Dream—not for us, but for our children and grandchildren.
Why I Wrote This Book My last book, The Death of Demand, explored the growth of the American corporation over the second half of the twentieth century. Although some looked at it as a doomsday book, others saw it for what it was—an aca-
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ix
demic study of growth rates and the impact on a corporation’s initiatives when growth rates begin to slow, as they have for all corporations that were around just after WWII. It was a study of the advent of reengineering or cost-cutting—activities that didn’t even exist in the 1950s, 1960s, and 1970s during which time America’s corporate infrastructure was built up in large part because of the arrival of 76 million baby boomers. It was a study of the deconstruction of the infrastructure of America’s blue chip and blue hair corporations. After reading William Strauss and Neil Howe’s groundbreaking work Generations: The History of America’s Future, I realized that the economic downturn for companies such as General Motors has not only been coming for a long time, but is part of a repeating cycle of American history that goes back to the very beginning. Suddenly, my last book made much more sense. History tell us that America experiences a major crisis every 80 years, and with a mature economy that is made up of mature sectors, mature industries, and mature corporations, it is rapidly approaching the eightieth anniversary of the day that marked the beginning if the last American crisis—Black Tuesday, October 29, 1929. The Revolutionary War was followed 80 years later by the Civil War, itself followed 80 years later by the Great Depression and World War II. Now as we approach 80 years since Black Tuesday and face an array of challenges never before matched in American history, it becomes our responsibility to prepare for the coming crisis of the new millennium. So the sociologically bent Boomer Destiny was born as a natural extension to the economically bent The Death of Demand. The Baby Boom generation has yet to distinguish itself as more than just the self-centered, materialistic consumers that they have come to be perceived as. Yet like FDR’s Missionary Generation—the senior leaders of the last American crisis—Boomers, led by Boomer President Obama, have a chance to write an entirely new ending to the legacy they will leave over the next 10 to 15 years as the senior leaders of the coming American crisis. One last reason that I wrote this book - I care deeply about the world we will be leaving to our children and grandchildren. It doesn’t look anything like the world we entered, and the prospect of being the first generation in American history to leave the country in worse shape than we found it should frankly shame all of us into action. We have been called as a generation to save the American Dream—not for us but for our kids; and there is no greater gift that we can possibly give them.
x
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A Few Words to Historians and Sociologists I must express my sincere appreciation to the gurus of generations—the late William Strauss and the very generous Neil Howe. It was upon their theses that this book was built, and without them, this book never could have been written. Second, there are different schools of thought on the precise definition of generations—many of which were coined by Strauss and Howe—and the time span that identify each. Sociologists and historians, for example, might define the Boomers as those born between 1943 and 1960, although pop culture says the Boomers were born from 1946 to 1964. Because the essence of this book does not turn on a generation’s precise date of birth, I have taken the liberty to standardize the time-definition of generations into neat 20-year spans. These 20-year spans also roughly coincide with the duration of each of Straus and Howe’s social turnings. For example, FDR’s Missionary Generation was born from 1865 to 1884 which coincides with the 20-year First Turning high of the Great Power Cycle. Dwight Eisenhower’s Lost Generation was born roughly from 1885 to 1904 which coincides with the Second Turning awakening of the Great Power Cycle. JFK’s GI Generation was born roughly from 1905 to 1924 which coincides with the Third Turning unraveling of the Great Power cycle. And John McCain’s Silent Generation was born roughly from 1925 to 1944, which coincides with the Fourth Turning crisis of the Great Power cycle. Those were the four generations born during the Great Power cycle. Boomer Barack Obama, on the other hand, was part of a generation that was born at the beginning of a new cycle—during the First Turning high of the Millennial cycle. The following are the nine American generations that are widely discussed in this book, along with their date of birth and the specific turning during which those births occurred: • • • • • • • • •
Missionary Generation—born 1865 to 1884—High Lost Generation—born 1885 to 1904—Awakening GI Generation—born 1905 to 1924—Unraveling Silent Generation—born 1925 to 1945—Crisis Boomer Generation—born 1946 to 1964—High Gen X Generation—born 1965 to 1984—Awakening Millennial Generation—born 1985 to 2004—Unraveling New Silent Generation—born 2005 to 2024—Crisis New Boomer Generation—born 2025 to 2044—High
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xi
Please understand that I mean no disrespect of the nuances of the study of sociology or history or of generations. But this standardization seemed like the best method for me to tell my story. One of the difficulties in writing a book about the U.S. government is that you need to be equipped with a calculator that adds, subtracts, multiplies, and divides in at least the tens of trillions. That’s 13 zeroes. A trillion looks like this: $1,000,000,000,000. And after writing this book, I wondered if you become desensitized to large numbers if you work for the U.S. government, because now when I look at $1,000,000,000—one billion dollars—it doesn’t look that huge anymore. Lastly, I have offered up some suggestions in the latter part of the book not as definitive solutions but more as thought starters for all Americans to ponder as we seek to fix the great country that we all love. My objective is to encourage us to look at old problems in new ways—for example, the suggestion for a Boomer Resource Grid that I detail in Chapter 10. This is simply an idea designed to demonstrate the potential power of a generation and how—with a little organization and creativity—the Boomer generation can make a huge impact on the world it leaves behind. Boomer Destiny was written as an appeal—a manifesto—for the generations now alive in America. I hope you enjoy the book, and I would welcome any questions or ideas that you might want to share. Just send me an email at
[email protected] and I’ll gladly reply.
Acknowledgments I first want to thank the amazing Miss Em. It would be impossible for me to thank you enough, Emilie, for all you’ve done to make my life better. Thank you also from the bottom of my heart for helping me think through and shape the book that I wanted to write. Without your help, it never would have gotten done. Thank you so much, Em, for all that you do. My sincere thanks to John McCabe for his time and keen eye and writing expertise at each step in the process. Thank you so much, John. Enormous thanks to my editor Jeff Olson who has an incredible eye and a great sense of the world in which we live. Jeff, thank you for helping me to make this book better in every way. Thank you to all my Millennial students who taught me much over the last three years. Finally, to the late Don Murray, who helped me so much in the early stages of thinking through this book: nulla dies sine linea.
Chapter 1
A Legacy Not Yet Written Life is a series of collisions with the future; it is not the sum of what we have been, but what we yearn to be. —Jose Ortega y Gasset
Winning the election was not nearly as difficult as the task that lay ahead for the newly elected president of the United States. The laundry list of challenges was daunting, exacerbated by the prior administration’s lack of urgency and action. A flagging economy, unemployment, an uneven distribution of wealth, the threat of bombings on Wall Street, immigration concerns, millions living beyond their means, a crumbling infrastructure, natural disasters, and weakening aggregate demand—all of it happening on the heels of a decade of prosperity. Although this may sound like the agenda for a newly elected Barack Obama in 2009, these were the challenges of the day for a newly elected Franklin Delano Roosevelt (FDR), as he stood on the steps of the U.S. Capitol and was sworn in as the 36th president on March 4, 1933. He had just turned 51 years old, and he already knew what he was getting himself into. After all, he had been governor of the state of New York when the stock market crashed in 1929; when the Depression picked up speed, his state was particularly hard hit. The new chief executive was no stranger to tough times; taking over the reigns from Herbert Hoover in mid-Depression was no big deal for the optimistic FDR. But sometimes it takes a little more than just a “rah-rah” attitude and a little elbow grease to turn a nation around. Make no mistake about it—FDR’s “can-do” attitude helped serve as the glue to rally a nation. But it also took a great deal of time, patience, resources, hard work, and luck, as well as the willingness of multiple generations of Americans to adjust their expectations and attitudes and to sacrifice selflessly by working together for the common good.
2
Boomer Destiny
Standing there on that cold and overcast Saturday morning in 1933, did FDR fully comprehend the enormity of the challenge that lay ahead? More than 13 million Americans were out of work. Many of the nation’s banks were closed. More than three years after the crash of 1929, the Dow Jones Industrial Average was still down more than 80 percent from pre-crash levels. A deepening depression would drag on through his first two terms. As chief executive, he would live through Pearl Harbor, D-Day, and the Battle of the Bulge yet would never personally experience U.S. victories on V-E or V-J Day. How could he have known, while listening to Hail to the Chief for the very first time as president, that, in just a little more than a decade, he would have conquered the vast majority of the challenges that were before him only to die at the age of 63? This is FDR’s legacy as well as that of his peers of the Missionary Generation—mostly born in the years immediately following the Civil War. It was the destiny of the Missionary Generation to serve as the wise senior advisors to the mid-lifers of General Eisenhower’s Lost Generation, who, in turn, served as the managers of the young adults of Lieutenant Kennedy’s GI Generation. These three generations of Americans worked together to overcome the last prolonged crisis in American history. For 16 long years, through a deep depression and a world war, Americans pulled together to overcome long odds and unimaginable suffering. It was Albert Schweitzer who said, “One truth stands firm. All that happens in world history rests on something spiritual. If the spiritual is strong, it creates world history. If it is weak, it suffers world history.” Something quite spiritual happened in the years following Black Tuesday and the Wall Street Crash of 1929. Three different generations of Americans teamed up to muscle through the most challenging times since the Civil War. It was a bitter and painful time for America, but the country prevailed. “If we had no winter, the spring would not be so pleasant,” wrote seventeenth-century American poet Anne Bradstreet. “If we did not sometimes taste of adversity, prosperity would not be so welcome.” Just about 80 years ago, America was served up a heaping helping of adversity: a Wall Street crash that triggered the Depression, a 1937 recession that slowed the recovery, and then a four-year World War. Yet even with 16 years of uncertainty and self-sacrifice, the United States eventually made its way through a very long, very cold winter and onto a new and prosperous spring of hope. And, when it did, it welcomed the arrival of an entirely new generation of Americans. Baby boomers, or Boomers—the largest generation in American history—ushered in a new seasonal cycle,
A Legacy Not Yet Written
3
and life in America was good. But, as with all seasonal cycles, spring doesn’t last forever. And neither does summer or autumn.
Déjà Vu All Over Again As the first decade of the twenty-first century draws to a close, the United States finds itself in uncertain times once again, facing many of the same challenges that FDR faced in the 1930s and 1940s. The economy is weakening, with record budget deficits and skyrocketing national debt. The working class is underpaid, underinsured (healthcare), underfunded (retirement), and overextended (credit). Services such as public schools, hospitals, and police and fire departments are all overstressed by budget cuts and the legal and illegal inflow of immigrants. Add to the equation the threat of domestic and international terrorism, as well as the ever-present possibility of a natural disaster, and America today is arguably facing a challenge that is at least equal to if not greater than the threat that existed in the years leading up to the Great Depression (see Table 1.1). Certainly the United States has always had its share of challenges, regardless of the era. But the current alignment of significant socioeconomic challenges has never been greater or capable of adversely affecting so many. These challenges may not result in a Depression, but the problems that they create certainly will require the cooperation of several generations of Americans and more than just a few years to fix. During the 1930s and 1940s, America slogged its way through a doublebarreled crisis that included financial disaster and a world war. Once again, America finds itself in the same precarious position it experiences every 80 years or so—on the brink of crisis. Increasing unemployment, a pull-back in consumer spending, a costly war, a mature economy, weakening demand, and the slowest GDP growth since the 1930s all add up to an inevitable period of pain and adjustment. During the 1930s and 1940s, there was high awareness of and sensitivity to the overconsumption of natural resources. Because most Americans did not yet own an automobile, demand and consumption of gasoline were not major issues. But by 2000, unbridled postwar commercial success brought the United States to the edge of saturation. When there are 40 million more registered vehicles than licensed drivers in the United States, it is difficult to sell cars—even with employee discounts. When the percentage of U.S. homeowners is relatively flat for decades because of responsible lending standards, it takes irresponsible lending standards to increase the universe of homeowners. After pushing the edge of the envelope for more and more growth, the United
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Boomer Destiny
TABLE 1.1. Constellation of Contraction What was will be again. The times may change but the issues remain the same Issue
1930s and 1940s
1990s and 2000s
The Economy
Depression
The Environment
Over-Consumption of Natural Resources World War II (3 Years 8 Months) Protectionism/ Collapse of Intl. Trade Stagnant
Slowest GDP Growth Since Depression Global Warming
War Trade Working Class Wages Federal Budget National Debt Healthcare Housing Security Immigration Wildcards
Deficits from 1931–1946 Increased 15-Fold from 1929 to 1945 National Health Insurance Defeated Lack of Affordable Housing Anarchists Bomb Wall Street National Origins Quota Dust Bowl, Drought, Great Okeechobee Hurricane
Iraq War (5 Years and Counting) Trade Deficit Stagnant Record Deficits from 2003–2009 Tripled from 1990 to 2007 47 Million Without Healthcare Coverage Sub-Prime Mortgage Bubble Terrorists Attacks of 9/11 20 Million Undocumented Workers Hurricane Katrina, Fires, Floods
States arrived at a very dangerous destination—one that negatively impacted the economy as much as it did the environment. During the 1930s and 1940s, immigration was a significant issue in the United States. National origins quotas greatly restricted immigrants from entering the United States and, in some cases, banned entire nationalities, such as the Chinese, from entering at all. Legislation from the late 1920s effectively ended the mass migration that had been common in the nineteenth century. In the 1990s and 2000s, immigration is once again a central issue, but this time the focus is on the growing number of immigrants living in the United States illegally—either by overstaying their original legal entry or by crossing the border illegally. The alignment of a host of once-a-century social and economic challenges has been quietly forming over the last quarter century. And, even though
A Legacy Not Yet Written
5
there has always been an ambitious agenda of issues facing the United States at almost any point in its nearly 235-year history, there have certainly been those rare moments when a unique convergence of challenges is so concurrently significant that it simply causes the dam to burst. The last American crisis was filled with dramatic events, such as the rare attack of the U.S. mainland, a Wall Street crash, and a long and painful war that ended with the use of nuclear weapons. Now America again faces a daunting list of challenges that are fundamentally not that much different than those of 80 years ago. America prevailed in 1945 and lived to see another spring—one of the greatest in U.S. history—and it will prevail again. But now, as then, the United States must endure a winter season that will challenge multiple generations and beg for truly inspirational new leadership with the guts to make difficult decisions at the risk of popularity. Gone however, are FDR’s Missionary Generation, Ike’s Lost Generation, and most of JFK’s GI Generation—the triumvirate that helped the United States through the last American crisis. Instead, a new line-up of generations has formed—one that has the aging Silent Generation (born 1925–1944) moving out of the role as senior leaders and into its senior years. Moving into the role as senior leaders of American society over the next 20 years will be the largest, most written-about, most marketed-to generation of all time: the baby boomers. The timing is such that Barack Obama’s Boomers are becoming senior leaders of American society at the beginning of an American crisis—just as Benjamin Franklin did as a member of the Awakening Generation through the crisis of the American Revolution, as Abraham Lincoln did as a member of the Transcendental Generation through the crisis of the Civil War,1 and as FDR did as a member of the Missionary Generation through the last American crisis—the Great Depression and World War II. Those are big shoes to fill and big issues to conquer. Besides being the largest and most conspicuously consuming generation of all time, who are the Boomers? Are they up to the task of leading the country through the next American crisis?
Boomer Bio We have heard the basic statistics a thousand times: 76 million Boomers were born during an 18-year period from 1946 to 1964—the largest generation in American history (although the Millennial generation, born from 1985 to 2004, came quite close in size). But no generation comes close to the prolific output of American women on an annual basis: in 1957—the
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Boomer Destiny
peak birthing year for Boomers—4.3 million Boomers were born during a time when the U.S. population was only 150 million. Now, more than 50 years later, it is still the case that U.S. women have never birthed 4.3 million babies in one year—even with a total population at more than 300 million, more than twice that of the late 1950s.2 Boomers were the first generation in history to gain notoriety as children because of the sheer size of the generation. Historically, it has taken time and experience for a generation to make its mark. The GI Generation—the generation that Tom Brokaw calls the Greatest Generation—made its mark as the rising adults who fought and died during World War II. This was the generation of young people who, returned to the United States after so much time and suffering, and started to turn out “victory babies” in record numbers. In the 18 years prior to 1946, the number of live births in the United States averaged 2,687,000 per year. In the 18 years following World War II, that average jumped to 4,215,000 births per year, or an additional 1,500,000 babies per year until 1964. That amounts to an incremental 27 million Americans added to the U.S. population from 1946 to 1964,3 or nearly one-half the size of all of Generation X, born from 1965 to 1984. So the Boomer Generation was first known for its size. Second, it was known for the economic opportunity that its size created. And, later in life, when Boomers joined the labor force, no other generation could spend like the Boomers—quite possibly as a means of self-remuneration as the selfcentered, narcissistic generation that happily traded quality of life hours for standard of living hours—in building what they deemed a “better” life.
Constellation of Expansion In the years immediately following World War II, a unique alignment of conditions and events provided a recipe for dynamic economic growth in the United States. First, three generations of Americans who had sacrificed so much for so long—through a depression and a world war—could finally get on with their lives. At last, FDR’s generation had done its part in managing Eisenhower’s generation, which, in turn, pulled the strings of the obedient grunts from JFK’s generation. These generational cohorts were spent, and, when their pent-up demand was finally unleashed after the war, it didn’t take much to spark a new wave of expansion in the United States—the first since the Roaring Twenties.
A Legacy Not Yet Written
7
Second, the birth of more than 76 million Boomer babies created new demands for basic food, clothing, and shelter. Birthed alongside the Boomers was the American Dream—with the help of the GI Bill, which provided lowinterest loans to cover college tuition, new homes, and new cars. Third, with the war effort behind them, Americans turned their innovative juices to the development of dozens of new household goods and appliances—all designed to make life a little easier for the postwar American family. The arrival of Boomers created the single largest demographic segment in history—a real boon for marketers such as David Ogilvy (Ogilvy & Mather) and Bill Bernbach (Doyle Dane & Bernbach), who opened their ad shops in 1948 and 1949, respectively, and made Boomers the most marketed-to generation in history. And that pursuit of trillions in discretionary dollars from this massive balloon of consumers continues today, as the Boomers march through time toward retirement. From manufacturers of medications for erectile dysfunction and osteoporosis to retirement community developers and cruise line operators, Boomers still represent an enormous opportunity for marketers. As soon as GIs returned stateside in late 1945, maternity wards across the United States started to swell. The country was euphoric. A photo of an unidentified sailor kissing an unidentified girl in the middle of Times Square captured the spirit of the times on the cover of LIFE Magazine. Even pregnant moms got into the act by painting the message “Kilroy was here” on their bursting bellies as they were wheeled into the delivery room. The boys were home—and with them came a recipe for explosive growth that had been bottled up in Europe or the South Pacific for nearly a generation. The 1950s and 1960s ushered in more new consumer product categories than any other time in U.S. history. The parade of images and pitches were all designed to take advantage of the sudden upsurge in demand. For whiter teeth, there was Pepsodent toothpaste (“You’ll wonder where the yellow went”). For a cleaner feeling, there was Dial soap (“People who like people like Dial”). You could fill up your new Chevy at your local Texaco station (“You can trust your car to the man who wears the star”). Those pesky insects spoiling your weekend get Raid insecticide (“Kills bugs dead”). If you had a hankering for green beans, there was Green Giant vegetables (“In the valley of the Jolly Ho Ho Ho Green Giant”). When you had too much of those green beans, well, then there’s Alka-Seltzer antacid (“Plop plop, fizz fizz, oh what a relief it is”). When you’ve failed at scrubbing out stains in your shirts, it’s time for Wisk detergent (“Ring around the collar”).
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Boomer Destiny
FIGURE 1.1. Constellation of Expansion Conditions for growth were ideal from 1946–1964. Pentup demand 4 Million GIs return home — unleashes years of pent-up demand
New products
New demand
+
76 Million baby-boomers create immediate new demand
+
Dozens of new products/new product categories
Network television
+
Most powerful mass-marketing tool in history
=
Greatest period of GDP growth in U.S. history
Literally hundreds of new products and new product categories that never existed before were introduced during the Boomer birth years. And, if spreading the word about a new product was a problem, it wasn’t a problem for long in postwar America. The arrival of network television in 1949 provided the final piece of the puzzle that helped create a remarkable growth anomaly over the second half of the twentieth century. The greatest mass marketing tool of all time provided marketers with instantaneous access to millions of hungry Americans with a powerful appetite for consumption. For the first time ever, local television stations across the country aligned with one of the three New York-based television networks in order to transmit a common signal to millions of households across the nation. This unique combination of events and conditions helped hundreds of companies—such as Procter & Gamble, General Foods, and Kellogg— successfully pitch their products to millions of American families, right in the comfort of their own living rooms. As a result, an American economy that had been idling for more than 20 years finally gained momentum, thanks in large part to the arrival of the Boomers (see Fig. 1.1). “The times, they were a changin’” and the U.S. economy was just one measure of that change. Real Gross Domestic Product (GDP) grew by more than two-and-a-half times over the course of the 20 years immediately following World War II (1946–1966): from $1.5 trillion in 1946 to close to $3.9 trillion in 1966.4 The postwar expansion was on, and for growth the sky was the limit.
Raised by Mom . . . and Dr. Spock Boomers largely grew up in one-income households—with mom at home and dad at work—characterized by American author Philip Wylie as The
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9
Sons and Daughters of Mom in his 1971 book of the same title. Predominantly engaged in the full-time career of raising children and making a home, many Boomer moms were guided by the philosophies of pediatrician Benjamin Spock. Dr. Spock’s 1946 book The Common Sense Book of Baby and Child Care was timed perfectly with the very beginning of the baby boom and was an attempt to counterbalance many of the rigid traditions of conventional pediatrics of years gone by. Dr. Spock’s essential appeal to new mothers— and there were record numbers of them—was more like advice from an old friend rather than a definitive rulebook on appropriate child-rearing. “Trust yourself,” said Spock, whose book was second only to the Bible in sales. “You know more than you think you do.”5 The controversial Spock was viewed by many GI dads as too liberal. But GI moms had a different take on the theories of the good doctor. GI dads looked at Spock as soft on discipline, which helped create a “good cop, bad cop” scenario in many Boomer households. When mom was forced to, however, she could use the threat of dad to keep Boomers in line until dinner time: “Just wait until your father comes home” was a common refrain in the 1950s, 1960s, and 1970s. It was this dynamic that helped shape an entire generation of independent thinkers who often questioned authority—seeing in their fathers, as well as their mothers, what they didn’t want to become when they grew up. Spock’s philosophy emphasized the individual and the need for flexibility in raising children. This liberal and tolerant focus on self-actualization encouraged mothers not to worry too much about spoiling the child. Labeled by many of his critics as “the father of permissiveness,” Spock later reflected that his original intent was to emphasize mutual respect between mother and child, not just one-way respect from mother to child. In the 1998 edition of Baby Care, Spock addressed the issue, saying that the parents may have misinterpreted the original intent of his message: “Parents began to be afraid to impose upon the child in any way,” explained Spock.6 By 1998, the youngest Boomers were already approaching the age of 35, so, if mom had misinterpreted Spock’s intent, it was way too late to do anything about it. The die had been cast on the most indulged generation in American history. The extent of Benjamin Spock’s role in that indulgence will forever be debated—but what can’t be debated is this: in the span of just one generation, parenting habits and behaviors radically changed and resulted in the hardwiring of a new generation of American children who would behave like no other in history.
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Wanting for Nothing If there ever was a period in recent American history when mothers had the time and the luxury of practicing a more patient and liberal means of child-rearing, it was during the 20 years following World War II. Those born during an economic expansion were simply parented differently than those born when times were tough. Parents of children born during good times rarely worried about basic needs; instead, they were more focused on ensuring that their children received a great education, as well as helping them adapt socially. But children born during an economic contraction often had to fend for themselves for very basic needs. During the Great Depression, thousands of young people wrote directly to the First Lady—Eleanor Roosevelt—telling their personal stories of desperation and asking for money, clothing, and even bicycles so that they could more easily get back and forth to work. A 16-year-old Massachusetts girl sent an appeal for some money to help make payments on the family’s refrigerator: Nov. 30, 1937 Springfield, Mass Dear Mrs. Roosevelt, I am a girl sixteen years old. Last May I beg [sic] my father to buy an electric refrigerator for mother on Mother’s day. We had talked about buying one with her. She thought it was not a very wise thing to do, because we could not afford to pay cash. I wanted it so very bad [sic] that my father bought it. He agreed to pay monthly payments of seven dollars and twenty two cents. What mother had said proved to be right. For two weeks after we bought the refrigerator I took sick with a serious kidney ailment which confined me to my bed from May twenty until Nov. twenty-second. I am just recovering from a delicate operation. I came home from the hospital Nov. eighth and my father was layed [sic] off after working for the railroad fifteen years. Many a girl of my age is hoping that on Christmas morn they will find a wrist watch, a handbag, or even a fur coat. But my one and only wish is to have father and mother spend a happy Christmas. Mrs. Roosevelt I am asking of you a favor which can make this wish come true. I am asking you to keep up our payments until my father gets back to work as a Christmas gift to me. Though father worked part time for quite a while we never lost anything for the lack of payments. If the refrigerator was taken away from us father and mother would think it a disgrace.
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I close hoping with all my heart that my letter will be considered. Mrs. Roosevelt you may rest assure [sic] that I have learnt [sic] my lesson. I am respectfully yours J.B. Springfield, Mass7
The childhood of most Boomers bore little resemblance to J.B.’s. Boomers may have been the first generation of Americans who did not wake up each morning painfully aware of how little they actually had. Boomers grew up in a fully equipped house, with all of the now-standard appliances—washers, dryers, telephones, televisions, toasters, record players, and a car in the garage. They were the first generation in American history to wake up early every Saturday morning to watch cartoons, while eating sugary cereals in a safe and secure environment of plenty. For Boomers, Leave It to Beaver was more than a popular television show—it was truly art imitating life. On the other hand, many of the parents of Boomers—and certainly the grandparents of Boomers—grew up at a time and in conditions that required great sacrifice. The most basic needs, such as food, clothing, shelter, and safety, were, in many cases, completely lacking. Other human needs, such as love, a sense of belonging, the building of selfesteem, and the desire to lead a fulfilling life, were mostly left unaddressed for families such as those that lived in makeshift tents in New York’s Central Park around 1930—the most southern area of the park that became known as Hooverville in mock homage to the incumbent president at the time. Boomers grew up in an environment bursting with opportunities that their parents never had, which helped them gain confidence early on about their feelings and choices. And, as Boomer children grew into the young adults on college campuses across the country, they were not shy about making their voices heard.
Anti-Establishment Boom Boomers were the rising adults of a society in turmoil during the 1960s and the 1970s, and their self-confidence pushed back against the many injustices of the times. Boomers were quick to rally behind the disenfranchised—most notably African Americans during the 1960s in the American South where civil rights were egregiously violated. Boomers also took up the fight against
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Boomer Destiny
the war in Vietnam, although it’s possible that not all of their motivations were purely altruistic. Boomers certainly did not like to be told what to do, and, when the military draft lottery was reinstituted in 1969, it provided an added incentive for healthy American males aged 18 and over to want to see an end to the war in Vietnam. It was the first time that the lottery had been used since early in World War II; consequently, the first draft included all American males born between 1944 and 1951. Normally, the oldest draftees were sent into battle first, but, under the lottery system, draftees would be taken based on the order in which birth dates were selected randomly, like a lottery. At its headquarters in Washington, D.C., the Selective Service System set up a huge drum with little capsules inside, each corresponding to the 365 (or 366 in a leap year) birth dates. Typically, a member of Congress was asked to select a capsule and read off the birth date contained therein. In the case of the December 1969 draft, Representative Alexander Pirnie (R-NY) pulled September 14 out of the drum as the first birth date. This meant that U.S. males born on September 14 in the years 1944 through 1951 would be the first to be called up for active duty—a certain ticket to the jungles of South East Asia. As it turned out, there were only three drafts during the Vietnam War, and they involved only Boomers born in 1953 or before. With the advent of an all-volunteer military, starting in 1973, the dynamic changed for the Gen X and Millennial generations, which may in part help explain why the Iraq war was not nearly as actively protested on college campuses. Boomers protested the Vietnam War in a big way and in prime time on college campuses across the United States, desperately trying to find ways to end the pointless conflict and killing in Southeast Asia. Vocal and oftentimes violent protests in the late 1960s created an “us versus them” tension between Boomers and the predominantly GI generation establishment. The establishment for Boomers was essentially their parents, school administrators, bosses, the government, and pretty much anyone else who was over 30 years old. As the 1970s dawned, most of America had become tired of fighting a war that had taken more than 58,000 American lives8—many of them Boomers—for reasons that were not entirely clear. The draft ended in 1972, and, by the spring of 1975, the United States was completely out of Vietnam and Nixon was out of the White House—signaling that change was in the wind for Boomers. The Boomers were beginning to enter the workforce, most of them with a college degree that many of their parents
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never received. Boomers now owned a shirt and tie and, in record numbers, poured into the civilian workforce for the balance of the 1970s and into the 1980s. The 1970s had it all—a war, an oil crisis, a deep recession, the resignation of a president, Republicans and Democrats in the White House, a hostage crisis, and the 200th birthday of the country. Change was certainly in the air as the country struggled to find a rhythm. As the 1980s dawned, the focus of the United States was off Southeast Asia and on the Middle East—a focus that would stay with the country well into the new century. Presidents from the GI generation dominated the White House for all of the 1960s, 1970s, and 1980s—seven straight presidents, including the 40th president of the United States, Ronald Reagan.
Deficits and DINKs “It is morning again in America.” The line was from one of President Reagan’s re-election television commercials in 1984. The rare 60-second commercial spoke about record employment levels and low interest and inflation rates. What it didn’t talk about was dramatically escalating budget deficits and the national debt. “Why would we want to return to where we were less than four short years ago?” asked the commercial. Maybe because budget deficits caused the national debt to nearly triple in eight short years?9 It’s easy to create the illusion of good times when the bill for those good times is passed from generation to generation. Like his great skill as an actor, Reagan’s good times of the 1980s were more fantasy than reality. A videotaped interview with editorial staffers of the Reno (Nevada) Gazette-Journal in January 2008 created a bit of a firestorm for late-wave Boomer and democratic presidential candidate Barack Obama when he identified with President Ronald Reagan—an odd comparison, especially for an African American candidate for the U.S. presidency. “Ronald Reagan changed the trajectory of America in a way that Richard Nixon did not, and a way that Bill Clinton did not,” Obama was quoted as saying, attempting to compliment Reagan for his “sense of clarity, optimism, dynamism, and entrepreneurship.”10 What critics heard was that Obama was crediting a Republican president whose record on civil rights and the working class was less than stellar. Reagan did change the trajectory of America—particularly in the areas of fiscal and monetary policy. Only months after Reagan took office, the
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Boomer Destiny
economy slumped into a serious recession, with unemployment topping 10 percent. Reagan turned to supply-side economics—the “build it and they will come” strategy for economic expansion—as a strategy to turn the economy around. The ushering in of supply-side economics brought with it the return of significant deficit spending—effectively borrowing from the future—the Keynesian theory that worked 40 years before but had outlived its effectiveness, because it assumes that future growth will pay for today’s programs. In the process, during Reagan’s tenure, the United States went from the world’s leading creditor nation to the world’s leading debtor nation. The president also cut the top income tax rate from 70 percent in 1980 to 28 percent by the end of his second term, thus solidifying his reputation as a friend of the wealthy and the privileged.11 By 1982, the generation of people who had gained a reputation as indulged, narcissistic brats were now all adult brats. With the oldest in their mid-thirties and the youngest just 18 years old, Boomers began to get serious about the future. Many of them turned in their tie-dyed T-shirts for Brooks Brothers’ suits and a chance to join the top 1 percent of wage earners. Whereas the parents and grandparents of Boomers had just looked for jobs, Boomers expected to build careers. They also expected to do better materially than their parents. For the most part, they did and they may very well be the last generation for some time to do so. But they did it at a cost—a cost that required most of them to trade quality of life for an increased standard of living. The American home didn’t quite resemble the Cleaver’s or the Nelson’s anymore. It was around this time that the term “Yuppie” appeared in pop culture and on Madison Avenue, describing young, upwardly mobile professionals. Yuppies were Boomers with plenty of discretionary income, and it was their coronation as Yuppies that forever solidified this generation as conspicuous consumers—especially the segment of the population known as DINKs—dual income, no kids. Strong Boomer women emerged better educated than their mothers and grandmothers, in touch with their own self-worth and desiring to seek their own career paths. Add to the equation the fact that the United States experienced the most significant period of real estate appreciation in history from 1950 to 1980, and suddenly the American Dream got a whole lot more expensive. Even though Boomers have certainly done better than their parents materially, they have not accomplished it without tradeoffs. There can be a
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downside to a relentless focus on improving one’s standard of living. In many cases, Boomer-led households required two incomes just to be able to afford the bigger house and the second or third car. And the generation that was raised by mom had children later in life, children who, most likely, were raised by someone else’s mom. This greatly changed the dynamic in the home—how the children were nurtured and by whom. Whether in a single-parent or a two-parent household, Boomers blazed the trail in establishing a new norm—most parents worked full-time in order to afford a “better” life. The two-income household became requisite to fund a lifestyle that was otherwise unattainable with one income. In many cases, Boomers created a much higher standard of living than that of their parents or grandparents, but it was often at the expense of major aspects of the quality of their lives—those measures that defined the lives of their parents. Gone were the days when dad—and now oftentimes mom—were home every night for dinner. Instead, the lion’s share of the 168-hour week was gobbled up by sleep, work at work, work while commuting, work at home, and then a weekend consumed with unfinished errands and travel to multiple soccer games before everything started all over again on Monday morning. Many Boomers found themselves running in an all-out sprint of no defined distance with no defined finish line. But on they ran, through good times and bad, in no particular direction with no particular destination in mind, applying the Olympic motto— Swifter, Higher, Stronger—to their need to achieve and accumulate.
Boomer Bust Beginning in the mid-1980s, many of America’s blue chip corporations started to show signs of maturing, with a slowdown in revenue growth despite aggressive new product development and both domestic and global expansion. As the top line continued to slow, it became clear that, if corporations were to deliver on Wall Street’s expectations, cost reductions would have to play a much more important role as a driver of earnings. This was when American business was first introduced to the concepts of re-engineering: cost-cutting, downsizing, rightsizing, gains in productivity. By any name, the infrastructure that American business had aggressively built up to handle the postwar expansion—largely caused by the arrival of the Boomers—needed to get smaller.
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Re-engineering became a buzzword of corporate culture in the late 1980s and into the 1990s. What was first viewed as a one-time, cost-efficient cleansing soon became a permanent corporate initiative. After a few years of squeezing out the obvious inefficiencies, two things became quite clear: (1) re-engineering was here to stay and (2) future efficiencies would more than likely be paid for with human capital. And a good portion of that human capital came in the form of Boomer jobs. By 1985, Boomers ranged in age from 21 to 39 and made up close to one-half of the U.S. labor force at the time. According to New York Times economic reporter Louis Uchitelle, more than 30 million Boomers lost their jobs12 as part of aggressive reengineering efforts by maturing U.S. corporations—especially public corporations. Boomers were the first generation in history to enter a labor force that was actively downsizing the infrastructure that it had been building up since the end of World War II. And no one perfected the skill better than General Electric’s (GE) own “Neutron Jack” Welch—quite possibly the single individual responsible for more Boomer job loss than any other chief executive in history because of his penchant for buying companies with large numbers of employees and consolidating a smaller number of them into the GE culture. General Electric’s strategy paid off handsomely for its shareholders, and Welch became a Wall Street darling. The real irony was that GE’s earnings bonanza during the 1990s was paid for—at least in part—by the livelihoods of many Boomers. Welch’s acquisition strategy could be likened to performance-enhancing steroid use by professional athletes in the mid to late 1990s. Corporate “juicing” certainly worked for Jack, but not so much for the company he left behind. Ever since a 3-to-1 stock split on May 8, 2000, GE’s stock has languished, losing more than 50 percent of its value—even when accounting for dividends—during the roughest decade for the industrial giant since the 1980s. Certainly not all Boomers were victims of the epidemic of downsizing during the 1990s. Many Boomers flourished during the “go-go” days that saw the introduction of the World Wide Web and, along with it, an Internet Bubble that went as fast as it came. It was also a time of rarified air for the Dow Jones Industrial Average (DJIA), which more than quadrupled during the decade—from 2810.15 on January 2, 1990 to 11,497.12 on December 31, 1999. Just to put that in perspective, in order for the Dow to make a similar move during the first decade of the 2000s, it would have to close at more than 47,000.00 on December 31, 2009—highly unlikely since
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the Dow retreated by more than 25 percent over the first nine years of the decade (2000–2008).13 As the new millennium dawned, the oldest Boomers were approaching 60 years old, and marketers shifted their focus from “What can we sell Boomers in mid-life?” to “What can we sell Boomers in old age?” The generation of people who grew up as the rising adults with a reputation of trusting no one over 30 was now turning twice that age, with conventional retirement age within striking distance. But would a generation that was wired like no other before it view retirement in the same way as their parents did?
Boomer Life Cycle In 100 years, the entry of the Boomer into American society will doubtless be viewed as quite the anomaly: more than 76 million babies, born in just 18 years, with a population half the size of the United States today—that phenomenon is very unlikely ever to occur again. Boomers follow the same life cycle as any other creature of nature. They are born, they grow, they mature, they decline, and they die (see Fig. 1.2). More than 76 million were originally born in the United States and, over the course of seven decades, not only has that number failed to decrease, it has actually increased because of legal immigration. There are now more than 78 million Boomers in the United States (probably well in excess of 85 million, counting undocumented workers), which only adds to the complexity of developing solutions in a world with dwindling resources. As infants, the Boomers arrived in record numbers during the postwar expansion. As rising adults, they learned how to shop, and they became an economic tour de force, the most sought-after demographic segment in history. In mid-life, they were productivity machines, thinking nothing of spending 60 hours in the office and working another 20 hours at home and on weekends. As seniors, they will continue to play an important role in society. However, their consumption levels will contract and, with attrition, slowly lose their impact on an economy that is already on the wane. Ultimately, by 2050, most Boomers will be gone—a distant memory of yesteryear—when Wally and the Beaver came home from school with Eddie Haskell and Larry Mondello for some cookies and milk. But it may be a little early to write the obituary on this generation.
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FIGURE 1.2. Boomer Life Cycle Boomers helped build the economy in more ways than one since 1950. They will be hard to replace.
Mid life
Young adulthood Childhood
Senior Leadership Senior years
The Boomer drive to get ahead helped create enormous productivity through the 1980s, 1990s, and into the 2000s. Now, as more and more Boomers turn 60, they begin to plan a life beyond their conventional careers. Some will certainly retire and stop working altogether. But it’s far more likely that we haven’t heard the last from this generation. Boomers are very unlikely to go quietly—and that might be a good thing. Replacing Boomers in the labor force will largely be members of the Gen X and Millennial generations—people who learned that they don’t want to be married to their work the way that their parents were. Instead, younger generations more often view work as a means to an end—not the end itself—and, consequently, they will likely forge very unconventional career paths that may involve a number of companies and perhaps even a variety of industries. The result in the economy may be a drop in productivity— as the driven Boomers are replaced by generations more focused on building a more balanced quality of life centering on family, home, and community, rather than on work as their parents did.
Boomer Seniors A 2005 study by the Met Life Mature Market Institute14 found that about one-third of all Boomers were “planning a second career during their Golden Years.” The members of a generation that defines itself as having a “feeling of youthfulness and optimism” expect to work longer than their parents did,
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with many creating second or third careers around their passions and special interests. Most do not view retirement as a time to withdraw abruptly from working life as their parents did. Instead, an entire cottage industry has emerged just to help the aging Boomer transition from a conventional career before retirement to another career after retirement. Boomers are now rapidly moving toward elderhood and toward the last phase of life—a phase that will in no way resemble the phenomenal period of growth in their first phase of life. By 2006, a majority of Boomers were already 50 or older and eligible for membership in the American Association of Retired Persons (AARP). Today, more than 10,000 Boomers per day are turning 60. Boomers will live longer than their parents, and those who make it to 65 can expect to live at least to the age of 83, according to the U.S. Bureau of the Census. So, for the generation as a whole, there is plenty of life left. The question is this: what will they do with the life that is left? The decision to continue to work beyond the age of 65 will be a matter of choice for some Boomers. For others, it will be a matter of necessity— especially if they intend to maintain the standard of living to which they have grown accustomed. But one selfish motivator that Boomers collectively share may play an increasing important role in driving them to make a much larger contribution to the future of America than they ever could with the purchase of Viagra, an oceanfront condo in Boca, or a platinum membership in the Hair Club for Men. Boomers are beginning to think seriously about the world that they are leaving to their children and grandchildren. It certainly bears little resemblance to the world into which they entered. And it may very well be these concerns that finally motivate Boomers to take action based on someone else’s needs. And, in the process, Boomers may get a chance to write a final chapter of their storied existence that no one expected.
Boomers’ Rendezvous with Destiny As the first decade of the new century draws to a close, what many call the most selfish generation of all time is staring its own mortality square in the face. The largest generation—even with a continuous inflow of Boomer immigrants—will also start to shrink in number over the years ahead, and one can only wonder how the epitaph will read on this generation’s headstone once this generation is gone. When FDR took office in 1933, little did he know that in 12 short years he would successfully lead the United States through the worst American
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crisis since the Civil War. Little did he know that he and his generational cohorts would write an enduring legacy in a little over a decade’s time that would change the course of American history. After FDR’s first term in office, unemployment was still at 18 percent and the country was still in the depths of the Great Depression. In his acceptance speech at the 1936 Democratic National Convention in Philadelphia, Roosevelt brilliantly captured the essence of his time in American history with a call to action for a generation: “There is a mysterious cycle to human events. To some generations much is given. Of other generations much is expected. This generation has a rendezvous with destiny.” The president, of course, was easily reelected for a second term in 1936— despite a persisting Depression—and used this proclamation as a rally cry for the difficult nine years ahead. In many ways, FDR’s call to arms serves as a timeless reminder to those who find themselves leading a country in crisis—as Abraham Lincoln did and Benjamin Franklin did before him. Now, it serves as a reminder to a generation that grew up trusting no one over 30. Like it or not, the generation that invented the phrase “shop ’til you drop” is now facing a new reality for the limited number of years that they have left on this Earth. Unfamiliar with a world that puts civic duty ahead of self, the Boomer generation—with its new Boomer president—now stands precisely where FDR stood almost 80 years ago—in front of an American people who are on the verge of a crisis, desperately hungry for leadership, and with their final legacy yet to be written. How will that legacy read when the crisis is over? Who will be its primary author? America is about to find out.
Chapter 2
Repeating Cycles in American History Excess generally causes reaction, and produces a change in the opposite direction, whether it be in the seasons, or in individuals, or in governments. —Plato
A pine cone falls to the ground and sheds its seeds. The seeds germinate and grow into seedlings, then into saplings, and eventually into mature adult trees, which bear fruit in the form of seed-filled pine cones, which, in turn, fall to the ground and start the life cycle of the pine tree all over again. Birth, growth, maturity, death—it is a common life cycle that is all around us. We see it in our families—children take cues from their older brothers and sisters, who, in turn, are guided by their parents, who, in turn, care for their aging parents. We also see it in our economy—a continuously rolling cycle from expansion to peak to contraction and trough, and expansion again. We see it in the products that we consume—from their celebrated introduction to robust growth to frustrating maturity to inevitable decline. We see it in the seasons—spring bursts forth with new life, signaling the beginning of a new cycle of life. A maple tree produces chlorophyll to help new leaves grow. The leaves reach maturity under the summer sun, until autumn’s cool temperatures slow the production of chlorophyll and the leaves turn orange and yellow and fall to the ground. In winter, the maple sleeps a temporary sleep until warmer weather awakens it from slumber in spring. Besides the sequential and progressive nature of each cycle, another similarity is the subtlety with which each phase evolves and blends into the next. Like the frog in the pot of water whose temperature slowly rises one
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TABLE 2.1. Cycles Cycle
First
Second
Third
Fourth
Seasonal Cycle Economic Cycle Business Cycle Human Life Cycle Societal Cycle
Spring Expansion Introduction Child High
Summer Peak Growth Young Adult Awakening
Autumn Contraction Maturity Mid-Lifer Unraveling
Winter Trough Decline Senior Crisis
degree at a time until the frog boils to death, so, too, do we experience the transition from one phase of a cycle to another. Many cycle shifts are so subtle that they often go unnoticed until well after the fact. It’s like celebrating your birthday—even though the calendar says you’re a year older, you feel no different than you did yesterday. The Earth is constantly in motion, but it is so large that we can’t feel its movement. Similarly, measuring the morphing of other entities, such as economies or the seasons, can be extremely difficult. It’s no different with the changes that occur in society over a number of years. Everyone knows what we mean when we say “back in the sixties.” That phrase represents a unique era in U.S. history. Almost like a photograph, “the sixties” conjures images of beads and peace symbols, helicopters and napalm, and Jimi Hendrix, wearing a headband and playing “All Along the Watchtower”: “There must be some way out of here . . .” The change from one season to the next is usually not a dramatic one. Over time, spring morphs gradually into summer, and, even though the calendar might say that it’s spring, the temperature might suggest otherwise on a blustery day in April. Similarly, a growing business morphs into maturity over the years, or a child moves through adolescence and grows into a young adult, and we barely notice until an event—a graduation, a wedding, a funeral—shakes us from the hypnotic state of our daily lives. It can often take months—sometimes years—for the economy to move from an expansion into a contraction, and, more often than not, the change can only be accurately identified well after the event. Let’s look at the last complete economic cycle in the United States that included a recession. Beginning in the first quarter of 2000, real GDP grew at 2.6 percent and reached a peak in the second quarter of 2000 at 4.8 percent growth.1 It wasn’t until after the results of the third quarter of 2000 that economists realized that the economy was cooling and had probably peaked during the second quarter of 2000.
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With first-quarter 2001 GDP growth posted at –0.6 percent, it was not only clear that the peak had been reached, but that the economy was now in contraction. But, because results had been negative for only one quarter, it was not yet clear whether or not the economy was officially in recession. Then second-quarter 2001 results confirmed that the economy was indeed in recession: GDP growth was announced at –1.6 percent for the quarter. Although it was clear that the economy was in recession in the second quarter of 2001 (well before 9/11, by the way), what was not clear was whether or not the recession had bottomed out. One quarter later, with GDP results still negative and the country still in recession, the economy showed signs of expansion by moving out of the trough and back toward positive growth and a brand new economic cycle. In this scenario, confirmation of the precise status of the economy was delayed at each 90-day gateway. The first question is this: was the economy continuing to expand? That question was not answered until 3 months after the fact. The second question is this: was the economy in recession? This question wasn’t answered until at least 6 months after the economy appeared to be contracting. The gradual transition between one phase of an economic cycle and the next is no different than the behavioral shifts that occur in our society. We were unable to see the 1960s coming, and only in retrospect did we recognize the decade’s unique turbulence. But on closer study, maybe the social upheaval of the 1960s was not so unique after all—and neither are devastating wars or economic expansions. Just like the seasons, there appears to be a rhythmic and sequential progression from one societal era to another. From a time of expansion, to a time of upheaval, to a time of decline, and, ultimately, to a time of crisis—a syncopated pattern in American history can be traced back to the very beginning of the Republic. Not only does it help us better understand the past, but it also helps us predict the future of life in America.
Societal Cycles The concept of the societal cycle was introduced by historians William Strauss and Neil Howe in their best-selling book Generations: The History of America’s Future, a book that Newsweek called “a provocative, erudite and engaging analysis of the rhythms of American life.”2 In Generations, the authors present an exhaustive and compelling case, viewed by sociologists and historians alike as the seminal work on the
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topic of groups of people of common age, common experiences, and common attitudes. This societal cycle parallels that of the seasonal, economic, business, and human life cycles, beginning with a period of expansion (spring), followed by a period of awareness and growth (summer), then a period of maturity (autumn), and finally a period of decline, or even death (winter), before spring returns (see Table 2.1 on page 26). Strauss and Howe (S and H) call each of these phases in the cycle turnings—and each turning lasts about 20 years or so before morphing into the next turning. And, like so many other cycles in nature, turnings occur in four phases: the First Turning represents a period of expansion or a High; the Second Turning, a period of Awakening; the Third Turning, a period of Unraveling; and the Fourth Turning, a period of Crisis. Together, all four turnings complete a full cycle, which usually lasts between 80 and 100 years, although there is some evidence to suggest that the cycle is becoming compressed mainly due to technological advances in transportation and communications.
Generations and Life Stages Just as there are four phases to a full societal cycle, there are four generations—each in a different phase of life—that make up the active core of society during that cycle. Each life phase is represented by one generation for the length of the turning—roughly 20 years—after which time a new generation begins to arrive, replacing the last generation of children. Similarly, the last generation of children begins to move up to replace the last generation of young adults, which in turn replaces the mid-lifers which replace the senior leaders of society. Concurrently, the senior leaders of society move out of an active work role and into either conventional retirement or oftentimes into a voluntary support role. At any given time, these four different generations occupy one of each of those four life stages: • Childhood: Children are the dependent offspring of those in young adulthood or mid-life. In 2010, the generation occupying this life stage in the generational constellation will be the New Silent Generation—those born from around 2005 to 2024. • Young adulthood: Young adults play the role of the rank and file—the workforce. In 2010, the generation occupying this life stage in the generational constellation will be the Millennial generation—those born from around 1985 to 2004.
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• Mid-life: Mid-lifers play the role of managers of the young adults in society. In 2010, the generation occupying this life stage in the generational constellation will be Generation X—those born from around 1965 to 1984. • Senior Leaders: Senior leaders play the role of the wise and seasoned mentors of society, providing wisdom and guidance. In 2010, the generation occupying this life stage in the generational constellation will be the Boomers—those born from around 1946 to 1964.
Marketers and researchers have long used labels to describe the habits and behaviors of the demographics of prospective customer segments. Terms such as the Pepsi Generation, the Me Generation, and even the labels Gen X and Gen Y are inventions of pop culture and are intended to make it easier to identify and sell to the “consumer du jour.” Each generation is far more than a collection of people bound by common birth dates. Every 20-year turning in American history can be characterized by a distinct and identifiable mood—a predominant parenting style, and a prevalent set of attitudes and behaviors, according to S and H. In any given cycle, there are four unique birthing locations that coincide with each of the turnings, and, because the mood of the country and the events of the day are so significantly different from one turning to the next, each generation is nurtured differently than the last. The nurturing styles of parents through the turnings effectively train each generation differently—to expect a lot, to expect little, to ask questions, not to speak until spoken to.
Age Location Strauss and Howe were the first historians to introduce the theory that age location—the era during which a generation is born—greatly shapes a generation’s personality, based on two critical behavioral components: 1. How they are nurtured by their parents during childhood; and 2. When they experience their first major “social shock”—either during an Awakening or during a Crisis.
These markedly different experiences have an enormous influence in shaping the generation’s early behaviors and attitudes. Table 2.2 identifies the timing of the arrival of each of the last five American generations by turning; from left to right, FDR and the Missionary Generation cohorts were born from around 1865 to 1884 during the expansion High just after
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Boomer Destiny
TABLE 2.2. Age Location: Obama Born during a High, McCain Born During a Crisis Born during First Turning: High (Spring)
Born during Second Turning: Awakening (Summer)
Born during Third Turning: Unraveling (Autumn)
Born during Fourth Turning: Crisis (Winter)
Born during First Turning: High (Spring)
FDR The Missionary Generation
Eisenhower The Lost Generation
JFK The GI Generation
McCain The Silent Generation
Obama The Boomer Generation
the Civil War. Dwight D. Eisenhower and the Lost Generation cohorts were born during an Awakening. Then JFK and the GI Generation cohorts were born during an Unraveling. John McCain and the Silent Generation cohorts were born during a Crisis. And, finally, Barack Obama and the Boomer Generation cohorts were born during a High, which started the cycle all over again. Age location also determines when a generation experiences the two major societal shocks that will occur during the cycle. These alternating major social shocks coincide with the Second Turning (Awakening) and the Fourth Turning (Crisis). The last such social moment in America was the Awakening of the 1960s and 1970s, when young adult Boomers and civil rights activists of all ages vocalized their discontent with the establishment on the campus of Kent State and in the streets of Chicago and Birmingham. The other type of social moment is a Fourth Turning—a Crisis—during which selfishness grows in importance and institutions begin to break down. The American people thirst for real change. The last American instance of a Crisis was the devastating 16-year-period that coupled the Great Depression with World War II. Every generation experiences an Awakening and a Crisis at some point during its own life. However, not all generations experience the same social moments during the same life phase. And, more important, not all generations experience two social moments as adults. Only two of the four generations experience major social shocks as adults during the cycle.
Born during a High A generation that is born during a High enjoys the unique perspective of experiencing its three adult phases of life during the Second, Third, and Fourth Turning, respectively. Such generations are the only ones who live
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the complete cycle in order—from the First Turning through the Fourth Turning. A generation that is born during a High will experience two social shocks in adulthood—the first as young adults during an Awakening— when younger generations question the motives of older generations. For FDR and the Missionary Generation, this meant rebelling against the practices of selfish big business during the 1890s. For the Boomers, this meant rebelling against the GI Generation establishment that was responsible for the war in Vietnam and civil injustices at home. For both generations, experiencing an Awakening as young adults had an impact on the way in which they viewed and reacted to events for the rest of their lives. Generations born during a High experience an Unraveling as mid-life adults, and they become senior leaders during the second shock—the Fourth Turning Crisis. Experiencing life in this order provides unique skills that are necessary to manage a Crisis later in life. These generations arrive on a High and go out as seniors, just after a Crisis. Sadly, FDR didn’t quite make it to the end of the Crisis, dying 4 months before V-J Day and the end of World War II. The Boomers will go out just after serving as the senior leaders of society during a Crisis. The Boomer Generation—like the Missionary Generation before it—will write the final chapter of its storied existence, as FDR did during a Crisis. Will Obama be its author?
Born during an Awakening A generation that is born during an Awakening will experience only one social shock in adulthood. Such generations become the young adults during an Unraveling, mid-lifers during a Crisis (their first social shock), and senior leaders during a High. For Eisenhower and the Lost Generation, this meant experiencing the first social shock as mid-lifers during a Crisis. Eisenhower lived more than half of his life before he experienced his first social shock—the Great Depression and World War II. Eisenhower’s Lost Generation was sandwiched between two highprofile generations—the Missionary and the GI Generations. John McCain’s Silent Generation—sandwiched between the GI Generation and the Boomer Generation—was similarly viewed, in some ways, like the second child in a family of three. The first child gets lots of attention, because the novelty of having a child is new. The third child gets special attention as the baby of the family. Consequently, the second child is often “silent” or “lost.” Generations that fall into this category include the Lost Generation and Generation X.
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Born during an Unraveling Like those born on a High, a generation that is born during an Unraveling will also experience two social shocks in adulthood—but in opposite order. Such generations become the young adults during a Crisis, mid-lifers during a High, and senior leaders during an Awakening. A generation born during the Third Turning Unraveling, (the GI and the Millennial Generations) experiences its first social shock as young adults during a Crisis. For the GI Generation, after spending childhood during the dark days of the Great Depression, millions in this generation shipped off for Europe or the South Pacific—many never to return. Such a generation is forced to grow up quickly and deal with a severity of challenges that none of its constellation mates have ever experienced. Generations that fall into this category are the GI Generation and the Millennials.
Born during a Crisis Similar to a generation born during an Awakening, a generation born during a Crisis will also experience only one shock in adulthood. Such generations become the young adults during a High, mid-lifers during an Awakening, and seniors during an Unraveling. Members of this generation, similar to their Awakening counterparts, live more than half of their lives before encountering the first social moment. The Silent Generation’s John McCain was born during a Crisis (Depression, World War II), was a young adult during the good times of a High; started to move into mid-life during the turbulent 1960s and 1970s, and served as a senior leader of American society during from the mid-1980s to present. Technically, he is in the process of moving out of that role and into years when one typically disengages from an active role in the day-to-day machinery of American society.
Authoritative and Permissive Parents Another important element in shaping a generation’s personality is the prevailing nurturing philosophy of the time. Parenting styles, like generations, come in several different flavors, depending on the mood of the country and the turning. A child born during the Depression—such as John McCain—is parented very differently than a child—such as Barack Obama—born during a time of prosperity and growth. In 1966, psychologist
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Diana Baumrind established her widely recognized theory of the three prototypical parenting styles, which lines up perfectly with the rotating nature of generational personalities: permissive, authoritative, and authoritarian styles fit perfectly along the tightening (authoritarian) to loosening (permissive) spectrum that alternates every other generation. Authoritarian parents put limits and controls on their children, usually in line with an absolute set of rules. Authoritarians use strict discipline and oftentimes punitive consequences in response to their children’s behaviors. Permissive parents, on the other hand, are usually open, warm, and affectionate with their children and often indulge their children’s wishes, acquiescing to their desires. Permissive parents are driven by a reluctance to disappoint their children and often allow them to make significant decisions autonomously, before they are mature enough to handle such decisions. Authoritative parents fall somewhere in the middle and usually engage their children in a discussion about right and wrong.3 A generation born during a Crisis is nurtured very differently than a generation born during a High. Consider the difference in parenting styles between the Silent Generation children living through a sacrificial contraction period during the Crisis of the Great Depression of the 1930s and the Boomer children living through a robust expansion period during the 1950s. Although basic survival needs were foremost in one period—the struggle for food, clothing, housing, and safety—parents in the other period worried little about making do. Parents of Boomers were able to look beyond basic survival needs to more advanced levels of development. The parents of FDR’s Missionary Generation parented in a relaxing way, whereas Missionary Generation members parented in just the opposite way—with tighter control of their children. The parents of Eisenhower’s Lost Generation relaxed their parenting styles even further 22 years later, raising children in an underprotective manner. The parents of JFK’s GI Generation started to change the momentum of the pendulum of nurture, as they began to tighten the reins on their offspring. Finally, parents of John McCain’s Silent Generation completed the full swing of the pendulum from the permissive side to the authoritative side, as they nurtured their offspring in an overprotective manner, according to S and H. Similarly, Boomers were born during a High, and parents that had been nurtured by the strictest means relaxed their own parenting habits when the largest generation of all time arrived. This type of nurturing fostered an inquisitive and often rebellious personality in the Boomers. When faced with the Boomer Generation’s first social event—the Awakening of the
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Boomer Destiny
1960s and 1970s—instead of running down to the local draft board to sign up, Boomers almost universally rejected the injustices that prevailed during the time—from the war in Vietnam to segregation in America’s public schools. The coming-of-age Boomers would have none of it and challenged the motives of the GI Generation senior leaders—especially those individuals whom former President Eisenhower (Lost Generation) warned against in his famous “Military Industrial Complex” speech to the nation as he left office in early 1961. John McCain’s bid for the White House in 2008 was extraordinarily difficult—especially given the fact that Boomers had already inhabited the Oval Office for four terms, or 16 years, by 2009. The odds were historically against McCain, for two reasons: (1) The Silent Generation is the only generation in American history never to have produced a U.S. President; and (2) only twice before had Americans elected a president from a generation older than that of the incumbent, and, in each case (Zach Taylor and James Buchanan).
The Last Four American Cycles To demonstrate that history does indeed repeat itself, let’s look at the last four cycles in American history: The Revolutionary Cycle lasted about 90 years, from 1704 to 1794, and culminated with the Fourth Turning Crisis—the Revolutionary War.4 The Civil War Cycle started with the First Turning, in the years immediately following the end of the Revolutionary War, and ended with the Fourth Turning—in the form of the Civil War from 1861 to 1865. The Civil War Cycle lasted approximately 71 years (1794–1865).5 The Great Power Cycle started with the First Turning High, in the years immediately following the end of the Civil War, and ended with the Fourth Turning Crisis that included both the Great Depression and World War II. The Great Power Cycle lasted about 80 years (1865–1946).6 The Millennial Cycle, the current American cycle, started in the years immediately following World War II, with a First Turning High (1946–1964), a Second Turning Awakening (1965–1984), and a Third Turning Unraveling (1985–2005). America then entered the Fourth Turning Crisis of the Millennial Cycle around 2005, which is expected to last until about 2024.7
All four cycles started with a period of expansion, followed by a period of social consciousness, and then a period of weakening institutions and selfish individualism, which ultimately lead to a Fourth Turning Crisis.
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Even though most of the Fourth Turnings in American history have resulted in serious economic hardship, to one degree or another, all of the Fourth Turning Crises have included a prolonged and costly war. The Revolutionary War, the Civil War, and World War II each resulted in a definitive and painful conflict that was not only conclusive but changed American life forever. Can war ever be conclusive again? How the complex and challenging economic dynamics will play out over the next 20 years is anybody’s guess. The length and depth of U.S. engagement in Iraq, a potential expansion of that engagement in the region, and/or the unforeseen necessity of the use of U.S. troops elsewhere around the world will have a great impact on the economics of the Crisis.
The Last American Cycle—The Great Power Cycle The last complete four-phase American cycle was the Great Power Cycle, which began in the days following the Civil War and lasted almost precisely 80 years until World War II officially ended on V-J Day—August 14, 1945. The First Turning High of the cycle that started after the bloodshed of the Civil War was characterized by major economic expansion and unprecedented innovation from 1865 to 1905. This period of innovation may have been the greatest in the history of humankind, simply because of the magnitude by which many of the inventions changed the day-to-day lives of Americans. It dramatically changed life for all social classes in America. The transcontinental railroad, the typewriter, the telephone, the phonograph, the automobile, electricity, the electric motor, the mass production of steel, the radio, and the airplane were just some of the amazing inventions that were introduced over a 40-year-period following the Civil War. Consider the enormous impact on daily life in America when it became possible to type a letter, speak on the telephone, listen to recorded music, and light the homes and streets with electricity, all for the very first time. The Great Power Cycle lasted about 80 years, and, during that period, America experienced two Depressions (1893 and 1930), two battles with influenza, and two world wars. It was truly a period of monumental innovation, including the introduction and use of a weapon that still threatens our very existence—the atomic bomb. In terms of human behavior, it was not significantly different than previous American cycles with respect to human needs, wants, successes, and failures.
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The Last American Crisis The five-year bull market of the mid-1920s resulted in a five-fold increase in the DJIA.8 This unprecedented run-up caused a speculative boom, encouraging many thousands of working-class Americans to jump on the wealth-creation bandwagon—many borrowing money just to buy stock for the first time ever, similar to the day-traders of the late 1990s. The credit-driven economy of the 1920s helped fabricate growth and created an economic bubble that was simply unsustainable—not unlike the Internet bubble of the late 1990s and the more recent subprime housing bubble. The Crisis at the end of the Great Power Cycle was very long and very difficult and included a Depression, a recession (in 1937), and a world war that involved nuclear weapons. Most economists look at the Crash of 1929 as the spark that ignited the powder keg that sent America into the Great Depression and, ultimately, World War II. Stocks increased by more than 70 percent from September 1927 to September 1929—which would have been the optimal time to sell. Some people did sell. Some waited and lost everything. Overproduction in the housing and auto industries created a surplus of goods that Americans were just not buying. And when businesses started to default on loans, which, in turn, helped cause the ultimate failure of hundreds of banks, the money supply sharply dropped. America was broke and looked for a sacrificial lamb: U.S. President Herbert Hoover was the likely candidate, with New York Governor, FDR, his likely successor. Franklin Delano Roosevelt managed the crisis from his wheelchair in Washington, Hyde Park, Campobello, and Warm Springs, Georgia until he died on April 12, 1945—less than a month before the war in Europe ended. With his indelible legacy, written over the course of the final years of the Fourth Turning, FDR passed the torch to a new generation of senior leaders at the dawn of a new spring—his legacy complete. The Crisis was over and a new generation of Americans started to fill the maternity wards across the United States. The Boomers had arrived.
The Current American Cycle—the Millennial Cycle The current four-phase American cycle started in the days immediately following World War II with the First Turning of the Millennial Cycle, so named because it would bridge America from one millennium (the 1000s) to the next (the 2000s).
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The first quarter of the Millennial Cycle was characterized by 20 years or more of dramatic expansion, coinciding with the arrival of the Boomers from 1946 to 1964. Then the mood of the country shifted during the second quarter, as the vague U.S. involvement in Vietnam turned into a full-scale war in 1965. The country’s Boomers protested both the war and the deplorable civil rights violations at home. The third quarter witnessed a weakening of the institution and a strengthening of the individual. Selfishness was suddenly in style, from the mid-1980s through the 2000s. The United States is still in the early years of the Fourth Turning of the Millennial Cycle, which started sometime around 2005, sparked by the greed-driven desire to expand U.S. homeownership beyond its natural limits. Sure it would be wonderful if everyone in the United States owned a home—but when the percentage of Americans owning homes has remained constant for more than 40 years (around 65 percent since the mid-1960s) one might say it had reached a saturation level. Increasing such a statistic that has been established by the free markets for more than four decades across millions of homeowners requires a change in the rules. And if a change in the rules involves a relaxation of standards, there will be a price to pay. There is a reason that 65 and not 70 percent of Americans own their own homes. And it was a powerful desire to artificially grow this sector that set off a series of events that have led us to a crisis. We often think of single events as the cause of crises: the shot heard ‘round the world at the Battle of Lexington and Concord in April 1775; the Confederate attack on Fort Sumter in April 1861; the stock market crash on Black Tuesday in October 1929; the Japanese attack on Pearl Harbor in December 1941. These are the events that make it easier for us to pinpoint the quintessential spark that triggered the outbreak of chaos and panic when in fact there were many smaller events that led up to the final straw. Some were economic in nature (Stamp and Tea Acts, Black Thursday, and Black Monday). Some involved social injustices (Fugitive Slave Act of 1850). For the current American crisis certainly the sub-prime mortgage meltdown will be viewed as the defining event that toppled the first domino. But a concurrent event—one that ultimately shifted to the back burner after mid-summer 2008—was the oil shocks that caused gas prices to reach record levels in 2008. And even though gas prices subsided in the fourth quarter of 2008, the retail price at the pump had still increased more on a percentage basis than any other decade since the 1950s. The underlying reason: world-wide access to easy oil peaked in 2005.
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Boomer Destiny
Hubbert’s Peak In 1956, American geophysicist Dr. M. King Hubbert predicted that U.S. oil production would peak around the late 1960s and early 1970s and then start on a course of decline—forever! Although many in the scientific and energy industries dismissed his assertion as unnecessarily dire, it turned out that Hubbert’s prediction was stunningly accurate: U.S. production peaked in 1970. “The end of the oil age is in sight,” said Hubbert in an interview in the June 1974 issue of National Geographic.9 Later, in response to remarks made by Exxon executive David Nissen, Hubbert articulated a future to which we are now remarkably close: There is a difference and more fundamental cost that is independent to the monetary price (of oil). That is the energy cost of exploration and production. So long as oil is used as a source of energy, when the energy cost of recovering a barrel of oil becomes greater than the energy content of the oil, then production will cease no matter what the monetary price may be.10
In other words, as soon as the cost to find and refine a barrel of oil exceeds the price that can be charged for that barrel, oil as a source of energy is over. Although experts agree that new sources of oil exist, to find and extract the oil may actually be so cost-prohibitive as to cause the price of crude to increase rather than decrease over the long term. Also, worldwide oil demand has never been higher, with a spike in consumption in China and India that may take decades to abate. The oil shocks of 2005 may ultimately be viewed as the final straw that set in motion the simple law of demand and supply, pushing the cost of petroleum-related products ever higher. These conditions were only exacerbated by greedy speculators of oil futures who artifically drove up the cost of oil in 2008. In 1973, member nations of the Organization of Petroleum Exporting Countries (OPEC) ceased exporting oil to the United States and other nations as a way to penalize those countries that supported Israel. A group of Arab states, led by Egypt and Syria, were locked in battle with Israel over the land that was captured by Israel in 1967 during the Six-Day War. The battle was known as the Yom Kippur War because it started with a surprise attack on Yom Kippur—the Day of Atonement—the most solemn and significant of all Jewish holy days. The embargo not only resulted in higher gas prices in the United States but also created severe supply shortages and long lines at the pump. The price of a gallon of gas increased from an average of 36 cents a gallon in 1972 to an average 59 cents per gallon in 1976—nearly a 50 percent
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increase.11 The oil shocks of recent years have had a similar impact on the price of gas, but for a different reason. This time the issue is about a longterm supply, not a short-term supply. It is altogether likely that the finite supply of global oil will continue to cause gas prices to increase for the foreseeable future, with virtually no plausible rationale for a rollback in gas prices on the horizon. People in the United States have had a habit of believing that inconveniences—such as the increased price of gas, electrical blackouts, or restrictions on watering the lawn—are temporary events. And, although, so far, they have been, there’s no guarantee that they will remain that way.
The Next American Crisis October 29, 2009, will mark the eightieth anniversary of Black Tuesday. If history is any guide, the United States is already in the early years of the next American Crisis and the worst days are still ahead of us. Not unlike the last American Crisis, the early transitional years are often characterized by erosion and decline, economically and systemically, and slow evolution into a palpable and measurable malaise. Consider the major issues facing America as the first decade of the twenty-first century comes to a close: immigration (both legal and illegal), Social Security, Medicare, terrorism, the environment, the budget deficit, the trade deficit, the farm deficit, generous subsidies, growing unemployment, inflation fears, as well as the threat of natural disasters and pandemics. Over the next 20 years, presidential administrations will certainly have their hands full. The U.S. government has so overspent its way into the red that it may take our children, our grandchildren, our great-grandchildren, and our great-great-grandchildren to pay it off, if ever. Just the interest on the national debt in recent years has amounted to more than $1 billion a day, or a total of $430 billion in 2007 alone.12 The hole that we have created is frighteningly deep, and most economists, including the last two chairmen of the Federal Reserve—Alan Greenspan and Ben Bernanke—believe that the United States will be unable to grow itself out of this mess. The numbers are so large that most common calculators cannot handle simple computations of the misuse of taxpayers’ money. History suggests that we are headed for a rough ride, and it will require the cooperation of multiple generations of Americans to get us through the ride.
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The Gathering Storm During the last American Crisis, FDR’s Missionary Generation teamed with Eisenhower’s Lost Generation and JFK’s GI Generation to move America successfully through a very long and difficult winter. The GI Generation is mostly gone now, its youngest members now approaching 90 or older. The Silent Generation has served as senior leaders of a society during an Unraveling—a society that has little or no confidence in its leaders, little or no savings in the bank, and little or no reason to be optimistic about the future. Boomers are on deck to slide into the role of senior leaders during a Crisis. The last generation to do so was FDR’s Missionary Generation. What do we know about that generation, its character, its makeup, its upbringing? Can we predict how the Boomers will behave as senior leaders during a Crisis? How will Generation X members behave as midlifers during a Crisis? How will members of the Millennial Generation behave as the young adults of a Crisis? Who will become the Boomer Generation’s FDR, Gen X’s Eisenhower, the Millennial Generation’s JFK, and the New Silent Generation’s John McCain? Historically, multiple generations have teamed to overcome major crises: FDR’s generation did it, Abe Lincoln’s generation did it, and now Barack Obama’s generation has to do it. Boomers are moving to center stage as the leaders of an American society that needs serious fixing. The question is this: will they create world history or suffer it?
Chapter 3
The Gathering Storm Without a struggle, there can be no progress. —Frederick Douglass, Abolitionist
Never have the conditions for severe weather in the continental United States been better. Over the course of recent decades, the indicators have only intensified, and scientists look to global warming as the primary reason for conditions that have not only yielded a record number of hurricanes but also an increasing severity to those hurricanes. In a 2006 National Bureau of Economic Research (NBER) paper, Yale economist William D. Nordhaus offered four critical insights into the changing behavior of severe weather, based on a major study of the economic impact of hurricanes in the United States in recent years: 1. There appears to be an increase in the frequency and intensity of tropical cyclones in the North Atlantic. 2. There are substantial vulnerabilities to intense hurricanes in the Atlantic coastal United States. Damages appear to rise with the eighth power of maximum wind speed. 3. Greenhouse warming is likely to lead to stronger hurricanes, but the evidence on hurricane frequency is unclear. We estimate that the average annual U.S. hurricane damages will increase by $8 billion at 2005 incomes (0.06 percent of GDP) because of global warming. However, this number may be underestimated by current storm models. 4. The year 2005 was a particularly rare case, involving four specific conditions: (a) a record number of North Atlantic tropical cyclones; (b) a large fraction of intense storms; (c) a large fraction of the intense storms making landfall in the United States; and (d) an intense storm hitting the most vulnerable high-value region in the country.1
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Dr. Nordhaus suggests that current conditions certainly favor an increase in frequency and intensity of hurricanes in the years ahead. In other words, the prospect of another Katrina—or worse—is not only real but likely. Given the experience of the United States in recent years in dealing with the economic and human loss caused by tropical storms, we are now painfully aware of the consequences of ignoring such early warnings. Although it’s not possible to prevent another Katrina—short of reversing the impact from global warming—it is possible to take the warnings more seriously and to mobilize more rapidly to protect human life and infrastructure well in advance of the storm hitting landfall. We now know that, if we ignore these warnings, we do so at our own peril—we are hoping for the best and sometimes experiencing the worst.
An Economic Early Warning Rarely do we get a heads-up in advance of catastrophic events. Car accidents, heart attacks, and power failures mostly happen rapidly and without warning. When it comes to the economy, we hope for the best; when things go off track, we rely on the government to step in and fix the problem. Our understanding of the cause and effect of economic shocks is more often gained retrospectively, well after the event—which, in some ways, helps minimize public fears. It’s like being on vacation in the Caribbean while there’s a record snowfall at home—by the time we get home, the snow has been plowed and life is back to normal. It is difficult to ignore the ominous clouds on the horizon in America— not necessarily clouds of a depression, but certainly signs that a storm is looming offshore. The severity of that storm is anybody’s guess. Will it just be a tropical storm or a Category 5 hurricane? But, as with the seasons, one blending into the next, we know that autumn has been turning into winter and some experts—even optimists inside the government, who have access to “economic Doppler systems”—suggest that a winter storm is heading toward us and that we’d better start to pay attention. Like the meteorologists who brief the nation in advance of natural disasters, Americans have been consistently receiving warnings about the long-term consequences of runaway entitlement programs and mounting national debt. The government’s former top accountant, David Walker, spent the better part of a decade preaching the gospel of fiscal responsibility to whoever will listen across the United States. As the country’s controller
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general, it was his responsibility to watchdog the government’s books, and the numbers that Walker has seen for sometime now are “all big and all bad.” Walker firmly believes that the United States is on an economic path that is not only unsustainable but also may bankrupt the country unless serious action is taken soon. “I will argue that the most serious threat to the U.S. is not someone hiding in a cave in Afghanistan or Pakistan but our own fiscal irresponsibility,” Walker told CBS’s Steve Croft in a 60 Minutes interview on March 4, 2007.2 Walker says that, although the future commitments from entitlement programs such as Social Security are unsustainable, they pale in comparison to the liability associated with Medicare. “The Medicare issue is five times greater than Social Security,” says Walker. And it was actually made worse in 2006 when the president and Congress added prescription drug coverage to Medicare. According to Walker, “The prescription drug bill was the most fiscally irresponsible piece of legislation since the 1960s.”3 The Medicare Prescription Bill that was signed into law by President Bush on December 8, 2003, added an additional $8 trillion in future commitments to a program that was already underfunded by $15 to $20 trillion. Walker simply dismisses anyone who believes that the United States can grow its way out of this fiscal challenge, and he is not alone in that assessment. Even Federal Reserve Chairman Ben Bernanke agrees that “economic growth alone is unlikely to solve the nation’s impending fiscal problems.”4 “We are mortgaging the future of our children and grandchildren at a record pace,” said Walker. “And that is not only an issue of fiscal responsibility, it’s an issue of immorality.”5 Walker resigned his post as Controller General on March 12, 2008 when he became President and Chief Executive Officer of the Peter G. Peterson Foundation where he continues to advocate for fiscal responsibility in the nation’s capitol. One of the foundation’s first projects was the August 2008 release of the documentary I.O.U.S.A.: One Nation. Under Stress. In Debt. The warnings are all around us, yet we refuse to take serious action. We have jeopardized the attainment of the American Dream for future generations, and we have no one to blame but ourselves. We are responsible for the mess that we are in, yet we are incapable of mobilizing. The track record on our inability to act before disaster strikes is very clear. It usually takes an event to galvanize us: the Crash of 1929, Pearl Harbor, September 11, Hurricane Katrina—but only after the fact.
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Economists Agree Economists mostly agree that, even though there were a number of early warning signs in the years leading up to the Crash of 1929, virtually no one predicted the coming of the Great Depression. Many were lulled to sleep by the bull market of the 1920s and assumed that any slowdown in the economy was simply temporary. Because virtually no one predicted it, nothing was done to prevent it. Some experts say that the Federal Reserve may have actually improved conditions for contraction by limiting the money supply in advance of the Great Depression. Inaction on the part of the Fed only undermined public confidence and added to the hysteria when it stood on the sidelines and watched as banks—one after another— failed in 1930. Herbert Hoover certainly paid the price for being in the wrong place at the wrong time. After just one term in the White House, America voted him out and Franklin Delano Roosevelt in to take on the most significant set of challenges in the history of the country. In their annual report issued in June 2007, the Bank for International Settlements (BIS)—one of the world’s most prominent financial institutions—issued a warning that identified a host of concurrent economic concerns that may put the U.S. economy at risk in the coming years: The attention of financial markets first focused on the U.S. subprime mortgage market, but the underlying issue is much broader . . . The household saving rate in the United States fell for a time into negative territory, as sluggish wage growth failed to provide adequate support for a sharp increase in consumer spending and residential investment. Easy credit terms, especially in the mortgage market, encouraged both higher debt levels and higher house prices. The latter, in turn, provided both the collateral to justify more lending and the perception of increased wealth to justify more spending.6
It was this vicious cycle that caused the BIS serious concern, especially the swelling of credit and the creation of bubbles that policymakers assumed would correct themselves over time. The BIS pointed to the failure of this strategy as a major factor in contributing to the depth and breadth of economic slowdowns in both the United States in the 1930s and in Japan in the 1990s. The vast buildup of debt and investment during the boom years enabled “sowing the seeds for more serious problems further ahead,” in BIS’s view—this well in advance of the Bear Stearns collapse in the spring of 2008 and the summer failure of California-based Indy Mac.
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Optimists say that the relatively small number of bank failures is far less than that of the Savings and Loan crisis of the late 1980s and early 1990s not to mention the 10,000 or more banks that collapsed from 1929 to 1933.7 However, years of bank consolidations dramatically changed the metrics by which banks are historically measured. In 1930, a bank was more often just one bank. Today, because of years of aggressive consolidation, a bank could represent thousands of banks creating a concentration of unprecedented activity and assets as well as risk. The U.S. government’s seizure of Government-Sponsored Entities (GSEs)—Fannie Mae and Freddie Mac—signaled in September 2008 that the sub-prime mortgage crisis was much bigger than officials first thought. Fannie and Freddie— the twin towers of the mortgage banking industry—fell clearly in the “toobig-to-fail” category and in order to avoid a systemic meltdown, the U.S. government stepped in and placed the nation’s largest mortgage finance companies into a conservatorship. The move guaranteed that the more than $5 trillion in mortgage debt that the companies owned or controlled—more than one-half of the country’s mortgages—would become the responsibility of the American taxpayer. After rescuing Fannie and Freddie, the bleeding only continued for the balance of what became Black—or perhaps Red—September: • September 15 • Lehman Brothers files for bankruptcy • Bank of America absorbs Merrill-Lynch • September 16 • U.S. government provides $85 billion bailout of insurance giant AIG • September 19 • Treasury Secretary Paulson proposes $700 billion Wall Street bailout plan • September 25 • Washington Mutual collapses – largest bank failure in American history • September 28 • $700 billion Wall Street bailout bill is passed • September 29 • Citigroup acquires banking operations of Wachovia
By the end of September, confidence that the U.S. government was able financially to rescue any entity was rapidly fading, as its own overall debt approached $10 trillion—certainly on the way to the newly established $11.3 trillion debt ceiling approved as part of the $700 billion Wall Street bailout. The U.S. government’s mounting credit indebtedness to foreign
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nations such as Japan and China “is a further worrisome sign for many,” according to the BIS. While there’s no doubt that a national debt that exceeds $11 trillion is certainly “worrisome,” isn’t it possible that these countries might at some point themselves either be unable or unwilling to loan billions of dollars to the dreadfully managed U.S. government? Some experts think that may not actually be a bad thing.
Brother, Can You Spare a Trillion? It is really quite an amazing fact that 60 years after the United States all but destroyed their country, the Japanese has become the largest foreign holder of U.S. treasury securities.8 In early 2008, Japan owned one-quarter of the total debt borrowed by the U.S. government in order for it to meet its financial obligations beyond the revenue collected through taxes from its citizens and corporations. The concept of borrowing money in order to pay for something now, only to pay it back over time, is certainly a common one. The purchase of large-ticket consumer goods such as houses and cars most often requires a loan from a local bank or other lending source. But, when the total amount borrowed grows so exponentially, interest on the debt alone can exceed more than a billion dollars a day—three times the cost of the Iraq War. From 2001 through August 2008, debt held by the public has increased by more than 60 percent—from $3.39 trillion to more than $5.48 trillion— because of an epidemic of budget deficits.9 And the top is nowhere in sight. In fact, the 2009 fiscal budget assumed a deficit in excess of $400 billion in advanced of Red September’s bailouts. Based on the administration’s eleventh-hour bailout of eight years of failed fiscal policies, it’s altogether possible that we will see a $1 trillion annual budget deficit before we see a budget surplus again. With annual outlays for all government programs about to exceed $3 trillion per year10 for the first time ever, continued runaway spending is like pulling the pin on a grenade, handing it to our children, and then running away. They stand to inherit the biggest financial liability in the history of humankind, with not even a whisper as to how we might reduce this devastating liability. The recent path to these lofty sums is often difficult to fathom unless it is put into terms that we can all understand. Let’s reduce the U.S. government to relative terms: it is a family of four in the year 2000, with a household income of $100,000. In relative terms, it would have a total debt of $280,000, which includes, for example, the
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mortgage on the family home. Here’s how the financial scenario unfolds since 2000: • In 2000, with an income of $100,000, the household paid all of its bills and had a surplus of $10,000, which it put into savings for the children’s college education. • In 2001, the household took a pay cut at work (Bush tax cuts) to $98,300, yet it still managed to pay all of its bills and save an additional $5,000. • In 2002, the household takes another pay cut (tax cuts) to $91,500, but this time, it spends more than it takes in by $7,800, and is forced to eliminate half of its savings to make up the difference. • In 2003, the household takes yet another pay cut (tax cuts) to $88,000 and spends $18,641 more than it takes in. It is forced to wipe out all of its savings and takes out a loan to cover the overage, adding to its overall debt, which now stands at about $290,000. • In 2004, the household gets a pay increase (personal investment gains and increased business earnings) to $92,800. It spends $20,377 more than it takes in and, once again, borrows to cover the overage, adding to its overall debt, which now stands at about $310,000. • In 2005, the household gets another pay increase to $106,400. It spends $15,717 more than it takes in and, again, borrows to cover the overage, adding to its overall debt, which now stands at $325,700. • In 2006, the household gets another pay increase to $119,000. It spends $12,253 more than it takes in and, again, borrows to cover the overage, adding to its overall debt, which now stands at $337,950. • In 2007, the household gets another pay increase to $127,000. It spends $7,998 more than it takes in and, again, borrows to cover the overage, adding to its overall debt, which now stands at $345,950.
Now consider the ride that this household has taken since 2000: • • • •
It increased its income by 26.8 percent. It increased its expenses by 52.6 percent. It increased its total debt by 60 percent. It wiped out all its savings in the children’s college fund.
Why is it that, if we look at this as an American household, we are shocked—yet when the same irresponsible behavior is perpetrated by the government with our money, we just shrug our shoulders? Unless this fictitious household gets its expenses under control soon, it may end up where millions of other American households end up each year—in bankruptcy.
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Sadly, this scenario has played out in many American households that are trying to keep pace by spending beyond their means. The U.S. government has not been fiscally responsible during the 2000s and, worse, has been a poor example to the American public as a model for running its own financial affairs. The reliance on credit as the way to pay current obligations has been greatly abused and certainly played a role in the collapse of many financial institutions in the years and months leading up to the last American crisis. Some fiscal discipline is required soon—not only for the U.S. government but for many of its citizens as well.
Economic Hurricanes Offshore Although most economists agree that it is very difficult to predict good times or bad, we have already learned that history has a way of repeating itself over and over again. Every 80 years or so, the United States is faced with a crisis of epic proportions—crises that have become the most historically significant in the nation’s history. Why do we choose not to deal with the elephant in the room? Is it because it’s easier to ignore than to deal with it? But it’s difficult to argue with the former Comptroller General of the United States or with the plain facts from history: • Eighty years after the American Revolution, the United States was in the middle of another major crisis: the Civil War. • Eighty years after the Civil War, the United States was in the middle of yet another major crisis: the Great Depression and World War II. • Eighty years after the Great Depression and World War II the United States finds itself on the brink of still another crisis triggered by subprime mortgage lending practices that artificially grew the universe of homeowners in the United States.
While it’s a fact that every 80 years the United States finds itself in a historyaltering crisis, it’s important to understand virtually all social and economic cycles have increasingly been compressed over the last 250 years, largely driven by technology. From transportation to communications, the time from expansion phase to crisis phase is shrinking and with it the distance between crises. When measured from the end of one crisis to the beginning of the next, major crises in the nineteenth century occurred every 80 years, in the twentieth century every 70 years, and now in the twenty-first century there is plenty of evidence in 2009 that we are in yet another major crises, just 60 years since the end of World War II.
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History has warned us. Economists have warned us. Even agents of the government itself have warned us. Now the question is this: what will we do about it?
America’s Vital Signs It’s impossible to deny the fact that, at the end of the first decade of the twenty-first century, the United States faces a confluence of some of the most formidable challenges in history. If the United States were to see a physician for its annual physical, frustrated doctors would be looking at an aging, stressed-out soul who is overweight, living well beyond its means, getting little exercise, little sleep, eating poorly, worrying about retirement, and concerned about its children’s futures. The prognosis would not be very good, and the physician’s orders would include strict adherence to a new and healthier lifestyle. Brewing offshore is a storm which—like a heart attack waiting to happen—is gathering strength and moving toward landfall. The storm is a formidable one, made up of two dozen or more smaller storms that together could cause permanent damage unless serious action is taken soon. The sobering health report would look something like this: • U.S. Economy’s Rate of Growth Real GDP has been growing at an ever-decreasing rate since the 1960s when it grew at 4.44 percent. U.S. GDP grew at 3.26 percent in the 1970s, 3.07 percent in the 1980s, 3.11 percent in the 1990s and less than 2.50 percent for the first eight years of the first decade of the twenty-first century11—the slowest average economic growth rate since the 1930s. There is no getting around the fact that the U.S. economy is mature and it becomes incumbent upon us to figure out how to make a mature economy work—not pretend that it doesn’t exist. One of the economy’s largest industries—the auto industry—has been shrinking since 2001. Automakers in the United States have been losing market share to imports for decades and, since 2001, have essentially sold fewer cars each year. There’s no end in sight for this death spiral. One of America’s proud old industries is officially in meltdown and will never be the same again. Industry growth has slowed to such a degree in recent years that even the import automakers experienced negative growth—for the first time ever—in 2008—when Toyota lost more than $1 billion. This underscores Bernanke’s belief that the U.S. economy will not be able to grow its way out of its significant fiscal problems. • Energy With the cost of crude oil at record levels, the impact on the U.S. economy is both wide and deep. With average gas prices approaching $5.00 a gallon in
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the summer of 2008, Americans have certainly felt the pain at the pump. Another important factor that has been widely ignored is that many experts believe global oil production peaked in 2005. In other words, world oil production stopped growing in 2005 because the most accessible oil sources had all been located by that point. Even though additional sources exist, they will be harder and more expensive to access, which will only put more upward pressure on the price of crude and ultimately gas. The impact of fuel prices goes well beyond the pump, however, and may ultimately begin to cause retail prices across the board to increase. The transportation industries have been extremely hard hit by the oil shocks. Truckers who haul everything from fruit to fashion have been impacted, as have other delivery services, as well as the commercial airlines. It’s likely that oil and gas prices will stabilize in the months leading into the 2008 election, but they may begin to again move upward as a new administration settles into the White House. Even if gas prices were to retreat to an average $2.10 a gallon by the end of 2009, real gas prices in the U.S. will have increased at a higher rate during the first decade of the 2000s than any other decade in history—more than the 24.9 percent increase during the 1970s. It is remarkable how Americans breathe a psychological sigh of relief when gas prices dip below $3.00 a gallon. After being exposed to per gallon prices in excess of $4.00 per gallon in 2008, $3.00 a gallon seems like a bargain. Historically, it is not.12 • Government Receipts and Outlays Government outlays (expenses) have outpaced receipts (revenue from taxes) by 2 to 1 since 2000. Outlays increased from $1.789 trillion in 2000 to $2.730 trillion in 2007—a 52.6 percent increase. Receipts, on the other hand, increased by only 26.8 percent during the same period—from $2.025 trillion in 2000 to $2.568 trillion in 2007. Since 2002, close to $2 trillion dollars have been added to the national debt through three quarters of 2008.13 Midway through FY 2008, the Office of Management and Budget (OMB) projected a $389 billion deficit for 2008 and a record-breaking $482 billion deficit for FY 2009, topping the previous record of $412 billion in 2004.14 From this perspective alone, the Obama administration will inherit a country that is in the worst financial condition in U.S. history. • National Debt The national debt is the amount of money owed by the U.S. government to its creditors in the form of treasury bills, notes, bonds, U.S. savings bonds, and so on. According to the Bureau of the Public Debt, as of October 2008, the U.S. government owed over $6.1 trillion to creditors.15 During March 2008, the government made principal payments of $376 billion, as well as interest payments of $8.56 billion. However, the government borrowed an additional $450 billion during the same month and therefore ended the
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month with a public debt balance of $5.33 trillion. The interest alone required to service the debt is in excess of $1 billion a day—or more than $430 billion in 2007.16 • Employment/Unemployment The manufacturing base in the United States continues to shrink, as more and more products that historically were “Made in the USA” are being made elsewhere. The loss of U.S. jobs has also been exacerbated by a dramatic drop in the volume of sales of domestic automobiles, causing the closing of a number of U.S.-based plants. The U.S. economy experienced steady job losses in 2008, with unemployment increasing to 7.2 percent in December—the highest jobless rate since January 1993. Close to 3 million jobs were lost in 2008—in the single largest drop since the end of World War II.17 • Inflation Always the double-edged sword, inflation was kept in check for the better part of the first eight years of the new century. Inflation fears are grounded in the theory that too much is not good and neither is too little. Often, inflation can be a sign of a strong economy, when companies look to take advantage of an increase in demand in order to add to profits. But very low inflation can have the opposite effect by slowing demand—causing further downward pricing pressures that ultimately have a negative impact on a company’s profit margins, which may lead to layoffs or, worse, bankruptcy. If consumer prices increase too much, that too could slow demand as consumers defer shopping decisions. Inflation concerns heightened in 2008, when the price of crude oil kept rising and, along with it, the average price of a gallon of gasoline, which increased dramatically—about the same in relative terms as it did during the Oil Crisis of 1973, when much oil from the Middle East was cut off from the United States in retaliation for America’s support of Israel. The Consumer Price Index (CPI) hinted that higher energy costs started to show up across the economy—when the index topped one percent in June 2008 for the first time since September 2005.18 • Social Security and Retirement Funding In fiscal year 2007, the CBO projected that the federal government would spend approximately $2.7 trillion (about 20 percent of the GDP) on all programs. The CBO estimated that about 46 percent of that budget would fund U.S. major entitlement programs—in the Social Security Administration (SSA) and the Department of Health & Human Services (HHS). Although the challenges around fixing Social Security are significant, they pale in comparison to the potential financial disaster created by Medicare and its prescription drug component. Not only is the number of participants increasing more rapidly than in the past, but so is the overall cost of healthcare.
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If revenue inflows to these programs do not increase at least as fast as the progressive costs, the result is likely to create further pressure on the budget, only adding to the national debt. An under-the-radar issue related to retirement is the Employee Retirement Income Security Act (ERISA) from the mid-1970s, which may have helped create its own bubble of sorts. Workers are rapidly moving toward retirement without a whole lot to show for their decades of work. In 1974, ERISA was signed into law and effectively eliminated an employee’s automatic right to benefits; instead, it placed the onus on the employee to sign up for health insurance and retirement plans voluntarily—the birth of the 401(k). Although there are scant historical records on the number of workers who have no pension, no 401(k) savings, and no personal savings, the government may have unintentionally created a whole new segment of needy Americans. By making the contributions to retirement plans voluntary, many millions will reach conventional retirement age with Social Security as the only asset set aside for their senior years, and they will simply be unable to retire. These types of trends have fueled the rise of one of the fastest growing segments in the labor force—men and women 75 years of age and over—which has grown by more than 75 percent since 1998. By comparison, the overall civilian labor force—age 16 and over—has grown by only 10 percent over the same period. Even though some of the rapid growth in super seniors’ work habits could be attributed to the desire to continue to stay active, the trend undeniably suggests that some portion of this segment continues to work out of necessity.19 • Education There were a record number of public school students in the United States in 2007.20 The system is stressed, in large part, by the higher rates of birth during the “Millenial Generation” years and by the influx of both legal and illegal immigrants into the public school system. The pre-kindergarten to grade 8 student segment grew by 28 percent since 1985—the fastest growth of all student segments. And increasing numbers of students have not been the only challenge. According to the 2006 Progress International Reading Literacy Study (PIRLS), conducted in conjunction with Boston College’s Lynch School of Education, U.S. fourth graders lost ground relative to their reading ability compared with other fourth graders around the world.21 The report showed that 10 countries were ranked ahead of the United States in the 2006 study, including the Russian Federation, Hong Kong, and three Canadian provinces. In the 2001 study, only three countries ranked ahead of the United States. • The Environment The issues relating to the environment are vast in the United States, and most are expensive problems to fix. Issues such as air and water quality, climate
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change, and damage to the ozone layer have mostly been caused by insensitive human behavior over a very long period of time. Unfortunately, there is no quick and cheap fix. Because there are no restrictions to automobile ownership and usage in most parts of the United States, a record 231 million vehicles were registered in 2003. With only 196 million licensed drivers, there is now a surplus of close to 40 million cars without drivers in the United States—the second, third, and fourth cars in households across the United States.22 Although money certainly is needed and can help in the battle to preserve the Earth, stewardship of the environment is much more complicated and requires the cooperation of multiple generations to change their behavior. In the meantime, the reality is that overconsumption only makes matters more complex and environmental problems more expensive to fix. • Infrastructure Following the collapse of the I-35W Mississippi Bridge in Minneapolis in August 2007, the public received a glimpse into the underreported age and condition of the massive public infrastructure in the United States—much of which was constructed 60 to 100 years ago. In its 2004 Conditions and Performance report, the Federal Highway Administration (FHWA) reported that more than one in every four U.S. bridges was either structurally deficient or functionally obsolete. In terms of the U.S. highway system, the FHWA reported that 15.1 percent of highway pavement was not acceptable—a percentage that has been increasing since 1995. Not surprisingly, the significant increase in the number of cars on the highway has only worsened the condition of aging highways and bridges. Infrastructure for public transportation in the form of buses and rail systems showed that 31 percent of all urban maintenance facilities for buses were substandard and that 51 percent of urban rail passenger stations were substandard.23 • Healthcare Currently, more than 47 million Americans have no healthcare coverage, according to the Urban Institute. Healthcare is a three-headed monster; the “three Ps” of healthcare in America are payer components (insurance companies and government agencies), provider components (hospitals, healthcare facilities), and pharmaceutical components (drug companies, pharmacies). Payers manage the complexities of insuring that providers and pharmaceuticals get paid. Issues include both public and private entities, including (1) Medicare, which provides medical and pharmaceutical coverage for Americans aged 65 and over; (2) Medicaid, which provides healthcare for Americans who are unable to afford healthcare coverage; and (3) insurance companies. Providers have a difficult set of challenges in trying to run profitable enterprises while managing issues such as (1) getting paid for services rendered, (2) seeing record numbers of patients in urgent care facilities
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•
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and emergency rooms, and (3) honoring Hippocratic Oath issues in handling patients without coverage. Pharmaceuticals provide medications through providers, including pharmacies, and also answer to the Food and Drug Administration (FDA) in navigating the process of testing to ensure that new medicines are safe for humans—even in the face of mounting pressure to get approval for drugs that could have an impact on the bottom lines of publicly owned pharmaceutical companies. Healthcare is a highly complex issue with a myriad of knowns and unknowns that will take unprecedented cooperation to fix. Bankruptcy Filings Both business and nonbusiness bankruptcy filings were up sharply in 2007, according to the Administrative Office of the U.S. Courts. Filings rebounded after a huge drop in 2006 following the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which was designed to reduce the misuse of the bankruptcy process. Nonbusiness or personal bankruptcy filings—which make up nearly 97 percent of all bankruptcy filings in the United States each year—were up 37.5 percent in 2007. If growth continues at that pace, the number of personal bankruptcy filings will return to pre-abuse prevention legislation levels by 2010.24 Consumer Credit Overall consumer debt in the United States continued to increase in 2007 to a record $2.46 trillion, or more than 20 percent of the GDP. This figure does not include debt associated with mortgages. Consumer credit card debt— which represents close to 40 percent of all consumer debt—also continued to increase in 2007. The Federal Reserve Bank reported that total revolving consumer debt was up close to 10 percent—to $962 billion dollars from $875 billion at the end of 2006. Concurrently, credit card delinquencies were also on the rise in 2007, with payment delinquencies of 30 days or more up 26 percent to $17.3 billion. Delinquencies of 90 days or more increased by 50 percent, and credit defaults increased by 18 percent to a record $961 million.25 U.S. Trade Deficit Trade with China has had a crushing effect on jobs in the United States since 2001. The Economic Policy Institute (EPI) estimated that 2.3 million U.S. jobs were lost between 2001 and 2007 as a result of the sharp increase in the manufacture of goods in China for U.S. companies during the period. The EPI also estimated that workers who were able to find alternative work earned $8,146 less per year than they did before their respective jobs were offshored.26 Food Crisis Even though most people in the United States are concerned about the price of gas for their cars, a growing number of people around the world are starving
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because of the dramatic increase in the price of basic foods in recent months. In April 2008, Robert B. Zoellick, the President of the World Bank, said that the poor spend as much as 75 percent of their income on food. “In just two months, rice prices have skyrocketed to near historical levels, rising by around 75 percent globally,” he said. The World Bank estimates that the price of wheat has risen by 120 percent over the past year and that, over the past three years, food prices overall have risen by 83 percent. Some experts believe that it is only a matter of time before the trend begins to have an impact on food prices in the United States.27 • Food Quality A spike in the number of reported cases of tainted imported food continues to place added stress on the FDA. According to a study released in April 2008 by the Trust for American’s Health, there are major deficiencies in the FDA’s food safety system—and they are getting worse. The study found that only about 1 percent of all foods imported into the United States for consumption is tested by the FDA. This is especially troubling when more than 60 percent of all fresh fruit and vegetables and more than 70 percent of all seafood are imported. The recent salmonella contamination of tomatoes and jalapeño peppers in the United States are examples of some of the new challenges facing the FDA.28 • Water Crisis Some experts believe that the worldwide shortage of potable (consumable) water will become an even more significant issue than the availability and price of oil in the twenty-first century. The United Nations estimates that about 40 percent of the world’s population does not have access to fresh water every day. Experts predict that by 2025 the percentage will grow to two-thirds of the planet and that access to water will ultimately become a real issue in the United States. • Foreclosures In 2008, a record 3.16 million homes received foreclosure-related notices, up 81 percent from 1.3 million in 2007 and quadruple the number in 2006, according to Irvine (California)-based RealtyTrac, Inc.29 An additional 1.8 million subprime mortgages, scheduled to be reset at higher rates in 2008, helped fuel a jump of 121 percent in U.S. foreclosures in the second quarter of 2008 versus the same quarter in 2007. As millions of American default on home mortgages, hundreds of banks struggle to remain in business, trying to write new loans while writing off old ones. Greedy lenders—supported by the administration’s stated objective to increase the level of homeownership in the United States despite having reached relative saturation decades before—ignited this explosive powder-keg, which set off a domino effect in the financial markets worldwide. Historians may well look back on this “event” as this generation’s Black Tuesday in touching off the first major crisis of the new Millennium.
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• Poverty According to the U.S. Census Bureau’s annual survey, more than 37 million Americans were living below the poverty level in 2007—virtually the same number as in 1964. Poverty levels are defined as $10,294 annual income for a one-person household, $13,167 annual income for a two-person household, $16,079 annual income for a three-person household, and $20,614 annual income for a four-person household.30 • Legal Immigration More than 1 million immigrants become naturalized U.S. citizens nearly every year. According to the Center for Immigration Studies (CIS), 1,052,415 immigrants became citizens in 2007.31 Legal immigration to the United States has increased by more than 50 percent since 2000. Because of this, the size of the Boomer Generation has actually grown since 1964 because of the influx of Boomer immigrants, which more than made up for the demise of millions of the original 76 million U.S.-born Boomers. Consequently, the current population of Boomers in the United States is more than 78 million, which means that the largest U.S. generation in U.S. history will be roughly the same size in 2011 as it was almost 50 years before, which will only exacerbate problems relating to Social Security, Medicare, and Medicaid entitlements. • Illegal Immigration The CIS estimates that there are approximately 12 million illegal aliens living in the United States.32 However, because of the size of the challenge, it is extraordinarily difficult to estimate the size of this segment accurately. Illegal immigration is also a multiheaded monster, because it has a direct or indirect impact on so many other elements of the economy, such as labor, expenditures, taxes, schools, hospitals, and public services, just to name a few. It has long been believed that the tax revenue collected from illegal immigrants exceeded the cost of the services that they use. But a December 2007 report from the CBO concluded that the cost of providing services to “unauthorized immigrants” exceeds what they pay in state and local taxes, therefore creating a net drain instead of a net gain to the U.S. economy. The study went on to say that only about one-half of all unauthorized immigrants pay federal, state, or local taxes, yet some services are still provided to this population. • The Wars in Iraq and Afghanistan Last, but certainly not least, in the checklist for America’s vital signs is the war in Iraq—currently the second longest war in American history, behind only Vietnam in its longevity. Through the first half of FY 2008, Congress had approved a total of $700 billion since the war started in early 2003. The effort is currently on a burn-rate of more than $300 million a day. And, like most wars, this one will also keep on spending well after the last troops have
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left the region. A study by Nobel prize-winning economist Joseph E. Stiglitz estimated that the total cost of the war in Iraq could top $2 trillion.33 Add to this an increasing need to respond to the resurgence of the Taliban and al-Qaeda in Afghanistan, and the United States finds itself funding efforts it cannot possibly afford and that show virtually no direct benefit to the American people.
The preceding checklist of American’s vital signs includes some formidable issues that will take a monumental effort in order to begin to minimize their negative impact on future generations of Americans.
Wild Cards America certainly has more than its fair share of economic and fiscal challenges, which may take decades to clean up. Making the chore much harder is the unpredictability of natural disasters such as floods, forest fires, hurricanes, and snowstorms. Munich Re, the world’s largest reinsurance company, reported that natural-disaster-related losses exceeded $75 billion in the United States in 2007—much smaller than the record $220 billion in 2005, fueled mainly by Hurricane Katrina and other Gulf Coast storms.34 Floods and fires—exacerbated by the overproduction of carbon emissions—account for loss of both life and property and have climbed into the hundreds of billions annually in the United States. Newark (California)-based Risk Management Solutions has estimated the total cost of damage from Hurricane Katrina as far exceeding $100 billion before the dust settles.35 Beyond natural disasters, surprise acts of terrorism or the need to utilize the military in ways and at times that no one can foresee all add to the country’s financial stress. Because the vast majority of U.S. military resources are committed in the Middle East, the United States is without a tremendous amount of flexibility when it comes to deployment domestically or elsewhere around the globe. Its presence in the Middle East puts the United States at risk in terms of the ability to respond to the unknown. The proactive decision to go to war is one thing, but the ability to react and mobilize militarily based on unforeseen threats or actions is quite another, one which has been greatly limited. The bottom line is this: we can’t afford war anymore. The idea of funding $5 billion per year for an eastern European missile shield to protect U.S. allies in the region from potential attacks is somewhat Reaganesque in its Star Wars–like imprudence.
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Some wild card disasters are predictable and some are not, but the frequency and intensity of both kinds of disasters are growing with each passing year. This creates the most complex and expensive challenge in U.S. history. This destructive bubble has been consistently pushed forward to future generations of Americans who will not have that luxury but instead will be forced to deal with it.
State-of-the-Mess We’re In The task that lies ahead for the next president of the United States is—in some ways—more daunting than the challenges that FDR faced some 80 years ago. The reason it’s so daunting is that the issues have become so much more complicated since the 1930s. The country is more than twice the size it was in 1933 and approaching three times the size, considering undocumented workers. The country essentially starts each year close to half a trillion dollars in the hole, given only the obligation to service the national debt—more than 1 billion dollars per day in interest alone. At the same time, the United States fights a war that, like Vietnam, will not end well and will not improve conditions at home or relations around the world. For the first time in American history, we may be raising a generation that will be unable to say that they lived a life that was better than that of their parents, at least materially. And that is a very sad fact. The parents of the Boomers did all that they could to help their children enjoy a better life. They wanted their children to be better educated, and they were. They wanted to help their children—financially or otherwise—to have a nice home and a good job without the worries inherent in growing up during a depression or a war. And, in the end, they wanted to leave their children a little nest egg— largely created from the significant equity appreciation in the homes that they purchased in the 1950s and 1960s. What will Boomers leave behind as a legacy—financially or otherwise? Right now, the picture is murky at best. Although much has been written about the impact of vast numbers of Boomers retiring and putting additional pressure on already overstressed Social Security and Medicare systems, few have looked at the overall impact of Boomers stepping out of conventional jobs and income levels at the age of 65. But that’s only part of the picture. Here’s a look at the full economic impact of the Boomers exiting the labor force: 1. Labor Force Contribution (Quantitative). Purely from a numbers standpoint, Boomers represent the largest segment of workers in the labor force. Replacing them will be difficult because Gen X is a much smaller generation,
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3.
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and, even though the Millennials represent a larger generation, it will take time for them to gain experience in large numbers. Labor Force Contribution (Qualitative). Boomers represent the most highly educated generation in history; they have very deep experience as well as work and leadership skills. Leaving the labor force along with the Boomers is a vast reservoir of knowledge that will be difficult to replace quickly. Productivity Contribution. Boomers were driven to get ahead and, consequently, had no reluctance about working in the office until 10:00 P.M., going home for a few hours of sleep, and then getting up and doing it all over again. Boomers viewed working at home at night and on the weekends as simply part of what was required for them to achieve their goal—a higher standard of living than their parents. Replacing Boomers in the labor force will include two generations that do not view work in the same way that Boomers did. Gen Xers and Millennials both look at work as a means to an end—not an end in itself. Leaving the office at 5:00 P.M. will more likely become their habit—not staying until 10:00 P.M. The economy loses a powerful amount of productivity when the Boomers exit. Economic Contribution. Boomers who retire from the active labor force or decide to channel their energies in more altruistic ways as volunteers will, in large numbers, stop contributing to the government by way of income taxes and Social Security, Medicare, and Medicaid taxes. Economic Withdrawal. At the same time that their contribution in to the system will slow or stop, Boomers will begin to draw from the system through Social Security and other related benefits. Additionally, Boomers are expected to live longer than previous generations—on average, to age 83 years. Consumption Downsize. The generation that earned the moniker of “conspicuous consumers” will begin to ratchet down their spending as their children leave the nest and as many Boomers begin to live on fixed incomes. They will be missed at retail and will be difficult to replace.
Some people that believe that, because Boomers are a relatively healthy and energetic group, they will prefer to continue to work beyond the conventional retirement age of 65. Even though that may be true, the assumption that Boomers will simply stay in income- and tax-generating jobs might be a huge mistake. Certainly some Boomers will continue as part of the labor force as they always have. However, a growing number of Boomers will transition to work situations that allow them to both use their skills and, at the same time, to give back to their communities. Although giving has not been their strong suit over the past 30 years, Boomers may surprise many people as they enter elderhood and begin to reflect on a life that could have included much more giving than taking.
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Saviors of the American Dream? Boomers have a decision to make. They can run out the clock and leave the United States in the worst shape it has been in since the Great Depression. Or they can rise to the occasion and be part of a solution that will ensure a better world for their kids. Boomers already know about living in a time of more. Now they need to learn—as did their great-grandparents—about living in a time of less. That will be a tall order for Boomer parents—themselves poster children for excessive living. Will Boomers be capable of providing the wisdom and guidance for their generational constellation mates that will be charged— as the GI Generation was—with providing the blood, sweat, and tears to carry a country for 20 years? The Boomer Generation has an opportunity to step up and write a new legacy for itself over the next 20 years. Boomers are blessed with everything that they need to achieve—individually and collectively—what FDR and his Missionary Generation did during the Fourth Turning of the last American Crisis. They have the creativity, intelligence, experience, guts, chutzpah, and that incredible need to achieve that will not fade away easily as they approach retirement. Boomers now have an inspired leader to lead them. They also have the time to do what is needed. Now only one question remains—will they?
Chapter 4
Boomer Spring: 1946 to 1964 Making a new beginning is one third of the work. —an Irish proverb
A little more than 3 weeks after the second of two atomic bombs was dropped on Japan in August 1945, the Japanese surrendered to the United States on the deck of the U.S.S. Missouri in Tokyo Harbor on Sunday, September 2. World War II was officially over—and with it a very long, very difficult period of personal and national sacrifice and loss: loss of fortunes, loss of innocence, loss of life. What was also over was the 16-year Crisis which also signaled the end of the Great Power Cycle—a cycle that started with the death of one president and ended with the death of another. Ironically, neither Presidents Lincoln nor Roosevelt lived to witness the culmination of their seminal contributions to American history. Lincoln was killed just 9 days after the South surrendered at Appomattox— 5 months before the signing of the Thirteenth Amendment, which officially ended slavery. When he died just 30 days before the Germans surrendered on May 8, 1945, FDR missed one of the greatest celebrations in U.S. history. In big cities and rural towns, people came together in the streets, marking the end of a very dark era and welcoming the light of a new spring. During the course of the war, movie theaters across the country were often filled with Americans anxious to watch the newsreels in hopes of the war’s end. The number of movie tickets sold during the war years has never been equaled—and probably never will be. More than 4.5 billion tickets were sold in 1945 alone, more than three times the number sold in 2007.1 No doubt those movie ticket sales were influenced by the fact that television
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was still very much in its infancy, but that period in American history also represented an important coming together, both physically and emotionally, in communities around the nation.
A Time of Expansion As one cycle ended, another began—with the First Turning of the Millennial Cycle, which ultimately brought the United States into a new century and a new millennium. It was a period of optimism and growth—a period that continues to build on the coming together of community that was established during the Crisis. The rotting institutions of the past were gone. The focus was now less on the individual and more on communities of people—family, church, even work. With a 16-year Crisis behind it, America was thirsting to move on. Eisenhower’s Lost Generation replaced FDR’s Missionary Generation as the senior leaders of American society. Many of its members had also lived through World War I and the influenza outbreak of 1918. The new turning could not have come sooner for them, now the leaders of a thriving peacetime America. Millions of GIs returned to the United States following V-J Day, in August 1945, and started the process of reentering civilian life. They made their way back to parents, girlfriends and wives, and some to their own children whom they had never before seen. As a result, the demand for affordable housing was particularly strong in the late 1940s. Taking advantage of the need was Long Island developer Abraham Levitt & Sons, who announced on May 7, 1947, that it was building a 2000-unit planned community of rental homes for returning GIs and their families. Within a day, more than half of the units had been rented and Levittown was born. By 1949, the Levitts started to build and sell larger homes, and, for just $98 down and payments of $58 a month, a family could buy a Levittown ranch for $7,990. The new ranches came complete with a brand-new 121/2-inch black-and-white Admiral TV set, built right into the wall.2 Low-interest GI loans enabled many couples to purchase their very first home, establish roots, and begin a family of baby boomers.
The Boom Is On On January 1, 1946, at 12:01 A.M., Kathleen Casey-Kirschling was born in a Philadelphia hospital and was widely regarded as the very first of the more than 76 million Boomers born from 1946 through 1964. Maternity wards
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across the United States were bursting, often handling more than 50 percent more deliveries per year compared to the war years. By the time the 1950s rolled around, many hospitals had either expanded or created entirely new maternity hospitals that were dedicated exclusively to delivering Boomer babies. According to the Centers for Disease Control’s (CDC) National Center for Health Statistics, in the 18 years prior to the end of World War II, the number of births in the United States totaled 46.7 million, or roughly 2.5 million babies per year on average. However, the 18 years after the war produced a record-smashing 75.8 million births, or an average of 4.2 million births a year. That’s an average of 1.7 million more births per year, or a total of 30 million incremental births over the 18-year-period.3 The rate of population growth after the war exploded, topping 2 percent for the first time since 1910—an extraordinary year in which the U.S. population increased by 1.9 million.4 However, more than half of that 1910 gain was attributed to the swarm of more than 1 million immigrants who were legally admitted to the country that year—about the same number of immigrants as were admitted in 2007.5
Mother Knows Best In the years following the war, the social orientation skewed toward a strong community of support from friends and family. The country had not yet sprouted its wings on the interstate highway network, which was to come later, in the 1950s, under President Eisenhower, so home for new parents of Boomers was more likely in the general vicinity of their own parents and grandparents. The family unit was therefore close in more ways than one. Grandparents were often actively involved in caring for the new arrivals. Dads were typically at work during the day, and moms ran the household. Dinnertime became the opportunity for the family to sit down together to discuss the events of the day—in a world before constant communication with cell phones, e-mail, and text messaging. It was also the time when Boomers were called to the carpet, now that dad was home. All of the threats made by mom to “wait until your father comes home” were usually aired at the dinner table, with GI dad holding court. Grandparents often served as surrogate parents and managed the children with the strict and inflexible approach that they had used on their own children. Boomer moms often counterbalanced the militaristic drills
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with a softer, gentler side. Moms were there, ready to indulge the first generation to be born after so much sacrifice, and indulge they did.
Stay-at-Home Moms The GI Generation moms were, for the most part, stay-at-home moms in a postwar era of new inventions that were designed to make domestic life a little easier. New washing machines, dryers, vacuums, and a score of household products were introduced, with the promise of helping keep that “schoolgirl complexion” (Palmolive soap), or put an end to dental decay (“Look ma, no cavities!” Crest toothpaste). These time-saving, lifeimproving products gave Boomer moms more time and energy to devote to their children. The GI Generation dads, on the other hand, oozed with testosterone and the swagger of John Wayne—leftover from the storied days when good guys won wars and the bad guys were vanquished, which, in many ways, provided a blueprint for American leaders for decades to come. It certainly wasn’t the first time that children born in the turning immediately following a Crisis were spoiled by mothers who wanted to create a world that in no way resembled the one in which they grew up. Similar to Boomers, FDR’s Missionary Generation was raised as the indulged children of a First Turning Expansion in the years following the Civil War. Like the Missionary Generation before them, Boomers were raised as the indulged children following a Crisis—in an optimistic world of possibility. Their indulgence helped give them license—license to their opinions, to question authority, to consider their own needs first. In the case of Boomers, they arrived after a particularly difficult Fourth Turning—a very severe winter. The core of the Crisis lasted almost as long as the arrival of an entire generation, those from the Silent Generation. Early wave Silent Generation members—born from around 1925 to 1930—were often the forgotten children of the Depression, because some parents ultimately filled their own needs first. Young boys were often on their own from a very early age, hopping freights cars across the country while panhandling for food and a place to sleep.
Hierarchy of Needs In 1954, psychologist Abraham Maslow introduced his now famous Hierarchy of Needs,6 which describes the order by which human beings are driven to satisfy their needs—starting with the most basic physiological
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FIGURE 4.1. Maslow’s Hierarchy of Needs Boomers expected their basic physiological and safety needs to be fulfilled. The parents of Boomers—especially moms—were driven to, often obsessed with, building a better life for their children.
Selfactualization Esteem needs
Belonging needs
Safety needs
Physiological needs Food, clothing, shelter
Source: Hierarchy of Needs—Abraham Maslow (1954)
needs and progressing to higher needs only after lower needs in the hierarchy were met. Maslow believed that, when faced with a choice, individuals satisfied the most basic of human physiological needs first—thirst, hunger, and sleep. Figure 4.1 is a graphic representation of Maslow’s theory. The first four levels deal with what he termed deficit needs. According to Maslow, each deficit need must be satisfied, starting with the base of the pyramid, before advancing to a higher need. Boomer moms vowed to raise their children in an environment free from worry about food, clothing, shelter, and safety, and they encouraged their children to “be all that they could be.” Dr. Spock’s Child Care was by now a best-seller and had become the de facto source of advice on the most effective means of parenting the postwar child. Boomer moms were filled with optimism for the promise in the lives of their children, who could easily climb past the physiological and safety needs and onto those needs based
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on feelings of belonging self-esteem and achievement. The last thing that Boomer moms wanted was to have their children experience a childhood like their own—one of anxiety over the very basics of survival. Boomers grew up with full bellies, in safe neighborhoods, where the only requirement was to be home before the street lights turned on. Strong institutional models were birthed right alongside Boomers and helped give them a sense of belonging, to a little league team or scout troop, at a very early age—an experience their parents mostly didn’t have. Although only one-third of adults over 25 in 1947 held a high school degree, by the time the youngest Boomer graduated from high school, around 1982, that percentage had nearly tripled.7 Parents of Boomers expected their children to graduate from high school. And Boomers became the first generation in U.S. history to be expected to go on to college—something that was a luxury for members of prior generations, who often were expected to begin to work as soon as they could in order to pay for their own existence. As Boomers matured and felt secure that the needs associated with the first three levels of Maslow’s hierarchy were met, developing their selfesteem became the next priority. Esteem manifests itself in two ways, according to Maslow—the need for (1) internal respect or self-respect and (2) external respect or respect from others. Satisfying the self-esteem needs can lead to feelings of responsibility, achievement, and confidence. From social interactions to the Boomers’ first taste of competition and achievement, aspects of self-esteem became the hallmark attributes of the Boomer generation for decades to come. It’s not surprising that a generation of individuals whose basic needs were met from the very start might develop as confident, self-absorbed personalities who were driven to achieve. Unlike the generations immediately before them, the Boomers have always lived in a world where the needs of the individual came first. They enjoyed an early life that was free from the pain and sacrifice of their parents’ and grandparents’ generations.
Teaming Up with Other Generations A selfless GI Generation returned from war and started a new life in a new America. Some went to school. Others went directly into business at the best possible time in the cycle—at the beginning of an expansion. Members of the GI Generation moved easily into leadership positions in businesses that were just beginning to take off, with their military duty serving as a
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decided plus on their résumés. The vaunted Harvard Class of 1949 produced a record number of captains of industry: Warren Buffett, James Burke (Johnson & Johnson), Marvin Traub (Bloomingdales), Thomas Murphy (Capital Cities/ABC), and many others like them all entered the workforce at just the right time and rode a rocket of growth to the top of the business world. The timing could not have been better to enter a business world. Boomers helped the GI Generation achieve remarkable success, creating new demand: first, as the largest generation of babies in need of dozens of products old and new; then, as the young adult consumers, with plenty of their own disposable income. Boomers obliged by disposing of most of it.
Loyalty Runs Deep During the First Turning, returning GIs brought their intense sense of loyalty to their new vocations. Spending 40 years with one company before retiring with a gold watch was not at all uncommon. And loyalty was a twoway street in corporate America during the First Turning. Companies such as General Motors provided generous benefits and pension packages for employees—through negotiations with the United Auto Workers (UAW) and, to this day, are still paying the price in the form of billions of dollars of legacy entitlement commitments. Loyalty was pervasive in American society during the First Turning. It was a time when people stayed put—when baseball players wore one and only one uniform during their entire careers. It was long before free agency, and provided comfort in knowing that your favorite player most likely would be back from one season to the next. Joe DiMaggio (Yankees), Ted Williams (Red Sox), Ernie Banks (Cubs), Stan Musial (Cardinals), and Sandy Koufax (Dodgers) all played on only one team during their entire careers until free agency appeared during the Second Turning, unlocking the salary flood gates and bidding adieu to a time of innocence and loyalty.
It’s a Wonderful Life It was certainly no coincidence that Frank Capra’s epic film It’s a Wonderful Life was released in 1946. It truly was becoming a wonderful life in America in the years after the war. The GI Generation welcomed the routine of getting up every morning, reading the daily newspaper, and then hustling off to work—before returning in the early evening for a family dinner. The
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days of bread lines were in the distant past, and Americans were now living in the land of plenty. Meanwhile, early wave Boomers (born 1946–1954) and their families began a lifelong love affair with America’s latest phenomenon—television. As the first generation to grow up with the new medium, Boomers were mesmerized by shows such as The Adventures of Superman, Howdy Doody, The Mickey Mouse Club, and Saturday morning cartoons. Boomer parents commanded control of the black-and-white television on most evenings, with mom pressing for shows such as I Love Lucy and The Honeymooners, whereas dad gained control for Dragnet, Bonanza, and Gunsmoke. For many Boomers, Sunday nights were family nights, planned around the 8:00 P.M. time slot, with the Ed Sullivan Show and the frequent appearances of Topo Gigio, Senor Wencas (“S’ahright”), Jose Jiminez, and the man balancing the spinning plates. It was a new era in two-way communications. Boomers were the first generation of children to grow up with a telephone in every home—something that was a luxury for generations of the past. Families were assigned the same phone number for decades—phone numbers that started with letters instead of numbers. It wasn’t uncommon for early wave Boomers to call their friends by dialing letters that corresponded with numbers. WE4-XXXX or BE2-XXXX. The letters identified a specific town or area of a larger town or city—in this case, WE for an area of Long Island and BE for a suburb of Boston. In the movies and on television shows, Klondike-5 (translated to 555-) became the prefix that was used to fictionalize a phone number. It was also a time when anything was possible in America. For example, a California teenager won the Olympic gold medal in the decathlon, as the Olympics returned, after a 12 years hiatus, in a still-recovering London. Bob Mathias became a symbol of American strength, hope, and opportunity. Even though life may have been wonderful for many Americans, it was still a less than perfect existence for others. Minorities, including women and African Americans, were still not treated equitably in America. Even though Jackie Robinson broke the color barrier to become the first African American to sign a major league baseball contract in 1947, it took other Major League Baseball teams, such as the Boston Red Sox, another 12 years before signing their first black players. The country had “come a long way, baby,” but it still had a long ways to go. As the 1950s drew to a close, America was growing in more ways than one. For two years in a row, the American flags in the classroom were being replaced with flags that first displayed 49 stars, because of Alaska’s admission
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to the Union in July 1958, and then 50 stars for Hawaii’s admission in August 1959.
An Era of Unwinnable Wars As the 1950s dawned, U.S. anxiety over the totalitarian behavior of its ally, the Soviet Union, in the final years of World War II reached a fever pitch in 1950. Wisconsin Senator Joe McCarthy fueled the anxiety of an impressionable nation with a series of paranoid assertions suggesting that communism was not only alive and well but thriving in the United States. This very same paranoia helped support a U.S. involvement in Korea in the first of two failed efforts to contain the spread of communism in Asia. The Vietnam war would come later. In 1952, World War II hero Dwight David Eisenhower was swept into the White House and Harry and Bess Truman just as quickly moved back to Independence, Missouri. Within months of his inauguration, Eisenhower had the United States out of Korea, but the United States, this time through the actions of the Central Intelligence Agency (CIA), continued to insert itself in the business of other countries, including orchestrated coups in Iran (1953) and Guatemala (1954). It was this mentality of “good versus evil,” which the GI Generation embraced, that would linger as part of U.S. foreign policy for decades—in fact well into the new century. As the Korean conflict ended, inflation fueled a slowdown in the American economy, and a skittish nation rode out a recession from 1953 to 1954. Although America was on a comeback in 1955, as the first Boomers approached the age of 10, it hit another brief bump in the long road to 1957 with the second recession of the decade. The number of Boomer births peaked in 1957 at 4.3 million—a number of births that, more than a half century later, had still not been reached, even though the country was almost twice as big. In the same year, the Soviets scored a major victory against the United States in the “race for space,” when they launched the first artificial satellite in 1957. As a result, the U.S. public school curriculum would never be the same; a heightened emphasis was placed on math and science as a requisite skill set for all children after the Soviet accomplishment in fear that communism might overtake America. Boomers were, of course, oblivious to the economic ebbs and flows throughout the 1950s. The focus for Boomers was more on backyard Wiffleball, living lives that resembled those of David and Ricky Nelson or Wally and Beaver Cleaver.
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Lost Innocence As the 1960s dawned, 75 percent of all Boomers had already been born, with the oldest entering high school. Most American households now owned a television set, which helped create a number of other firsts. Families crowded around the family TV with their parents to see the first-ever televised presidential debates during the 1960 campaign, with Republican candidate Richard Nixon, the incumbent vice president, against Democratic hopeful Senator John F. Kennedy from Massachusetts. Kennedy’s youth, energy, and charm impressed the nation—especially Boomer moms—and replaced the Lost Generation’s Eisenhower in the White House as the first of seven consecutive GI Generation presidents. It was the same year that Louisville’s Cassius Clay won a boxing gold medal at the Rome Olympics. He later reportedly threw his gold medal into the Mississippi River in protest of the Vietnam War. In 1964, Clay joined the Nation of Islam, changed his name to Muhammad Ali, and refused to be inducted into the U.S. military. He was convicted as a draft evader and sentenced to 5 years in jail. Because of racial tensions in the country at the time, Ali was viewed by mainstream America as an unpatriotic dissident when he reportedly answered a reporter’s question with another question: “Shoot them? For what? Them Vietcong never called me nigger.”8 Within 90 days of JFK’s inauguration, the charismatic president started down a dark path that would end in his death just 2 years later. In 1961, a band of Cuban exiles—trained by the CIA and supported by the U.S. government—came ashore at the Bay of Pigs in Cuba and attempted to overthrow the government of Fidel Castro. The failed attempt exposed the United States in its attempt to again overthrow a foreign government. Then, a year later in the fall of 1962, just 20 days after Johnny Carson took over the Tonight Show, President Kennedy spoke to the nation about his plans to place a naval blockade around the island of Cuba in response to a buildup of Soviet missiles just 90 miles from the U.S. mainland. Although some in Congress called for air strikes on Cuba, Kennedy continued to appeal to the Soviets, listening instead to his close advisors. On October 24, Senate majority leader Mike Mansfield purportedly made a statement during a briefing for Congressional leaders that eerily resembled the argument that Colin Powell would make 40 years later when discussing the downside of invading Iraq in 2003. Mansfield was concerned about “overstating the ease as well as the results of an air strike” on Cuba. “I don’t think there is any such thing as one of these quick, easy and sanitary air
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strikes. There is no such thing as a small military action. Now the moment we start anything in this field, we have to be prepared to do everything.”9 The world held its collective breath for 13 days until Soviet leader Nikita Khrushchev agreed to dismantle the missile sites, averting a potential nuclear war.
The Needs of Ms. Boomer As Boomers started to matriculate to America’s colleges in large numbers in the early 1960s, Boomer women represented a significant piece of that growth segment. No longer was a college education the exclusive domain of the American white male. With the dramatic increase in the number of college-educated women Boomers, there was a desire to have it all—not unlike their male counterparts. This caldron had been—and in some ways still is—bubbling since the early days of the Women’s Suffrage Movement. Boomer women felt the need to shape their own experience and identity, and this was new for America. Helping feed the need in 1963 was the best-selling work The Feminine Mystique by author Betty Friedan, which was based on interviews with college-educated housewives—many of them mothers of Boomers. Friedan wrote about the need for housewives to break from their “comfortable concentration camp”10 at home and enter the workforce in order to seek and find a satisfying and fulfilling life. This marked the beginning of the feminist movement in America and played extremely well with confident, well-educated Boomer women, who saw no difference between themselves and Boomer men. It was an era when women—like other marginalized groups—sought equal rights in all aspects of American life. But it was still a time when women were not treated equally—not allowed entry into something as benign as the Boston Marathon or a golf club in Georgia. It was still a time of inequality. The Equal Rights Amendment (ERA) to the U.S. Constitution was specifically written to protect the constitutional rights of women: equality of rights under the law shall not be denied or abridged by the United States or any state on account of sex. First proposed in 1923, the ERA has yet to be ratified by the necessary two-thirds majority of states. Fully 35 states have ratified the ERA, but a total of 38 states is necessary for it to become part of the U.S. Constitution as the 28th Amendment. In some ways, we have come so far. In others, we have barely begun the journey.
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Abraham, Martin, and John Racial tensions continued to disrupt progress of a nation that was still trying to find its footing after World War II. The 1954 landmark Supreme Court decision in the Brown vs. the Topeka (Kansas) Board of Education case made it illegal to segregate public schools. As a result of the Supreme Court ruling, nine African American students enrolled at Central High School in Little Rock, Arkansas, in the fall of 1957. In defiance, Arkansas Governor Orville Faubus ordered the Arkansas National Guard to surround Central High in order to deny admittance to the nine students as school opened in September. In response, President Eisenhower dispatched troops from the 101st Airborne Division to escort the students safely into Central High, averting a more serious conflict. Civil rights events occurred in places across the southern U.S. in places such as Montgomery, Alabama. A young Atlanta minister stepped into the fray as a peaceful voice of reason. In August 1963, Martin Luther King Jr. organized a peaceful march on Washington D.C.: tens of thousands gathered in front of the Lincoln Memorial and the Great Emancipator to hear King’s vision in his now famous “I Have a Dream” speech. In his lifelong struggle for equality for all people, King’s courage and wisdom helped pave the way for the Civil Rights Act of 1964. Within 90 days of that historic gathering at the Lincoln Memorial, President Kennedy suffered the same fate as Lincoln and, ironically, the same fate that would befall King less than 4 years later. At 1:30 P.M. Eastern Standard Time on Friday, November 22, 1963, the 35th president of the United States was shot and killed in Dallas, Texas. The event was a shock for the ages—a seminal event that became indelibly etched in the memory of early wave Boomers. Even today, Boomers are bound by the common experience and share that moment in history with other Boomers by asking the timeless question: where were you when you heard that Kennedy had been shot? An exciting time of hope and possibility came to a screeching halt. The ideals of this man, which were deeply rooted in the American Dream, ultimately moved forward—but not until a nation mourned more than the loss of a president. It mourned the loss of an era—when life was simple and carefree. The world was growing dark and most decidedly distressed.
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The First Turning Fades For Boomers, the assassination of President Kennedy may have been the shock that signaled the end of spring and the beginning of summer in the Millennial Cycle. Only 47 days after Dallas, the new president, Lyndon Baines Johnson (LBJ), declared war on poverty in America in his first State of the Union speech on January 8, 1964. Then the controversial Gulf of Tonkin incident led to the significant escalation of the war in Vietnam occurred only 90 days before the election of LBJ in November 1964. By Labor Day of 1964, LBJ had the justification that he needed to escalate the war and, at the same time, to appease his hawkish advisors. The 17-month period from August 1963 to the end of 1964 signaled the end of an era of hope and the beginning of a time of uncertainty and turbulence in America. Suddenly, the First Turning Expansion of the Millennial Cycle came to an abrupt ending, and the Second Turning Awakening began. In five short years, a society that was focused on a new beginning featuring commercial prosperity, institutional solidarity, political stability, and purposeful society ended with the threat of nuclear war, the assassination of a U.S. president, and U.S. involvement in a full-fledged war in Southeast Asia—another war that Americans would be unable to win. Clearly, the mood in America was changing. Even though many felt the hope of a new leader, others continued to feel increasingly disenfranchised. By the end of the turning, all Boomers had been born and the oldest were turning 18—the minimum age for active duty in the armed services. The transition to the Second Turning Awakening was complete. A time of innocence was over. And a time of conflict was just beginning.
Chapter 5
Boomer Summer: 1965 to 1984 Unfortunately, the administration chose to hang the rationale for expanding its war-making franchise in Southeast Asia on an incident which could not stand up to any kind of objective examination of the full documentation. So, as eventually happened in 1968, when the Gulf of Tonkin Resolution came to be reviewed, the incident that it was based on also came under scrutiny. When the events of 4 August (1964) were revealed to have been based on very thin evidence, it concurrently demonstrated that the Johnson administration had indulged in a very selective use of information. If the administration had not lied exactly, it had not been exactly honest with the public, or, for that matter, even honest within its own deliberations. The question no longer was about the appropriateness of the resolution, but the basic honesty of the administration. It would cast a pall on an already distrusted Johnson presidency. —Analysis of NSA historian Robert J. Hanyok, from the NSA’s Cryptologic Quarterly, on the declassification of documents relating to the alleged August 1964 incident that sparked the U.S. escalation of the war in Vietnam.1
The longest war in American history may have been sparked by an incident that didn’t even happen. Based on declassified National Security Agency (NSA) documents that were released in 1975, data were apparently either selectively used or fabricated altogether to support an action that had been predetermined by the administration. The timing of the alleged incident is certainly fortuitous, if not completely calculated. At the time, LBJ was seeking first-time election to the office of president, against a formidable opponent in Republican Barry Goldwater. An attack on a pair of American destroyers in the Gulf of Tonkin, coupled by swift and decisive retaliatory action on the part of the incumbent president, might go a long way to help cinch an election that was less than 90 days away.
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In a matter of months after the assassination of JFK in November 1963, it was clear that the United States had the opportunity and means to justify an escalation of its involvement in Vietnam. All that was needed was motive and it looked as though the Gulf of Tonkin incident would fill the bill. Americans certainly have a history of rallying around the flag when attacked. After reports of the Gulf of Tonkin incident, U.S. military enlistments spiked, just as they had following Pearl Harbor and, again, after the attacks of September 11, 2001. So an unprovoked attack on U.S. ships less than 3 months in advance of the general election in November 1964 certainly couldn’t hurt the president’s chances—especially given that he was running against a well-known Republican hawk. Prior to the alleged incident, U.S. troop levels had increased, from a group of just 700 advisors in 1960 to 16,000 troops in 1963. After the incident and the subsequent successful election of LBJ, troop levels grew exponentially: to 50,000 in May 1965; 125,000 in July; and 175,000 by the end of 1965—more than 10 times the number of troops from just the year before.2 The move puzzled many, however, because LBJ appeared to be a schizophrenic member of the GI Generation—not unlike his predecessor JFK— one minute displaying compassion for the country’s poor, the next minute displaying paranoia while planning to attack a foreign nation in order to stop the spread of communism. By the end of 1965, the stage had been set for a significant polarization inside of America—with the GI Generation on one side and the first-wave Boomers on the other. To a great extent, it was a small group from the GI Generation—people who, ironically, had little or no prior military experience—that drafted the blueprint for a very unpopular war that ultimately lasted nearly another decade. Vice President Hubert Humphrey and National Security Advisor McGeorge Bundy had no military experience at all; Secretary of State Dean Rusk and Secretary of Defense Robert McNamara had posted limited noncombat tours with the U.S. Army. Ironically, America would face a similar situation 40 years later: the administration of George W. Bush, a president who was entirely lacking in combat experience, built a case for war on what also turned out to be questionable intelligence.
America Turns and Enters an Awakening It was 1965 in America and the happy days of Ozzie and Harriet Nelson’s world were rapidly giving way to one of the earliest forms of reality television. Replacing Ozzie’s heroics, such as when he rescued the neighbor’s cat,
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were the images of naked South Vietnamese boys and girls running through the dirt streets of bombed-out villages. The nightly newscasts of Walter Cronkite (CBS), Chet Huntley and David Brinkley (NBC), and Howard K. Smith and Harry Reasoner (ABC) brought the reality of war into America’s living rooms for the first time ever. Suddenly, the romantic notion of a just and noble war seemed pathetically unimportant. The nightly news would more often be a series of split screens—with a shot of a helicopter sweeping in to collect bodies in a jungle clearing on one side and a shot of student demonstrators burning the American flag on the steps of the Capitol on the other. The daily images were a stark reminder that the mood in America had fundamentally shifted. It was the start of a new turning, and, suddenly, it didn’t look much like Kansas anymore. As a generation born of an expansion, Boomers started to experience their first major social shock as young adults during the Awakening. The Second Turning started with the escalation of the Vietnam War, which awakened the innermost passions of a generation of people who had no need for it. The establishment was coming under vicious scrutiny by the very generation that they had themselves created—the Boomers. A growing new social order was increasingly calling into question the motives of a generation that had romanticized war, turning it into a “good versus evil” drama in which good always prevailed and evil was always vanquished. But war was becoming more complex, with increasingly uncertain outcomes. Few Awakenings in history can match the level of frustration and anger felt by multiple generations of Americans. Members of the GI Generation looked at young rebellious Boomers as smart-ass know-it-alls. Boomers looked at members of the GI Generation as inflexible bullies, telling the rest of the world what to do and how to do it. It was the first time that the motives of the storied GI Generation were questioned. Political and social injustices were the charges levied against a generation whose racial and ideological prejudices were largely driven by fear—fear of minorities, fear of communists, and fear that their own children feared neither minorities nor communists.
A Generation Gap The clouds of the Second Turning rolled in and replaced the docile and innocent world of Father Knows Best with the dangerous and unpredictable world of Mission Impossible. Boomers were coming of age, having enjoyed
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a life of unprecedented freedom and choice, free from the types of sacrifices that prior generations had made. Boomer children had lived in a world where their needs came first. They were the self-confident, self-absorbed sons and daughters of GI Joe and Betty Crocker—who hated to be told what to do. After an indulged childhood, the battleground was set for a classic confrontation between two dominant generations, and they were about to make themselves heard in the streets and on campuses across America. The GI Generation parents, who grew up obeying orders without question, were raising a generation of people who just couldn’t help but ask “why?” Frustrated parents let their bitter disappointments be known, and their nonconformist sons and daughters pushed back. Suggestions for Marine-like buzz haircuts turned instead into Beatles-like mops for the boys. Dresses that fell below the knee turned into miniskirts for the girls. Behavior that was considered tasteless and uncouth by young ladies of past generations was not only done but probably overdone. Sex, drugs, and rock ’n roll—it was more than just a lyric for Boomers. It was a declaration of independence for an entire generation of people who were hell-bent on shaping their own opinions and lives. It was during this period that the term generation gap was coined in America, referring to a profound and growing lack of understanding between GI Generation parents and their Boomer children about their differences in experiences, opinions, behavior, and choices. Certainly, this was not the first time in history that such a gap existed. But, in the 1960s, the sheer number of Boomers gave them unprecedented influence and voice. In music, fashion, culture, social conscience, and politics, Boomers defied their GI Generation parents, making the gap even wider. Boomers took up arms against the institutions that they believed were telling them what to do, where to go, what to wear, and how to act. In turn, Boomers had little difficulty telling authority where to go. They didn’t just debate the issues on the war and equal rights—they burned their draft cards and their bras in defiance. Boomers came of age as the young adults of an Awakening—the first social shock for Boomers—and the moment would galvanize the generation and its personality for life. The GI Generation also experienced its first shock as young adults, but as the young adults of a Crisis that similarly influenced the rest of their lives. Even though it was the same phase of life for both generations, the events were quite different. This is why the generations
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became wired as polar opposites: two very headstrong generations—and each thought that its way was the only way.
The Great Society On Monday, January 4, 1965, LBJ spoke to the country in his first State of the Union address since becoming elected. In his speech, the president outlined his vision for sweeping legislation that addressed the most pressing domestic issues facing the country. Johnson’s vision for a “Great Society” was a good one. The spirit of LBJ’s domestic programs was pure, and it spoke directly to the issues of the day that affected millions of Americans— poverty, education, civil rights, and healthcare for aging Americans. In some ways, LBJ sought to build on FDR’s original New Deal vision to help those who needed it most. Unfortunately, LBJ’s Great Society agenda was forced to compete with the agendas of a number of his GI Generation advisers who were determined to escalate U.S. involvement in Vietnam. Johnson appeared to be more interested in fixing a broken America than he was in fighting a war in Southeast Asia. But the hawks in the Johnson administration pressed hard for escalation only days after JFK was assassinated in Dallas. According to Stanley Karnow’s Vietnam: A History, just over a month after Kennedy’s assassination, Johnson told his joint chiefs of staff at a Christmas Eve gathering at the White House, “Just let me get elected and you can have your war.”3 Over time, Johnson was worn down by his advisors, and, in the end, he got elected—and they got their war. Ironically and, for some, unfortunately, Boomers started turning 18 years old just as the Johnson administration started to escalate the war in 1965. Rising out of the generational divide was the Boomer generation, poking at the conscience of America—questioning the wisdom of aggressively forcing an American way of life on other countries around the world. It was a foreign policy strategy that would cost the United States dearly as it lingered well into the new century. Coincidently, the United States went to war a total of three times during the Second (Vietnam) and Third Turnings (Gulf War and Iraq War); each time, the president of the United States was from the state of Texas. Although Crises have often originated outside the United States as issues of foreign affairs, Awakenings have mostly been home-grown conflicts. Boomers had been raised in an environment that encouraged questions
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and they were certainly asking them. Patriotic GI Generation dads willingly signed up for duty in Europe or the South Pacific. Some 30 years later, they expected their opinionated sons to do likewise in Vietnam, telling them that it was their duty and their obligation. That strategy was bound to fail and, of course, it did.
Generational Constellation Moving up into the role as senior leaders of American society from around 1965 to 1984 were heroes of the GI Generation. Many of them became captains of industry—plucked from the storied Harvard Business School classes of the late 1940s to lead America through its greatest period of expansion in history. This generation’s string of seven straight American presidents over a 35-year period—from the 35th president, JFK in 1961, to the 41st president George H.W. Bush, in 1993—is unprecedented in U.S. history. Only the Gilded Generation (born 1822–1842) comes close to such generational dominance in the White House, matching the GI Generation in total number, with seven presidents, but over only 28 years. John McCain’s Silent Generation took on the personality of a classic second child, wedged between the favorite first child (GI Generation) and the high-attention Boomer. The birth order of children in a family can have a profound effect on the personalities of the children as they grow. Child psychologists have long studied this phenomenon and typically find that oldest siblings tend to be responsible leaders, the youngest tend to be spoiled rotten and are often coy and manipulative, and the middle child often has no defined role in the family. Middle children tend to be loners, which helps explain why the Silent Generation is so called. It may also help explain why John McCain’s generation is the only generation in American history that has never produced an American president. The Gen X Generation—born 1965–1984—is the first generation in American history with a greater than 50 percent chance of growing up in a household with a single parent or with both parents working in order to fund the pursuit of their American Dream. Members of Gen X were also the first generation to experience daycare outside of the home in large numbers. Whereas Boomers were raised by mom, Gen Xers were largely raised by someone else’s mom. As the war in Vietnam started to heat up in 1965, members of the GI Generation were once again in a position to serve as masters to the younger Boomer Generation—this time, not as their parents but as their bosses.
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Over the course of the turning, tens of millions of Boomers came of age and entered the workforce for the first time.
Hello Darkness, My Old Friend If ever there was any doubt whether the mood in America had radically changed, that doubt was erased in the first six months of 1968. One of the darkest years in American history started with the Tet Offensive in Vietnam— an 8-month surge taking its name from the Vietnamese term Tet (meaning New Year)—the escalation started on January 30, 1968, the beginning of the Vietnamese New Year. Troop levels reached their pinnacle in 1968 (536,000 troops). The number of troop deaths also reached the highest levels in 1968—between 40 and 50 American deaths per day, totaling 16,592 deaths by year’s end.4 On returning from a trip to Vietnam following the Tet Offensive, even iconic newscaster Walter Cronkite appeared convinced of the futility of America’s war efforts in Southeast Asia: “It seems now more certain than ever that the bloody experience of Vietnam is to end in a stalemate.”5 An increasingly pessimistic LBJ reportedly responded to the broadcast, abruptly turning off the television and announcing to an aide that his role in this game of “Texas Hold ’Em” might be over: “That’s it. If I’ve lost Cronkite, I’ve lost middle America.”6 On Sunday, March 31, LBJ addressed the nation on live television and spoke about measures that he was proposing to limit the war in Vietnam. Toward the end of the speech, he shocked the nation by announcing that he would not be running for reelection in the fall. With America’s sons in the fields far away, with America’s future under challenge right here at home, with our hopes and the world’s hopes for peace in the balance every day, I do not believe that I should devote an hour or a day of my time to any personal partisan causes or to any duties other than the awesome duties of this office—the Presidency of your country. Accordingly, I shall not seek, and I will not accept, the nomination of my party for another term as your President.7
Johnson was done. He was now openly talking about limiting the war that he had escalated over the previous 3 years. Something had happened to cause the president to change his mind. Something had convinced him that the United States was off track. Was it Lady Bird? Was it Cronkite’s remarks? What was it? Perhaps we were about to find out.
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Untruths and the Unthinkable Although it took some years to be exposed to the public, one of the darkest little secrets of the Vietnam era happened in the small South Vietnamese hamlet of My Lai on March 16, 1968. Under the command of Lieutenant William Calley, the troops of Charlie Company were on a search-anddestroy mission to find North Vietnamese Vietcong fighters. Weeks before, dozens of U.S. soldiers were maimed or killed in the heavily mined area. Calley ordered his men to enter the village firing, and, when no Vietcong were found, the incident turned ugly. Frustrated U.S. soldiers turned their aggression against the villagers and murdered over 300 apparently unarmed civilians—most of them women and children.8 When word finally made it to the White House, this event may have been the tipping point of the war and, perhaps even, of the future of the Johnson administration. My Lai was just the first domino to fall in 1968. The next would come before tax day. A little more than 2 weeks after My Lai, while he was supporting striking sanitation workers in the city of Memphis, American civil rights leader Reverend Martin Luther King Jr. was struck down by an assassin’s bullet at the age of 39 on April 4, 1968. America was stunned by such a violent act against such a peace-loving man who espoused nonviolent civil disobedience as the path to civil rights change in America. Robert Kennedy (RFK) was campaigning in inner-city Indianapolis as part of his bid for the White House in 1968 when King was shot. He was to speak before a mostly African American crowd that night; instead of going forward with his political remarks, he offered these words of comfort: Ladies and Gentlemen—I’m only going to talk to you just for a minute or so this evening. Because . . . I have some very sad news for all of you, and I think sad news for all of our fellow citizens, and people who love peace all over the world, and that is that Martin Luther King was shot and was killed tonight in Memphis, Tennessee. Martin Luther King dedicated his life to love and to justice between fellow human beings. He died in the cause of that effort. In this difficult day, in this difficult time for the United States, it’s perhaps well to ask what kind of a nation we are and what direction we want to move in.9
Robert Kennedy’s soothing words comforted the crowd, but the hurt from the loss of King ran deep, and one of the darkest years in history was far from over. Within 60 days of the King assassination, RFK himself was
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assassinated in the kitchen of a Los Angeles hotel after winning the California primary against Eugene McCarthy. Within 60 days of the RFK assassination, demonstrations outside the Democratic National Convention in Chicago erupted into violence when protesters clashed with police, resulting in more than 600 arrests. A little over 60 days after the Chicago convention, Republican Richard M. Nixon was elected as the new president of the United States. Nixon’s election seemed to polarize the generations even further—the third GI Generation president in just 8 years.
The Draft Lottery The military draft was a rite of passage for all Boomer men as soon as they turned 18. Even though they couldn’t yet vote, it was their legal obligation to register with the local office of the Selective Service System on turning 18. And, as troop levels in Vietnam increased, it became clear that the military was short of soldiers. Even though able-bodied American males could be called up at anytime, draftees were taken in order of age—oldest first—which was considered unfair, especially if you were among the oldest eligible. The solution was to reinstitute the draft lottery on December 2, 1969—the first since 1942.10 That lottery determined the order of induction into service for U.S. males born between January 1, 1944, and December 31, 1950. A large glass container held 366 capsules, each corresponding to a day in the calendar year—including leap years. The lower the draft number was, the higher the likelihood would be that you would be drafted into the service, provided that you were physically fit to serve. A classification of 1A meant that the individual could report to active duty immediately if called up. Now young Boomers were being forced to serve in a war that was built on an aging generation’s view of what was right for the rest of the world. The very thought of being told what to do chafed Boomers no end. Being told to fight a war that was based on the premise of telling other countries what to do was grounds for rebellion. After the bloodiest years of the war, there appeared no end in sight when the draft returned, further alienating Boomers and strengthening their resolve to resist. With every passing year after the Gulf of Tonkin incident, another crop of close to 2 million 18-year-old Boomer males became draft-eligible. Of course, not all Boomers were classified as 1A, indicating that they were physically and mentally able to serve. Some registered as conscientious
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objectors—individuals opposed to serving in the armed forces based on moral or religious principles. Ironically, the one generation that was so vehemently opposed to the war ultimately sacrificed the most in terms of lives. In the end, almost two-thirds of the 58,19311 soldiers killed in Vietnam were Boomers and this—among other devastating events to come—had a dramatic and long-lasting impact on Boomers. Before the turbulent 1960s came to a close, the United States experienced a glimpse, in 1969, of U.S. life as it might be—a peaceful nation poised for accomplishment. Two important events helped America look momentarily beyond the war: Neil Armstrong fulfilled the vision of the late President John F. Kennedy—the United States had successfully sent a man to the moon before the end of the 1960s. Within 3 weeks of the moon landing, more than 500,000 people—most of them first-wave Boomers— gathered in upstate New York for 3 days of peace and music at the Woodstock Music & Art Fair from August 15 to August 18, 1969. For America, it was an important reminder of what life could be like. For Boomers, it was a defining moment and a statement of the generation’s personality and the end of one of the most difficult decades in American history.
The Decade of Lost Trust As a new decade dawned, the war continued and frustrations mounted, reaching a crescendo on May 4, 1970, when four student Boomers were shot and killed on the campus of Kent State University by Ohio National Guardsmen.“On May 4, four students at Kent State University were killed by rifle-fire from National Guardsmen dispatched by Ohio Governor James Rhodes, to keep order during several days of violence. There was a shock wave that brought the nation and its leadership close to the point of physical exhaustion,” recalled former Secretary of State Henry Kissinger in The White House Years. The momentum of student strikes and protests accelerated immediately. Washington took on the character of a besieged city. A pinnacle of mass public protest was reached . . . Police surrounded the White House; a ring of buses was used to shield the grounds of the President’s home . . . The very fabric of government was falling apart. The executive branch was shell-shocked. After all, their children and their friends’ children took part in the demonstrations . . . 12
In retrospect, the tragedy may have been the tipping point in the war. Just as My Lai may have been the last straw for LBJ, the Kent State killings marked
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the beginning of the end for Nixon.“Kent State, in May 1970, marked a turning point for Nixon, a beginning of his downhill slide toward Watergate,” said one of Nixon’s White House advisors, H.R. Haldeman, in his book The Ends of Power. “None of us realized it then (because) we were all too busy trying to calm the national furor over the Cambodian invasion.13 The frustrated National Guardsmen—some of them members of the GI Generation—may have simply reached a boiling point in a classic struggle between generations—one that unquestionably obeyed all of the rules and the other that resisted all of the rules. Kent State was symbolic of a war designed by the GI Generation and largely fought by the Boomers—a formula for failure from the very start.
All the President’s Men The American people were fed up with the Vietnam War and all that it represented. For frustrated members of the GI Generation, it meant another failed war effort—the second in as many decades. For the group also called the “Greatest Generation,” wars were not supposed to end this way: no flag raisings on Iwo Jima, no unconditional surrenders, no sailors kissing girls in Times Square. After the complete and final victory in World War II, the Vietnam War underscored the futility of both war and the imposition of one government’s will on another’s. In 1972, it was the start of another election year, and the Nixon administration wanted to take no chances in the president’s reelection bid and so went to great lengths to make sure that he would remain in the Oval Office. Nixon went so far as to pardon Jimmy Hoffa in consideration for the Teamster’s support—support that he had not gotten in the 1968 election— in the upcoming election. America would never look at politics or politicians the same way again after the Sunday edition of the Washington Post was distributed, June 18, 1972. The headline simply read: “Five Held in Plot to Bug Democratic Offices Here.” The story reported that a team of burglars had been caught by a security guard in the offices of the Democratic National Committee, which were located in the Watergate office complex in Washington D.C. On the surface, the story seemed pretty benign but young Post reporters Bob Woodward and Carl Bernstein were tenacious and, instinctively, would not let the story die. The early-wave Boomers worked with sources inside the government, including a shadowy figure known only as “Deep Throat”—a reference to a popular hard-core pornographic movie of the
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day. What followed was a little more than 2 years of deception and cover-up that ultimately led to Nixon’s resignation on August 9, 1974. The war in Vietnam officially ended on January 27, 1973, with an agreed-upon cease-fire and an agreement by the United States to withdraw all military personnel within 60 days; the North Vietnamese agreed to release more than 500 U.S. Prisoners of War. After 13 difficult years, the longest war in U.S. history was over. Two years later, Saigon fell to the North Vietnamese and was renamed Ho Chi Minh city. North and South Vietnam were reunited under communist control—the original objective of U.S. involvement in the region was thus essentially negated.
The Lessons from Vietnam In his 1996 book, In Retrospect: The Tragedy and Lessons of Vietnam, Robert S. McNamara (GI Generation), U.S. Secretary of Defense in the Kennedy and Johnson administrations, served up 11 lessons learned from the U.S. engagement in Vietnam. McNamara, a Harvard Business School graduate, wrote a book, closely resembling the popular management-style books of the day, that identified numerous erroneous assumptions and strategic miscalculations that were made while prosecuting the war. If only McNamara’s retrospective insights could have been his guiding vision in 1965, how different the outcomes would have been. Even more sadly, although his specific lessons were available to future administrations, they were all but ignored in the days leading up to the decision to invade Iraq in 2003. In particular, McNamara cautioned against underestimating the resolve of the locals and overestimating the potential dangers to the U.S. mainland.14 Although he steered well clear of comparing Vietnam with the Iraq War, McNamara’s lessons serve as a manifesto against preemptive war, and one only has to wonder how—30 years after the Vietnam War ended— such wisdom could have been ignored by the United States in 2003.
Roe v. Wade Aside from mandated military conscription, another important fight for choice during the Second Turning Awakening played out in the courtroom instead of in the rice paddies of Southeast Asia. Abortion was illegal in America before 1973, but its illegality was about to be challenged by a young Boomer whose name was withheld and only referred to as Jane Roe. Roe brought a class action suit challenging the constitutionality of Texas
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law that viewed abortion as a criminal offense. Roe was later identified as Boomer Norma McCovey. Prosecutor Henry Wade of Dallas represented the State of Texas when Roe challenged the state law prohibiting a woman’s right to an abortion. Wade had gained national notoriety when he represented the Lone Star State in the prosecution of Jack Ruby for the murder of Lee Harvey Oswald, presumed assassin of JFK. Wade was later found to have convicted a number of innocent defendants in order to maintain an almost perfect conviction record. Roe v. Wade played out in one of the most celebrated landmark cases of all time, in which the U.S. Supreme Court overturned all state and local laws prohibiting abortion—on the grounds that those laws violated a woman’s constitutional right to privacy. The ruling, decided on January 22, 1973, effectively made abortions during the first trimester permissible for any reason. The historic case was a victory for the pro-choice movement in the United States and a loss for the pro-life movement. An ironic byproduct of the Roe v. Wade decision was identified in the 2005 book Freakonomics by University of Chicago professor Steven D. Levitt and New York Times reporter Stephen J. Dubner. The authors link the significant drop in crime in the 1990s in cities like New York not to any change in strategy from Rudy Giuliani or his police commissioner, but to the fact that there were more abortions and fewer babies born (Gen Xers) during the years following Roe v. Wade. Fewer inner-city babies in the years 1974 to 1980 translated into fewer 15- to 21-year-olds in the 1990s. In other words, the authors believe that the decrease in crime was much more a matter of a statistically smaller pool of prospective criminals in inner cities. As the 1970s faded, many Boomers began to transition to life in the real world. By 1980, two-thirds of Boomers were already in the workforce, with some of the early wave Boomers moving up the corporate ladder. At the start of the decade, 20 young American Boomers defeated the Soviet hockey team at the 1980 Winter Olympics in Lake Placid—for many, the greatest sports moment in history. It may also have represented the first and only time that the Boomer Generation made the GI Generation proud in a way that they could understand and appreciate—by defeating evil in a way that was complete, final, and shared by the rest of the world. After incomplete and unsatisfying efforts in Korea and then Vietnam, ironically, it took a band of Boomer college hockey players to give GI Generation the “Iwo Jima” moment that they had been seeking for 35 years.
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Tech Sector In—Manufacturing Out It certainly is no surprise that the U.S. manufacturing sector has been shrinking for decades. Manufacturing jobs increased from 15.521 million in 1950 to 19.812 million in 1980, which represented the peak year in manufacturing employment; the numbers have been sliding ever since. According to the CBO, the drop in U.S. manufacturing jobs has actually accelerated since 2000. In 2004, there were 14.3 million manufacturing jobs in the United States, according to the CBO—down 3.0 million from 17.3 million in July 2000 and more than 5.2 million jobs since the historical peak. The number of U.S. manufacturing jobs has actually declined to 1950s levels in recent years. The United States officially became a “service economy” in 1982 when the services component of personal consumption expenditures of GDP topped expenditures for goods for the first time in history. The services sector has grown every year since 1982 and, in 2007, represented about 60 percent of consumption, whereas goods represented 40 percent of personal expenditures. But, fortunately for the U.S. economy, just as the manufacturing sector started to shrink, jobs in the tech sector took off—concurrent with the introduction of the IBM personal computer in 1981—and continued through the introduction of the World Wide Web in the early 1990s and into the late 1990s before hitting a wall when the “dot com” bubble burst. Since 2000, however, jobs in the tech sector have dramatically decreased. A University of Illinois-Chicago study showed that Internet technology (IT) jobs in Massachusetts (known for its high-tech environment) decreased by nearly 35 percent from 2000 to 2006. Ironically, many IT jobs are now going the way of conventional manufacturing jobs—offshore.
Right out of Central Casting Fade in: Exterior Western Plains at dusk: Cactus, rocks, sand, and wind blows up dust as tumbleweeds roll from right to left. Cut to:
Tight shot of a tall, handsome man on horseback wearing a crisp, white ten-gallon hat.
Cut to:
Tight shot of a large, dark figure on horseback wearing a crushed black hat.
Cut to:
Wide shot of both figures as they slowly approach each other and then finally stop.
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Cut to:
Extreme close-up of a hand reaching for a pearl-handled revolver.
Cut to:
Wide shot of the two figures. SFX (sound effects): One gunshot. Slowly, the large, dark figure slumps forward and then falls off the horse to the ground.
Cut to:
Extreme close-up of a hand replacing the pearl-handled revolver into its holster.
Cut to:
Wide shot of the tall, handsome man in white hat, riding off into the sunset.
Fade to black.
The 40th president of the United States was virtually always in control. After all, that was his training as an actor. The “great communicator” navigated through a first term that was burdened by the deep recession that he inherited. He responded with deep tax cuts and the reintroduction of escalating budget deficits, leading to a near tripling of the national debt— the most rapid rise in U.S. history. Ronald Reagan’s supply-side economics were roundly criticized as ineffective in helping increase tax revenue, and Reagan became the first president in U.S. history to preside over $1 trillion in outlays in a single year. The war in Vietnam was already a bad memory for America when Ronald Reagan took office, with most people vowing never ever to get involved in another Vietnam. There was another GI Generation president in the White House and a period of GI Generation leadership dominance in corporate America. Having spent much of mid-life (the Third Turning from 1965 to 1984) as the beneficiaries of the greatest commercial expansion in U.S. history, the GI Generation moved up the corporate ladder and into the roles as senior leaders of American society as the most successful generation of salespeople in U.S. history. So, as newly minted Boomer graduates made their way into the marketplace from 1971 to 1989, it was on the heels of a remarkable sales track record by the GI and the Silent Generations. Now it was time for Boomers to step up and grab the torch from their senior constellation mates. But, at about the mid-point of the Boomer entry into the business world, something dramatic happened on the way to continued record sales outputs. Around 1980, the rate of growth of the major corporations that had been reaping the post-World War II sales boom hit a wall.
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Sales outputs for the Dow components and S&P 500 corporations of the day, which had been growing at ever-increasing rates, peaked and started growing at ever-decreasing rates of growth. The trend was clear at the dawn of the 1980s: Sales outputs would simply be harder to grow with each passing year. Looking with disdain on the eager Boomers in business were their senior leaders from the GI Generation. Displeased with their efforts, GI Generation business leaders were once again disappointed in their Boomer offspring. First, they refused to serve their country. Now, they were simply unable to “sell like we did.”
The End of the Second Turning The Second Turning of the Millennial Cycle was wrought with conflict and tension, as Boomers questioned the authority and wisdom of its leadership and its laws. At the beginning of the turning, the United States was just starting to escalate a senseless war in Vietnam. By the end of the turning, the war had been over for more than a decade and most Boomers had moved on to jobs in an America at peace. The life lessons learned by the GI Generation, as young adults during the Crisis that ended with World War II, were quite different than those learned by the Boomer generation as the young adults during the Awakening. Although members of the GI Generation learned that sacrificial efforts such as D-Day were worth it, Boomers learned that waging war in strange locations tens of thousands of miles from home in order to impose an American way of life was probably not worth it. Ironically, three decades later, Boomers would be asking the same questions about Iraq, except, this time, there was no draft. Yet, also ironically, it would be a first-wave Boomer who would make the same mistake that another U.S. president from Texas had made 40 years before—ordering a pre-emptive military engagement in a foreign country with oppressive weather and with no exit plan. An era of lost innocence was over, and many Boomers had traded in their tie-dyed T-shirts, headbands, and love beads for dark suits, white shirts, and conservative ties. The “corporatization” of America—and of the Boomer generation—had begun.
Chapter 6
Boomer Autumn: 1985 to 2004 Every man must decide whether he will walk in the light of creative altruism or in the darkness of destructive selfishness. —Martin Luther King Jr.
Jeffrey Skilling will be remembered for a lot of things. Selflessness will not be one of them. Skilling will be remembered as the former chief executive officer (CEO) of the largest corporate bankruptcy in U.S. history. As the poster boy for bad corporate behavior, Skilling spent a career living in the gray area between what was legal and what was illegal. What was ethical or unethical was more often lost when business school students such as Skilling moved on to the real world. And that’s the unfortunate truth in an era driven by a mandate to increase shareowner value at almost any cost. Skilling’s own interpretation of that credo landed him in a federal penitentiary in Waseca, Minnesota, for 24 years.
The Unraveling: 1985–2004 Following the Second Turning Awakening of the Millennial Cycle, America slipped from the heat of summer to the coolness of autumn, a season when trust in institutions begins to erode and, usually, with good reason. Scandals such as the Iran-Contra deal, the Lewinsky indiscretion, and the justification for war in Iraq undermined the loyalty and confidence of the American public and helped bring about an overwhelming desire for dramatic change. As the Third Turning began, Boomers were approaching mid-life; they had high expectations for themselves and even higher expectations for their children. There was tremendous pressure to achieve in all aspects of
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their lives. Financially, Boomer adults fully expected to build a “better” life, which, for them, meant improving their standard of living—the number of cars in their garage, as well as the size and number of homes that they owned. What they forgot was that a quantum leap in their standard of living might come at the expense of the quality of their lives. During the Third Turning, it became increasingly necessary for both husband and wife to work outside of the home in order to maintain a relatively high standard of living. The result for parents was less time available with their children and more time on the weekend needed for running the household errands and chores that didn’t get done during the week because no one was home to do them. Consequently, Saturdays became a blur of “to do’s,” including laundry, food shopping, house cleaning, yard maintenance, and soccer games. Add more children to the equation and downtime became limited to the first minutes of a movie rental before falling asleep during the opening credits. Monday morning came quickly when Saturday and Sunday were mostly devoted to readying for another sprint to the next weekend. Even though dual careers may have afforded Boomers a bigger house, a second car, and some of the other trappings of the typical Third Turning family, all of that was not without its cost. Add to the equation a modicum of guilt—especially from mom—and you have a formula for a more permissive, more indulgent nurturing environment.
The Shifting Mood in America Given the ever-loosening parenting styles of the Third Turning, it’s not surprising that the conventional family structure was eroding as a result of the splintering of the family unit, which was most often focused on individual efforts as opposed to family efforts. The results included skyrocketing divorce rates and the high incidence of single-parent households, which often increased the level of parental guilt and thus led to more indulgence, less supervision, less respect, and an unraveling of values. Although the family unit during the Second Turning may have started to weaken, it decayed as the Third Turning progressed. According to a 2002 National Bureau of Economic Research (NBER) working paper by Marianne E. Page and Ann Huff Stevens, divorce rates increased by more than 50 percent from 1960 to 1995; nearly one-third of all children were born out of wedlock by 1995.1 As a result, more than half of all American children alive today can expect to spend at least some of their childhood years
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as part of a family that is headed by a mother who is divorced, separated, unwed, or widowed. The working paper went on to say that “family income of children whose parents divorce and remain divorced for at least six years falls by 40 to 45 percent,” which tends to make the single parent feel even more guilty and to work even harder and longer hours, resulting in an escalation of indulgence and a progressively weakening family structure. Another child-rearing trend of the Third Turning involved keeping children extremely busy in all kinds of extracurricular activities—especially when mom was working out of the home. In 2001, Dr. Alvin Rosenfield and Nicole Wise wrote a best-selling book, The Over-scheduled Child: Avoiding the Hyper-parenting Trap,2 that described a frenetic child-rearing style that involves parents who push their children to build world-class résumés in advance of applying to the country’s leading colleges. To take this a step further, dozens of workshops have emerged across the country offering help to parents who have overscheduled their children, leaving little time for them just to hang out. The idea of kids simply being kids all but disappeared by the end of the turning. Kids were booked— often forced to choose a single sport or activity because of the level of intensity and year-round commitment required to compete at the highest possible level. To the overachieving Boomer mother, just hanging out might have appeared to be a waste of time. In his book On Paradise Drive,3 New York Times columnist David Brooks calls Boomer mothers Uber Moms—the product of a cross-generational conspiracy to focus energy and milliondollar educations to rear young achievers. “Uber Moms are easily recognizable because they generally weigh less than their children,” says Brooks.
Maturing Economy The U.S. economy continued to grow in actual terms during the Third Turning, but at ever-decreasing rates—after growing at a very robust average of just over 4 percent during the 1950s and an even healthier 4.44 percent during the 1960s. But then the economy hit the top—the average rate of growth stopped increasing and started decreasing on a very slow but steady pace over the next four decades. When economic and financial results are served up every 90 days, it’s difficult to see any trend—especially when the economy has always moved through the classic four-phase business cycle of expansion, peak, contraction, and trough.
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FIGURE 6.1. Rate of U.S. GDP Growth Rate of U.S. GDP growth has been slowing since the 1960s.
Source: Bureau of Economic Analysis—U.S. Department of Commerce
Of course, the American economy continued to grow during the 1970s, 1980s, 1990s, and into the 2000s—but at ever-slower rates—at 3.30 percent in the 1970s, 3.09 percent in the 1980s, 3.12 percent in the 1990s, and just 2.55 percent through 2007. Through Q3 2008 GDP figures only make the first decade of the new century look even worse with growth of 1.06 percent.4 From a macro view, the U.S. economy started to mature in the 1970s, with its greatest growth rate years behind it, but few noticed that an uptrend had turned into a downtrend—at least, not until the mid-1980s. From a micro view, the same slowdown was having an impact on all U.S. corporations that had been in business at least since the end of World War II, including the hundreds of blue chip companies that drove the major indices—especially the Dow 30. Many of America’s great corporations reached peak growth rates during the latter years of the Second Turning, with the pace of erosion picking up speed in the early years of the Third Turning. The U.S. economy grew so fast through the 1950s, 1960s, and 1970s that it simply became harder and harder to match that growth starting in the 1980s—the decade that spawned cost-cutting. Consequently, many U.S. corporations became victims of their own success. The more they grew, the harder it was to grow even more. For example, General Electric (GE) more
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than tripled its revenue, from around $39 billion in 1990 to more than $129 billion in 2000, acquiring more than 100 companies per year from 1996 through 2000.5 If there ever was a parallel to performance-enhancing drugs, Jack Welch’s last 5 years at the helm of GE is roughly equivalent to Boomer Mark McGwire’s last 8 years in baseball. McGwire bucked the conventional baseball trends by dramatically improving his hitting statistics during the second half of his career compared to the first half. McGwire improved his batting average by 28 points and hit 125 more home runs over the second half of his career. By comparison, New York Yankee Hall of Famer Mickey Mantle hit 36 fewer home runs and dropped 26 points off his batting average over the second half of his career. Instant gratification became the hallmark of the Third Turning in almost all aspects of life, underscoring a major shift to selfish individualism over cooperative teamwork. The rules of engagement had changed. It was now every man and woman for himself or herself in a marketplace that was beginning to mature. By 1980, two-thirds of all Boomers had already entered the workforce, logging the long hours necessary to get noticed on their important climb up the earnings ladder. Boomers’ desire to have it all coincided with an economy that was beginning to show signs of maturity. Unlike the economic boom times that had defined their childhoods and young adulthoods, the Third Turning brought slower growth to the economy. The best years of growth at General Motors (GM), for example, were in the rear view mirror. From the mid-1970s to the early part of the new century, GM experienced a long and sliding road, as its rate of growth slowly declined until it turned negative in 2001. The former titan of industry was not only aging but in decline, along with many of its Dow component compadres. This was not a good thing for the waves of Boomers who began to enter the workforce just as the tide was turning and robust double-digit growth became harder and harder to deliver.
Growth at All Costs As revenue growth slowed for America’s maturing corporations, we witnessed the rise in importance of earnings growth and the birth of a near Faustian concept on Wall Street—shareholder value. If public corporations were unable to deliver top line growth consistently, they had sure better learn quickly how to deliver bottom line growth consistently.
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Suddenly, re-engineering became part of the business culture during the Third Turning, giving way to a host of new courses of business school study, including supply and value chain management, total quality management, and six sigma strategies. Suddenly, the product or service that a company created mattered much less than meeting analysts’ expectations— giving way to a new management formula at America’s maturing public companies: 1. When revenue and unit growth begins to slow. For some corporations, the rate of revenue and unit growth stopped increasing and started decreasing—until reaching a rate that is nil or negative. One of America’s most recognizable brands started to feel the growth pinch, after turning 100 years old, just after the start of the Third Turning. The Coca-Cola Company (ticker symbol: KO) went global well before most other American companies, and, in the early 1970s, it even began to peddle Coke in previously closed China. So, by the turn of the century, the soft drink giant had already spent over one-quarter of a century establishing a presence in China, introducing its brands to the largest number of new prospects in the world. Regardless, the rate of Coke’s growth continued to slow through the 1980s and 1990s, until it achieved negative growth in 1998 and then again in 2001 and 2002. No one can fault Coke for not trying every possible marketing strategy under the sun. And, when the company decided to increase marketing spending dramatically during the late Chuck Fruit’s final years as chief marketing officer, it essentially answered the question that marketers of hugely recognizable yet mature brands have been asking for decades: what would happen if we increased our marketing? The answer came back: not a whole lot. The lack of return on Coke’s investment prompted the company to shift to a decidedly different growth strategy, with the return of Neville Isdell as chairman in June 2004, to acquisition and product-development initiatives—strategies that quickly add brand-new revenue to the mix each year—revenue that was not there the previous year.6 But such strategies can be likened to sales promotion—although they certainly can add a temporary spike in revenue, a bigger and better sales promotion strategy would be required the next year. There are certainly limits to growth, and a closer look at Time-Warner’s Sports Illustrated shows that the universe of prospects for every product or service is limited to a number that is only known after it has been reached. In 1985, the sports-weekly had grown to a circulation of 3.1 million over a 30-year-period since launching in 1954. More than 20 years after reaching the 3.1 million mark, its circulation is still 3.1 million. Why? Because it had
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reached its natural size. Try as they might to grow subscriptions in a sportscrazy country, the folks at Time-Warner realized a long time ago that there are limits to the number of people who are willing to subscribe to their showcase publication. The good folks at maturing companies such as Hershey realized the very same thing about Twizzlers—no matter how much they wanted to expand sales of popular brands, those brands had effectively achieved natural limits. Unit sales growth was over, replaced by unit-pricing growth. 2. Downward pressure on price in order to maintain volume levels. Some corporations, such as GM, looked to maintain volume, and prices dropped often at the expense of margins. Employee discount programs certainly delivered volume, but at a cost. For many years, GM was the largest company in the world, often held up as the quintessential model of American business by those teaching the subject, such as Harvard’s John Kenneth Galbraith. Around 1975, the rate of GM’s unit sales began to slow—although sales were still growing in actual terms—and, over a quarter century, rode a long and declining road to negative unit growth, starting in 2001. Management monumentally misread the market and placed all bets on “making it up in volume.” This old-world assumption has cost GM and its employees dearly. Once considered the shining corporation on the hill, GM has been dying a slow death since the mid-1970s, tragically unable to see its way through to creating a wholly new business model. Table 6.1 shows the slide in terms of unit sales, market share, and total number of employees. 3. Cost reductions gain in importance. When revenue growth slows, cost reductions gain in importance in order to meet earnings targets. And that’s exactly the shift that took place toward the end of the Second Turning and into the Third Turning.
TABLE 6.1. The Unraveling of General Motors U.S. Light Vehicle Sales—1995 to 2007 General Motors Sales
1995
2000
2005
2007
Sales of U.S. Light Vehicles
4,895,000 U.S. Market Share: 32.4%
4,953,000 U.S. Market Share: 27.8%
4,517,730 U.S. Market Share: 25.9%
3,867,000 U.S. Market Share: 23.5%
Number of Employees
709,000
386,000
335,000
266,000
Source: SEC Filings
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For mature corporations, such as Kraft Foods, cost reductions became much more important to the process of delivering earnings increases. By the mid-1980s, corporate America introduced a new initiative to the workplace— re-engineering. Management consulting firm Coopers & Lybrand was one of the first organizations to help its corporate clients trim their bloated enterprises. Consultant Michael Hammer popularized the term re-engineering in his 1990 article in the Harvard Business Review, “Re-engineering Work: Don’t Automate, Obliterate.” Although Hammer and companies such as Coopers & Lybrand certainly helped lay the groundwork for the downsizing of corporate America, little explanation was given as to why the need for re-engineering appeared in the first place. And that reason, quite simply, is tied directly to the maturation of the American corporation and the inherent inability to continue indefinitely to grow sales at historical rates. For the first time ever, an American infrastructure that had been built up around the arrival of the Boomers in the 1950s, 1960s, and 1970s was forced to begin to dismantle. And so started the deconstruction of the American corporation that had been built up during the First and Second Turnings of the Millennial Cycle. 4. The wholesale acquisition of sales gains in importance. When organic growth could no longer drive the levels of revenue that corporations needed in order to continue earnings growth, inorganic growth strategies became the play for some. For example, GE used acquisitions aggressively to deliver portfolio growth. The Third Turning was one of the great periods of wealth creation in the history of the United States. Some of that wealth was the result of a tsunami of corporate deal-making and high-risk financing. From junk bonds to leveraged buyouts (LBOs) to record numbers of initial public offerings (IPOs) and mergers & acquisitions (M & A)—the path to wealth for some became less about developing new products and much more about investment banking. Accounting was also playing an increasingly detailed and complex role in serving up the results of America’s public corporations. When earnings growth became difficult to deliver, some companies used the embarrassingly transparent method of reporting earnings on a per share basis (EPS). A company could improve its earnings per share simply by purchasing blocks of shares on the open market, thereby reducing the number of shares outstanding and increasing EPS. 5. Earnings fork-in-the-road. Many U.S. corporations experienced this evolution of maturity, which— in the end—tested the mettle and morals of its highest-ranking executives.
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Some chose wisely. Others did not. Corporations that failed to deliver expected earnings growth found themselves in the difficult position of having to choose between (1) reporting decreased earnings or even negative earnings growth, for example, American Airlines (AMR) or (2) fabricating results, for example, HealthSouth (HLS). And, if all of that failed, perhaps Uncle Sam could help.
Corporate Welfare A new era in American politics arrived in Washington with the appearance of former Hollywood actor and California governor Ronald Reagan. By the time he was elected a second time in 1984, Reagan had already chartered a new course for America—one that favored the wealthy as well as the maturing American corporations. After a serious recession at the end of the Second Turning (1980–1982), a new political agenda began to unfold from an administration that would cut social programs from LBJ’s Great Society-era while dramatically increasing defense spending, on the way to creating record budget deficits as well as record levels of national debt. Under Ronald Reagan, the U.S. government rekindled its love affair with American corporations. Earlier in the decade, Chrysler Corporation was on the brink of bankruptcy before the U.S. government stepped in with a $1.5 billion7 loan in an effort to save hundreds of thousands of U.S. jobs. Later in the decade, the George H.W. Bush administration agreed to bailout the beleaguered savings and loan industry, costing U.S. tax payers in excess of $124 billion.8 In the end, Reagan will not be remembered for his failed economic policies or the Iran-Contra embarrassment, but rather for the classic confrontation of good versus the “evil empire”—the Soviet Union—before riding off into the sunset. As U.S. corporations struggled with top line revenue growth during the 1990s and into the 2000s, the U.S. government stepped in again to help— this time to make it easier for maturing public corporations to meet Wall Street’s bottom line expectations. While it’s true that the tax rate for U.S. corporations is among the highest in the developed world, it’s a rather superfluous point since the majority of them pay no income tax at all. In April 2002, the General Accounting Office (GAO) of the U.S. government released a report on corporate taxation, revealing that most public corporations paid no income taxes at all over the 5-year-period from 1996
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to 2000—a particularly robust era for corporate earnings. The GAO report said: • During the 5-year period, 61 percent of U.S. corporations and an even higher percentage (71 percent) of foreign-controlled corporations in the United States paid no income tax whatsoever. • Overall corporate taxes fell from 5 percent of GDP in 1946 to 1.4 percent in 2002. • Corporations accounted for 23 percent of all tax revenues collected by the U.S. government in 1960—13 percent in 1980 and less than 8 percent in 2002. • Although the corporate tax rate was at 35 percent in 2002, the average effective tax rate for all publicly traded companies in 2002 was 12 percent—down from 15 percent in 1999 and 18 percent in 1995.9
Why was there all of this benevolence for the publicly traded U.S. corporation? The answer was simple: lower corporate taxes meant higher corporate earnings. And that fulfills the number one Wall Street requirement that helps drive the price of a stock higher and higher. So, in a time when revenue growth was slowing, which mandates deeper cost cuts, any help from the federal government that will have a positive impact on earnings was greatly appreciated.
An Era of Cheap Labor After almost 20 years of driving costs out of maturing American corporations, the cost-savings strategies shifted after 2000. With pressure squarely on public corporations to continue to meet Wall Street’s stringent demands for steady increases in earnings, cheap labor became the choice of many as a way to squeeze a few more pennies out of expenses and into earnings. Cheap labor came in an increasing number of unlikely forms in the new century, and even the bluest of blue chip corporations took advantage of some if not all of these strategies: • Trade Agreements After more than a decade of mixed reviews, the North American Free Trade Agreement (NAFTA) stands as an abject failure to deliver on the original promises of the agreement. From the American worker’s perspective, the NAFTA resulted in the loss of jobs in the United States, primarily in the manufacturing sector. A little more than a decade after NAFTA was signed into law, the Central America Free Trade Agreement (CAFTA) was similarly criticized for having a negative impact on U.S. workers in the manufacturing
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and farming industries. The winners in such trade agreements have mostly been U.S. corporations that are seeking to drive costs out of their businesses by replacing higher-wage earners with lower-wage earners. • Minimum Wage The minimum wage in the United States remained frozen for the longest period in American history from September 1997 to July 2007, when it was finally increased to $5.85 from $5.15. Over the same period, Congress voted itself seven pay increases. At $5.15 an hour, an individual working full-time earned a total of $10,712 a year for an entire decade, a total that fell below the poverty level for a two-person household under 65 years of age, according to the U.S. Census.10 • Undocumented Workers According to an April 2006 study by the Pew Hispanic Center, there are 11 to 12 million undocumented workers in the United States, with close to onethird working in the leisure and hospitality industries and about 20 percent working in construction-related jobs.11 The undocumented worker is also becoming more and more transparent in American society. In many parts of the country, it is not uncommon to see large groups of undocumented workers gathering outside a Dunkin’ Donuts or 7-Eleven every morning for the chance to join a construction or landscaping crew for the day. Rightly or wrongly, undocumented workers have become a valuable resource for local businesses; therefore, the future status of these workers must be handled carefully to avoid a major disruption to the productivity of local communities. • Offshoring For years, many U.S. companies outsourced certain parts of their business processes in order to evolve their business model. But slower top-line growth drove many U.S. companies to offload jobs of all types to countries with significantly cheaper labor costs—relegating the latter-day rally cry of “Made in America” to the annals of American business folklore. For example, U.S. companies such as Dell, American Express, and a number of other credit card companies set up offshore customer service call centers in order to pay a fraction of the cost per hour for managing inbound 800 telephone numbers. No company ever sent its call center activity to India in order to improve the quality of its customer service. Even though the practice most assuredly saves companies money, the long-term impact of offshoring customer service is not yet known. What is known is that, with inbound offshored calls, time-to-resolution dramatically increases, probably as a result of lack of familiarity with products and U.S. consumer demands. Tight guidelines and scripting also restrict flexibility and empowerment of representatives—all of which results in a longer period of time on the phone, often without any resolution to the caller’s problem. Although the cost of that longer call may be significantly cheaper than one that is handled by an on-staff employee
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stateside, only time will tell how a company’s decision to save money might affect a consumer’s decision to spend money in the future.
The relentless pressure to squeeze dollars and cents out of mature enterprises—an exercise that started as a temporary initiative in the mid1980s—became as much a part of the office as the famed water cooler. In the years leading into the Fourth Turning, cost cutting certainly hit employees hard. But no one could have imagined that joining the party— in giving back to the corporation—would be a group that so many assumed was sacrosanct—retired employees.
Era of Lost Pensions The days of companies providing pensions to employees may be nearly over. What began as a tool to recruit employees in the late 1800s, turned into a company-sponsored entitlement during good times; now it has become a rare exception outside of government or union jobs. During the 1960s and 1970s in Detroit, unions such as the UAW were successful in creating pensions that have become yet another serious millstone around the neck of U.S. automakers like GM. It was not uncommon for the benefits from pensions, such as retirement income and health benefits, to outlive greatly the employee and be passed on to the surviving spouse for the balance of his or her lives. Demographic trends, such as longer life expectancies, have made programs such as these painfully expensive for companies. Although often viewed as sacrosanct, pension funds, in both the private and public sectors, have come under increasing pressure in recent years as a source of potential savings for companies that are desperate to make the numbers. On the private side, pensions are normally protected, but all bets are off if the company files for bankruptcy protection, as was the case with Delta Airlines in 2005. As part of its bankruptcy proceedings, Delta asked for relief from the liability in its pilots’ pension program, which was underfunded by more than $3 billion according to the Pension Benefit Guaranty Corporation, which took over administration of more than 13,000 pilot pensions on December 31, 2006. The $1.7 billion asset in the pension fund fell well short of the $4.7 billion overall future liability that was needed to fund the original program fully.12 So, not even pensions are completely safe from the long arm of the corporate cost-cutter—and this is making a lot of retirees—and soon-to-be retirees—very nervous.
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The Housing Bubble Bursts Over a 30-year period from 1965 to 1995, the average percentage of Americans owning homes was fairly consistent, averaging around 64 percent, with a low of 63.4 percent (1965) and a high of 65.5 percent (1980). This trend suggests that homeownership in America reached a natural level of saturation around 1980. In fact, the percentage virtually did not change over a 20-year period during all of the 1980s and the 1990s. Until the new millennium when homeownership percentages spiked from an average 64.2 percent in the 1990s to 68.2 percent in the 2000s (through 2007). The homeownership percentage spiked beyond 69 percent in 2004—the most significant jump in homeownership since the 1950s—fueled by subprime mortgages by unregulated lenders, many of which ignored conventional underwriting standards. Millions of people who ordinarily would not qualify for a home mortgage suddenly became eligible. But, as soon as the teaser rates to these adjustable rate mortgages (ARMs) expired, millions of new homeowners were unable to pay the higher monthly mortgage fees. The flood of new buyers into the lower end of the marketplace did little to increase demand for or the value of homes at the midrange prices and up. As new homeowners started to default on their subprime mortgages and exited the market, the value of existing homes continued to slide. According to the S & P/Case-Shiller Index, home prices declined by 17 percent in May 2008 FIGURE 6.2. U.S. Homeownership Rate Percentage of Americans owning homes.
Source: U.S. Bureau of the Census
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TABLE 6.2. Artificially Inflated Homeownership Like so many other elements of the Third Turning, housing was unable to grow naturally. Percentage of Americans Owning Homes
1975
1980
1985
1990
1995
2000
2004
2005
64.5%
65.5%
63.5%
64.1%
65.1%
67.5%
69.2%
68.9%
2006
2007
68.8% 68.2%
Source: U.S. Bureau of the Census
versus during the same month in 2007. Overall housing values decreased by more than 23 percent by May 2008, after peaking in July 2006.13 Millions of homeowners started defaulting on their home mortgages, starting in 2005, which helped fuel the meltdown. Not surprisingly, the percentage of Americans owning homes has retreated for 3 years in row— in 2005 (68.9 percent), 2006 (68.8 percent), and 2007 (68.2 percent)—and it is unclear when the slide will settle at more natural levels.14 As the percentage of homeowners started to return to more natural levels in 2008, the Justice Department kept busy with a nationwide crackdown on lenders that used unethical, if not illegal, tactics to lure new homeowners into the market in order to boost sales artificially. The shortterm gain turned into tens of billions of dollars in losses when the housing bubble finally burst in 2007. The subprime mortgage meltdown signaled the end of the road for the nation’s largest underwriter of mortgage bonds in Bear Stearns, prompting the Federal Reserve to step in to avert a Wall Street crisis. Bear Stearns was eventually purchased for $10 a share by JPMorgan in a deal that was brokered by the Federal Reserve. Chairman Ben Bernanke—an expert on the Crash of 1929—moved quickly to take action, realizing that a string of bank failures in an already fragile economy could be devastating. The financial sector continued to struggle through 2008 as more subprime mortgages expired, triggering more defaults and foreclosures when consumers were simply unable to pay the higher rates.
The Nation Overspends Just off Times Square in New York, there is a lighted sign on a building two stories up showing in real time—like an electronic scoreboard—the everincreasing national debt. The lights on the sign count up so quickly, adding
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to the national debt, that it hurts the eyes. Even though the U.S. government has virtually always been in debt, it is the depth of that debt that brings the common 10-digit calculator to its knees. It’s been 30 years since the debt was measured only in hundreds of billions. Ever since 1982, it has been measured in trillions of dollars—that’s a number with 12 zeroes after it and that probably cannot be easily handled by the calculator in your kitchen drawer. Helping launch the nation into the financial stratosphere was none other than the great communicator—Ronald Reagan. In 8 short years in the White House, Reagan nearly tripled the national debt. And, because Reagan grew the debt so much during his tenure, it made George H.W. Bush’s growth rate of a measly 54.8 percent seem like chump change. However, the 41st president of the United States increased the debt in real terms, over just 4 years, by almost the exact same amount as his successor Clinton did in twice the time.15
The Nation Drifts Meanwhile, as the citizens of the nation sat on the sidelines, watching on their flat screen high-definition plasma TVs—purchased on their already overstressed credit cards—the mood of the nation turned cynical at what was seen as a national double standard—in the wake of scandals, such as IranContra, Whitewater, and Lewinsky, and the folly in Iraq that was Weapons of Mass Destruction (WMDs), as, time after time, high-profile leaders increasingly ignored the rules by pushing the edge of the moral and ethical envelope. President Bush has accomplished what only his father was able to do before him—create the largest gap in history between the highest approval rating and the lowest approval rating during his time in office. Bush 41 generated an 89 percent approval during Desert Storm, before plummeting to a low of 33 percent in 1992. That’s a 56-percentage point gap between good and bad.16 Not to be outdone by pappy, Bush 43 put up virtually unbeatable numbers, by posting an approval rating high of 92 percent in the days following 9/11, down to 27 percent and dropping after a portfolio of missteps that puzzle even the staunchest of Republican supporters—a whopping 65-percentage point difference between high and low—undermining the confidence of the American public and fueling a powerful desire for change throughout the 2008 presidential election process. Ironically, it was during Bill Clinton’s tenure that America enjoyed the greatest stability of all of the U.S. presidents during the Third Turning. Fighting a reputation of democratic ineptness when it comes to managing
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TABLE 6.3. U.S. President’s Approval Ratings Third Turning—1985 to 2004 President
High
Low
Ronald Reagan 1981–1988 GHW Bush 1989–1992 Bill Clinton 1993–2000 George W. Bush 2001–2008
73% 89% 68% 92%
42% 33% 55% 27%
Difference 31 56 13 65
PP. PP. PP. PP.
Source: ABC/Washington Post Poll
money, Clinton not only balanced the budget but delivered a surplus for 3 years in a row (1998–2000). But, even with a $236 billion surplus in 2000, the United States was unable to reduce the national debt because the interest on the debt was greater than the surplus. The last time that the United States actually reduced the national debt from one year to the next was in 1950 when Truman was president.17 Americans became increasingly pessimistic about their respective futures by mid-2008 when The Conference Board—a consumer research group—reported that its consumer confidence index had slipped to 51.0, down from 90.0 in December 2007, driven largely by a weakening labor market in the United States.18
When Down Is Up At least part of the reason why the wholesale acquisition of growth became vogue during the period was that the largest economy in the world was beginning to show signs of maturing—growing at slower and slower average rates as the new millennium dawned. But, looking at Wall Street results, one would never know it. Ironically, the DJIA enjoyed its greatest period of growth ever—a 799percent gain—during the Third Turning Unraveling, from 1985 to 2004. The dramatic move far outdistanced the growth of the DJIA during the Second Turning (only 39.3 percent) and grew more than twice as fast as it did during the First Turning High, from 1946 to 1964. The DJIA shattered the 1500, 2000, 3000, 4000, 5000, 6000, 7000, 8000, 9000, 10000, and 11000 marks during the period, before retreating for close to 7 years following the terrorist attacks of September 11. And there never was a better time in U.S. history to be the CEO of an American public corporation. In 1978, U.S. CEOs were paid 35 times that of the average worker. By 2000, this elite group earned 531 times the average
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worker’s salary, according to the Towers-Perrin study.19 And even in a “bad” year on Wall Street, average annual bonuses can approach $180,000— more than 7 times the annual per capita income of $25,465 in the United States in 2004.20 When business is good, there’s little reason for bad behavior. Revenue is up; earnings are up. The board is happy. And all is especially well when the Street is happy. But when business is bad—especially when business is trending down—the “Me” gene in the human genome is summoned. And, if you care to look closely enough, you will find that we are all wired to fulfill the “Me” needs first—some more than others. After all, Maslow’s Hierarchy of Needs is not about someone else’s needs.
Era of Selfishness The Third Turning Unraveling of the Millennial Cycle in America will be remembered as an era of extraordinary selfishness—a time when individuals and institutions stretched and ultimately overstepped ethical boundaries in order to improve results. Simply put, it was an era of deception and of the dirty little secrets: trading arms for hostages, cooking the books, cooking up weapons of mass destruction, cheating on the Mrs., and taking anything under the sun to hit more home runs or run faster than any other human. It was Harvard economist John Kenneth Galbraith who said that “the modern conservative is engaged in one of man’s oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.” The cast of characters during the Third Turning of the Millennial Cycle in America could fill a book. The cast includes “Kenny Boy” Lay, Marion Jones, Elliot Spitzer, Roger Clemens, Jack Abramoff, Barry Bonds, Jack Grubman, Michael Milken, Dennis Kozlowski, Martha Stewart, and Bernie Madoff; hundreds, if not thousands, of Catholic priests; greedy venture capitalists from the dotcom bubble; greedy bankers from the housing bubble; and one of the latest entrants, former presidential candidate John Edwards. Even the good folks at Kraft Foods decided to reduce the amount of milk used to make Cheese Singles in order to save a few bucks or to make a few more bucks. Founder James Kraft must be spinning in his grave. Then there were the IPOs, such as Burger King’s, when the 55-year-old fast-food giant went public in 2004 for the first time. In the old days, companies went public in order raise capital so that they could invest to grow the company, not so in the case of Burger King. After raising an estimated
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$431 million, the company used almost all of it to pay down debt and clean up its balance sheet. The good people over at Kolberg Kravis (KKR) put the deal together. There were dozens of IPOs that were done simply as transactions to make money on the deal, leaving investors holding stock in companies that have no growth story or growth potential whatsoever. How much is enough? Now KKR wants to go public. Early-wave Boomer Henry Kravis is reportedly worth between $3 and $5 billion.21 Will this Boomer’s legacy simply be that he made a lot of money? Certainly not all Boomers took the Faustian route to riches. But many of them did. It was during the Third Turning that Boomers made a choice— to improve their standard of living with the belief that it would also improve their quality of life. For some, it did. For many, it did not. By the end of the Third Turning, around 2004, corporations had explored every possible means to increase revenue and cut costs yet still found it difficult to create any kind of sustained momentum. Somewhere along the way, America was transformed from a country that cared about being better to a country that only cared about being bigger. That metamorphosis has truly taken its toll. The cumulative effect of the slowdown has been mentally fatiguing, and the challenges that society now faces are so profound, so overwhelming, that it becomes easier for the powers-that-be to ignore them by looking inward, borrowing more money, and creating an even larger collective debt that will be the responsibility of future generations. The challenges ahead are significant for the country, its corporations, and its citizens. The crisis has begun. Will we jump out of the pot of water before it boils or will we simply cook to death?
Frost on the Pumpkin As the crisp days of late autumn morph into the frosty evenings of early winter, an increasing number of people are seeing and feeling the signs of a difficult season ahead. Even though even the most optimistic realize intellectually that winter is coming, many still prefer to hang onto the futile hope that winter will pass us by this time. But it never has. Winters can be mild, as was the winter of 1999–2000 in the northeastern United States. Or they can be severe, as was the winter of 1977–1978 in the northeastern United States. So what will it be? Will it be a record-breaking winter such as the United States experienced during the prior Fourth Turning Crisis from 1925 to
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1945? We ignore the coming winter at our own peril. Whatever the severity of the winter that is upon us, like the storm off the Gulf coast that we can see on Doppler radar, we can prepare for it and minimize its damage. This didn’t happen in the years leading up to the last American winter. Nobody saw it coming. Like Katrina gathering strength off the Gulf coast, the crisis gets closer and more severe every day and it won’t just go away because we want it to.
Chapter 7
Boomer Winter: The Next American Crisis, 2005 to 2024 Out of every crisis, every tribulation, every disaster, mankind rises with some share of greater knowledge, of higher decency, of purer purpose. Today we shall have come through a period of loose thinking, descending morals, an era of selfishness, among individual men and women and among Nations. Blame not Governments alone for this. Blame ourselves in equal share. Let us be frank in acknowledgment of the truth that many amongst us have made obeisance to Mammon, (god of greed) that the profits of speculation, the easy road without toil, have lured us from the old barricades. To return to higher standards we must abandon the false prophets and seek new leaders of our own choosing. Never before in modern history have the essential differences between the two major American parties stood out in such striking contrast as they do today. Republican leaders not only have failed in material things, they have failed in national vision, because in disaster they have held out no hope, they have pointed out no path for the people below to climb back to places of security and of safety in our American life. —Franklin Delano Roosevelt, Nomination Speech at the Democratic National Convention July 2, 1932, Chicago
Two weeks after being sworn in for the second time as president of the United States, Boomer George W. Bush spoke to the nation in his State-ofthe-Union address on February 2, 2005. Within the first few hundred words of his address, the president made one of the most important statements of his two-term tenure: [As] we watch our children moving into adulthood, we ask the question: what will be the state-of-their-Union? . . . Over the next several months, on
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issue after issue, let us do what Americans have always done, and build a better world for our children and our grandchildren.
Truer words were never spoken. The president was no doubt referring to his experience as a parent of twin daughters, one of whom (Jenna) would be married 3 years later. That vision was spot-on for the offspring of the Boomers. What will be the state of their Union? Will it be better or worse than ours? That’s a frightening question for many Boomers, as they see their children take on the real world toe-to-toe. Fortunately, there’s still time left for Boomers to do something about it before moving through their senior leadership role and onto their senior years. Unfortunately, the balance of Mr. Bush’s address shortchanged the dozens of challenges that not only have an impact on Americans every day but also make the long-term issues worse—much worse. Clearly, the real problems facing America are in America, not in the Middle East, yet we continue to issue warnings to other countries about the inappropriateness of their behavior—casting the first stone in spite of our own sins. The president’s address essentially focused on four themes: 1. About 22 percent of the president’s speech focused on his plan to reform Social Security. 2. About 20 percent of the president’s address lightly touched on no fewer than 20 domestic issues, including the economy, taxes (relief and credit), corporate criminals, homeownership, inflation, the budget, the deficit, new markets, spending discipline, jobs and job training, college education, small business, legal reform, energy, pollution, immigration, healthcare, women and minorities, advances in medicine, and the No Child Left Behind education program. Ironically, the president took credit for raising homeownership “to the highest level in history”—an accomplishment that would come back to bite him in the months following the speech, as millions of marginal mortgage holders started to default on their subprime loans. 3. Only about 12 percent of the president’s speech focused on America’s responsibility to future generations. 4. Close to one-half of the president’s speech focused on foreign policy issues—issues that are important to the security of the United States and to trade relations abroad, but not so relevant to the challenges that the average American faces on a day-to-day basis. And there seems to be little sense of the urgency on the part of administration officials to address the emergent issues of the day that affect America here. Unfortunately, it may require an old fashioned, big-bang disaster to get the United States to focus on its substantive domestic issues.
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TABLE 7.1. State-of-the-War Address Prioritizing America’s Issues Theme President’s Plan for Social Security Reform Various Domestic Issues America’s Responsibility to Future Generations The Middle East & the War in Iraq Totals
Number of Words
Percentage of Overall Speech
1115
21.9%
1047 638
20.7% 12.6%
2280
44.8%
5080
100%
The president’s speech seemed especially detached from what was actually happening to Americans in America on that February night in 2005. Like so many of its own citizens, the United States had spent way more than it earned since 2001, pushing huge liabilities out to future generations of Americans. Consider the poor stewardship record of the Bush 43 administration: • Deficits in the United States increased each year during Bush’s first term, from a surplus of $128.2 billion in 2001 to a string of deficits including $157.8 billion in 2002, $377.6 billion in 2003, $412.7 billion in 2004.1 Outlays outpaced revenues by more than $1 trillion over President Bush’s first term. The only other president in U.S. history to add more to the national debt in a 4-year-period was Bush’s father. And, although deficits retreated in 2005, 2006, and 2007, the administration’s final deficit was again headed in the wrong direction—nearly three times the shortfall recorded in 2007, with a projected $400+ billion deficit submitted as part of the administration’s proposed 2009 budget. • Presidents Reagan and Clinton increased the national debt by $1.6 trillion and $1.3 trillion, respectively, over 8 years, whereas Bush 41 and Bush 43 increased the debt by $1.2 trillion and by $1.6 trillion, respectively, over just 4 years. The difference in both cases: war.2 • The interest alone on U.S. national debt in 2007 ($430 billion) was greater than the GDP (Purchasing Power Parity) of close to 90 percent of all of the countries in the world.3
The bottom line is this: the United States simply cannot afford to wage war proactively. It has too many domestic issues that require time and
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resources, and, unless we reverse course soon, our children and grandchildren will inherit a broken America they will have to fix.
The State of Reality Now consider the same State-of-the-Union message with the following domestic issues facing the American public on the night of the president’s address: • The economy grew at an average rate of 2.0 percent from 2001 to 2004, which was the slowest rate of growth since the 1930s. • The public debt was more than $7 trillion in 2004 and was costing Americans close to $1 billion per day in interest expense alone.4 • The war in Iraq—about to start its third year—was costing the American public more than $250 million per day.5 • More than 37 million Americans were living in poverty.6 • More than 7 million Americans were unemployed.7 • More than 45 million Americans were without healthcare.8 • More than 3.5 million Americans were homeless.9
A slowing economy makes employees very nervous, because they know that, when revenues slow, cost reductions speed up. Although some are concerned about the possibility of the United States developing a protectionist view, the United States now finds itself in a smoke-filled airline cabin with a choice to make: put on its own oxygen mask first or run the risk of passing out from smoke inhalation while tending to other passengers. The United States can legitimately be criticized for a lot of things, but one of them is not its historical benevolence as a good-hearted global citizen in coming to the aid of others in need. But times and circumstances have changed.
Morphing into Crisis America received not one but two political shocks that signaled Crisis in the 1930s and 1940s. First, there was the economic shock when the stock market crashed on Black Tuesday in October 1929, which sparked the Depression. Then there was the attack on Pearl Harbor in December 1941, which pushed the United States into World War II. Both shocks were devastating events and both hurt America deeply. It was certainly not difficult to figure out how America would react in the hours and days following the Japanese attack on Pearl Harbor. There was no lobbying, no backroom
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negotiations, no pork-barrel politics—no debate in Congress as to what to do next. The very next day—Monday, December 8, 1941—FDR addressed Congress and, in no time, war was declared on Japan, with only one dissenting vote. Historically, a crisis in the Fourth Turning has been sparked by powerful events. Some have speculated that the attacks of September 11 may have created the momentum for a long-term crisis. Others look to the oil shocks that started around 2005 as the culprit. When President Bush took office in 2001, the price of crude oil was around $28 a barrel.10 In 2008, the price of crude spiked to more than $140 a barrel, sending gasoline prices well beyond $4.00 per gallon in the United States. The early impact of this dramatic spike manifested itself as pain at the pump. However, it may very well turn out that the increase in the price of oil will create an inflationary ripple effect across the economy because of the vast number of petroleumrelated products, such as plastics, as well the diesel fuel that fills the trucks and the jet fuel that fuels the airplanes that deliver all of the goods that Americans buy. The question in the minds of Americans in 2005 was the same one that is always on their minds when the economy slows: do I have enough money to survive? Whether they are employed or retired, whether their source of money is a job, a pension, 401(k), Social Security, personal savings, or a combination, Americans get very nervous about the future, particularly when filling up the family car becomes a $75 to $100+ event. Many Boomers remember the days of long lines at the pump during the Oil Crisis of 1973. Supply was the issue in those days. Many gas stations simply ran out of gas, which caused consumers to scramble for available gas. So far, that has not been the case with the Millennial Oil Crisis. A little more than 30 years after the Oil Crisis of 1973, global oil production peaked in 2005, leading to a steady increase in the price of crude. At the same time, the increase in global demand from burgeoning economies such as China and India will only make matters worse over the years to come in terms of both limited supply and increased demand. Given current global demand, it is difficult to imagine that the demand for oil would subside over the next 20 years unless fundamental behaviors dramatically change around the world. How do you know if you are in a Crisis when there is no disastrous event such as Black Thursday or Pearl Harbor? As Supreme Court Justice Potter Stewart wrote in his opinion about a hard-core pornography case in 1964, although obscenity is hard to define, “I know it when I see it.” The same
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may be said of the gradual ramp to the next American Crisis. We may know it only after we are in it. If history repeats itself, we will be continually presented with changing value propositions over the coming years about actions that we take each and every day. Should we get rid of the SUV and get a smaller car? What about a hybrid? What about two cars instead of three? Are we able to eat out as much as we’d like? Will we have to choose between a home mortgage and our child’s college education? Are there alternative schools that are closer and that cost less? Should we downsize our home? Can we sell it? Maybe we should cut our own lawn and take our own trash to the dump. As we watched history begin to repeat itself during the second half of 2008, the questions on everyone’s mind are how deep and how long? The last American Crisis started—as most do—with a series of missteps that over time we conveniently link to a single day’s event such as Black Tuesday. This crisis may simply sneak up on us—death by a thousand cuts as the Chinese might say—without one single event that enables us to lay blame and chronicle the slide. The American public showed remarkable resilience during the last Crisis, pulling together as one, and this is what must happen again. The last American Crisis, a drive that culminated in overcoming both internal and external threats, literally started October 29, 1929, and ended August 14, 1945. After October 29, 1929, things got worse. After August 14, 1945, things got better. Whether or not the next American Crisis will unfold as succinctly this time around is simply unknown. The last American Crisis literally shocked Americans, who banded together in a cooperative common cause in the days following the attack on Pearl Harbor. All superfluous activity ceased after Pearl Harbor. Not only was there a sense of urgency, there was a sense of emergency—as if the future of the Republic depended on the cooperation of all generations— and, in many ways, it did. It was a united front to defend America, as well as the American Dream. Each Crisis in American history has been uniquely shaped by the times; consequently, they are all very different. The American Revolution was all about fighting a foreign foe domestically. The Civil War was all about fighting a domestic foe domestically. World War II was all about fighting foreign foes around the world. How will this American Crisis be shaped? Will it involve a war? Will it include an economic crisis? Or will it be both? All that can be said for certain is that the United States faces monumental challenges ahead that include extrication from a complicated and expensive engagements in Iraq and Afghanistan, as well as a daunting array
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of domestic issues the likes of which this country has never seen—not even in the years leading into the Great Depression. Out of the last American Crisis came America’s love affair with the “good versus evil” story line—where good always prevails and evil is always defeated or at least vanquished until the sequel. It was pervasive in literature following World War II (To Kill a Mockingbird, Old Man and the Sea) and also in movies (From Here to Eternity, Cape Fear, West Side Story). The formula was simple: protagonist (John Wayne) is in a race to overcome antagonist (the Japanese military); antagonist tries to prevent protagonist from accomplishing that objective (winning the war); protagonist ultimately triumphs over antagonist with the help of his friends in raising the American flag in victory (The Sands of Iwo Jima). Will the next American Crisis unfold in a similar external way or will it be an internal victory? It is certainly unclear when the Great Depression truly ended and how it would have been resolved had the United States not entered World War II. It’s possible that, this time, our energies will be able to focus inward without the distraction of a foreign war that simply saps resources, time, and lives. On the other hand, every American Fourth Turning Crisis has included a serious war, and it’s likely that this time it will be no different. Whether or not it will take on a shape beyond Iraq and Afghanistan is anybody’s guess. But, with unpredictable powers such as Iran, Pakistan, and even Russia, the elements for a potentially broader, more costly, and more destructive engagement in the region is distinctly possible. What we do know is that the United States is already engaged in a war in the Middle East that could easily expand across the region. We know that the country faces historically complex domestic challenges. The plate is overflowing and there’s no capacity to add more. Now is the time to simplify. The midpoint of the last American Crisis was 1937—before the United States entered World War II. Few realize that, after several years of recovery, the country sank into a recession again in 1937, and few economists are willing to say definitively when and if that recession ever subsided before the United States entered World War II on December 8, 1941. For many, including the president of the United States, 1937 was a rough year: FDR had been reelected in 1936 and, just as the economy appeared to be healing, it slipped into recession, slowing the recovery. It took almost another decade for the country finally to move past a very long and dark period.
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Every 80 Years a Crisis The research is pretty compelling; the idea that the United States might be facing difficult times ahead doesn’t seem like much of a stretch. First of all, there’s the evidence from history. Every 80 years since the United States became an independent republic, the country has experienced a prolonged period of difficulty—and, each time, a constellational team, made up of senior leaders, mid-lifers and young adults, literally rose to the occasion and carried the country through the Crisis. Sometimes the Crisis was financial in nature (the Great Depression); sometimes it wasn’t, but, each and every time, it involved a war. Benjamin Franklin led the fight for independence in the Revolutionary War as a senior leader. About 80 years later, Abraham Lincoln led the fight to keep the Union together as a senior leader. In another 80 more years, Franklin Delano Roosevelt led the fight to free the world from Nazism and Fascism as a senior leader. After another 80 years, we are at the end of the first decade of the twenty-first century and in the early years of a crisis. Will it be as short as the Civil War or as long as the Depression and World War II? However you look at it, the United States faces daunting challenges over the course of the next 10 to 15 years. A brand-new generation of Americans—the New Silent Generation—will move into young adulthood, and a new generation of children will begin to appear in 2025—the New Boomers. What will the world be like for the first full generation of the new millennium? And, more important, what will it take to fix a dizzying array of systemic issues that have not only festered for decades but come to a head at precisely the same moment in time? The task is daunting. It affects multiple generations and will require multiple generations to fix.
An Aberration of Growth In 200 years, when students study the history of growth in the United States, they will point to the 50-year period from 1950 to 2000 and ask: “What happened here?” The aberration will be obvious in retrospect even though it is not so obvious today. It all starts with a maturing economy. The United States has just experienced an incredible half-century of expansion. When viewed from this perspective, quantum leaps of growth simply do not and cannot continue forever. Because we most often inspect the economy from a very close range—every 90 days—it is difficult to see trends over very long periods of time. When viewed in 50- or 100-year blocks
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of time, the second 50 years of the twentieth century truly stand out as a unique era—an era that will likely not repeat in any of our lifetimes. The Boomer Generation played at least a role in that uniqueness, first as baby consumers and then as adult consumers and productivity machines. Tom Brokaw is not wrong in saying that the GI Generation was the “Greatest Generation”: they certainly were qualitatively, but it’s tough to match the Boomers as the greatest generation quantitatively. What is an economy but a collection of sectors, made up of industries, made up of companies, made up of products and services? All products and services exist somewhere in a life cycle from moving up the growth curve to moving down the growth curve. Today, the U.S. economy is largely made up of products and services that are on the downside of growth, which rolls up into corporations that are on the downside of growth, which rolls up into sectors that are on the downside of growth, which rolls up into an economy that is on the downside of growth. Growth will no doubt continue—it just won’t happen as dramatically as it once did—no matter how many new products we develop, ads we run, or companies we acquire. Just as we would all like to be able to perform as we once did in our youth, it is hard for us to accept the fact that we simply can’t. It’s why some people get face-lifts and tummy-tucks and color their hair.
An Era of Failed Strategies It’s difficult not to feel sorry for GM—once the largest company in the world. It has gone through a very difficult time over the past 20 years— shrinking in almost all respects. In some ways, it resembles the U.S. government—creating, for example, incredibly generous benefit programs for its people in the 1960s, just as did the U.S. government. Now those programs are coming back to bite both GM and the United States. The respective entitlement programs sponsored by GM and the U.S. government are now creating a drag on both institutions. On the revenue side, both institutions have been growing at ever-decreasing rates for decades. For the United States, even though its GDP has been slowing in recent decades, at least it continues to grow on an actual dollar basis. However, the same cannot be said of GM. Like sitting and watching Katrina approaching landfall, GM can be blamed for staying the course with a strategy and business model that need to be discarded completely. But the company is incapable of doing so. Rather than change its business model and pursue a “better” strategy, GM instead chose to stay the course with its “bigger” strategy. The result
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FIGURE 7.1. General Motors U.S. Light Vehicle Sales since 2000 Seven straight years of negative growth.
GENERAL MOTORS U.S. LIGHT VEHICLE SALES 2001 to 2007 5000000 4500000 4000000 3500000 3000000 2001
2002
2003
2004
2005
2006
2007
UNIT SALES
Source: SEC Filings
was that Toyota—a company that pursued a “better” strategy—ended up leading in both categories in the end, replacing GM as the largest automaker in the world in 2007. Figure 7.1 shows GM’s U.S. light vehicle unit sales from 2001 through 2007—a period when the automaker lost more than 20 percent of its sales or close to a million units. Time is running out on GM. It has already lost its leadership position in terms of worldwide sales to Toyota. And it’s possible that the Japanese automaker will become number one in the United States in 2009 as well. During the First Turning of the Millennial Cycle, televisions were manufactured in the United States. Now no televisions are made in the United States. During the Second Turning, the very cool Chuck Taylor sneakers were made in America. Now they are not. During the Third Turning, Levis were made in the United States. Now they are not. It is not completely out of the realm of possibility that, by the end of the Fourth Turning, there will be no U.S. automakers making cars in America. It seems that GM is like a proud athlete. Watching it try to recapture the days of its youth is like watching newsreels of Babe Ruth in the latter part of his career—swinging wildly at pitches and badly twisting his ankle, only to limp back to the dugout after striking out. No one wants to see that. We want to see GM point to the bleachers and hit a home run. But, unfortunately, those days are part of the past. If GM is to
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survive, it must completely reinvent itself, probably as a much smaller company. But it is unlikely that it will do so of its own accord.
An Era of Economic Wild Cards There are certainly enough economic challenges in the United States in the early years of the Fourth Turning. What the United States doesn’t need in the future is the confluence of known events that have an impact on the economy with unknown events that affect the economy. It doesn’t help a sagging economy when natural disasters, such as Hurricane Katrina, terrorist attacks, or devastating forest fires or floods, require hundreds of billions of dollars of budgeted and unbudgeted federal funds in relief. When Hurricane Katrina slammed into the Gulf Coast in August 2005, no one could have predicted the extent of the damage that it would do. In the aftermath of the storm, more than 1,800 people were dead and tens of thousands were homeless and hungry. Although the full economic impact of Katrina on the region, as well as the nation, is still being calculated, some experts estimate that the total bill to the U.S. taxpayer could ultimately top $300 billion. Consistent with other weather patterns, the frequency and severity of forest fires in the state of California have increased in recent years, destroying millions of acres and tens of millions of dollars of personal property. The U.S. Forest Service was budgeted for $1.14 billion to fight forest fires in 2008, which was well under what it spent the previous year to fight fires across the United States.11 Floods have also increased in both volume and intensity in recent years. Iowa floods in the summer of 2008 forced 38,000 people to evacuate from their homes. The floods also had a dramatic impact on local farmers, virtually wiping out the state’s corn crop for the season. Since 1980, the National Oceanic and Atmospheric Administration (NOAA)’s National Climate Data Center (NCDC) has tracked all U.S.based weather and climate-related events that result in at least $1 billion in damage. Over the period, the NCDC has tracked a range of billion-dollar natural disasters, including droughts, freezes, hurricanes, tornadoes, snowstorms, ice storms, hailstorms, floods, and firestorms. The research shows that there were 12 natural disasters during the 1980s that caused more than $1 billion in damage in nominal terms. However, the number of billiondollar disasters tripled, to 36 events, in the 1990s and continued on that pace through the first 6 years in the 2000s.12
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A Crumbling Infrastructure On August 1, 2007, the ugly underbelly of the American infrastructure was exposed for the rotting, decaying mess that it is when the I-35 Bridge in Minneapolis collapsed into the Mississippi River. Although it appeared to be an isolated event, the bridge disaster raised awareness in a growing problem that is beginning to threaten the safety and lives of Americans driving the highways, crossing the bridges, or using other public buildings, airports, and bus and subway stations across the country. America’s aging infrastructure was the subject of a 2008 study by Ernst & Young LLP and the Urban Land Institute (ULI).13 The report estimated that there is a funding gap of about $170 billion earmarked for infrastructure projects and that gap has been widening every year. “Frankly, the United States has been coasting when it comes to infrastructure spending, especially when compared to growing economies such as China which spends about nine percent of GDP on infrastructure,” said Dale Anne Reiss, global leader of real estate at Ernst & Young. “The economic uncertainty facing us means that public infrastructure is even in greater jeopardy.” The report concluded that a joint effort between the public and private sectors will be the best way to shrink the funding gap and address the most emergent issues. Other countries have effectively used public-private partnerships (PPP) as an important tool in solving infrastructure problems. In the days following Katrina, there was almost a palpable loss of confidence in bipartisan American leadership. A string of government officials were accused of serious crimes. Former House Majority Leader, Tom Delay (conspiracy), Vice President Cheney’s Chief of Staff, Scooter Libby (obstruction of justice), and Washington lobbyist, Jack Abramoff (fraud), were forced out of their cushy positions in 2007–2008. Then came the Abu Ghraib scandal, the unconstitutional spying on Americans without warrants, and the CIA’s destruction of interrogation videotapes, which caused confidence to sink even further. The best thing that happened in 2007 was that it ended and 2008 began. As it turned out, 2008 became a surprising year of hope for the American public. Emerging from the shadows of the Senate was Barack Obama—with a fresh and honest outlook, he became a beacon of hope for the future of America.
A New Number One Just as GM was once the largest corporation in the world, it’s also a good bet that, before the end of the Fourth Turning, the United States will also
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FIGURE 7.2. U.S. and China GDP Growth At current average rates of growth, China’s economy will top the U.S. in 2023.
Source: Bureau of Economic Analysis (BEA)
give way—probably to an Asian country that will replace the United States as the world’s largest economy. If the growth rates of China and the United States continue as they have in recent years (see Figure 7.2), China’s GDP will pass that of the United States in 2023. The question now for both GM and the United States is this: what’s the strategy now? The United States has always been able to reinvent itself. It has done so after every Crisis. After the Civil War, innovation in the United States mushroomed, with the introduction of the telephone, the radio, and the automobile. After World War II, American energy and creativity rapidly created a thriving economy that was kick-started by the arrival of the Boomers. How will the winter of the Fourth Turning metamorphose into the spring of the next First Turning?
On-Deck as Senior Leaders: Boomers As the first decade of the 2000s draws to a close, the GI Generation is all but gone, and the Silent Generation has mostly moved into its senior years. Stepping up to the plate as the next senior leaders of society will be the Boomers, in what may turn out to be one of the most challenging quarter-centuries in
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U.S. history. Can a generation of narcissists lead the United States through the worst American Crisis since the Great Depression? That’s a good question. But it’s a question that has been asked before of generations that ended up creating a legacy in their Final Turning that literally changed the course of American and world history. Consistent with Strauss and Howe’s theory of repeating generational types, FDR’s Missionary Generation experienced a similar upbringing as the indulged children of a postwar era. As young adults, members of the Missionary Generation were in the forefront of the widespread student unrest on college campuses across the United States. Colleges and universities became centers for radical and revolutionary thought during the late 1800s, and helping drive that movement was the bull-headed Missionary Generation. It was also during the First Turning of the Great Power Cycle that the first African Americans and women—all from the Missionary Generation—started to attend college regularly, sparking civil unrest and underscoring just how little had changed since the signing of the Thirteenth Amendment (emancipation). We remember FDR as the strong leader in the face of tyranny—not Frank Roosevelt, opinionated editor of the student newspaper the Harvard Crimson. “The 1960s was only one of the many eras of student unrest at Harvard,” according to the Physiologist in 1982. “In 1904, a group of students sought an audience with the Dean of the Harvard Medical School to protest the large number of failures of physiology . . . a third of the class was failing.”14 Student unrest was touched off at many colleges across the country as administrations started to clamp down on the academic studies of social butterflies like FDR who, as an undistinguished student, happily accepted a “Gentleman’s C.” Just as Boomers caused a ruckus during the Awakening in the 1960s, so did those from the Missionary Generation around 1900. Boomers are on the same repeating track as the Missionary Generation and are about to become the senior leaders of a society in Crisis. Joining the Boomers in the generational constellation in taking on the Crisis will be Gen Xers entering mid-life and the Millennial Generation entering young adulthood. How they will perform as a team will unfold over the years leading up to the end of the Fourth Turning, around 2024.
Boomer Inspiration On February 12, 2008, 62-year-old Kathleen Casey-Kirschling—the nation’s first Boomer—made history when she became the first of her generation to receive Social Security retirement benefits. A steady stream of
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Boomers will follow Casey-Kirschling’s footsteps, all the way through the end of the Fourth Turning, in 2026, when the youngest Boomers turn 62. But don’t count on Boomers to flock to Florida just to put their feet up by the pool. This generation does not intend to go quietly and probably not anytime soon. And they certainly don’t intend to live the same sedentary lifestyle that their parents did after reaching the age of 62. It’s likely that Boomers will mostly come in three flavors on reaching the magic number: certainly some will continue to work because they have to—they simply won’t have enough money to stop working. Another segment of Boomers will transition out of their long careers of work and into their second careers of passion—doing the things that bring them joy and getting paid for it. A third group will stop their work of mid-life that fed their egos and bank accounts and begin their work as senior leaders—quite possibly the most important job that they will ever have. There are virtually hundreds of studies on the concerns of Boomers as they approach retirement age. Because the overwhelming majority of these studies focus on financial issues, much of the research fails to focus on what is becoming the generation’s number one concern for the future— the shape of the world that we are leaving to our kids. For better or for worse, your generation has been appointed by history to deal with those problems and to lead America toward a new age. You have the chance never before afforded to any people in any age. You can help build a society where the demands of morality, and the needs of the spirit, can be realized in the life of the Nation. So, will you join in the battle to give every citizen the full equality which God enjoins and the law requires, whatever his belief, or race, or the color of his skin? Will you join in the battle to give every citizen an escape from the crushing weight of poverty? Will you join in the battle to make it possible for all nations to live in enduring peace—as neighbors and not as mortal enemies? Will you join in the battle to build the Great Society, to prove that our material progress is only the foundation on which we will build a richer life of mind and spirit? There are those timid souls who say this battle cannot be won; that we are condemned to a soulless wealth. I do not agree. We have the power to shape the civilization that we want. But we need your will, your labor, your hearts, if we are to build that kind of society. Those who came to this land sought to build more than just a new country. They sought a new world. So I have come here today to your campus to say that you can make their vision our reality. So let us from this moment
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begin our work so that in the future men will look back and say: It was then, after a long and weary way, that man turned the exploits of his genius to the full enrichment of his life.
On May 22, 1964, LBJ spoke those words at the University of Michigan in Ann Arbor—6 months to the day after he had been sworn in as president on Air Force One, following JFK’s assassination in Dallas. It was a time of uncertainty. It was a time of war. It was after the High and at the beginning of the Awakening. But his words ring as true today as they did in 1965 when a conflicted country made decisions that it later regretted. Now it is time to revisit the words of LBJ and his vision for a Great Society. The role of Boomers in helping build that Great Society will require both leadership and compassion. Boomers spent most of their lives devoting time to building their careers— an homage to themselves—and they succeeded. But the transaction was a costly one—their time and spirit in exchange for the resources to increase their standard of living and to forge an identity. We all have the same amount of time. For Boomers, time and spirit were the currency that they gave up in order to build their own American Dream. The transaction was costly for Boomers. In some ways, Boomers lost in the exchange: they lost time at home, marriages, relationships with peers, and the opportunity not only to watch their children grow but to build a foundation for a relationship years later. Now Boomers have a chance to change all of that. They have a chance to leave the greatest gift of all to their children and grandchildren—the gift of a better world. Former heavyweight boxing champ Muhammad Ali may have said it best in the inimitable way that only he could: “We have one life; it soon will be past; what we do for God is all that will last.” Some Boomers have taken this advice to heart. We look to them for inspiration and a way to channel the abundant energy of the largest generation for the common good. It is now that we need it the most.
Chapter 8
The New New Deal As an immediate program of action we must abolish useless offices. We must eliminate unnecessary functions of Government—functions, in fact, that are not definitely essential to the continuance of Government. We must merge, we must consolidate subdivisions of Government, and, like the private citizen, give up luxuries which we can no longer afford. Throughout the Nation, men and women, forgotten in the political philosophy of the Government of the last years, look to us here for guidance and for more equitable opportunity to share in the distribution of national wealth. I pledge you, I pledge myself, to a new deal for the American people. Let us all here assembled constitute ourselves prophets of a new order of competence and of courage. This is more than a political campaign; it is a call to arms. Give me your help, not to win votes alone, but to win in this crusade to restore America to its own people. From FDR’s nomination address at the Democratic National Convention in Chicago, July 2, 1932
When FDR spoke these now famous words at the 1932 Democratic National Convention in Chicago, he was still governor of New York, yet only days away from being crowned the nominee of the Democratic Party for the general election in the fall. The only real obstacle between FDR and the nomination was a former New York governor, Al Smith, who had been the party’s nominee in his failed bid for the presidency against Republican Herbert Hoover in 1928. In the years leading up to the 1932 election, it was not customary for the party’s nominee to appear at the convention at all. But FDR broke with that tradition—when, even though he was heavily favored to win the nomination, it became clear that he might not. On the convention’s first ballot, FDR held a commanding lead in delegates over Smith. On the second and third ballots, FDR’s margin didn’t change much, yet he still did not have enough delegates (two-thirds were required) to clinch the nomination. His 682 total after three ballots fell just 80 votes shy of the
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nomination. So, between the third and fourth ballots, the behind-thescenes political machinery of the day kicked into overdrive. After a deal was struck with media mogul William Randolph Hearst—a Smith supporter—FDR finally gained the nomination on the fourth and final ballot, and the path to the White House was clear. Only an unpopular incumbent stood between FDR and the presidency and his vision for a new deal for America. If it wasn’t for some eleventh-hour lobbying, the New Deal might never have seen the light of day.
The New Deal The primary purpose of the New Deal was to jump start a failing U.S. economy. Within days of taking office, FDR started to lay the groundwork for the first phase of the program that he promised in his inaugural address. Part one of the New Deal was designed to attack short-term issues, such as getting Americans back to work. Part two of the New Deal would come 2 years later, with more long-term programs and objectives—most notably Social Security. However, a little known but critical component of the New Deal had nothing to do with adding new programs. The U.S. government had become increasingly bloated and ineffective through some passive administrations that simply maintained the status quo (the Hoover administration, 1929–1932) and another that focused on managing its own self-interests (the Harding administration, 1921–1923). We have heard so much about the programs that FDR added when he took office that we rarely hear about how he attempted to shrink a government that itself was preventing progress. As part of the very early New Deal initiatives, less than 2 weeks after taking office, FDR successfully pushed through Congress the Economy Act of 1933, which enabled him to cut more than $500 million from the budget.1 His choices were limited. After all, the country was in a depression, so increasing taxes in order to generate more revenue was certainly not an option. He also rejected the notion of borrowing from a future that was so uncertain. So making serious cuts in the budget was his only choice, and it provided an important lesson for all Americans, to whom he reached out through his fireside chats on the radio. Although the Economy Act did not prevent budget deficits from growing in FDR’s early years in office, it did help to curb the unbridled growth of government programs—a seemingly timeless issue for the U.S. Government. The new chief executive set a new tone for the country—You can’t spend what you don’t have2—and it was
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as much an appeal to Congress as it was to millions of Americans who had become credit-dependent in the years leading up to the Crash of 1929. At that time, FDR’s ambitious goal was to cut 25 percent of the budget. The savings would come from a variety of sources, including a 15-percent pay cut for all federal employees, as well as a reduction in pension benefits for nondisabled veterans. The action proved that FDR was serious about fixing the economy and, in the process, made it crystal clear that he had no patience for budget deficits—at least at this point in his presidency. But the cuts were not without pain or controversy—especially from veterans of the Spanish-American War or World War I who received generous pensions after their respective wars. Even though the concept of shrinking the government is certainly not a new one, it has only been accomplished a few times in the nation’s history— and since 1965 the government has only expanded. Every U.S. president over the last 45 years has agreed that bigger government is not the answer, yet every president since Lyndon Johnson has watched the federal government grow every year since the escalation of the Vietnam War in 1965. Even during the Clinton surplus years, outlays increased every year. The difference in those years was more a matter of increased revenues than decreased outlays. Because of reckless spending, the public debt has increased in all but 5 of the past 40 years (1969, 1998–2001).3 And, along the way, the United States has created a liability so large that it’s rarely even discussed. Instead, when it comes to spending money in Washington, the emphasis is more often on limiting the size of the deficit, with the goal someday of balancing the budget—as if that’s the end game. Balancing the budget simply gets us to a place where we’ve stopped the bleeding. Lawmakers have carelessly spent U.S. taxpayers’ money with little regard as to how it might be paid back. Just to put national debt in perspective, the United States would have to generate a budget surplus of $100 billion a year for more than 50 years in a row just to pay off the current $5.3 trillion in principal. The number of years during which the United States has delivered a surplus of $100 billion or more is only three: 1999, 2000, and 2001. Just to underscore the difficulty of the burden of payback, the total budget surpluses that were generated in 1998, 1999, and 2000 ($431.2) would have barely covered the interest on the national debt in 2007 alone ($429.9).4
Entitlement Programs It’s no secret that the country’s entitlement programs are the chief cause of the government’s financial woes. Two of the three largest budgets that
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make up the overall U.S. budget are tied to entitlements—programs that are born of the heart and not necessarily of the head. And, instead of changing with the times and the economy, these programs have grown well beyond our ability to pay for them. Many of the entitlement programs that exist today were designed and initiated during a time when America and Americans were deeply hurting. It was in that spirit that programs such as Social Security and later Medicare and finally the prescription drug bill were adopted. Like a parent wanting the best for its children, Presidents Roosevelt, Johnson, and George W. Bush were the chief executives responsible for the most significant entitlement programs in U.S. history. Although it’s hard to argue with the spirit of entitlement programs, there comes a time when programs that were designed for one era create untenable conditions in the next. There’s no question that these programs greatly help seniors on fixed incomes. But because of changing demographics, longer life cycles, and especially skyrocketing healthcare costs, the future benefit commitments from these programs alone total in the tens of trillions of dollars. As nice as it would be for Uncle Sam to continue to pick up the tab for current and future generations, the math simply does not work. Continuing to borrow money in order to fund the broken programs of the past comes very close to the definition of insanity—providing the same ineffective solutions over and over again and hoping for a different outcome each time. The current entitlement programs were twentieth-century solutions for twentieth-century problems. At worst, these programs must evolve into a wholly new form in the twenty-first century. A re-engineered America that is run with more business discipline will certainly not be without a heart and soul. But it also must be realistic. American seniors who rely on entitlement programs every day to stay alive should be able to count on that promise. On the other hand, as younger generations begin to move toward retirement, they understand—as many seniors already do—that the meager retirement income from programs such as Social Security won’t begin to cover the cost of living in America over the next 30 years. At the same time, what many seniors view as the most valuable of retirement benefits— Medicare and prescription drug coverage—are simply unaffordable and cannot continue in their current form. So what’s a country to do? No doubt today’s seniors value the existing entitlement programs more than tomorrow’s seniors, which may provide an opportunity to segue creatively and fairly from the existing antiquated model to an entirely new one. Enabling current seniors to maintain the coverage that they already have may be a place to start the discussion at least. However, as for future
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generations of seniors, it’s almost a certainty that the governmentsponsored programs that currently exist will either change dramatically or be eliminated altogether in the near future. The challenge will be in crafting legislation that does the near impossible: satisfy the needs of tomorrow’s seniors without disrupting the needs of today’s seniors. It certainly can be done, but it won’t be without pain. Many of the challenges that lawmakers face go well beyond reform. Adding another coat of fresh paint to Social Security or Medicare is not the solution. Everything about the house that the United States has built is outdated, inefficient, and in need of replacement. The wiring, the plumbing, the floor plan, and the garage are all from another era. We are living in a house whose foundation was designed and constructed during the Depression. Reform suggests a tweak here and a tweak there and voilà—a new government appears that works for all of the people all of the time. Most business models in the first half of the twentieth century bear little resemblance to new millennial models. Businesses have continually evolved over the past 100 years, with profitability as the common goal. The government has not. No business school case study has ever described the creativity and genius behind the re-engineering of America. Why not? Because it’s difficult and painful and disruptive to a selfish status quo. It’s not uncommon today for wealthy homeowners to buy a house only to bulldoze it to the ground and construct a new one. The government generates plenty of revenue each year both to run and to reinvent the government, all at the same time. That doesn’t mean that it will be easy. It wasn’t and still isn’t easy for American corporations to restructure into organizations that are much smaller in historical terms. The time for the government to follow suit has long since passed. Some may say that the idea of rebuilding the government from scratch is a naïve notion. Thinking that the government now in place is the best that we can do is also naïve. President Kennedy challenged the American people to put a man on the moon within a decade’s time. It seemed fantastically impossible at the time, but we did it. There’s a Nextel commercial that asks the question: what if firefighters ran the world? The ad opens with a shot of firefighters sitting in a Congress-type setting, with the fire chief addressing the troops from the podium; we are to assume that firefighters have replaced lawmakers in the decision-making process. The chief asks a number of simple questions to which the firefighters—presumably the Congress—rattle through and make decisions on a number of issues, such as the budget, clean water, taxes, and better roads. At the end of the 30-second commercial, the chief slams the gavel and says, “this is the easiest job I’ve
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ever had—we’re outta here,” underscoring how dreadfully complicated politicians have made politics. We often treat latter-day government programs in such a sacrosanct way as to paralyze our ability to make sensible changes in a world that is constantly changing. Conventional thinking is not what is needed now. What‘s needed now is radical thinking that helps us reinvent the way that we run our country. Only the greatest nation in the world would be able to reinvent itself. It can be done, and it actually can be empowering and exciting. What are we waiting for? If we are waiting for a crisis to happen before we make a move, it will come. But the pain and suffering will be far more severe if we wait. It will be up to lawmakers in Washington to wrestle with the issue of limiting the size of government by eliminating unnecessary programs, prioritizing spending, and holding expenditures to budgeted levels. As it struggles with pork-barrel spending and the selfish needs of one member over another, the Congress might consider some disciplined fiscal exercises that make it possible to see what the government might become if it started with nothing more than a blank spreadsheet. Naysayers point to the fact that the vast majority of government funds are earmarked as “mandatory” spending and are therefore restricted from scrutiny. What business in America would be able to survive today if nearly 70 percent of all its expenses were protected as sacrosanct spending?
The New New Deal What successful business in America is voluntarily increasing costs in one or more categories today by 10 percent or more? There is a consequence to increasing the operating costs of a business that is not growing revenues— the ire of both the shareholders and the Wall Street analysts. If the U.S. government were a publicly traded stock, analysts would certainly not be issuing “buy” or even “hold” recommendations. The reason is simple: the U.S. government has been a very poorly run business, lacking almost any fiscal discipline. In many ways, the U.S. government is like an alcoholic who is locked in a wine cellar. There is access to—or, at least, the ability to access—the one thing that causes deeper and deeper trouble. For the alcoholic, it’s alcohol. For the U.S. government, it’s cash. And, because the U.S. government can’t help itself because of its addiction to spending, the scenario will probably play out in one of two ways: a tragic event or an intervention. History tells us that the United States has more often dealt with the pain and difficulty of the aftermath of tragic events than the pain and difficulty of proactively reversing its destructive course. In either case, the United States
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will likely experience a painful stretch over the next decade. The only question that remains is this: will the U.S. government intervene on behalf of its addictive self and reverse course or will it do what it usually does and wait until catastrophe strikes? It certainly can intervene, but will it? The time for posturing and talk has passed. This is a bipartisan issue that requires a bipartisan intervention that leads to a proactive solution over the next 10 years. The U.S. government needs political rehabilitation immediately. Like the old Fram Oil Filter ad, the choice is pretty simple: pay me now, or pay me later. Paying now will be less costly but will require the United States to change behavior, which is not easy to do. It wasn’t easy for U.S. corporations to do either, but they’ve adjusted to cost reductions as simply a way of business life today. Companies re-engineered themselves over the past 20 years, and now it’s time for the country to do the same over the next 20 years.
Re-Engineering America When corporate America started to hit a wall in the mid-1980s, it was the shareholder who demanded action to fix the problem. When revenue growth started to slow, earnings soon followed and that was an unacceptable premise for shareholders whose investments were threatened. Enter re-engineering into the American business lexicon in the late 1980s—and what is necessary when costs as a percentage of revenue have reached levels that threaten the corporation’s ability to deliver increased earnings. Corporations first sought blamed-based solutions as to why revenue growth was slowing. Hire a new vice president of sales? A new sales force? Change the sales compensation plan? Fire the ad agency and hire a new one to get new and better creative, a snappier jingle or a pithier slogan? None of it worked. What most corporations such as GM didn’t realize was that they had hit a market share wall, reaching innovation saturation5—the point at which an ever-increasing rate of revenue growth peaks and begins a trend of ever-decreasing rate of revenue growth, and an inability to reverse that trend over the long term. For the post-World War II American corporation that experienced everincreasing growth rates through the 1950s, 1960s, and 1970s, the 1980s was the decade when revenue growth rates started to slow, having reached innovation saturation. For example, after stellar revenue growth rates at GE in the 1970s, growth rates in the 1980s dropped dramatically and ushered in the cost-cutting practices that gave “Neutron” Jack Welch his now infamous reputation. Even though the last thing that the country
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needs is another Jack Welch, it certainly could use a little fiscal discipline, if not an entire Department of Fiscal Discipline. We already have the Office of Management and Budget (OMB), the General Accounting Office (GAO), and the Congressional Budget Office (CBO). What publicly traded company has three finance departments? As the turmoil, pain, and punishment inflicted on the sales side of the business world continued through the 1990s and into the 2000s, it became clear that no new combination of factors could substantively change the nature of a maturing organic sales base. So, although sales initiatives shifted to global expansion and the wholesale acquisition of market share through mergers and acquisitions, the chief financial officer (CFO) got busy squeezing costs out of an infrastructure that had mostly grown since the end of World War II. This is precisely where the U.S. government stands today—well beyond the point where it should be seeking additional loans from foreign governments. That’s the heroin that makes kicking this addiction harder for our children and grandchildren. Smaller is the solution. Before even contemplating any moves on the revenue side of the equation, the first step in re-engineering America is to go cold turkey relative to borrowing additional funds to pay for current programs. The next step requires a dramatic rethinking of U.S. spending across all programs—but particularly with respect to those programs that are the largest and that grow at the fastest rates. There are a number of effective business strategies that can be employed to help the United States begin to reprioritize spending of funds that are probably sufficient in the whole to fulfill all of the needs of the American people if viewed from new and creative perspectives—not at all dissimilar to the way that FDR and his team thought through U.S. needs and resources in the early 1930s.
Zero-Based Budgeting One popular exercise, especially when dealing with a bloated enterprise, is zero-based budgeting. It is a means of budget planning that is effectively the opposite of conventional budgeting. Instead of starting with amounts that had been allocated or spent during the previous year and either boosting or reducing those levels for the next fiscal year, the budget is literally built from the ground up—with each department starting with no money allocated to any programs whatsoever. Even mandatory programs are reviewed from year to year. Zero-based budgeting requires the architects of the budget to prioritize programs from most critical to least critical and also to identify new pro-
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grams that might replace older, less effective programs. For example, the Department of Defense’s 2009 budget called for an increase in spending from $583 billion to $651 billion—an 11.6 percent increase over 2008. As much as the Pentagon might believe that every program in the budget is necessary from one year to the next, the process of zero-based budgeting cares little about what happened in the past. Dynamic budgets are budgets that assume nothing from year to year. Even mandatory programs such as salaries and wages are carefully reviewed. It’s certainly easier just to add incremental costs to existing programs from year to year. But desperate times call for desperate measures. The discipline of justifying value in program investments each year would provide Congress with a much better understanding of and accountability for what’s being funded and why.
The 40/20/20 Exercise Another creative tool in helping prioritize spending is an exercise called 40/20/20. This program was made popular during the mid- to late-1980s by U.S. management consulting firms, which were hired to look at bloated U.S. corporations that—for the first time in history—were forced to rethink the organizational cost structure of a corporation from the ground up as revenues slowed and expenses continued to increase. The 40/20/20 concept is an exercise in eliminating programs and tasks that are ineffective while adding new programs that are designed to address more contemporary needs. The beauty of the program is that the new programs are fully funded from the dollars that are cut—plus there’s a little left over that could be used to either reinvest or write down the national debt. As part of the planning process, the first step is to ask each department to identify 40 percent of budgeted costs that could be eliminated. The OMB’s 2009 projected baseline budget for the federal government indicates expected outlays of just over $3.0 trillion.6 Applying the 40/20/20 exercise to this budget would mean cutting $1.2 trillion (40%) from the budget and across the board. The second step requires each department to identify new, more innovative, and more productive programs that, if approved, could be funded by half of the cost savings, or, in the case of a $3.0 trillion budget, a total of $600 billion (20 percent). The third step is that the leftover 20 percent—or $600 billion—that was identified in the original $1.2 trillion in cuts can either be used to fund other federal programs or be used to write down the national debt. The 40/20/20 exercise requires serious cuts, but the long-term benefits, such as debt elimination, could temper the short-term pain from the cuts.
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Now is the time to change course, which will be necessary if we are to have a substantive impact on what President George W. Bush called the “state of our children and grandchildren’s Union.” We must start running the government as we would run a business. Expenses must never exceed revenues, and loans would be taken only to fund programs that could be directly linked to a hard return on investment. For more than 20 years, U.S. corporations have been actively downsizing, yet, during the same period, the U.S. government has only increased in size and has never experienced the discipline—and benefits— of re-engineering.
An Intervention by Executive Order In a hypothetical case, let’s assume that one of the first orders of business for Barack Obama would be to challenge his cabinet to use a baseline budget of $3.0 trillion in outlays as the basis for recasting an entirely new budget from the bottom up for 2010 and beyond. Additionally, the new president has declared that budgeted outlays would be frozen at $3.0 trillion for 3 years (2010–2012), with each of the major departments within the government required to perform a 40/20/20 exercise prior to the casting of the new budget. In issuing this important fiscal challenge, the president identified five major objectives to accomplish within the parameters of the frozen budget: 1. Re-engineer the Department of Health & Human Services (HHS)—the single largest line item in the budget. At the same time, tie all future welfare payments to a quid pro quo method of compensation—a workfare model. 2. Re-engineer the Social Security Administration (SSA)—the second largest line item in the budget, without causing a negative impact on those seniors already covered by existing entitlements programs. Also come up with a creative way for seniors to offer up their time and expertise both in paid and volunteer positions. 3. Re-engineer the Department of Defense (DOD)—the third largest line item in the budget, in anticipation of a responsible drawdown of U.S. troops in Iraq. 4. Implement universal healthcare coverage for all Americans with creative ways of funding what will undoubtedly become the largest line item in the budget in future years. 5. Balance the budget and begin to reduce the national debt within the president’s first term.
That would be a pretty ambitious agenda for the new president—recasting the largest line items while changing the way the U.S. government operates fundamentally—taking a page out of Harry Truman’s playbook
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when he called for a “fair deal” for the American people, which he outlined to Congress in his first State of the Union address in 1949. The re-engineering of America starts with a 40/20/20 analysis of the $3.0 trillion federal budget—a budget that would be frozen for Obama’s full first term: Total Projected Outlays 40 Percent Reduction New Baseline Budget 20 Percent Reinvestment 20 Percent Savings
$3.00 trillion7 $1.20 trillion $1.80 trillion $600 billion $600 billion
This analysis assumes that every department in the federal government would first identify 40 percent of its projected outlays to eliminate. Second, they would make recommendations as to how they might more wisely reinvest half of the 40 percent—or $600 billion—into new, more efficient programs designed to work harder than the existing programs. With new recommendations in hand, the new president would have $1.2 trillion at his disposal in order to (a) fund some, all, or none of the new programs recommended by his cabinet; (b) fund new programs such as universal healthcare, which is currently unbudgeted; (c) allow some or all of the savings to drop to the bottom line in order to begin to deliver balanced budgets and debt write-down; or (d) some combination of the above. Now, it’s on to re-engineering.
Step One: Re-Engineer the Department of Health & Human Services For a very long time, the U.S. government has built a reputation as a very generous provider. The new president’s objective would be to maintain a spirit of compassion within the boundaries of sound fiscal responsibility—a caring government, but not a foolish one—so HHS is challenged to re-engineer its original $737 billion budget into a much leaner $442 billion budget. Total HHS Projected Outlays 40 Percent Reduction New Baseline Budget 20 Percent Reinvestment 20 Percent Savings
$737 billion8 $295 billion $442 billion $148 billion $148 billion
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First, the cabinet recommends the reinvestment of 20 percent or $148 billion from HHS’s original budget into new workfare initiatives. Workfare time and energies would be applied to a prioritized list of government initiatives that are tied to a master strategy utilizing the time and skills of workers to reduce the burden on existing government needs. Workfare assignments are generated from a “needs database” (the Boomer Grid) discussed in more detail in Chapter 10. Workfare payments are made to participants based on their fulfillment of designated workfare hours. So, even though the $148 billion has been designated as outlays, these funds only turn into outlays in exchange for work performed by recipients. Assuming that the recipients fulfill 100 percent of the hours required to earn $148 billion in outlays, a total of 7.4 billion hours of dedicated work would be generated in exchange for workfare cash. To put that in perspective, it would be like hiring 3.7 million full-time employees for an entire year. That’s more employees than Wal-Mart, Procter & Gamble, GE, GM, Home Depot, and AT&T combined. Medicare and Medicaid would no longer exist as we know it after 2009. Instead all Americans would be covered under a new universal health care plan. However, in order to secure the integrity of coverage for existing Medicare recipients, a shift to a universal healthcare plan would not result in any reduction in coverage or benefits. Workers would continue to pay social insurance taxes to help pay for grandfathered programs, as well as for new universal healthcare coverage for themselves. The oldest Boomers, turning 65 in 2011, would no longer qualify for Medicare as we know it but would instead be covered by the new universal healthcare plan that includes all Americans. Existing recipients of Medicare in 2010 would receive comparable benefits under the new universal healthcare program. Because no new recipients would be added to Medicare after 2010, social insurance tax revenue would be used to help fund the new universal healthcare program. As the next major generation that will begin to qualify for Medicare, it becomes imperative that Boomers stand up as a generation and support a move to universal healthcare in lieu of a current Medicare program that is simply unsustainable. Table 8.1 shows that outlays to Medicare and Medicaid cease in 2010 and that $148 billion would be dedicated to workfare for three years before increasing starting in 2013. Other assumptions for these outcomes require that (1) workers under the age of 65 continue to pay social insurance taxes at current rates, (2) no new recipients are added to Medicare after 2009, (3) all existing Medicare recipients receive comparable benefits for life, (4) workfare members are required to devote a minimum number
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TABLE 8.1. Medicare, Medicaid, and Welfare (Figures shown are in the billions.)
Outlays Medicare Medicaid Welfare/Workfare Other Total Outlays
2010
2011
2012
2013
2014
$0 $0 $148 $52 $200
$0 $0 $148 $52 $200
$0 $0 $148 $52 $200
$0 $0 $155 $55 $210
$0 $0 $163 $57 $220
of hours in order to receive any outlays, (5) workfare funds begin to marginally increase after 2012, (6) Medicaid will no longer exist as we know it after 2009 but instead will be replaced by universal healthcare, and (7) other HHS programs are frozen at $52 billion for three years, then begin to increase in 2013. Revenue in the form of social insurance taxes would be used to cover the cost of HHS programs, a reengineered social security program, as well as the new universal healthcare program. Because of the generous nature of the existing Medicare program, it is possible that supplemental funds may be required in order to maintain the integrity of benefits currently in place. However, such supplemental funds would diminish over time because no new Medicare recipients would be added after 2009.
Step Two: Re-Engineer Social Security Similar to Medicare, no new Social Security recipients would be added to the rolls after 2009, when all existing program participants would be grandfathered into their Social Security retirement benefits for life. Revenue would continue to grow—through the collection of social insurance taxes from workers under the age of 65, who, in exchange for these taxes, would receive universal healthcare coverage (discussed in detail in Step Five). Outlays for Social Security benefits would continue to shrink over time (see Table 8.2) because no new recipients would enter the program after 2009 but revenues would continue to grow and more than cover the cost of remaining SSA commitments. Other programs that are funded by the SSA would be covered on an ever-diminishing basis, as the pool of funds shrinks over the years ahead. Table 8.2 identifies outlays for SSA from 2010 forward and reflects an ever-diminishing group of beneficiaries drawing from SSA. The objective of this plan is to eliminate Social Security outlays to future generations and to replace those benefits with universal
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TABLE 8.2. Social Security (Figures shown are in the billions.)
Outlays Social Security (shrinks by 5% per year) Seniorfare Total
2010
2011
2012
2013
2014
$687
$653
$620
$589
$560
$0 $687
$25 $678
$50 $670
$75 $666
$100 $660
healthcare coverage. Individuals would be responsible for managing their own retirement benefit programs—either through work, independent investment, or a combination of both. Those citizens not grandfathered into existing Social Security outlays could begin to earn income once they reached the age of 65 through a new program called “Seniorfare.” Seniorfare would become an active workfare program for seniors as they turned 65 beginning in 2011, concurrent with the grandfathering of Social Security the same year. Seniorfare would operate on the same principle as workfare, in that all outlays would be tied to volunteer work performed in connection with the government’s “needs database” (the Boomer Grid—see Chapter 10).
Step Three: Re-Engineer the Department of Defense The DOD budget for 2009 is projected to be $651 billion, in large part as a result of the U.S. presence in the Middle East. A simple 40/20/20 exercise could identify $260 billion in cuts, with a new baseline budget of $391 billion for 2010. Total DOD Projected Outlays 40 Percent Reduction New Baseline Budget 20 Percent Reinvestment 20 Percent Savings
$651 billion9 $260 billion $391 billion $130 billion $130 billion
In essence, the challenge for the DOD would be to create a much leaner operation however it can. It would never get done by asking the Joint Chiefs of Staff what they needed. It would only get done by presenting the Joint Chiefs of Staff with a smaller budget and challenging them to make the dollars work harder—like all Americans have to do.
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Step Four: Create Universal Healthcare Coverage for All Americans Beginning in 2010, all Americans would be covered by a new universal healthcare plan. There would be two sources of funding for the program: 1. Individuals, through the continued payment of Social Insurance Taxes. Unused funding from diminishing HHS and SSA budgets would be shifted to help defray UHC costs; and 2. Corporations, through a 50 percent contribution of an employee’s UHC costs. Currently, approximately 63 percent of all companies contribute on average about 70 percent of employees’ healthcare coverage. These companies would likely recognize a savings by reducing coverage from 70 percent of the cost to 50 percent of the cost. Companies not currently supporting employee coverage or supporting it at a level less than 50 percent would have a choice: pay 50 percent of each employee’s coverage or be subjected to a tax increase equal to that figure. The bottom line objective is to engender a spirit of cooperation among employers, employees, and the government in order to fund coverage for all.
Individual segments of the population would receive funding for coverage as follows: • Existing Seniors. Approximately 35 million seniors would have 100 percent of their coverage paid by the government. • Workers and their dependents. Approximately 250 million workers and their dependents would have 50 percent of their coverage paid by their employers and 50 percent paid by the government. • Unemployed and disabled. Approximately 25 million unemployed or disabled Americans would have 100 percent of their coverage paid by the government.
The cost of universal healthcare will not be cheap. According to the National Coalition on Healthcare (NCHC), total spending on healthcare in the United States in 2007 topped $2.3 trillion, or roughly $7,600 for every American. Let’s assume that in negotiation with healthcare providers – and the elimination of third-party health insurance payers – the government is able to reduce that figure down to $6,000 for every man, woman and child in the United States. That’s a total of approximately $1.86 trillion per year for universal healthcare. But if corporations pick up half the cost of approximately 250 million employees and their dependents – or about $750 billion – then the government would be responsible for covering the balance of about $1.1 trillion which it would collect from individuals paying social insurance taxes as they are now.
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TABLE 8.3. Universal Healthcare Plan (Figures shown are in the billions.) 2010
2011
2012
Outlays Universal Healthcare $1,100 $1,188 $1,283 (cost not covered by employers—increases at 8% per year) Total $1,100 $1,188 $1,283
2013
2014
$1,386
$1,497
$1,386
$1,497
Table 8.3 shows that the cost of universal healthcare would increase by 8 percent per year through 2014. Because the plan is sensitive to the promise made to senior Americans with regard to maintaining the integrity of existing Social Security and Medicare commitments, it makes it much harder to add universal healthcare coverage for all Americans and still balance the budget, all at the same time. However, under this aggressive plan, the budget could be balanced before the end of Obama’s first term, at which time a serious plan to reduce the national debt could be implemented. This new sense of fiscal discipline, championed by the new president in 2009, would set the United States on a course that would not only address short-term budget shortfalls but also long-term issues arising from a mounting national debt.
Step Five: Balance the Budget and Reduce the National Debt If the United States were able to institute a disciplined fiscal program such as the one sketched out here, the impact on the overall budget would be profound (see Table 8.4). What is required of the government in order to accomplish this goal is to institute the same fiscal disciplines that many American corporations have been championing for nearly a quarter century. Although deep cuts and shifting of funding seems like a radical notion, it is no more radical than the actions taken by thousands of companies since the late 1980s. Let’s assume that revenue increased at 5 percent per year and that outlays increased at 3 percent per year from 2015 forward. It would be extremely difficult, but the United States could eliminate the national debt by the presidential election of 2024—an accomplishment that would requrie the cooperation of at least two presidents. Now it’s up to Americans to make it happen. Eliminating the national debt is certainly a lofty goal, but it’s one that just might intrigue the Boomers, by playing to their egos and their need to achieve. It certainly would be one of the great financial accomplishments of all time, and it would make up for a tremendous number of bad decisions on the part of the
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TABLE 8.4. Balancing the Budget
Revenue Projected Income Taxesa Projected Social Insurance Taxes Other Total Revenue Outlays HHS Social Security Universal Healthcare Department Of Defense Other Outlays Total Outlays Surplus/(Deficit)
2010
2011
2012
2013
2014
$1,743 $1,002
$1,956 $1,056
$2,123 $1,107
$2,200 $1,154
$2,308 $1,202
$171 $2,916
$188 $3,200
$235 $3,465
$246 $3,600
$260 $3,770
$200 $687 $1,100 $391 $622 $3,000
$200 $678 $1,188 $391 $543 $3,000
$200 $670 $1,283 $391 $456 $3,000
$210 $666 $1,386 $411 $388 $3,061
$220 $660 $1,497 $431 $315 $3,123
($84)
$200
$465
$539
$647
a
Office of Management and Budget (OMB), Budget for the fical year 2009, page 31, http:// www.whitehouse.gov/omb/budget/fy2009/pdf/hist.pdf
U.S. government. To accomplish it would give our children and grandchildren a much better chance at living the American Dream in the years to come. What better gift could we possibly leave to them? There are certainly many other challenges that the government faces over the next 20 years. However, this exercise is intended to demonstrate that, with some guts and true dedication to change, the U.S. government can be re-engineered. None of this will be easy. But FDR had it much harder, with shrinking tax revenue during his first and second terms. The time to act is now—before we run the risk of creating a shrinking tax base and end up precisely where FDR was in 1933.
Rising to the Occasion The bottom line is this: in order to fix the financial mess that we have created, one generation must suck it up. The Boomers are in a position to be another American generation that sacrifices for the common good. The sacrifice this time may be quite different than that made by FDR’s Missionary Generation, Eisenhower’s Lost Generation, and JFK’s GI Generation. But the outcome could be the same: leaving a better world for our children and grandchildren. It’s really a matter of a generation’s desire to make a difference before exiting. Will Boomers rise to the occasion?
Chapter 9
Rising to the Occasion The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty and we must rise with the occasion. As our case is new, so we must think anew and act anew. We must disenthrall ourselves, and then we shall save our country.1 —Abraham Lincoln
When the 16th president of the United States wrote these words, the country was moving through the bloodiest years of the Civil War Cycle. Four years and more than 600,000 American deaths later, the war was over and the Union was preserved. It was a particularly difficult winter, but America moved through it successfully and onto to another spring and another celebration of American ingenuity and prosperity. Some 80 years after the Civil War, America was in Crisis again—10 years or more of economic devastation, followed by a World War that, according to some estimates, wiped out between 50 and 70 million people worldwide, including more than 400,000 Americans. But again America persevered and moved through another rough winter and onto another glorious spring of expansion and prosperity. The year 2009 marks the 80-year anniversary of the event that sparked the last American Crisis. The Wall Street crash on Black Tuesday, October 29, 1929, signaled the beginning of what turned out to be the longest major crisis in American history. Most of America’s Silent Generation— the generation of John McCain (who was born in 1936)—grew up during the years from the Crash in 1929 to the end of the World War II in 1945. Although it is unlikely that few will mark the event with celebration, the anniversary provides a sobering reminder that we are once again on the doorstep of the final phase of a cycle—the crisis phase—
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that has rolled through American history as consistently as the tides and the seasons. It’s upon us and we must deal with it.
Boomers Have Lived the Good Life Almost by any measure, Boomers have lived the good life. So far, they have been the healthiest, wealthiest, and wisest generation of all time, and they are a long way from their final curtain call. From a health perspective, they will live longer than any previous generation in history. The average life expectancy in the United States was 77.8 years in 2005, according to the National Center for Health Statistics (NCHS). However, considering Boomers alone, the numbers get even better. Boomers who reach the conventional retirement age of 65 can expect to live to the ripe old age of 83.2 Thus far, Boomers are the wealthiest generation in history—in relation to their parents at the same time in life. According to the Brookings Institute, two of three adults today enjoy higher incomes than their parents.3 But that has not necessarily translated into a greater net worth because Boomers are saving less and spending more than their parents did. They are also inheriting less from their parents. According to Boston College’s Center on Wealth and Philanthropy, retirees are spending more in retirement than they expected to, and they therefore have less to pass on to their heirs. Second, about 1 percent of U.S. households inherit one-half of all accumulated U.S. wealth; the other half is spread among the other 99 percent of households, which dramatically pulls down the average, at the same time disappointing the heirs.4 So Boomers are just now beginning to worry about whether or not they have enough money to retire comfortably. Before they started having and educating families of their own, Boomers were the best-educated generation in American history. Thanks to their parents’ encouragement, Boomers expected to go to college and a majority of them did. They have passed this expectation along to their own children, whose educational expectations often looked beyond a bachelors degree to a masters or even a PhD. Even though the average cost of a college education has increased by more than 10-fold since Boomers were in college, it matters little to Boomers. Their kids will go to college. In terms of war, Boomers are certainly familiar with it, having grown up in households with veterans of World War II, the Korean War, or both. And many had their own experience with the Vietnam War. But, for the most
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part, this generation has mostly lived without war. Except for the 6-month Gulf War in 1990–1991, Boomers spent 30 war-free years—1973 to 2003— during which time they built careers and families, but not necessarily in that order.
Boomers Have Done Some Bad Like most generations, Boomers have done some bad. The Boomers’“Hall of Shame” is well represented by cannibals (Dahmer), child murderers (Andrea Yates), and serial killers (Son of Sam, Ted Bundy). Then there is the whitecollar variety of criminal, bitten by the greed bug that distorts reality and calls for disproportionate wealth accumulation. Junk bond king Michael Milken, Tyco’s Dennis Kozlowski, and Enron’s Andrew Fastow are just some of the infamous individuals who joined fellow Boomer Jeffrey Skilling in embracing the deadliest of deadly sins on their way to the big house. Boomers have also had their share of fallen heroes. What Boomer will ever forget the helicopter shots of football legend O.J. Simpson driving up the Interstate in a white Ford Bronco? What could have been sadder than watching the unraveling of an American hero on live television during the narcissistic nineties? These fallen Boomers were the most extreme products of a generation that mostly believed and acted as if the rules did not apply to them, and they paid dearly for their sins.
But the Boomers Have Done Some Good Plenty of Boomers have done some good. Early wave Boomer Bill Clinton broke the dominance of GI Generation presidents in the Oval Office. And two Boomer Senators reenergized the Democratic Party in 2008 on the way to record voter turnout, just when the privilege of voting appeared to be an all-but-dead tradition. Barack Obama and Hillary Clinton almost singlehandedly brought a new energy to the political process in an election year that was about changing America’s course. Not surprisingly, high-achieving Boomers have won countless awards in all fields. There have been Boomer winners of the Oscar (Tom Hanks, Sally Field, Jodie Foster, Steven Spielberg, and Ron Howard), the Tony (Bernadette Peters), the Grammy (Whitney Houston), the Super Bowl (Joe Montana), the Pulitzer Prize (Maureen Dowd), and even the Nobel Prize (Al Gore). Politically speaking, there are Boomers on the right (Rush Limbaugh) and on the left (Al Franken). There have been Boomer queens (Lisa Hajeeb
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Halaby—Queen Noor of Jordan), kings (Stephen), and even princesses (Carrie Fisher). Some Boomers have created enormous fortunes and are among the wealthiest people on the planet. And you will find some of them on Business Week’s list of the 50 Most Generous Philanthropists. But you’re likely to find many of their younger generational constellation mates from Gen X on the list as well. As a generation, Boomers have been pretty stingy, and they trail prior generations significantly in every form of giving, from time to money. They actually live up to their reputation as a selfish brood. According to the Center on Philanthropy Panel Study (COPPS) of more than 7,400 households between 2001 and 2003, Boomers’ philanthropic giving for all types of gifts trailed prewar (World War II) generations by more than 40 percent and were only slightly better than that of Generation X.5 The study characterized the difference between prewar and later generations as both “numerically large and statistically significant,” which undoubtedly has nonprofits concerned about the prospects of future giving. Boomers’ tendency to fall short of other generations with their time and money may in part be based in their own selfishness and desire to do better than their parents. The Boomer definition of a better life most often translated into the need for more household income, in order to fund a bigger lifestyle than that of their parents. The opportunity to demonstrate their success openly by accumulating unnecessarily large quantities of material possessions was fueled by that increased income. The possessions made it possible for Boomers to live out the narcissist’s need for self-promotion and the acknowledgment of achievement. Although their parents might have owned a 1500-square foot, threebedroom, Cape-style home, Boomers instead opted for largesse—a 3,800-square-foot McMansion with four bedrooms, a three-car garage, and a car in each of the bays. The migration to super-sized SUVs helped make a louder and louder statement of the Boomer’s success—they often drove just a few miles in three tons of metal and plastic just to pick up a gallon of milk. And it didn’t matter if that particular Boomer was a Wall Street broker or a plumber in suburbia. Bigger became better according to the Boomer definition. But that trade-off came at a cost. More time working meant less time at home with family. An increase in a Boomer’s standard of living was oftentimes proportionately equal to a decrease in his or her quality of life, which may in part explain why more than 50 percent of marriages fail today.6
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Generating higher household income also translated into more working hours for both mom and dad, leaving little time for volunteer work during mid-life. According to a 2007 study by the ACT Community Service Center (funded by a grant from the Massachusetts Service Alliance), the number one reason why Boomers don’t volunteer is that they “don’t have enough time.”7 Additionally, the motivation to volunteer varies greatly from one generation to the next, according to a 2008 study by Temple University. The GI Generation has been motivated to volunteer because they believe it’s simply the right thing to do. Boomers, on the other hand, were more motivated by what they might get out of the experience, expecting that they would “get credit and respect for accomplishments”—a quintessential Boomer reaction.8 Even though Boomers may have lived a more expensive lifestyle than their parents did, it’s not exactly clear whether or not Boomers have ended up better off materially. With their bigger homes and more expensive cars came much higher mortgage and car payments and thus a substantial drain on Boomer cash flow. As a consequence of their need to live the good life, Boomers as a generation never developed the good saving habits that their parents did. Boomers often live well beyond their means. Boomers learned early that they could leverage their purchasing power through one of the most debilitating habits that individuals, corporations, or even governments can adopt—credit. Boomers learned well from a government that started pushing huge financial liabilities out to the future during the 1980s—a colossal mistake in retrospect and either a complete misread of the potential growth of the U.S. economy in the 1990s and 2000s or a case of complete indifference. Whether he knew it or not, FDR had the luxury of borrowing from a future that was capable of dynamic growth. Reagan did not. Almost in parallel, Boomers adopted the same bad habit as the government, just as they started to earn more and want more during the White House years of Ronald Reagan. Boomers’ poor fiscal habits have no doubt helped fuel a disturbing trend—the virtual abandonment of savings. American’s lack of financial discipline from top to bottom comes at a time when it can least afford to be cavalier about living within limited means. Now, after all that work, earning, and consumption, Boomers are beginning to feel financial pressure from the two generations on either side of them—their children and their parents, according to a Pew Research Center Social and Demographic Trends survey.9 Children are an increasingly
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expensive investment, especially for big ticket items such as college and when it comes time to scrape together a down payment to buy a home. Parents of Boomers are becoming increasingly strapped financially, sometimes finding it necessary to either move in with their children or borrow money from them—or both. Perhaps this is another reason why Boomers have been so challenged with their time and money in terms of generosity. After spending on themselves, is there anything left?
Then Junior Went off to College Boomers pushed hard through their thirties and forties, spending money as fast as it came in. And, as their own children started to approach college age, it became painfully clear to some Boomers that they might not have enough cash savings to pay for skyrocketing college educations. Living the high life for 20 years or more put some Boomers behind the eight ball when it came time to send little Matthew and Kaitlyn off to college. The days when Boomers paid $3,000 a year for the most expensive education in America were long gone. According to the National Center for Education Statistics, the cost of 1 year at a 4-year private university has increased more than tenfold since the 1973–1974 academic year. Tuition, fees, and room and board at a 4-year private university cost $3,040 in 1973–1974. In 2006–2007, the same education cost $38,400.10 More than half of all Boomers were 18 or over by the 1973–1974 school year, so there are many Boomers who remember the days when a college education cost $3,000 a year, all in all. Those were the years when a good summer job cutting lawns, babysitting, or painting houses could help Boomers put a dent in their school expenses—not anymore (see Figure 9.1). Consider what it would take to pay for the privilege of sending your child to Harvard for the next 4 years. For a mere $1,000 a week—52 weeks a year—you could have sent your son or daughter off to Harvard in the fall of 2008.11 That’s a total investment of more than $210,000—and that doesn’t even include beer money. That figure was more than the gross value of the average American home in 2005, according to the American Housing Survey of the U.S. Census Bureau. Boomers were often regaled with stories of their parents’ childhood (when I was your age . . .) about how little they had when growing up— especially during the Depression years. Boomers dismissed these stories,
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FIGURE 9.1. The Cost of a College Education Tuition, Fees, Room & Board For 4-Year Private Universities, 1970-2005.
Source: National Center for Education Statistics
often offered up as advice from parents, as hooey. They rationalized that they had plenty of income in relation to their parents at the same time in life—even though it may have required two incomes to fund the Boomer lifestyle. Increasingly, first-time homeowners—including Boomers—have been forced to seek help from their parents for the down payment in order to purchase a home—a fundamental element of the American Dream. Many parents of Boomers realized a windfall from real estate purchased in the 1970s and 1980s that they cashed out after their children left home; they often downsized their homes and lifestyles on the way to retirement. Leaving a piece of that financial legacy was often viewed by many parents of Boomers as one of the most important gifts that they could leave their children. However, a change in the financial situation of many retirees of the GI and Silent Generations has forced them to liquidate some, if not all of their retirement investments in order to meet escalating costs. Increasingly, retirees are outliving their retirement investments and are forced to liquidate what they can in order to survive. This trend is now beginning to have an impact on the level of inheritance that Boomers and younger
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generations might expect from their parents, making the chances of a financial windfall more and more remote.
Waiting for the Reading of the Will If Boomers are planning on receiving a sizable inheritance from mom and dad, they’d better think again. Increasingly, investments that were thought to be sufficient at the time of retirement are not the only resource that is falling short of retirees’ expectations. Social Security payments haven’t kept pace with the cost of living in most years, and, in most cases, they only serve the original intention of the entitlement—as a supplement to other sources of income. A study conducted by the Federal Reserve Bank of Cleveland found that nearly 92 percent of Americans will receive no inheritance at all in the future and the vast majority of the remaining 8 percent will average less than $25,000.12 As Boomers begin to approach retirement, a combination of factors may require some of them to rethink when, where, and how they transition into retirement. Many have lived beyond their means, and their retirement savings can’t possibly maintain their lifestyles. Their options are to continue to work in some capacity beyond conventional retirement age, to be forced to reevaluate and downsize those lifestyles as they consider transitioning out of the workforce, or both.
Redefining Retirement Already, the very definition of retirement is rapidly changing, and, by the time the youngest Boomers turn 60 years old in 2024, the entire concept may itself be, well, retired. “The current language of aging is obsolete and may actually be an impediment to change,” says a 2005 joint study by the Harvard School of Public Policy and the Met Life Foundation.13 Terms such as seniors and golden years are rapidly losing relevance, as more and more Boomers move into their sixties. It’s more likely that Boomers—even those over 60—view their parents as seniors but see themselves as frozen at middle age. Most Boomers do not have the same vision of retirement as their parents. And that might be a good thing for at least three reasons. First, many Boomers will not have enough savings to retire. Second, Boomers need to feel productive. This is not a generation that will be content playing golf 5 days a week, followed by a walk around the mall. Third, and this
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may be the most important of all, the country needs the intellect, energy, and experience of Boomers to help lead us through the difficult times ahead. According to the Harvard-Met Life study, Baby-boomers will soon have the opportunity to redefine the meaning and purpose of the older years . . . As some of the demands of work and family that have commanded their attention in mid-life recede, Boomers will have the potential to become a social resource of unprecedented proportions by actively participating in the life of their communities.14
As a generation, Boomers possess far superior educational credentials, professional skills, and work experience compared to their parents. Boomers are driven to achieve—a nurturing gift from their GI Generation parents. More than 70 percent of Boomers see themselves working well beyond the conventional retirement age of 65, and some even envision second or third careers. Although their parents have always been generous with their time when asked to pitch in, it is unlikely that Boomers will be content spending their free time pushing patients around the local hospital in a wheelchair or filing books on the shelves of the local public library. Even though that might appear to be an arrogant outlook for efforts altruistic, the fact is that their uniquely advanced experience and skill set across so many professions make the Boomer generation the greatest potential civic resource in U.S. history. But, instead of planting trees as the Civil Conservation Corps (CCC) did in the 1930s, Boomer professionals could match their vast skills in a planned way against the significant needs of the United States over the next 20 years; that is a powerful notion indeed. So, although Boomers may need to continue to generate some income in their senior years in order to survive, they will still find themselves with extra time on their hands. The question is—what will they do with that time? But an even larger question looms for a generation that already has a poor track record for civic participation—trailing their GI Generation parents in almost every area of community participation, including voting rates and joining community groups. Can Boomers mobilize in an organized and meaningful way that leverages the generation’s significant skills and experience to help solve the problems that put the American Dream at risk?
Inspirational Leaders America has been fortunate to have been led by a remarkable group of inspirational leaders through every generation in American history. Through good times and bad, the roll call of leaders from each generation of
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Americans since the American Revolution is inspirational in itself. If it were possible to have a dinner honoring the great generations in American history, consider the cast of honorees that might be seated on the dais: seated from left to right, beginning with the oldest, would be Benjamin Franklin, representing the Awakening Generation. Next to him would be George Washington, representing the Liberty Generation, Thomas Jefferson of the Republican Generation, Andrew Jackson of the Compromise Generation, Abraham Lincoln of the Transcendental Generation, Ulysses S. Grant of the Gilded Generation, Teddy Roosevelt of the Progressive Generation, Franklin Delano Roosevelt of the Missionary Generation, Dwight David Eisenhower of the Lost Generation, John F. Kennedy of the GI Generation, Martin Luther King, Jr. of the Silent Generation, and Barack Obama of the Boomer Generation. Master of ceremonies for the gathering would have to be the late Tim Russert. Like a kid in a candy store, the ever-prepared Russert would relish the tough questions that he’d ask of Washington, Lincoln, and, especially, JFK, on the way to what might be one of the most entertaining and revealing evenings in U.S. history. The common talent and vision of these great builders of American society lived more in their ability to inspire than in their ability to craft legislation. The nation has been beaten up badly during the first decade of the 2000s—a decade of too much politics and too little progress on so many fronts calling for reform—immigration, Social Security, healthcare, education, and on and on. The first decade of the twenty-first century will be mostly remembered as one of tragedy—September 11, the Iraq War, skyrocketing oil and gas prices, Hurricane Katrina, and culminating in the final days of the Bush 43 administration with enormous financial distress fueled by the sub-prime mortgage meltdown. It may be viewed as a decade of lost hope, which ended with the need for serious change and inspired leadership that made the elections of 2008 all the more important. In the 1990s, President Bill Clinton provided textbook management of the government as a business—by the numbers, he was the best president of the twentieth century. In his inspirational book Giving: How Each of Us Can Change the World, Clinton describes politics as a “getting business”— one that requires the politician to get support, contributions, and votes— and, because of this, politics leaves little room or time for “giving.”15 Truer words were never spoken—especially from a man who had plenty of experience with his own “getting.” And, although President Clinton does a fine job of weaving in stories about inspirational Americans and how they “gave” to make a difference, it
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encourages conventional giving (time and money) in conventional ways. Giving in the United States is mostly a collection of vertical efforts for vertical purposes—the Red Cross raising money or organizing volunteers for its relief efforts, Stanford University raising money and organizing volunteers for its educational efforts, or Sloan-Kettering raising money and organizing volunteers for its cancer research and patient care efforts. All of those efforts are to be applauded. But what’s needed in America—especially now—is a mechanism for giving time and money that is tied to a national vision and strategy for the purpose of achieving specific goals for the common good. It is that type of collective and cooperative initiative that Americans have always embraced—especially when united and motivated by a very specific common goal, such as getting people back to work during the Depression or defeating the Nazis in World War II. Unfortunately, our history also tells us that we are not very good at prevention. More often, we have been a nation that reacts to disasters—to the bombing of Pearl Harbor, the attacks of September 11, or the devastation of Hurricane Katrina. In order to minimize the pain and suffering of the coming crisis, it is imperative that Americans begin to organize now in preparation for the winter storm ahead.
Inspirational Money No other couple in history has given more than Boomers Bill and Melinda Gates. The foundation that carries their names holds a trust asset of more than $37 billion, and, in recent years, it has granted in excess of $2 billion annually around the world. The core values of the foundation are simple: it focuses on issues that affect the largest number of people, especially those who have been neglected in the past. Because of this guiding principle, much of the foundation’s efforts are dedicated to its Global Health Program and Global Development Program, which serve individuals in some of the neediest locations around the world. In 2006, the foundation received a magnanimous gift from financier Warren Buffett that effectively doubled the size of the foundation along with its ability to improve people’s lives globally—which is the objective that these remarkable Americans have set out to accomplish. Another truly remarkable American Boomer is the multitalented Oprah Winfrey, whose foundations similarly help some of the most needy people in the world. Winfrey has always been generous with her time, money, and advice in helping the less fortunate through her television shows and
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numerous charities. Winfrey also took advantage of the reality TV phenomenon by creating a prime-time show called The Big Give, in which contestants compete against each other by helping total strangers who are in need. In some ways, Winfrey’s effort is an antidote to the reality TV offerings that can more often be described as the greed-driven form of the programming genre. Both the Gateses and partner Buffett, along with Winfrey and U2’s Bono, have done more to advance lives of the less fortunate around the world than any five people on the planet. In many ways, their visions transcend the portfolio of needs that America faces during the coming Crisis over the next 10 to 15 years. It is money that is needed most to solve many of the very basic problems, such as hunger and disease around the world. But, although money certainly helps solve domestic issues, the United States is in need of more than money to overcome the challenges of the coming years. It needs a spirited commitment of time and talent from its most famous generation—a generation to which much has been given and from which little has been asked.
Inspirational Time If you don’t have $37 billion lying around, maybe you could consider donating your time as social currency. Although the concept of retirement continues to evolve, so does the concept of volunteerism. Certainly not everyone can give to the extent that Bill Gates or Oprah Winfrey can. But there are more ways than one to make a huge difference. Marc Freedman is the founder of Encore—according to its Web site, a growing network of people who want the personal fulfillment of giving back, along with continued income.16 Author of the best-selling book Encore: Finding Work that Matters in the Second Half of Life, Freedman has created a social network that helps people transition from their conventional jobs to work that allows them to give back while still earning a salary—a perfect solution for many Boomers out there who find themselves not quite ready to stop earning but wanting to do something more meaningful with their lives.17 “Tens of millions of baby boomers are entering a period of their lives between midlife and the onset of true old age,” said Freedman. “For most, this period will not only be a new stage of life, but also of work.”18 Freedman’s work is truly visionary and has enabled thousands to transition to work that is more meaningful to them: a truant officer who became
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a critical care nurse, a homemaker who became an Episcopal minister, a corporate executive who became a school teacher. Each and every member of Freedman’s network has shifted focus from performing a job that is a means to an end to performing a passion that is an end in itself. Freedman has created a perfect solution for the Boomers who want to do more with their lives but are simply not able to forgo the inflow of cash that helps fund their very existence. The spirit and vision of these and many other innovators are literally changing lives around the globe every day. These projects speak to the ongoing challenges that the world will continue to face every day until they are eradicated, and the world is blessed to have these extraordinary people and resources working overtime to make a difference. But the storm that is brewing in the United States is a serious one and threatens the very foundations of the Republic on which it stands. The fundamental health of the world’s greatest benefactor is failing. The broad shoulders of the United States are tired and the body needs to be repaired and refreshed. It will take a coordinated multigenerational effort to help rehabilitate one of the world’s great resources, enabling the United States to move successfully through a Crisis and come out the other side as a healthier contributor, both domestically and internationally, to the challenges.
Putting on the Oxygen Mask First Anyone that has flown on a commercial airline over the past 50 years has heard the instructions a thousand times: “Please place your own oxygen mask on first, before caring for others.” At first, this may have sounded odd or even selfish, but, on further examination, it makes perfect sense to enable the strong so that they can, in turn, help those who are less likely to be able to help themselves. Although there are some who may be concerned that any inward focus on the part of the United States is protectionist, now is the time for some self-healing, some strength-building. The United States is an adult passenger on an airplane that is filling with smoke. It’s simple: unless the United States has oxygen to sustain its own life in a crisis, it will not be able to help others in crisis. Even though the United States can be faulted for historically sticking its nose into the business of too many countries worldwide since 1950, its track record for lending a hand to the rest of the world over the last half century is unmatched. A world with an unhealthy
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United States is a world that is itself unhealthy. But it now faces its own crisis, which may threaten its unflinching ability to provide aid wherever and whenever it is needed worldwide. Yet don’t look for other nations to run to the aid of a needy United States. That’s why it’s critical for the United States to stop hurting itself and start healing itself. Otherwise, no one else around the world gets help.
It’s Up to the Boomers Some of the great figures in American history who helped muscle through the past three American Crises did not necessarily hold a populist view. An aging Benjamin Franklin was growing weary of the debate over changes to the original Constitution of the United States toward the end of the Constitutional Convention in Philadelphia in 1787: I confess that there are several parts of this Constitution which I do not at present approve. . . . I doubt . . . whether any other Convention we can obtain may be able to make a better Constitution. For when you assemble a number of men to have the advantage of their joint wisdom, you inevitably assemble with those men, all their prejudices, their passions, their errors of opinion, their local interests, and their selfish views. From such an assembly can a perfect production be expected? It therefore astonishes me . . . to find this system approaching so near to perfection as it does. . . . Thus I consent . . . to this Constitution because I expect no better, and because I am not sure, that it is not the best.19
Franklin knew that a document alone was not the answer to the country’s challenges, and, frankly, so did Lincoln during the Civil War Crisis and FDR during the Great Power Crisis. The Emancipation Proclamation was not enough, and neither was the Thirteenth Amendment to the Constitution, which officially abolished slavery in the United States. “I am a firm believer in the people,” said Lincoln. “If given the truth, they can be depended upon to meet any national crisis. The great point is to bring them the real facts.” Honest Abe had the guts to speak the truth, even though it probably ended up costing him his life. Lincoln was assassinated eight months before the Thirteen Amendment, outlawing slavery, was ratified by all states. As for FDR, he literally crafted a blueprint to rebuild America that was attacked on all sides—including the Supreme Court, which ruled that some of his New Deal programs were simply unconstitutional. But FDR’s
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own legacy was not so much the brilliance of his legislative abilities as the inspiration and vision that he provided as a leader of the people. “The test of our progress is not whether we add to the abundance of those who have much. It is whether we provide enough to those who have little.”20 Certainly, FDR was a master of rallying the troops and inspiring a generation. As much as we’d like to think that an FDR-like figure will emerge from the sea of the Boomer generation’s conspicuous consumers, many wonder if that is really possible. But, miraculously, the United States has always been blessed with great leaders, and, for the first time in American history, an African American has become the president of the United States. Barak Obama now has the privilege of leading the United States through dark times. Imagine the pride that Abraham Lincoln and Martin Luther King Jr. would feel if they were alive today. If ever there was a time in recent history that such a miracle could happen, it is now. Record numbers of citizens—close to 60 million registered voters—made their way to the polls to vote in the primaries leading to the election of the 44th president of the United States. The words of FDR echo as a reminder of the duty of the few to serve the many—not the many to serve the few.
The Next 10 Years No one knows the extent of the crisis that has now moved onshore. It could be mild or it could be severe. A philosophy of preparing for the worst and hoping for the best is perhaps the wisest one that we can adopt over the next 10 years. Pretending that a major economic turnaround is just around the corner is foolhardy. It was Daniel Webster who said, “wisdom begins at the end.” If that’s true, we are approaching a time of wisdom and it couldn’t come any faster. Preparedness is our best defense for two reasons. First, the onset of crisis may be so gradual that we are well into it before we even notice. Second, the fix will take all of our ingenuity, experience, and a good deal of our time over the next decade. The Great Depression is remembered as a time of scarcity that left Americans with a fundamental imperative—manage limited resources sparingly. Americans lived day-to-day, struggling to make ends meet. The choice was made every day about what was needed to sustain a family spiritually and physically. Basic sustenance has not been an issue for most Boomers. They have been blessed to live in times of plenty. But the current
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economic storm could change all of that and, for the first time, force Boomers to rethink their “bigger is better” philosophy of living. In 1971, when the oldest Boomers were turning 25 years old, there were 114 million licensed drivers in the United States and 113 million registered motor vehicles. That was the last year that licensed drivers ever outnumbered registered vehicles, according the Bureau of Transportation Statistics (BTS).21 In 2006, as the oldest Boomers turned 60, there were 40 million more registered motor vehicles than licensed drivers in the United States. Think about that. If every licensed driver got behind the wheel of a car, there would be 40 million cars without drivers—more than enough cars for every man, woman, and child in Canada. America has pushed and pushed for growth from all quarters over the past century, and what has happened? It has mostly succeeded in creating that growth. But there’s a downside to so much dynamic growth—and therein lies the “capitalist’s dilemma”—the more you grow, the harder it is to grow more. There is usually a price to be paid for dynamic growth over a period of time. Consider the environmental price that China is paying right now for its remarkable growth. What kind of a world are they creating for their children and grandchildren? Our vast overconsumption has led to the creation of two industries during the peak years of Boomer earnings, spending, and consumption. Would it surprise you to know that there is a Self-Storage Association? Believe it or not, the exponential growth that this industry has enjoyed in the past 25 years has spawned a trade association for the estimated 60,000 operators of self- and mini-storage facilities nationwide. The Self-Storage Association estimates that the $22 billion industry has grown by more than 65 percent since 1995. More than 10 percent of U.S. households now rent some part of the 2.2 billion available square feet of storage space in the United States every year. That translates into 78 square miles of storage space, or, roughly, three times the size of Manhattan. What is it in our fragile, insecure makeup that compels us to overconsume?22 Once we decide to dispose of some of that extra stuff, we have an entire industry dedicated to coming to our home to haul it away. Waste management has grown from a cottage industry in the 1800s to more than $50 billion in 2006. Three major companies—Waste Management, Allied Waste Industries, and Republic Services—manage more than half of all of the waste that is generated in the United States each year. According to the Environmental Protection Agency’s (EPA) most recent report on Municipal Solid Waste (MSW), Americans generated over 88 million tons of MSW
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in 1960. More than 45 years later, total MSW nearly tripled, to 251 million tons in 2006, or 4.60 pounds per person per day, which is beginning to approach 1 ton of waste for every person in the United States each year and rising.23 The good news is that after four decades of consistent per capita increases in MSW production, there was a slight decline in the amount of waste generated on a per person basis in 2006. But still we overconsume. A serious reexamination of personal consumption habits by Boomers and their generational constellation mates would go a long way to decreasing per capita waste generation in the United States through the balance of the crisis.
Land O’ Plenty Boomers have expected plenty and have received plenty. They have been accustomed to a life in which they don’t have to think in terms of choosing whether to buy this or that because often they could afford to buy both. Even though we are not experiencing the Second Great Depression today, each Boomer must still ask an honest question—how much do I need, to sustain myself physically and spiritually going forward? More important, Boomers need to understand that whatever they consume will not be available for their children and grandchildren to consume. Think of it this way: we are all today consuming gas that is stored in one giant gas station; and when it’s gone—it’s gone. The supply that we deplete today means just that much less for the future—not our future—but our children’s future. Whatever you choose to use, they will lose. Rightsizing is a reasonable strategy for Boomers—as consumers and as role models for their constellation mates (and for the government, for that matter). There are simple things that we can do. For example, turning off the water in the sink when brushing your teeth can save gallons of water every time—and drinkable water at that. Then there are the harder tasks, like growing your own tomatoes in the summer. That takes time, effort, patience, and attention, but it’s an experience that you might be able to share with children, and it’s less likely that you’ll have to worry about salmonella contamination. It won’t be easy to craft a life that provides you with what you need in balance with what you can afford and what you can justify consuming. Your consumption decisions today have an impact on all of the generations who will be alive after you are gone. Channeling the extraordinary talent and experience of Boomers into meaningful work can make a big difference to the U.S. economy—just as
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the Civil Conservation Corps did for FDR in the early years of the Depression. Giving time and money is important, but channeling time and money is even better. Channeling is not only about the aggregation of all resources but also about directing those resources into efforts within the context of an overall strategy that is designed to heal and strengthen a nation.
Channeling Boomer Energy Consider the potential power of Boomers if that power is channeled correctly. There are 78 million Boomers, who are the best educated, most experienced generation in history—and they don’t intend to retire any time soon. Although many of them might need to generate income beyond the age of 65, it doesn’t mean that they can’t craft a second or third career—making money at the same as providing more meaningful work. Coordinating the energy and talents of the Boomer generation into the “Biggest Give” (with apologies to Oprah Winfrey) in history is what is needed now to help turn this country around. What we need is a way to take advantage of the time and talents of the Boomer Generation. We need to match those substantive resources with the substantive needs in this country, needs that won’t be fixed with money alone or with conventional volunteer time. We need a way to channel the overwhelming power of Boomers and to connect resources directly to needs in a national strategy that helps heal the country—mentally and fiscally.
Time to Rethink Priorities There is an opportunity now—not only to rethink America’s priorities but also the means by which those priorities are met. This is not just a unique opportunity to change the direction of America dramatically—it is our obligation to do so. Just as specific needs and resources were unique to the times in the 1930s and 1940s, there are needs and resources that are unique to twenty-firstcentury America. In 1935, the Social Security Act was written into law as a way to help Americans ease into their golden years, when a lifetime of hard work was complete and a life of leisure began. Try to envision a great big whiteboard on the wall with absolutely nothing written on it. Now put up the headings: needs on one side and resources on the other. On the needs side are all of the issues that America faces today—healthcare, education, homeland security, retirement funding, immigration, maintenance of infrastructure, and dozens more.
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On the resources side are the tesn of millions of Boomers—really all generations of Americans—with unique talents and skills that can be directly matched to the needs side. The greatest challenge for Boomers—the senior leaders of the Crisis— will be to create a balance of funding that is both fair and consistent with the times. Who pays for healthcare? Who pays for retirement funding? Are undocumented workers a need, a resource, or both? Now is the time to start with a blank whiteboard and a new palette of colors with which to re-create America. This is what Benjamin Franklin did. This is what Lincoln did. This is what FDR did. As the prior chapter established, America needs a New New Deal and the imagination and energy of the next generation of senior leaders who can, in the process, write a new legacy for themselves.
The Clock Is Ticking Boomers have a limited number of years left on this planet. Most Boomers will be gone by 2040. If the epitaph were written today for the Boomer Generation, it might read something like this: Here lies the Boomer Generation Born from 1946 to 1964 The largest and most selfish generation in history.
So far, Boomers have mostly been takers and not givers. But there is still time left to change that. When FDR stood on the steps of the Capitol in March 1933, the legacy of the Missionary Generation had not yet been written. But what it accomplished over the next 12 years is what history now remembers as its legacy—its contribution to America and to humankind. This time, we don’t have to save the world to be heroes. We have to save those most dear to us—our children and grandchildren—and the country that we love. And the clock is ticking.
Chapter 10
The Boomer Grid In our personal ambitions we are individualists. But in our seeking for economic and political progress as a nation, we all go up or else all go down as one people. —Franklin D. Roosevelt
Somewhere along the way, we got the impression that the U.S. government owed us. We came to expect that Uncle Sam would provide us with an income if we had a baby, paid for our healthcare and prescription drugs when we became seniors, and paid for housing 3 years after a hurricane destroyed our home. Maybe it all started with the benevolence of FDR during the Great Depression and then followed up with LBJ’s Great Society efforts in the 1960s and, finally, George W. Bush’s overzealous generosity when he signed the Prescription Drug Bill into law. The United States has been a parent that has overindulged many of its children. Just look at the 2009 federal budget: weighing in at slightly more than a projected $3.0 trillion, nearly half of the entire federal budget is tied up in just two departments, the Social Security Administration (SSA) and the Department of Health and Human Services (HHS)—departments that didn’t even exist during the last American Crisis. Three areas of spending have to change quickly if this government is to find its way out of the very deep hole that it has created. The United States must begin to reduce its addiction to spending on runaway entitlement programs, loans from foreign governments that enable the United States to avoid fiscal accountability, and oil. These three addictions have the capacity to bring the U.S. empire down.
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Matching Needs and Resources When times get tough, it becomes even more important to be very stingy with limited resources while, at the same time, creating alternative programs that fulfill needs at virtually no cost. This was part of the spirit and genius of some of FDR’s programs back in the 1930s that always appeared to get more bang for the buck. There was an enormous concern about the overconsumption of natural resources. Because most Americans did not own cars in the early 1930s, the serious threat posed by carbon emissions was still decades away. However, there already was a common sensitivity to the need to replenish what had been stripped from the land. Inspired by his distant cousin Teddy, FDR was determined to replace the millions of trees that had been mined from U.S. forests in the decades of expansion following the Civil War. One of the first efforts coming out of FDR’s New Deal was the Civil Conservation Corps (CCC), a program that put hundreds of thousands back to work, planting millions of trees in stripped forests across the country. Ironically, more than 75 years later, a similar need has arisen in U.S. forests because of budget cuts. But those cuts will greatly limit efforts to deter both the frequency and intensity of major forest fires. In recent years, devastating fires have taken their toll in the western United States, causing billions of dollars in damage while destroying millions of acres of U.S. forests. Cuts in the 2009 budget for the U.S. Forest Service’s fire preparedness would mean that the agency would be unable to clear dead trees and overgrown brush that serve as a kind of kindling and increase both the likelihood of fires starting and their intensity once started. It is precisely this type of project that was enthusiastically embraced during the early days of the New Deal. It goes without saying that money was tight during the Depression, but that didn’t deter the administration from creatively matching needs and resources to solve two problems at once— unemployment and environment needs. That type of innovative thinking requires a different type of mind-set. It takes a sense of urgency, powerful motivation, and innovative thinking to get things done. Unfortunately, today we are lacking in all three areas.
Twenty-first–Century Needs and Resources It’s coming up on 80 years since FDR signed into law the sweeping legislation that dramatically changed the country’s course for the rest of the century. As important as that vision was, it was a vision for its time, based
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on the needs of its time. It is not a vision for this time. But it does provide inspiration for a new vision—a vision that enables a more creative approach to solving the mountain of problems that the United States faces with limited resources. What is needed is not reform. What is needed is a complete rethinking of the purpose of all programs for twenty-first-century America. As we move through this time of crisis, it’s not possible to predict precisely what will happen to a fragile economy for which the limited resources are getting even more limited each day. Hubbert’s Peak provided an early warning that our most precious natural resources are not without limits. Hubbert’s prediction that U.S. oil production would peak around 1970 was spot-on and so was his follow-up prediction about world oil production, which peaked around 2005. But, rather than act on that warning, we have mostly chosen not to escalate our energy situation to an emergency status. Instead, we fool ourselves into thinking that offshore drilling is the silver bullet solution. It is not. As predicted, after a run-up to record prices in the early summer of 2008, the price of gas miraculously started to decrease 90 days before the presidential election. But as January 20, 2009 approached, gas prices began to inch their way up. Let’s put to bed the myth that gas prices will retreat permanently. Since 1950, gas prices have either increased or remained the same in 47 of 58 years. In the 11 years that gas price decreased from year to year, it dropped by less than 10 cents per gallon nine times and by 27 cents per gallon twice (1986 and 1998). The average price of gas has been higher at the end of each decade than it was at the beginning in all but one decade (the 1980s), and the likelihood that it will end the first decade of the 2000s at a record percentage increase compared to the beginning of the 2000s is a virtual certainty.1 Table 10.1 shows the average price of a gallon of gas (all grades) at the beginning and at the end of each decade since the 1950s. Prices increased from beginning to end in each decade, except for the 1980s when prices dropped by 16 cents per gallon. Only two decades show an increase in gas prices of 100 percent or more—the 1970s and the 2000s (through 2008). Even if gas prices average $2.00 per gallon in 2009, they will still have increased more than any other decade besides the 1970s. So we can sometimes get fooled into thinking prices are moderate when they are not. The simple law of supply and demand already started dictating higher market prices in 2007. A reversal of those prices is now highly unlikely, given that energy-hungry China and India—comprising one-third of the world’s population—are just now taking a seat at the world’s oil table.
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TABLE 10.1. Average Price of a Gallon of Gas in the U.S.—All Grades 1950s
1960s
1970s
1980s
1990s
2000s
Beginning of Decade
$0.27
$0.31
$0.36
$1.22
$1.22
$1.56
End of Decade
$0.31
$0.35
$0.86
$1.06
$1.22
$3.25*
+$0.04 +12.9%
+$0.04 +11.4%
−$0.16 −15.1%
+$.00 +0.0%
Increase or Decrease
+$0.50 +138.9%
+$1.69 +108.3%
Nominal U.S. Dollars *Average price of gas in 2008
Just as there are, no doubt, huge deposits of gold in the Earth’s core, so too are there sources of oil that could satiate the most ravenous of consumption appetites. But there comes a point when the cost of extraction far exceeds the value once the oil is extracted, and we are rapidly approaching this point with oil. That was the purpose of Hubbert’s original warning in the 1950s. The 30-year view suggests that we desperately need to begin to augment or replace historical sources of energy with new alternatives. But, in a world that measures and compensates itself based on 90-day cycles, there is not enough built-in motivation for the powers that be to care much about the 30-year view. What will it take for us to realize that the days of easy access are over? No matter what the natural resource is, it is limited. And, as it relates to our future stewardship of those resources, there are only four potential courses of action: 1. 2. 3. 4.
Continue to drain existing sources. Find new sources. Create alternative sources. Change our consumption behavior.
Is it difficult to imagine a day when rolling blackouts, like those common in California in the early 2000s, will become a regular part of our lives? Is it difficult to imagine that certain foods that we enjoy will not always be available when we want them or that, when they are available, they might cost two, three, or four times what they now cost? Is it difficult to imagine that gas will become so scarce and so expensive that the family car mostly sits in the garage and is only used once or twice a month? Is it difficult to imagine a world that gets so much smaller that most stores are within
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walking distance, and the office building becomes a relic of the twentiethcentury past? Can you imagine life as a throwback to the days before the automobile? The reality is that our resources are rapidly disappearing, and it’s time for our perceptions to catch up with that reality. More than that, we may have to get our minds around an entirely new definition of the American Dream—a definition that is measured more in terms of quality than quantity—when “more” means more time with family and friends and less time at work.
The Wake-Up Call That May Never Come America has a unique opportunity now to take advantage of a powerful resource because of an unusual demographic trend that will literally be gone in 40 years. Boomers, like oil and gold, are a substantive but finite resource that, if channeled wisely during the Fourth Turning Crisis, can help the United States overcome its near-term crises and lay a foundation for a chance at a better way of life. Fix Social Security? That’s absolutely possible. Create universal healthcare for all Americans? That’s also possible. Balance the budget on the way to eliminating the national debt? It’s all possible. In America, and for Americans, there’s nothing that’s not possible. In some ways, our problems are much bigger than those that FDR faced 80 years ago. But we also have many more tools with which to fix the problems. It is truly a matter of channeling energy and using resources wisely. During the last Fourth Turning Crisis, FDR sketched out a wide vision and a detailed plan to help get America back on its feet. One of the biggest differences between this and other crises is that we may never receive the type of wake-up call that Americans received in October of 1929—at least, let’s hope not. That’s why it is important for a Boomer-led generational constellation to take on the challenge proactively before it takes us on. The New Deal was a practical reaction to the challenges of the time— even if a number of aspects of the program failed. The success of the New Deal lived in its spirit—in its ability to pull a people together for the common good. There will always be critics of the effectiveness of specific programs, but FDR must be given enormous credit for mobilizing quickly and taking action. As Obama did in his first days in office. American society today is so fractured and so self-directed that it rarely feels as though we have a common cause or goal. Unfortunately, it takes events like September 11 to pull us together and motivate us to act. The
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New New Deal must be shaped around twenty-first-century needs, with twenty-first-century resources. The tools of the past will not help us solve this crisis. The solutions that were shaped 80 years matched the needs of those primarily in the Lost, GI, and Silent Generations—the parents, grandparents, and great-grandparents of Boomers. The solutions that will be shaped during this crisis must match the needs primarily of Gen X, Millennial, and New Silent Generations—the children and grandchildren of Boomers. The challenge will be this: how can the United States channel the significant skill and talent of the most highly educated generation of all time into an amazingly powerful and productive resource that meshes with the overwhelming needs of a nation in crisis—all without using a penny of the government’s money? And the question for Boomers now is this: how can Boomers mobilize in a meaningful way to channel their enthusiasm and expertise into an overall strategy that helps preserve the American Dream for future generations of Americans? The government can’t do it alone. It has always relied on the remarkable strength and resilience of the American people to pull through a crisis.
Power Grids For many years, electricity stations in the United States have been connected via a network that allows electricity generated in one state to be shared with another state. Power grids enable a community that may be in a high-need situation because of weather conditions or during high-usage periods to access electricity from another community in a lower-need situation. The United States has 6,000 such power generation stations that are linked in a network that allows electricity to flow from one station to another over high-voltage lines. The flow of electricity is controlled by expert personnel who monitor need as well as distribution of power from low-demand to high-demand areas. So, if San Diego were in a highdemand situation as a result of a heat wave, grid coordinators would be able to identify excess power from a low-demand area and reroute the necessary energy to ease San Diego’s temporary crisis. The concept of the power grid has been borrowed by a number of industries and causes, as a way to manage resources more efficiently. Some Web sites have captured the essence of grids by asking those with a given need to post that information for those seeking to fulfill a need—really it’s no different than simple ride-sharing programs. But, because of the democratic
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and pervasive nature of the World Wide Web, social networks are growing in importance and effectiveness—matching needs with resources.
The Boomer Resource Grid There are 78 million Boomers out there with extraordinarily skills, experience, and energy who could end up becoming one of the greatest resources in U.S. history. Whether Boomers intend to retire outright, transition to another type of work, or stay in their current jobs indefinitely, they still represent enormous potential as a supplementary resource that fulfills a variety of needs that the U.S. government is simply unable to provide. As part of a New New Deal initiative, the Boomer Resource Grid is a concept that would harness the largely untapped resource of 78 million talented Boomers and channel that power into a thoughtful strategy that helps take financial pressure off federal, state, and local governments. The Boomer Grid would be a nongovernmental organization (NGO) that helps aid the government in delivering high-priority resources. The Boomer Grid would be a Web-based resource that identifies specific local and federal needs on one side, matching those needs with individual talent on the other. The Boomer Resource Grid would be a social network, in the form of a virtual labor force that trades off all generation’s time and talent—based on the altruistic premise that greed is indeed not good, but that generosity is. As a generation, Boomers have been running a lifelong sprint to nowhere— understanding no more than the need to keep running. Boomers are talented and creative thinkers with the collective human power to eliminate the national debt over time. Few of them are thinking about conventional retirement, but many of them are thinking about life after leaving the conventional workforce and the Boomer grid provdes a framework to channel this generation’s time and talent.
The Objective of the Grid The overall objective of the Boomer Grid would be to strategically channel the enormous resource that is the Boomer generation, in order to take pressure off of the government in funding critical programs for Americans. In the short term, the objective of the Boomer Grid would be to help reduce the necessity for additional spending and reliance on loans from foreign banks and governments. The Grid’s long-term objective would be to help the U.S. government eliminate the crippling national debt. What better gift could a generation leave its children and grandchildren?
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The Boomer Grid would enable the U.S. government to use budgeted outlays to deliver priority programs to U.S. citizens within budget limits. It could also be an important component in an overall strategy to bring fiscal responsibility, fiscal discipline, and department/agency accountability to the overall management of government programs. What better legacy could the Boomer generation leave than to end a difficult Fourth Turning Crisis around 2024 by consistently delivering balanced budgets, and with no future liability for the sins of the past?
The Spirit of the Boomer Grid If you ever travel to Colorado Springs, Colorado, and you need a wireless connection to the Internet when waiting for your plane at the local airport, it’s as simple as firing up your laptop and opening up your browser. There is no fee for wireless Internet access at the Colorado Springs Airport. The experience of logging on to the Internet for free is somewhat of a shock in today’s “squeeze every nickel” world. Kudos go to Colorado Springs for providing a great example of the type of spirit that’s required to heal America. Greed is the enemy. Generosity and selflessness are the cure. The Linux open-source software was founded on the same altruistic spirit as that of the Boomer Grid as an open social network. In Linux, software development work is done collaboratively and becomes part of the free Linux operating system. Individual volunteers enrich the collective value of the software by adding functionality, based on their own experience, skills, and interests. Similarly, Wikipedia—the Internet-based free encyclopedia—is developed by a social network of individuals who contribute content on virtually all topics. The collaborative effort enables individuals to update and enrich the content continually, content that can then be challenged by other collaborators to ensure the accuracy and reliability of the data. Wikipedia as a free resource is built purely for the common good and relies on the generosity of others in order to survive. In the past, Wikipedia has been criticized for inaccuracies and questioned as a reliable and trustworthy source. However, a 2006 study in the Harvard Business Review found that the Encyclopedia Britannica—with decades of contributions by paid writers and a stellar editorial board—had an average of 2.9 inaccuracies per page. On the other hand, Wikipedia—launched in 1999—had an average of only 3.9 inaccuracies per page—a remarkable record compared to the much older, much more expensive business model. The Boomer Grid could be similarly
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designed to provide high-quality productivity and output in a collaborative social network for virtually no cost.
How the Boomer Grid Would Work The currency that would run the Boomer Grid is hours—hours of labor, expertise, counseling, and so on. These hours could, for example, be “deposited” into the Grid’s Web-based repository, which might be segmented into 10 major resource categories and 10 major needs categories, such as healthcare, education, and food and clothing. Individuals or organizations could deposit resource hours into an online resource database based on four characteristics: (1) total number of hours donated; (2) the type of hours donated, for example, manual-labor hours or skilled-labor hours, such as accounting; (3) the location of the hours, for example, manual labor hours for which the work must be performed in a specific city, or virtual hours for which the work could be accomplished online; and (4) the dates and times for the hours. 1. Resource Hours Resource-hour contributions would be deposited into the Web-based repository by individuals or organizations by completing a simple online resource form. For example, let’s say a registered nurse wishes to donate 8 resource hours per month of, in her case, skilled labor hours—in the greater Phoenix-area on either Saturday or Sunday in all months except August. The Grid searches on deposited needs-hours requests for matches and contacts the individual via e-mail with any matches. 2. Needs Hours Approved government agencies would be able to deposit needs hours into the Web-based repository by completing a simple online needs form. The Grid searches on deposited resource hours for matches and contacts the agency administrator via e-mail with any matches.
Because of the vast number of needs in jobs and skills across the U.S. economy, it would be necessary to organize the Grid into 10 broad sectors that allow donors to deposit resource hours into specific sectors and, at the same time, allow member organizations to identify needs hours on a sector-by-sector basis.
Ten Sectors for Needs and Resources Within each of the 10 sectors, participants would be able to complete detailed online forms to enable a more granular match of skills and needs. For example, within the environmental sector, individuals or organizations
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could identify very specific skills, such as “experience fighting forest fires” or “recycling management skills,” that would help Grid administrators more closely match needs with resources. The following is a description of 10 major sectors of the Grid, with examples of some of the tasks or skills in each area: Food and Clothing The most basic of all needs are represented here relating to food and clothing. Included in this sector might be classes from experts on growing your own vegetables, starting a food coop, or washing clothes for a clothing network that serves out-of-work parents who have multiple children at home. Shelter All issues relating to housing are coordinated through the shelter sector of the Grid. From advice for first-time homeowners to homeless shelters to safe houses, the Grid’s temporary and permanent shelter needs would be coordinated here. Other skills would include donation of time for construction and home-building and repair skills offered by carpenters, electricians, plumbers, and others. Healthcare Healthcare would continue to be a high-need area—especially with more than 47 million people living in the United States without healthcare coverage. For example, the skilled labor of doctors, dentists, nurses, physicians’ assistants, and other medical professionals could be used to staff free clinics and wellness and preventative care clinics. Safety The safety sector would enable police officers and firefighters, for example, to donate time to help supplement efforts in areas that are lacking their skills. It is likely that, as budgets tighten, there will be a high demand for supplemental help in this sector—in ways that enable the safety professionals to dedicate more of their time to the unique skills that they have, in order to focus more proactively on fire and crime prevention. Education One of the most underpaid livelihoods in the United States is public school teaching. How many stories have we heard about the local second-grade teacher who purchases school supplies out of his or her own pocket in order to provide a richer experience for students? Mentoring, substitute teaching, and supplementing offerings in the arts that may have been drastically cut over the past 25 years are just some of the initiatives that this sector could provide. Employment The Boomer Grid would serve as means of helping get employees back to work. Expert human resource volunteers could offer seminars, advice, and
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training to people who are out of work and need help getting back on track. These efforts would be designed to help reduce financial pressures on the government, in managing people that constantly move in and out of the labor force. Energy This sector would cover a wide array of energy-related topics, such as natural gas, oil heat, solar energy, wind energy, public transportation, car pooling, and free seminars on how to save water, electricity, and gas. The real challenge of this sector would be to develop creative solutions to our limited energy resources, including a research and development component that would offer incentives to individuals or organizations through significant cash awards and tax credits to develop alternative sources of energy. Personal Finance Unfortunately, millions of Americans have followed the lead of the U.S. government in spending significantly more than they take in. This sector would help individuals and families with advice about financial management and planning, including strategies to reduce and eliminate debt, repair credit, increase savings, and set up plans for retirement or college expenses. Infrastructure Much of the federal and local infrastructure in the United States is old and tired and, in some cases, no longer safe to use. In what may end up looking similar to FDR’s Civil Conservation Corps effort of the 1930s, the Boomer Grid could help identify volunteer workers of all levels to help supplement the imperative upgrading of America’s bridges, highways, parks, transportation outlets, and other facilities that are in disrepair and desperately need more than simply another coat of paint. Environment This sector would cover all issues that have an impact on the environment— from global warming to the pollution of local water sources—and would provide physical labor, as well as expertise, in cleanup and prevention elements. Educational seminars could include subjects ranging from changing your driving habits in order to save gas to car-pooling strategies or beach and park cleanup patrols that would reduce government’s need to spend on those services.
Each sector would be chaired by a prominent American Boomer who is recognized as a subject matter expert and whose job would be to oversee the major efforts of the sector. As an NGO, the Boomer Grid would link to the government as a resource, but it would not be funded by the government. Table 10.2 is a representation of the dashboard of the Boomer Resource Grid. From one summary screen, Grid administrators are able to access a summary view of the 10 resource and needs sectors. Under each sector are
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TABLE 10.2. The Boomer Grid Dashboard View: Needs and Resources Food Clothing RH 4430
NH 4231
+199
Shelter RH 3776
NH 2889
+887
Healthcare RH 6298
NH 6276
+22
Safety RH 4176
NH 3657
+519
Education RH 7092
NH 6345
+747
two columns marked RH and NH: RH refers to the number of resource hours currently available in that sector of the grid and NH refers to the number of needs hours that sanctioned organizations have posted on the Grid. The very bottom row of Table 10.2 calculates the difference between resource hours (RH) and need hours (NH) in each sector. In this example, most sectors are showing a surplus of resource hours to needs hours, until reaching the second to last column under the Infrastructure sector. This sector shows that its current needs outpace its resources to fill those needs by 457 hours. And, because there are more than enough collective surplus hours from the nine other resource categories, it’s quite possible that Infrastructure can borrow resource hours from other categories in order to fill the current need. Grid administrators would be able to drill to a deeper view to determine the specific nature of the need requirements in the Infrastructure sector and to attempt to match those needs with available resources elsewhere in the Grid. If, for example, there is a high need for manual labor in the Infrastructure sector because it’s midsummer and the peak season for highway and bridge maintenance and repair, a significant percentage of the 457 deficit hours might be manual labor hours, which could possibly be shifted from one of the other sectors. When the need is purely physical labor, ordinarily hours can be shifted from one sector to another. However, because the Boomer Grid attempts to also take advantage of highly skilled expertise, highly skilled hours would not necessarily translate into useful hours in another sector that has high manual labor needs. When there is a high need in a sector requiring manual labor because of tornado destruction in Kansas City, for example, Grid administrators would send out via e-mail to Grid members a “call for resource hours” that specified the need for manual labor hours. On the other hand, when there is a high demand for the highly skilled professional—such as registered nurses to work in free clinics during the
The Boomer Grid
Employment RH 3431
NH 3425 +6
Energy RH 3324
NH 3214
+110
Personal Finance RH 1217
NH 1009
+208
Infrastructure RH 4988
NH 5445
-457
173
Environment RH 5463
NH 5401
+62
summer months in San Francisco—Grid administrators would issue a “call for resource hours” from within the healthcare sector and specifically with registered nurses. In the case of other professional skills, such as accounting or information technology, there is a much higher likelihood that those skill hours could be shared with other sectors. Hospitals need accountants as well as IT professionals, but so do most other organizations.
Boomers for Education California Governor Arnold Schwarzenegger proposed cuts of $4.8 billion for the state’s K–12 budget for 2008–2009 in an effort to address the overall $14.5 billion budget deficit in the state.2 The proposal called for a suspension of Proposition 98, which effectively guaranteed minimum funding levels for California schools. As a result, programs such as special education and child care and child development have been slashed by $550 million. Governor Schwarzenegger, himself a parent, is certainly not without compassion for the state’s school children, but he is charged with running the state of California as a business—money out must not exceed money in. Consequently, it’s unlikely that the state’s educational needs will ever be satisfied through conventional funding. In theory, Governor Schwarzenegger would be able to access the Boomer Grid to relieve some of the financial pressure on the school budget, enabling the schools to do more with less. For example, music and art programs could be supplemented, if not completely staffed, by Boomer volunteers in order to save money. According to the National Education Association (NEA),3 the federal government created a $71 billion gap between promised and actual funding for the nation’s public schools under the No Child Left Behind program. Although the funding gap is truly unfortunate, it is now unrealistic to think that all of the gaps in the nation’s educational system can be filled by the federal government.
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TABLE 10.3. Boomer Grid Education Sector Needs and Resources Special Ed RH 2233
NH 2192
+41
Child Care RH 1776
NH 2689
−913
Health Services RH 3425
NH 3256
+169
Tutoring RH 3336
NH 3945
−609
Maintenance RH 2002
NH 1975
+27
If Governor Schwarzenegger had access to the Boomer Grid as a resource to help fill some of the gaps in California’s educational needs, he would be able to relieve some of the stress on the state’s education budget. Although it may not be the answer to all of the state’s educational woes, it certainly could help relieve budgetary pressures while helping enrich the public school experience for California’s children. Table 10.3 provides a drilled-down view of the Education sector of the Grid for the state of California. All of the resource and needs hours are specific to the state and can be further identified by town, city, county, or zip code (not shown). Reading across the top of the chart, the Education sector has been divided into 10 major needs and resource categories: special education, child care and development, health services, tutoring, maintenance, teachers, the arts, life skills, technology, and athletics. The school systems have articulated their needs in the form of skill type and number of hours and have posted them on the Grid. Schools in this example are seeking volunteer support in virtually every subsector—from medical professionals for health services, to assistant soccer coaches in athletics, to help with maintenance, life skills, and in substitute teaching. In this particular example, child care, tutoring, and the arts (music, theater, art) all show that their needs are far greater than their resources at this point in time. Grid administrators would able to match relevant skills from the surplus resource hours from other areas that may be able to close some of the gaps that exist here, but they would have to issue a “call for resource hours” for the particular skills in high demand. The $71 billion gap that the NEA reports between promised and actual federal spending on education is equal to roughly 3.5 billion hours of volunteer time valued at $19 per hour—the estimated value of volunteer time according to the leadership forum Independent Sector.4 If every Boomer donated 1 week of skilled labor during the school year, it would equal $71 billion in value to the nation’s public schools. Certainly not all of
The Boomer Grid
Teachers RH 2431
NH 2325
+106
The Arts RH 4312
NH 4914
−602
Life Skills RH 4988
NH 4901
+87
Technology RH 1109
NH 2044
−935
175
Athletics RH 1324
NH 1199
+125
the $71 billion could be replaced with volunteer time. But the point is that the enormous energy, skill set, and experience of Boomers—as well as their generational constellation mates—could go a long way toward relieving some of the financial pressure on the federal and state and local governments in so many areas that are often forced to continue to limit the breadth and depth of a public school education in the United States because of limited resources. If 78 million Boomers contributed 2 hours to the Grid per week, it would represent 624 million resource hours per month. That would be the same as hiring close to 4 million full-time equivalent employees. In terms of monetary value, the numbers are pretty impressive. The 624 million resource hours per month would represent a dollar value of nearly $12 billion a month. That’s $144 billion per year or nearly enough to completely fund the budgets of the Departments of Education, Energy, Housing and Urban Development, the Small Business Administration and NASA. What if we applied half the number of hours and were able to channel all of it toward the public school system in the United States? According to the Bureau of Labor Statistics, there were 3,954,000 public school teachers at the preschool, kindergarten, elementary, middle, and secondary school levels in 2006. The public school teacher labor force is expected to grow to 4,433,000 by 2016—a 12-percent increase—which may be understated, based on recent matriculation trends of children of both legal and illegal immigrants.5 Based on a contribution of just 2 hours per week to the Grid, the country’s public school administrators could have access to 156 million resources hours per week to help assist, in any way, the existing public school teachers and staff. Just 2 volunteer hours per week from every Boomer effectively doubles the number of hours currently provided by the 4 million existing teachers on a weekly basis. If that resource were made easily available to the public schools, they would doubtlessly use that resource to create an even better, safer, and connected school experience for children.
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What We Need to Leave Our Children We certainly need to leave our children much more than money. Money alone will not solve the problems that our children and grandchildren will face if we don’t act soon. Part of what we need to leave our children is a demonstration of compassion, to show them that we care deeply about the world that we are leaving them. Like so many other generations in American history, the Gen X and Millennial Generations are already predisposed to live a life that is unlike the one that their Boomer parents lived. The same way that Boomers learned from their parents that they didn’t want a life defined by financial struggle, the offspring of Boomers have learned, by watching the frenetic pace that their parents set in building a bigger life, that working long hours is not at all for them. The trend of recent college graduates—steering away from jobs on Wall Street to more meaningful lifetime work—at greatly reduced earning levels—is an important sign that Boomers will have cooperative generational partners in reshaping the future of America. Boomers have an extraordinarily unique opportunity now to bond with their children, perhaps for the first time, in shaping futures together that tip the scales in favor of building a life based on quality and not quantity. The question still remains: will they do it?
Chapter 11
Boomers’ Will Real generosity toward the future lies in giving all to the present. —Albert Camus
As the frenetic pace that they have set for themselves begins inevitably to slow, Boomers increasingly reflect on the lives that they have lived and the lives that they have not lived—on the examples that they have provided and the examples that they wish they had provided. And, more and more, the disproportion of Boomer withdrawals to deposits is crystallizing into the realization that those behaviors might affect someone other than themselves. So now what? We know that Boomers have pretty much sprinted through life so far, producing much, consuming much, and achieving much, by following the philosophy that a better life is a bigger life. But the highlight film of the Boomer journey thus far turns out not to be such a flattering one. Fortunately for Boomers, they are now in a position to finish the story of their generation with a completely different final act. The question is whether they can now look deep inside and ask themselves what matters most to them as they begin to get in touch with their own mortality. The jury is still out as to whether or not Boomers are capable of stepping back and reversing direction from the course that they have followed their whole lives—and, in the process, writing a completely new legacy. Boomers began life in an environment that was safe and nurturing, with the security of extended family nearby and the richness that comes from time to play, time to discover, and even time just to goof off—an activity often frowned on by adult Boomers, labeling those without the same drive to achieve and acquire as “slackers.” In a rhythmical twist of irony, Boomers have become their parents, criticizing Gen Xers and Millennials for not seeing the world as they see it. Back in the day, mom was at home and seemingly always available to make Fluffernutters for lunch and take turns with other moms shuttling
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the kids back and forth to the public pool on steamy summer days. Dad was home for dinner every night, sitting in his favorite chair, smoking his pipe, reading the evening newspaper, and waiting for mom to call everyone to the dinner table. There was plenty of time for just goofing off with your friends—like the scenes from the movie Stand By Me—walking along the railroad tracks, throwing rocks, heading nowhere in particular, and putting your ear to the rail to feel the vibration of the oncoming train. Life was good. So what happened?
The Definition of Better There’s a famous scene in Woody Allen’s Annie Hall when a split-screen shot shows Allen in character Alvy Singer speaking with his therapist on one side and his girlfriend Annie Hall (Diane Keaton) speaking to her therapist on the other. “How often do you sleep together?” Alvy answers, “Hardly ever, maybe three times a week.” Then Annie’s therapist asks the same question of her and she answers, “Constantly, I’d say three times a week.” Often, our perceptions don’t match our realities at all. As Boomers were growing up, they constantly heard about the conditions in which their parents grew up, and, often, the implied or even overt message was this: “That’s not a life for you.” Instead, parents wanted a better life for their babies. Boomers saw the simple but good life that was often wrought with money troubles, and so they interpreted what a better life would be in strictly extrinsic terms. Thus they were off on a lifelong quest for the Boomers’ Holy Grail—a higher standard of living. The message to Boomers as they were nurtured as children was this: “Get a good education so you can get a good job that pays well so that you won’t ever have the money worries that we had growing up.” Observant young Boomers interpreted that advice quite literally and entered the workforce with a laser-like focus on achieving one thing: earning lots of money. What they took from their formative years was that increasing their standard of living was crucial. Lost in the balance, however, was the simpler, quality-of-life days of childhood, which were replaced by the more complex and frenetic standard-of-living days of adulthood. At the end of the day, Boomers have to look back and ask whether it was all worth it. As Boomers ventured out on their own to build their careers, from around 1975 to 1984, they frequently stayed at the office until all hours of the night. As they continued to climb the corporate ladder, increasing both position
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and income, many of those elements that define quality of life started to erode and disappear. Instances of quality time with the family, friends, and extended family and even time alone became fewer and farther between. Along the way, a greedy corporate America happily accepted the enormous productivity boost that was gained as Boomers forsook home and family in their mission to drive to the top of the standard of living mountain. Boomers got married, had kids, and moved into 3,800-square-foot homes in the suburbs. But, with a bigger home, more cars, and now kids, two new issues emerged in the pursuit of a higher standard of living: First, Boomers continued to push the edge of the achievement and consumption envelope—earning more and spending more and therefore needing more (especially with college educations to pay for on the horizon). Second, mom was an intelligent, college-educated business professional who had her own career until the kids came along. So mom’s re-entry into the workforce actually helped fulfill two objectives: her own personal satisfaction and the need for more money. As soon as mom went back to work, the kids were either shipped off to daycare or cared for by an au pair or nanny. Boomers spent most of the Third Turning in an outright sprint to improve standard of living, often at the expense of quality of life. Hand in hand with an ever-increasing number of hours at the office, as well as more business travel, came an everincreasing helping of guilt and a loosening in parenting style. Suddenly, the kids got the green light on most requests, from sleepovers to personal cell phones. But those trinkets were nothing compared to the general size and dimension of birthday and Christmas presents, as well as the debut of the family mega-vacation. No more Lincoln logs or erector sets for these kids; instead, they got $500 X-Boxes and their own laptops. Birthday parties went from a couple of friends and a cake to a $5,000 catered affair, with a clown and pony rides for 30. Vacations went from driving the old station wagon down to the shore for the weekend to flying to Orlando for a week at Disney World. By 2004, Disney World, even for the lowest income families, seemed to achieve rite-of-passage status for many American children.
Boomer Motivation Maslow observed that “man is a perpetually wanting animal.” Once a need emerges—such as the desire to build a better life—then human beings organize their behavior in their conscious life around the fulfillment of
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that need, assuming that all lower, more fundamental needs have been fulfilled. This certainly describes the behavior of Boomers as they took full control of their own lives as young adults and as they were able to shape a so-called better life on their own terms. But what was it that shaped the Boomers’ motivation? Why did Boomers follow a blueprint that took them down a road that only defined better quantitatively? There are two types of human motivations: intrinsic motivation and extrinsic motivation. Intrinsic refers to the needs that fill us spiritually— from within us. Extrinsic refers to pursuits that fill us materially—from outside of us. Like so many other elements of human behavior, these motivations are first cast in us based on when we are born. If we are born, like the Boomers, during a time when quality of life was relatively high, we tend to want what’s missing from our lives—material gain. Alternately, if we are born during a time when standard of living is high, such as the Millennials, we again tend to work toward attaining what’s missing—but this time it’s about what fills us spiritually. As selfish Homo sapiens, we always want what we don’t have—in constant motion, swinging from one end of the spectrum to the other. A better life can be defined as either attaining a higher standard of living (SOL) or a higher quality of life (QOL). Because people are driven to want what they don’t have, QOL and SOL are almost always mutually exclusive. In order to achieve a higher SOL, it usually requires giving up some of those elements that add to the quality of one’s life, such as dinners at home every night or more time to garden or exercise. On the other hand, in order to achieve a higher QOL, it usually requires giving up some of those elements that add to the standard of one’s living, such as higher incomes that come with longer days and two working parents. Certainly there are exceptions to the rule, but, for most, it is difficult to attain one without compromising on the other. Figure 11.1 graphically shows that humans are either driving toward a higher SOL or a higher QOL. As progress is made toward one, it is usually at the expense of the other. Boomers were born when QOL was relatively high (1) and SOL (2) was relatively low. Mom was at home and dad was at work and the household operated on one salary. The house was small, vacations were within driving distance, and eating out was a rare extravagance. Mom cooked a meal every night and found creative ways to stretch a dollar and yet deliver a satisfying meatloaf. The family sat at the dinner table and talked about each other’s days. Even in Beaver Cleaver’s world, Ward and June spoke about saving money and living the frugal life.
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FIGURE 11.1. The Law of Wants As SOL increases, QOL decreases, and vice versa. 1946–1964 HIGH
1965–1984
1
1985–2004
2005–2024
4
2025–2044 HIGH
SOL
QOL
3
6 QOL
SOL
LOW
LOW 2
5
Source: www.boomerdestiny.com
As Boomers came of age, from 1965 to 1984, many entered the workforce and started their pursuit of a better life. As shown in Table 11.1, this caused an upward movement in SOL from (3) to (4) and a downward movement in QOL from (3) to (5). Because of a heightened emphasis on increasing resources (money), dad spent more hours away from home, either in the office or traveling, and often so did mom. This translated into less family time together—more daycare, fewer family dinners, and a generally frenetic pace to get everything done before it started all over again on Monday morning. The need to create a bigger life also created higher expenses in order to run the household. House-cleaning services, car washes, dry cleaning, laundry, snow removal, lawn care. Many of the chores that Boomers had performed themselves, as part of their upbringing, were now being performed by strangers for a fee because of a lack of time. Boomers maintained this pace through the mid-life years, from around 1985 to 2004, when their SOL peaked (4) and their QOL reached its lowest point (5). And we are not just talking about Boomers who work on Wall Street. We are talking about all Boomers—Boomer electricians, Boomer painters,
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Boomer police officers, firefighters, and yes Boomer plumbers (just not Joe the Plumber—he’s a Gen Xer). The Boomer Generation wanted more—no matter what the career or neighborhood. And for credit-seeking Boomers, an increase in standard of living usually translated into the purchase of material goods for all to see: shiny new pickup trucks with Hemi engines, Cadillac Escalades to haul the kids on youth hockey trips to Montreal, and trips to Cancun. As they went through their thirties, forties, and fifties, Boomers earned more and more and spent more and more, in most cases giving up the quality of life that had defined their childhood and their adolescence. Instead, they built a life that deprived their own children of that idyllic start in life. Even though Gen Xers and Millennials enjoyed ski trips to Vail, they witnessed what Mom and Dad gave up in order to deliver “the good life” and came to the conclusion that their adult lives would look very different than their parents’ adult lives. Having spent a life in a drive for more, Boomers now find themselves moving into senior hood and reflecting on a chaotic 40-year blitzkreig of steady advancement and increases, followed by mergers, layoffs, and angst that come hand in hand with a life that defines better as more. Like a soldier returning from battle, Boomers are an exhausted generation, and they are just now beginning to seek a reversal of the fortune that they’ve enjoyed. They find themselves longing for the days of their youth and, at worst, a return to equilibrium (6) in which SOL and QOL meet, as one decreases while the other increases. Just as Boomers watched their own parents argue over money and vowed never to live that life as adults, observant Gen Xers and Millennials similarly watched their Boomer parents run a race to nowhere, acquiring lots of stuff along the way—like a couple who won a supermarket sweep, sprinting from aisle to aisle, filling up their carts until the final buzzer signals them to stop. Children of Boomers are saying no to the lifestyle that defined their parents and that they enjoyed. Instead, their definition of the American Dream and a better life is much more about QOL than SOL— and, econonmically, the timing could not be better.
The Definition of the American Dream The pursuit of the so-called American Dream is inextricably tied to a generation’s definition of better. In its simplest form, the American Dream has been defined in the very same way by every generation of Americans, from George Washington’s Liberty Generation forward. All that any generation
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ever wants for its children is a better life. It’s what Benjamin Franklin wanted for his children, what Abraham Lincoln wanted for his children, what FDR wanted for his children, and what Barack Obama wants for his children. The difference is that each generation has its own definition of what a better life and the American Dream mean to them. For the parents of those in the Missionary Generation—the greatgrandparents of Boomers—the American Dream may have simply meant coming to America in the mid-1800s for the chance at a life that was better than the life that existed in Ireland, Italy, or Germany at the time. For the parents of those in the GI Generation—the grandparents of Boomers—the American Dream may have simply meant establishing a life here and the ability to survive in America, just for the chance at greater opportunities. For the parents of Boomers, the American Dream may have meant providing a means to getting a better education, as a way to move beyond manual labor or working in the trades as a carpenter, electrician, or plumber. What evolved with each generation was its own definition of the American Dream—typically alternating from one defined intrinsically to one defined extrinsically. For Boomers, the extrinsic drive that helped fill their garages, closets, basements, attics, and storage units is lost on their children. A lifetime of superconsumption does not appeal to the Gen X and Millennial Generations. Unlike their parents, they entered young adulthood near the peak of standard of living, in relative terms. As humans, they look at what they don’t have and they want it. And, more often than not, for the children of Boomers, that means a higher QOL. Imagine what Boomers’ children will go through over the next 40 years in dealing with the assets from the estates of Boomers, sifting through the junk collected over a Boomer’s lifetime. What is it that Boomers will leave that is anything more than a burden to be sold via a mammoth yard sale or the classifieds? Boomer heirs will sort through mountains of stuff to find a few precious tidbits that truly defined their parents as individuals. What will those be? Mom’s well-worn 3 × 5 recipe files that bring back memories of meatloaf dinners and warm chocolate chip cookies on snow days? Or dad’s bull’s-eye putter that had generated so many stories of dramatic 30-foot winners?
Boomers at the Crossroads As more Boomers look back on a life that, so far, has been far more about taking than giving, will they finally establish their own philosophy of stewardship before they move on to that big shopping mall in the sky?
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Over the first three-quarters of their lives, Boomers were remarkably motivated animals—driven to achieve, to gather, and to consume like no other segment of humans before or since—and only now are they looking for a deeper understanding of their own wants and emerging needs. The decisions that Boomers make over the next 20 years about their own habits and behaviors will have a profound effect on the resources that they consume as well as the resources that they will leave behind for other generations. Although they certainly enjoyed life built on their parents’ credit cards, it’s unlikely that children of Boomers will be willing to trade QOL for SOL. They saw firsthand what their parents gave up in QOL terms in exchange for a higher SOL. The alternating nature of human wants continues its flipflopping pattern, with a decided shift by Gen Xers and Millennials that places a much higher value on QOL. At the same time, the worn-out Boomer also begins to reshape the definition of a better life as retirement nears and a sense of mortality sets in for the first time.
What Do We Really Need Now? As Boomers continue to move through life, they contemplate questions that many of them have never considered before. Ironically, Boomers have hit an SOL wall at precisely the same time that their offspring are beginning to build their own lives around a QOL core. It may very well be this coincidental movement away from a life defined by SOL and toward a life defined by QOL will serve to bring the generations back together as each begins to seek a more balanced life that does not require pushing the limits of consumption in order to achieve contentment. Already it appears that a new momentum is beginning to pull the Boomer generation in a new direction, which may explain in part why divinity school applications for students over 50 are on the rise. And it may explain why programs such as Encore—the San Francisco-based organization that helps match retirees with altruistic second careers—have appeared as a bridge for the growing number of Boomers whose definition of better seems to be shifting back toward one that is motivated more intrinsically rather than extrinsically. We have been accustomed to think that all bad conditions are temporary. Huge layoffs, tornadoes, hurricanes, rolling blackouts, and spikes in the price of gas are all seen as temporary events. They may cause a lot of short-term pain, but then it will be over. What if these inconveniences become a routine part of everyday living in America? It’s been a very, very
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long time since Americans truly had to sacrifice. Are we prepared to make the mind shift necessary to deal with a world that suddenly is short on the very basics of food, water, shelter, and electricity? What does a day in the life of America look like without those four essential resources? When the will and testament of the Boomer Generation is read to its children and grandchildren, will they be enriched by the experience or drained by it? No one expects to go into a lawyer’s office and listen to a will that leaves debt to its heirs: “To America’s children, we leave the sum total of $11 trillion in outstanding public debt—plus interest.” If that’s the case, we might bequeath a life of deep sacrifice and struggle to our children and grandchildren.
A Return to the Way Things Used to Be Out of necessity, we may be headed for a world that is just the opposite of supersizing. Just as corporate America has downsized, so too will the lifestyles of Boomers need to be downsized. What’s the worst that would happen if our world started to shrink? What would happen if employees worked out of their homes, shopped at a grocery store down the street, and vacationed within 2 hours of home? Doesn’t that sound remarkably similar to the life that Boomers experienced while they were growing up—a life built on quality and not quantity? That might be exactly what the doctor ordered to help the United States get through difficult times ahead—a shift in attitude and expectations and a recalibration of what we really need in this life in order to live the American Dream. Figure 11.2 portrays a simpler life of the 1950s, when families spent most of their time within a 20-mile radius of home. Working, shopping, school,
FIGURE 11.2. Life in America—1950 Home Work Shop Recreation Vacation
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play, even vacations happened within striking distance of their living rooms. Vacations in other states or outside of the United States were reserved for the wealthy. Butcher shops, fish stores, and produce stands were often within walking distance. Even though, in some ways, the world has gotten much smaller over the past 50 years—with the advent of satellites and live television as well as the Internet and the World Wide Web— in other ways, it has gotten much bigger. We have lived in a world of mighty high expectations for so long that we have lost sight of the fact that we might not actually need more—and that less might actually be a welcome alternative. Figure 11.3 shows how life in America grew well beyond the home over the past 50 years of the twentieth century. Suddenly, destinations such as Europe, South America, and even Asia became part of both work and vacation possibilities. Even youth sports teams were no longer limited to playing teams from surrounding towns. Suddenly, Billy’s peewee team is flying to Calgary for a week-long tournament in February. During the 50-year
FIGURE 11.3. Life in America—2000 Home Shop Work Recreation Vacation
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drive to create a higher standard of living in the United States, we gave up a great deal of the quality of our lives along the way. Maybe it’s time to reverse direction and start a new journey, from SOL toward QOL. With the expansion of commercial airline travel, our respective worlds grew even more. The concept of having an early morning breakfast meeting in New York—and then boarding a cross-country flight to Los Angeles for lunch and a meeting, only to return on the “red eye” in time to go straight into the office the next day—became a reality. Like putting a man on the moon, it became possible in the second half of the twentieth century. As the world grew further and as countries such as India and China opened up to free trade, our worlds expanded even further. We already know that our children and perhaps even our grandchildren look on the second half of the twentieth century and the frenetic lifestyles of Boomers and ask “why?” Why would you live a life so dedicated to the material world? They only have to wait for their own children and grandchildren to come along before they hear the same refrain from them about the way that life was lived over the first 50 years of the twenty-first century—a time when money was tight and standard of living was once again low. The escalating cost of transportation may actually force a return to simpler times across our personal and professional lives. Although the virtual world might continue to shrink, bringing Beijing closer and closer, the reality in our real worlds might make a trip to Beijing simply unaffordable— even for businesses and much more transparent. The Web plays an even more important role in business, as the primary means of getting together. Increasingly, unaffordable trade shows find ways to come to life over the Web, avoiding the cost of travel, the cost of exhibition, the cost of hotels and meals. Marketing becomes almost exclusively Web-based. As a result of this contraction, Billy no longer flies to his peewee competitions but more often plays the town next door—just as they did in 1950. Figure 11.4 depicts a return to simpler times, when most purchases were transacted within 20 miles of home. A major difference in 2050, compared to 1950, is that e-commerce is central to many activities in the home, including our some of our primary sources of entertainment. Just 10 years ago, it was next to impossible to deliver a full-length motion picture over the Internet. How long will it be before we are able to purchase first-run releases on our laptops or iPhones? The days of the physical packaging of intellectual property of any kind are nearing an end. Some industry experts believe that, by as early as 2015, the vast majority of
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FIGURE 11.4. Life in America—2050 Home Work Shop Recreation Vacation
books, music, and movies will be purchased and delivered online— enabling our individual worlds to shrink back to that 20-mile radius. The business model for book publishing, music, and movie-making has moved away from the physical world and has actually spurred a renaissance in creating and sharing intellectual property. The world is a much simpler place, gets by on less, and is just as fulfilled as it was when it had 100 pairs of shoes in the closet. “The best things in life are free” becomes a slogan for a new American society that feels less burdened, less pressured, less driven to attain the highest possible SOL at the expense of the quality of that living— that is, until the members of the New Boomer Generation (born 2025 to 2044) come of age around midcentury and realize that they lack the SOL that their great-grandparents, the Boomers, had achieved from 1985 to 2004. And so the cycle will start again, with a new generation of children of the First Turning who end up forsaking a high QOL in exchange for a high SOL.
Boomer Legacy The precise legacy that Boomers will leave has yet to be written. How that legacy will read is entirely up to them. How will the final act of the play end? Will it have a tragic ending? Will it be more of the same excesses? Or will the final act show a side of Boomers that the world has never seen— that of compassionate and generous beings who are driven to heal an ailing American society? The choice is theirs.
Chapter 12
Boomer Legacy One generation plants the trees; the next enjoys the shade. —Chinese proverb
It’s not uncommon for newspapers such as the New York Times to prepare the obituaries of famous individuals well in advance of their passing in order to save time—especially in cases when the death comes on suddenly. Next to the GI Generation, there is no generation in history that has made more headlines than the Boomer Generation. So it seems appropriate that the Times might consider preparing an obit in advance of the passing of the generation. Like many of the movie stars and politicians whose partial obits sit in the files over at the Times, the Boomer’s life thus far could be captured in expectation of the day when the generation becomes part of America’s past. The first part of the Boomer obit might read something like this: Boomer Generation Succumbs—Reluctantly Known as the overindulged children of the post-World War II era, Boomers were mostly the sons and daughters of those from the GI Generation—the heroes of the last American Crisis. Boomers were raised in a world that was literally without limits, and they spent most of their time on Earth trying to reach those limits anyway. The generation came of age as the bold and rebellious collegians of the 1960s and 1970s and used their cunning to dodge the draft and the pill to avoid pregnancy—on the way, battling their parents’ generation as well as the establishment that it represented. Boomers developed a reputation as the most selfish generation in American history, starting in the 1980s, as many of them turned in their tie-dyed T-shirts and bandanas for Brooks Brothers’ suits and ties and their colorful VW buses for silver BMWs and Upper East Side co-ops.
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As parents, the generation gained a reputation as overschedulers, keeping their children busy during long days at the office, for both dad and mom. Nannies often served as surrogate parents during long days and late nights, as well as for business trips to Asia, as Boomers forged a standard of living like no other generation in American history. The price paid was less time at home, which, in turn, resulted in guilt-driven gifts and vacations in order to make up for quality-of-life shortcomings as parents. Boomers provided a model for building a standard of living that their children both enjoyed while growing up and yet rejected as a model for their own adult lives—in keeping with the American tradition of doing just the opposite of the parents’ generation. More to come.
It’s certainly too early to write the ending of the generation’s obit, but it’s not too early for the generation to start to think about what that obit might say once the last Boomer has rung up his or her last purchase on Quality Value Network (QVC). At this point in time, if the New York Times were to prepare for the inevitable passing of the generation, it might commission two different obits in order to save time in the end if Boomers end up changing course over the last decades of life. Film director Francis Ford Coppola struggled over the ending to his 1979 Vietnam War epic Apocalypse Now, so he created two endings and then decided, just before the film’s opening, which one he’d use. Ironically, he ended up choosing the more docile ending, rather than the explosive end-of-days climax that the film’s distributor United Artists preferred. Coppola’s decision was an intrinsic one. United Artists’ preference was more extrinsic. Eight oscar nominations suggest Coppola was right. Boomers now have a similar choice. The generation can choose the ending of its own obit and there are two possibilities: the first ending describes more of the same type of selfish behavior that Boomers have exhibited so far. The second describes a change of heart—from extrinsic to intrinsic, from selfish to selfless, from taking to giving. Which one will they choose? Around 2064, the youngest of Boomers will turn 100 years old. We know that Kathleen Casey-Kirschling was the first Boomer—born on January 1, 1946, at 12:01 A.M. Who will be the last living Boomer? What will the Times say about the generation that he or she represented over the span of a lifetime?
Boomer Obit: Ending #1 A Legacy of Selfish Concern for Themselves During their twilight years, Boomers maintained a lifestyle of excess, to which they had grown accustomed—bankrupting the generation financially
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and spiritually, leaving its offspring with a growing inventory of insurmountable challenges. Serious issues run the gamut from homeland security, to a decaying infrastructure, an eroding quality of education, unaffordable healthcare, as well as tens of trillions of dollars of debt that now become the responsibility of their children, grandchildren, and great-grandchildren. A number of times in recent years, Boomers mostly watched as the nation’s entitlement programs and mounting national debt brought the country to near insolvency. The lack of urgency and action by Boomers has helped create a downward spiral in both the quality of life and the standard of living in America, in large part because of Boomers’ selfish nature and wonton desire to take care of themselves first, leaving future generations to fend for themselves in a world that was been weakened—not strengthened— because of their participation in it. Boomers are survived by the struggling members of the Gen X, Millennial, New Silent, and New Boomer Generations, who will now be responsible for dealing with billions of tons of junk collected over a lifetime of spending on many items that were altogether unnecessary. In lieu of sending flowers, family and friends are asked to save their money because they will likely need it.
Boomer Obit—Ending #2 A Legacy of Selfless Concern for Others During their twilight years, Boomers turned over a new leaf, reversed the momentum of their lives, and started giving more than taking. In the process, the generosity of the generation, in terms of time and resources, over the last quarter of its life not only provided an inspiration for younger generations but also helped address and solve many of the pressing social issues of the day. A vast improvement in America’s infrastructure, healthcare, and education programs, as well as the overall fiscal health of the nation, provided an environment that enabled balanced budgets, the creation of universal healthcare for all Americans, as well as a significant reduction in poverty, homelessness, and the national debt. Quite possibly, the greatest gift left to its survivors was a new spirit of hope for America that Boomers helped build during their final years on Earth. Boomers are survived by the thriving members of the Gen X, Millennial, New Silent, and New Boomer Generations, who continue in the tradition of building a better quality of life, inspired by their parents before passing. In lieu of sending flowers, Boomers have asked that family and friends plant a tree so that future generations may enjoy the shade.
Which ending will it be? The choice now lies squarely in the laps of individual Boomers everywhere. Each Boomer must look inside and ask the
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question: what will my legacy be? What do I want it to be? A legacy of taking less and giving more is within reach for Boomers. But it requires a conscious effort to change direction, change behavior, and change outcomes. The motivation is simple. Not only does it create a better world for the children, grandchildren, and great-grandchildren of Boomers, but it’s also simply the right thing to do. Time is about up, Boomers. This is your chance to write a new legacy. Will you?
Notes Chapter 1 A Legacy Not Yet Written 1. William Strauss and Neil Howe, Generations: The History of America’s Future (New York: William Morrow, 1991), 420. 2. U.S. Census Bureau, Historical National Population Estimates, Historical National Population, http://www.census.gov/popest/archives/1990s/popclockest.txt. 3. U.S. Census Bureau, Historical National Population Estimates, http://www .census.gov/popest/archives/1990s/popclockest.txt 4. U.S. Bureau of Economic Analysis (BEA), http://bea.gov/national/ index.htm#gdp. 5. Benjamin Spock, M.D., Dr. Spock’s Baby and Child Care, 8th ed. (New York: Pocket, 2004), 1. 6. Benjamin Spock, M.D., Dr. Spock’s Baby and Child Care, 7th ed. (New York: Pocket, 1998). 7. The New Deal Network, Dear Mrs. Roosevelt, http://newdeal.feri.org/ eleanor/jb1137.htm. 8. The National Archives, http://www.archives.gov/research/vietnam-war/ casualty-statistics.html. 9. Congressional Budget Office (CBO), http://www.cbo.gov/budget/data/ historical.shtml. 10. Reno Gazette-Journal, January 16, 2008, http://news.rgj.com/apps/pbcs.dll/ article?AID=/20080115/VIDEO/80115026. 11. Dale Bumpers, “To Cut the Deficit, Keep ’87 Tax Rate,” New York Times, November 18, 1987, http://query.nytimes.com/gst/fullpage.html?res= 9B0DE7DE163DF93BA25752C1A961948260. 12. Louis Uchitelle, The Disposable American (New York, Vintage, 2007). 13. The Wall Street Journal, http://online.wsj.com/mdc/public/npage/2_3051 .html?mod=mdc_h_dtabnk&symb=DJIA#IndexComponents. 14. MetLife Mature Market Institute, The New Face of Work, http://www .civicventures.org/publications/surveys/new_face_of_work/new_face_of_work.pdf.
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Chapter 2 Repeating Cycles in American History 1. Bureau of Economic Analysis, http://bea.gov/national/index.htm#gdp. 2. Jonathan Alter, “The Generation Game,” Newsweek Magazine, April 15, 1991, http://www.newsweek.com/id/121923. 3. Diana Baumrind, “Effects of Authoritative Parental Control on Child Behavior,” Child Development 37(4): 887–907. 4. William Strauss and Neil Howe, Generations: The History of America’s Future (New York: William Morrow, 1991), 151. 5. Ibid., 190. 6. Ibid., 228. 7. Ibid., 295. 8. The Wall Street Journal, http://online.wsj.com/mdc/public/npage/2_3051 .html?mod=mdc_h_dtabnk&symb=DJIA#IndexComponents. 9. Thomas J. Abercrombie, “Oil, the Dwindling Treasure,” National Geographic, June 1974. 10. Letter to David Nissen, http://www.hubbertpeak.com/hubbert/to_ Nissen.htm. 11. U.S. Department of Energy, http://www.eia.doe.gov/emeu/aer/txt/ ptb0524.html. 12. U.S. Department of the Treasury, http://www.treasurydirect.gov/govt/ reports/ir/ir_expense.htm.
Chapter 3 The Gathering Storm 1. William D. Nordhaus, National Bureau of Economic Research (NBER) Paper, The Economics of Hurricanes in the United States, 2006. Working Paper 12813. 2. CBS Television Network, 60 Minutes, March 4, 2007, http://www.cbsnews .com/stories/2007/03/01/60minutes/main2528226.shtml. 3. CBS Television Network, 60 Minutes, March 4, 2007. 4. Ben Bernanke, Business Week, February 28, 2007, http://64.233.169.104/ search?q=cache:wGiUv8wUkTcJ:www.businessweek.com/investor/content/ feb2007/pi20070228_636020_page_3.htm+%22BEN+BERNANKE%22+AND +UNLIKELY+TO+GROW&hl=en&ct=clnk&cd=19&gl=us. 5. CBS Television Network, 60 Minutes, March 4, 2007. 6. Bank for International Settlements (BIS), 2007 Annual Report, http://www . bis.org/publ/arpdf/ar2007e8.pdf. 7. William R. Parke, The Econ Review, http://www.econreview.com/events/ banks1929b.htm. 8. U.S. Department of the Treasury, http://www.treas.gov/tic/mfh.txt. 9. U.S. Department of the Treasury, http://www.treasurydirect.gov/govt/ reports/pd/histdebt/histdebt_histo5.htm.
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10. Congressional Budget Office (CBO) baseline budget projections, http://www.cbo.gov/ftpdocs/90xx/doc9015/Selected_Tables.pdf. 11. U.S. Bureau of Economic Analysis (BEA), http://bea.gov/national/ index.htm#gdp. 12. U.S. Department of Energy, Energy Information Administration (EIA), http://www.eia.doe.gov/emeu/aer/txt/ptb0524.html. 13. Congressional Budget Office (CBO), http://www.cbo.gov/budget/data/ historical.shtml, http://www.cbo.gov/publications/bysubject.cfm?cat=35. 14. Office of Management of the Budget (OMB), http://www.whitehouse.gov/ omb/budget/fy2009/pdf/09msr.pdf. 15. U.S. Department of the Treasury, http://www.treasurydirect.gov/ NP/BPDLogin?application=np. 16. Ibid. 17. U.S. Bureau of Labor Statistics (BLS), http://data.bls.gov/PDQ/servlet/ SurveyOutputServlet?data_tool=latest_numbers&series_id=CES0000000001& output_view=net_1mth. 18. U.S. Department of Labor Statistics, http://data.bls.gov/PDQ/servlet/ SurveyOutputServlet?data_tool=latest_numbers&series_id=CUSR0000SA0& output_view=pct_1mth. 19. U.S. Bureau of Labor Statistics, http://data.bls.gov/PDQ/outside.jsp ?survey=ln. 20. National Center for Education Statistics (NCES), http://nces.ed.gov/programs/digest/d07/tables/dt07_002.asp?referrer=report. 21. Progress in International Reading Literacy Study (PIRLS), http://pirls.bc.edu/PDF/P06_IR_Ch1.pdf. 22. U.S. Department of Transportation, Federal Highway Administration, http://www.fhwa.dot.gov/policy/ohim/hs03/htm/dlchrt.htm. 23. U.S. Department of Transportation, Federal Highway Administration, Conditions and Performance Report 2004, http://www.fhwa.dot.gov/policy/2004cpr/ chap3c.htm#body. 24. U.S. Federal Courts, http://www.uscourts.gov/Press_Releases/2008/BankruptcyFilings.cfm. 25. Federal Reserve Bank, http://www.federalreserve.gov/releases/g19/Current/, http://www.federalreserve.gov/releases/chargeoff/delallsa.htm. 26. Robert E. Scott, The China Trade Toll, Economic Policy Institute (EPI), http://www.epi.org/content.cfm/bp219. 27. The World Bank, Food Price Surge Could Mean ‘Seven Lost Years’ in Poverty Fight, http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK: 21726628~pagePK:64257043~piPK:437376~theSitePK:4607,00.html. 28. Trust for America’s Health (TFAH), Report Finds Food Safety System in Crisis, http://healthyamericans.org/newsroom/releases/release043008.pdf.
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29. RealtyTrac Inc., Foreclosure Activity Up, July 2008, http://www.realtytrac .com/ContentManagement/pressrelease.aspx?ChannelID=9&ItemID=4891&accnt= 64847. 30. U.S. Census Bureau, http://www.census.gov/hhes/www/poverty/histpov/ hstpov2.html. 31. Center for Immigration Studies (CIS), http://cis.org/Legal. 32. Center for Immigration Studies (CIS), http://cis.org/Illegal. 33. Tom Regan, Christian Science Monitor, http://www.csmonitor.com/2006/ 0110/dailyUpdate.html. 34. MunichRe Group, http://www.munichre.com/en/press/press_releases/ 2007/2007_12_27_press_release.aspx. 35. Risk Management Systems, CNN/Money, http://money.cnn.com/2005/09/ 02/news/katrina_estimates/.
Chapter 4 Boomer Spring: 1946 to 1964 1. All Library Index, http://www.libraryindex.com/pages/1984/Arts-Media -MEDIA-USAGE.html. 2. Levittown Historical Society, http://www.levittownhistoricalsociety.org/ history.htm. 3. Centers for Disease Control (CDC), Live Births, http://www.cdc.gov/nchs/ data/statab/natfinal2003.annvol1_01.pdf. 4. U.S. Census Bureau, Population Estimates, http://www.census.gov/ popest/archives/pre-1980/. 5. U.S. Department of Homeland Security, Immigration Statistics, http://www.dhs.gov/ximgtn/statistics/publications/LPR07.shtm. 6. Abraham Maslow, “The Instinctoid Nature of Basic Needs,” Journal of Personality 22 (1954): 326–347. 7. National Center for Education Statistics, Digest of Education Studies, http://nces.ed.gov/programs/digest/d07/tables/dt07_008.asp. 8. Joseph Epstein and Fred R. Shapiro, The Yale Book of Quotations (New Haven: Yale University Press, 2006). 9. Mike Mansfield, “Cuban Missile Crisis 1962, History and Politics Out Loud,” www.hpol.org. 10. Betty Friedan, The Feminine Mystique (New York: W.W. Norton & Co., 1963), 307.
Chapter 5 Boomer Summer: 1965 to 1984 1. Robert J. Hanyok, National Security Administration’s (NSA) Cryptologic Quarterly, http://www.gwu.edu/~nsarchiv/NSAEBB/NSAEBB132/relea00012.pdf. 2. Tim Kane, The Heritage Foundation, Global U.S. Troop Deployment 1950–2003, http://www.heritage.org/Research/NationalSecurity/cda04-11.cfm.
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3. Stanley Karnow, Vietnam: A History (New York: Penguin, 1997), 342. 4. The National Archives Records Administration (NARA), Casualties, http://www.archives.gov/research/vietnam-war/casualty-statistics.html. 5. “This Is Not the Media’s Walter Cronkite Moment,” Columbia Journalism Review, November 2006, http://64.233.169.104/search?q=cache:5e2s0ALapiEJ: www.cjr.org/politics/this_is_not_the_medias_walter.php+%22Vietnam+is+to+ end+in+a+stalemate%22+AND+cronkite&hl=en&ct=clnk&cd=9&gl=us. 6. Cal Fussman,“What I’ve Learned: Walter Cronkite,” Esquire Magazine, June 2006, http://www.esquire.com/features/what-ive-learned/ESQ0406WILCRONKITE_170. 7. LBJ Library and Museum, The President’s Daily Diary, March 31, 1968, http://www.lbjlib.utexas.edu/johnson/archives.hom/Diary/1968/680331.asp. 8. Vietnam Online, http://www.pbs.org/wgbh/amex/vietnam/trenches/ my_lai.html. 9. Robert F. Kennedy, “History and Politics Out Loud,” http://www.hpol.org/ transcript.php?id=56. 10. Selective Service System (SSS), http://www.sss.gov/lotter1.htm. 11. The National Archives Records Administration (NARA), Casualties, http://www.archives.gov/research/vietnam-war/casualty-statistics.html. 12. Henry Kissinger, The White House Years (New York: Little, Brown & Company, 1979). 13. H.R. Haldeman, The Ends of Power (New York: Times Books, 1978). 14. Robert McNamara, In Retrospect: The Tragedy and Lessons of Vietnam (New York: Vintage, 1996).
Chapter 6 Boomer Autumn: 1985 to 2004 1. Marianne E. Page and Ann Huff Stevens, “Will You Miss Me When I’m Gone? The Economic Consequences of Absent Parents,” February 2002. National Bureau of Economic Research (NBER), http://www.nber.org/papers/w8786. 2. Alvin Rosenfeld and Nicole Wise, The Over-scheduled Child: Avoiding the Hyper-parenting Trap (New York: St. Martin’s Griffin, 2001). 3. David Brooks, On Paradise Drive: How We Live Now (and Always Have) in the Future Tense (New York: Simon and Shuster, 2004). 4. U.S. Bureau of Economic Analysis (BEA), http://bea.gov/national/ index.htm#gdp. 5. General Electric Company, http://www.ge.com/annual00/highlights/ index.html, http://www.ge.com/search/index.jsp. 6. The Coca-Cola Company, SEC Filings, http://ir.thecoca-colacompany.com/ phoenix.zhtml?c=94566&p=irol-SECText&TEXT=aHR0cDovL2NjYm4uMT Brd2l6YXJkLmNvbS94bWwvZmlsaW5nLnhtbD9yZXBvPXRlbmsmaXBhZ2U9 MTM0NzY1MCZhdHRhY2g9T04%3d. 7. Eduardo Porter, New York Times, April 14, 2006, http://www.nytimes .com/2006/04/14/automobiles/14bailout.html?pagewanted=print.
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8. McGraw-Hill Companies, “America’s Biggest Bailouts,” Business Week, October 1, 2001, http://www.businessweek.com/magazine/content/01_40/b3751710 .htm?chan=search. 9. U.S. General Accounting Office, “Comparison of the Reported Tax Liabilities of Foreign and U.S. Corporations,” http://www.gao.gov/new.items/d08957.pdf. 10. U.S. Department of Labor, http://www.dol.gov/esa/whd/flsa/. 11. Pew Hispanic Center, “Estimates of Undocumented Migrant Population,” http://pewhispanic.org/files/factsheets/17.pdf. 12. Pension Benefit Guaranty Corporation, http://www.pbgc.gov/media/ news-archive/news-releases/2007/pr07-09.html. 13. Standard & Poor’s/Case-Shiller Index, May 2008, http://www2 .standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0 ,0,0,0,0,1,1,0,0,0,0,0.html. 14. U.S. Census Bureau, http://www.census.gov/hhes/www/housing/hvs/ historic/index.html. 15. U.S. Department of the Treasury, http://www.treasurydirect.gov/govt/ reports/pd/histdebt/histdebt_histo4.htm. 16. Washington Post/ABC News Poll, http://www.washingtonpost.com/ wpdyn/content/custom/2006/02/02/CU2006020201345.html. 17. U.S. Department of the Treasury, http://www.treasurydirect.gov/ govt/reports/pd/histdebt/histdebt_histo4.htm. 18. The Conference Board, Consumer Confidence Index, June 2008, http://www.conference-board.org/economics/consumerConfidence.cfm. 19. Gretchen Morgenson, “Explaining (or Not) Why the Boss Is Paid So Much,” New York Times, January 25, 2004, http://query.nytimes.com/gst/fullpage.html ?res=9807E4DE1F39F936A15752C0A9629C8B63. 20. Tomoeh Murakami Tse and Renae Merle, The Washington Post, January 28, 2008, http://www.washingtonpost.com/wp-dyn/content/story/2008/01/29/ ST2008012900465.html. 21. “The 400 Richest Americans,” Forbes Magazine, 2006, http://www .forbes.com/lists/2006/54/biz_06rich400_Henry-R-Kravis_ED7G.html.
Chapter 7 Boomer Winter: The Next American Crisis, 2005 to 2024 1. Congressional Budget Office (CBO), http://www.cbo.gov/budget/data/ historical.shtml. 2. Ibid. 3. CIA World Fact Book, https://www.cia.gov/library/publications/the -world-factbook/rankorder/2001rank.html. 4. U.S. Department of the Treasury, http://www.treasurydirect.gov/govt/ reports/ir/ir_expense.htm.
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5. Peter Grier, “The Rising Economic Cost of the Iraq War,” The Christian Science Monitor, May 19, 2005, http://www.csmonitor.com/2005/0519/p01s03-usmi.html. 6. U.S. Bureau of the Census, Historical Poverty Tables, http://www.census .gov/hhes/www/poverty/histpov/hstpov2.html. 7. U.S. Department of Labor, Bureau of Labor Statistics (BLS), ftp://ftp.bls.gov/ pub/special.requests/lf/aat1.txt. 8. U.S. Bureau of the Census, http://www.census.gov/hhes/www/hlthins/ hlthin06/p60no233_table6.pdf. 9. National Law Center on Homelessness and Poverty, http://www.national homeless.org/publications/facts/How_Many.pdf. 10. U.S. Department of Energy, Energy Information Administration (EIA), http://tonto.eia.doe.gov/dnav/pet/hist/wtotworldw.htm. 11. Ben Goad, “Bush Proposal Cuts National Forest Fire Prevention Budget,” The Press-Enterprise, Riverside, California, February 13, 2008, http://www.pe.com/ localnews/politics/stories/PE_News_Local_H_forest13.4007b7b.html. 12. “Chronological List of U.S. Billion Events,” U.S. Department of Commerce, National Oceanic and Atmospheric Administration (NOAA), National Climate Disaster Center (NCDC), http://lwf.ncdc.noaa.gov/oa/reports/billionz. html# chron. 13. Ernst & Young Study, “Private Investment Vital to Improve Public Infrastructure,” September 12, 2007, New York, http://www.ey.com/global/content.nsf/ International/Media_-_Press_Release_-_Real_Estate_Investing_Global_ Infrastructure_2007. 14. A. Clifford Barger, The Physiologist, Vol. 25, No. 5, 1982, http://www.the-aps.org/ publications/tphys/legacy/1982/issue5/407.pdf.
Chapter 8 The New New Deal 1. U.S. National Parks Service, http://www.nps.gov/hofr/upload/March %2020%20and%2022.pdf. 2. FDR quote. 3. Congressional Budget Office (CBO), http://www.cbo.gov/budget/data/ historical.shtml. 4. U.S. Department of the Treasury, http://www.treasurydirect.gov/govt/ reports/ir/ir_expense.htm. 5. Tom Osenton, The Death of Demand (New Jersey: Financial Times Prentice Hall, 2004), 179. 6. Office of Management and Budget http://www.whitehouse.gov/omb/budget/ fy2009/summarytables.html. 7. Office of Management and Budget http://www.whitehouse.gov/omb/budget/ fy2009/summarytables.html. 8. http://www.whitehouse.gov/omb/budget/fy2009/hhs.html.
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9. OMB, U.S. Department of Defense 2009 Proposed Budget, http://www.white house.gov/omb/budget/fy2009/defense.html. 10. National Coalition on Healthcare (NCHC), http://www.nchc.org/facts/cost. shtml.
Chapter 9 Rising to the Occasion 1. John T. Wooley and Gerhard Peters, The American Presidency Project, University of California—Santa Barbara, “Lincoln’s ‘Second Annual Message,’” December 1, 1862, http://www.presidency.ucsb.edu/ws/index.php?pid=29503. 2. Centers for Disease Control and Prevention, National Center for Health Statistics (NCHS), http://www.cdc.gov/nchs/data/hus/hus07.pdf#027. 3. Julie B. Issacs, The Brookings Institute, “Economic Mobility of Families across Generations,” November 2007, http://www.brookings.edu/papers/2007/11 _generations_isaacs.aspx. 4. John J. Havens and Paul G. Schervish, Boston College’s Center on Wealth and Philanthropy, “Financial Resources and Charitable Contributions of Retired Households,” August 1, 2005, http://www.bc.edu/research/cwp/meta-elements/ pdf/wealthofretired.pdf. 5. Richard Steinberg and Mark Wilhelm, “Tracking Giving across Generations,” Center on Philanthropy Panel Study (COPPS) 2001 and 2003, http://www3 .interscience.wiley.com/cgi-bin/fulltext/107629281/PDFSTART. 6. Centers for Disease Control (CDC), http://www.cdc.gov/nchs/fastats/ divorce.htm, http://www.cdc.gov/nchs/data/vsus/mgdv84_3.pdf. 7. ACT Community Service Center, http://www.1-800-volunteer.org/ 1800Vol/ACT-csc/VCContentAction.do?aNewsId=477668. 8. Corporation for National and Community Service, “Motivating Generational Cohorts to Civic Engagement,” http://www.nationalserviceresources. org/node/17902. 9. Pew Research on Boomers feeling financial pressure. 10. U.S. Department of Education, National Center for Education Statistics, Digest of Education Statistics, Table 320, http://nces.ed.gov/programs/digest/ d07/tables/dt07_320.asp. 11. Harvard College, Financial Aid Office, http://www.fao.fas.harvard.edu/ cost.htm. 12. Jagadeesh Gokhale and Lawrence Kotlikoff, The Baby-Boomers MegaInheritance: Myth or Reality? (The Federal Reserve Bank of Cleveland, October 2000). 13. Harvard School of Public Health/Met Life Foundation, “Reinventing Aging: Baby-Boomers and Civic Engagement,” http://www.hsph.harvard.edu/chc/ reinventingaging/report_highlights.html. 14. Ibid. 15. William J. Clinton, Giving: How Each of Us Can Change the World (New York: Knopf, September 4, 2007).
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16. Encore.org, http://www.encore.org/#. 17. Marc Freedman, Encore: Finding Work that Matters in the Second Half of Life (New York: Public Affairs, June 2007). 18. Encore.org, http://www.encore.org/book/marc. 19. Benjamin Franklin, http://www.usconstitution.net/franklin.html. 20. Franklin D. Roosevelt, “Second Inaugural Address,” January 20, 1937, http://www.presidency.ucsb.edu/ws/index.php?pid=15349. 21. U.S. Department of Transportation, Federal Highway Administration, Driver Licensing, http://www.fhwa.dot.gov/policy/ohim/hs03/dl.htm, Motor Vehicle Registrations, http://www.fhwa.dot.gov/policy/ohim/hs03/mv.htm. 22. Self-Storage Association Fact Sheet, http://www.selfstorage.org/pdf/ FactSheet.pdf. 23. Environmental Protection Agency (EPA), “Quantity of Municipal Solid Waste (MSW) Generated and Managed,” http://cfpub.epa.gov/eroe/index.cfm ?fuseaction=detail.viewInd&showQues=Land&ch=46,47,48,49,50&lShowInd= 200,201,202,203,205,208,209,210,211,225,228,246,281,287,313,315,341,342,343,3 81,405&subtop=312&lv=list.listByQues&r=188238.
Chapter 10 The Boomer Grid 1. U.S. Department of Energy, http://www.eia.doe.gov/emeu/aer/txt/ ptb0524.html. 2. Judy Lin, “The Sacramento Bee, Scant Support for California Budget Changes,” April 13, 2008, http://www.sacbee.com/111/story/857786.html. 3. National Education Association (NEA), “No Child Left Behind Act: Unprecedented and Unbalanced Federal Role in Education,” http://www.nea.org/lac/ gpsfactsheet.html. 4. Independent Sector, “The Estimated Dollar Value of Volunteer Time,” http://www.independentsector.org/programs/research/volunteer_time.html. 5. U.S. Department of Labor, Bureau of Labor Statistics (BLS), Occupational Outlook Handbook, http://www.bls.gov/oco/ocos069.htm.
Index 7-Eleven, 97 60 Minutes (CBS News), 39 101st Airborne Division, 68 401(k) retirement plans, 97 AARP (American Association of Retired Persons), 19 ABC-TV, 73 Abortion, 82, 83 Abramoff, Jack, 103, 118 Abu Ghraib, 118 Academy Awards, 143 ACT Community Service Center, 145 Adjustable Rate Mortgages (ARMs), 99 Administrative Office of the U.S. Courts, 50 Admiral TV, 58 Adventures of Superman, The (TV show), 64 Afghanistan, 39, 52–53 African Americans, 11, 13, 64, 68, 155 AIG, 41 Airplane, 31 Ali, Muhammad, 66, 122 Alka-Seltzer, 7 Allen, Woody, 178 Allied Waste Industries, 156 Al-Qaeda, 53 American Airlines (AMR), 95 American Association of Retired Persons (AARP), 19 American Dream, the, 7, 14, 39, 56, 68, 76, 112, 122, 139, 147, 149, 165–166, 182–183, 185 American Express, 97 American Housing Survey, 146 American Revolution, 5, 44, 112, 150 Apocalypse Now (movie, Coppola), 190 Appomattox, 57 Arkansas National Guard, 68 Armstrong, Neil, 80
AT&T, 134 Atomic bomb, 31 Auto industry, 45 Automobile, 31 Awakening Generation, 5, 150 Bank for International Settlements (BIS), 40, 42 Bank of America, 41 Bankruptcy, 43, 47, 50, 95, 98 Bankruptcy Abuse Prevention & Consumer Protection Act, 50 Banks, Ernie, 63 Battle of Lexington and Concord, 32 Baumrind, Diana, 29 Bay of Pigs, 66 Bear Stearns, 40, 100 Beatles, The, 74 Bernanke, Ben, 35, 39, 45, 100 Bernbach, Bill, 7 Bernstein, Carl, 81 Betty Crocker, 74 Big Give, The, 152 Black Monday, 33 Black September, 41 Black Thursday, 33 Black Tuesday, 2, 33, 35, 51, 110–112 Bonanza (TV program), 64 Bonds, Barry, 103 Bono, 152 Boomerdestiny.com, 181 Boomer Grid, 134, 136, 167–175 Boston College Center on Wealth & Philanthropy, 142 Lynch School of Education, 48 Boston Marathon, 67 Boston Red Sox, 64 Bradstreet, Anne, 2 Brinkley, David, 73
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Index
Brokaw, Tom, 6, 115 Brookings Institute, The, 142 Brooks, David, 89 Brown v. Board of Education, 68 Buchanan, James, 30 Budget deficit, 14, 35, 42, 46, 108–109, 125 surplus, 42, 125, 139 Buffett, Warren, 63, 151–152 Bulge, Battle of the, 2 Bull market, 32 Bundy, McGeorge, 72 Bundy, Ted, 143 Bureau of Labor Statistics (BLS), 175 Bureau of the Census, 52, 97, 146 Bureau of the Public Debt, 46 Bureau of Transportation Statistics (BTS), 156 Burger King, 103 Burke, James, 63 Bush, George Herbert Walker, 76, 95, 101–102, 109 Bush, George W., 39, 72, 101–102, 107–109, 111, 126, 132, 143, 161 Business cycle, the, 22 Business Week (magazine), 144 Castro, Fidel, 66 Calley, William, 78 Cambodia, 81 Camus, Albert, 177 Capitalist’s dilemma, the, 156 Capra, Frank, 63 Carbon emissions, 53 Carson, Johnny, 66 Casey-Kirschling, Kathleen, 58, 120–121, 190 CBS-TV, 39, 73 Centers for Disease Control (CDC), 59 Central American Free Trade Agreement (CAFTA), 96 Central High School, 68 Central Intelligence Agency (CIA), 65–66, 118 Center On Philanthropy Panel Study (COPPS), 144 Charlie Company, 78 Cheney, Dick, 118 Chevrolet, 7 Childcare, 173–174 China, 32, 42, 50, 92, 111, 118–119, 156, 163, 187 Chrysler Corporation, 95 Citigroup, 41 Civil Conservation Corps (CCC), 149, 158, 162, 171
Civil rights, 33, 68, 75 Civil Rights Act of 1964, 68 Civil War, 2, 5, 20, 26, 30, 31, 44, 60, 112, 114, 119, 141, 154 Civil War cycle, 30, 141, 162 Clay, Cassius, 66 Cleaver, June and Ward, 180 Cleaver, Wally and Beaver, 65, 180 Clemens, Roger, 103 Clinton, Hillary Rodham, 143 Clinton, William Jefferson, 13, 101–102, 109, 125, 143, 150 Coca-Cola Company, 92 Communism, 72 Communists, 73 Compromise Generation, 150 Conference Board, the, 102 Congress, 39, 52, 66, 97, 111, 124–125, 127–128, 131, 133 Congressional Budget Office (CBO), 47, 52, 84, 130 Conscientious Objector (CO), 79 Conservatorship, 41 Consolidation, 41 Constitutional Convention, 154 Consumer Price Index (CPI), 47 Coopers & Lybrand, 94 Coppola, Francis Ford, 190 Cost-reductions, 93, 98, 129 Crash of 1929, 2, 32, 100, 141, 165 Credit, 32, 40, 50, 125 Credit card debt and delinquencies, 50 Crest toothpaste, 60 Croft, Steve, 39 Cronkite, Walter, 73, 77 Cuba, 66 Dahmer, Jeffrey, 143 Debt credit card, 50 national, 4, 41–42, 46–48, 95, 125, 132, 138, 165, 167, 191 D-Day, 2, 86 Deep Throat (Watergate scandal informer), 81 Deficit budget, 14, 35, 42, 46 farm, 35 needs, 61 trade, 4, 35, 50 Delay, Tom, 118 Dell, 97
Index Delta Airlines, 98 Demand and supply, 34, 111, 163 Democratic National Committee, 81 Democratic National Convention, 20, 79, 107, 123 Department of Defense (DOD), 131–132, 136, 139 Department of Education, 175 Department of Energy, 175 Department of Housing & Urban Development, 175 Dial (soap), 7 DiMaggio, Joe, 63 DINKs, 14 Dot Com bubble, 84 Douglass, Frederick, 37 Dow Components, 86, 90–91 Dowd, Maureen, 143 Dow Jones Industrial Average (DJIA), 2, 16–17, 32, 102 Doyle, Dane, Bernbach (DDB), 7 Draft, military, 79 Dragnet (TV show), 64 Dubner, Stephen J., 83 Dunkin Donuts, 97 Dust Bowl Drought, 4 Economic contraction, 23–24, 40, 89 cycle, the, 22–24, 44 depression, 38 expansion, 23–24, 45 peak, 89 recession, 38 trough, 89 Economic Policy Institute (EPI), 50 Economy Act of 1933, 124 Economy, the, 4, 22–23, 38, 40, 45, 47, 52, 84, 89–91, 108. 114–115, 124–126, 145, 157 Ed Sullivan Show, The (TV program), 64 Edwards, John, 103 Egypt, 34 Eisenhower, Dwight David, 2, 6, 26–27, 29–30, 36, 57, 59, 65–66, 139, 150 Electricity, 31 Electric motor, 31 Employee Retirement Income Security Act (ERISA), 48 ENCORE, 152, 184 ENRON, 143 Encyclopedia Britannica, 168 Entitlement programs, 47, 115, 125–126, 132, 161 Environment, 162, 169, 171
205
Environmental Protection Agency (EPA), 156 Equal Rights Amendment (ERA), 67 Ernst & Young, 118 Extrinsic motivation, 180, 184, 190 Exxon, 34 Fair Deal, The, 133 Fannie Mae, 41 Farm deficit, 35 Fastow, Andrew, 143 Fascism, 114 Father Knows Best (TV program), 73 Faubus, Governor Orville, 68 FDR (Franklin Delano Roosevelt), 1–6, 19–20, 25–27, 29, 32, 36, 40, 54, 56–58, 60, 75, 107, 111, 113–114, 120, 123–126, 130, 139, 145, 150, 154–155, 158–159, 161–162, 165, 171, 183 Federal Highway Administration (FHWA), 49 Federal Reserve, 35, 39–40, 100 Federal Reserve Bank of Cleveland, 148 Feminine Mystique, The (Friedan), 67 Field, Sally, 143 Fisher, Carrie, 144 Food crisis, 50 quality and safety, 51 Food & Drug Administration (FDA), 50–51 Foreclosures, 51 Fort Sumter, 33 Foster, Jodie, 143 Fram Oil Filter ad, 129 Franken, Al, 143 Franklin, Benjamin, 5, 20, 150, 154, 183 Freakonomics (Levitt), 83 Freddie Mac, 41 Free agency, 63 Free clinics, 170, 172 Freedman, Marc, 152–153 Friedan, Betty, 67 Fruit, Chuck, 92 Fugitive Slave Act, 33 Galbraith, John Kenneth, 93, 103 Gas prices, 33, 45–46, 50 Gates, Bill and Melinda, 151–152 Gazette-Journal, Reno, 13 General Accounting Office (GAO), 95–96, 130 General Electric, 16, 90–91, 94, 129, 134 General Foods, 8 General Motors, 63, 91, 93, 115–116, 118, 129, 134
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Index
Generation gap, 74 Generation X, 6, 12, 18, 25, 27, 36, 54–55, 76, 83, 120, 144, 166, 176–177, 182, 184, 191 Generation Y, 25 GI Bill, 7 GI Generation, 2, 5, 12–13, 26–30, 36, 56, 60–61, 63, 72–76, 79, 81, 83, 85–86, 115, 119, 139, 143, 145, 147, 149–150, 166, 183, 189 GI Joe, 74 Gilded Generation, 76, 150 Giuliani, Rudolph, 83 Goldwater, Barry, 71 Gore, Al, 143 Government-Sponsored Entities (GSEs), 41 Grammy, the (award), 143 Grant, Ulysses S., 150 Great Communicator, the, 85 Great Depression, the, 1–4, 10, 20, 26, 28–32, 40, 44, 56, 60, 110, 113–114, 120, 127, 146, 151, 155, 157–158, 161–162 Great Emancipator, the, 68 Greatest Generation, the, 6, 81, 115 Great Power Cycle, the, 30–32, 57, 120 Great Society, 75, 95, 121–122, 161 Green Giant (food company), 7 Greenhouse effect, 37 Greenspan, Alan, 35 Gross Domestic Product (GDP), 3–4, 8, 22–23, 37, 45, 50, 84, 90, 109, 115, 118–119 Grubman, Jack, 103 Gulf of Tonkin incident, 69, 72, 79 Resolution, 71 Gulf War, 75, 101, 143 Gunsmoke (TV program), 64 Hair Club for Men, 19 Halaby, Lisa Hajeeb (Queen Noor), 144 Haldeman, H. R., 81 Hammer, Michael, 94 Hanks, Tom, 143 Hanyok, Robert J., 71 Harvard, 63, 82, 93, 103, 146 Harvard Business Review, 94, 168 Harvard Crimson, 120 Harvard School of Public Policy, 148–149 Health & Human Services (HHS), Department of, 47, 132–135, 137, 139, 161 Healthcare, 47, 49–50, 108, 110, 126, 137, 150, 159, 170, 173, 191 Health insurance, 49 HealthSouth, 95
Hearst, William Randolph, 124 Hendrix, Jimi, 22 Hierarchy of needs, 60–61, 103 Ho Chi Minh City, 82 Hoffa, Jimmy, 81 Home Depot, 134 Homeland Security, 158 Homelessness, 110, 170 Home ownership, 33, 51, 99, 108, 147 Honeymooners, The (TV program), 64 Hoover, Herbert, 1, 32, 40, 123–124 Hooverville, 11 Houston, Whitney, 143 Howard, Ron, 143 Howe, Neil, 23–25, 29 Hubbert, Dr. M. King, 34 Hubbert’s Peak, 34, 163–164 Humphrey, Hubert H., 72 Huntley, Chet, 73 Hurricanes Great Okeechobee, 4 Katrina, 4, 38–39, 53, 105, 115, 117–118, 150–151 IBM, 84 I Love Lucy (TV program), 64 Immigrants, 52, 59, 175 Immigration, 35, 52, 108, 150, 158 Independent Sector (leadership forum),174 India, 34, 97, 111, 163, 187 Indy-Mac, 40 Inflation, 35, 47 Infrastructure, 49, 171–172 Initial Public Offerings (IPO), 94, 103–104 Innovation saturation, 129 Insurance, health, 49 Intrinsic motivation, 180, 184, 190 I.O.U.S.A.: One Nation. Under Stress. In Debt (documentary), 39 iPhone, 187 Iran-Contra Scandal, 87, 95, 101 Iraq War, 4, 12, 31, 42, 52–54, 66, 75, 86, 109, 112, 132, 150 Isdell, Neville, 92 Israel, 34 I-35 W Bridge, 49, 118 It’s a Wonderful Life (movie), 63 Iwo Jima, 81, 83 Jackson, Andrew, 150 Japan, 42, 57, 111 Jefferson, Thomas, 150
Index JFK (John F. Kennedy), 2, 6, 26, 29, 36, 66, 68–69, 72, 75, 76, 80, 82–83, 122, 127, 139, 150 Jimenez, José, 64 Johnson, Lady Bird, 77 Johnson, Lyndon Baines (LBJ), 69, 71–72, 75, 77, 80, 82, 95, 122, 125–126, 161 Joint Chiefs of Staff, 136 Jones, Marion, 103 JP Morgan (financial and banking company), 100 Junk bonds, 94 Justice Department, 100 Katrina, Hurricane, 4, 38–39, 53, 105, 115, 117–118, 150–151 Keaton, Diane, 178 Kellogg, 8 Kennedy, John Fitzgerald (JFK), 2, 6, 26, 29, 36, 66, 68–69, 72, 75, 76, 80, 82–83, 122, 127, 139, 150 Kennedy, Robert F. (RFK), 78–79 Kent State University, 26, 80–81 Keynes, John Maynard, 14 Keynesian economics, 14 Khrushchev, Nikita, 67 King, Jr., Martin Luther, 68, 78, 87, 150, 155 King, Stephen, 144 Kissinger, Henry, 80 Kolberg Kravis Roberts (KKR), 104 Korean War, 65, 83, 142 Koufax, Sandy, 63 Kozlowski, Dennis, 103, 143 Kraft, James, 103 Kraft Foods, 94, 103 Kravis, Henry, 104 Labor force, 48, 54–55, 175 Lay, Kenny Boy, 103 LBJ (Lyndon B. Johnson), 69, 71–72, 75, 77, 80, 82, 95, 122, 125–126, 161 Leave It to Beaver (TV program), 11 Lehman Brothers, 41 Leveraged Buyouts (LBOs), 94 Levi’s (clothing), 116 Levitt, Abraham, 58 Levitt, Steven D., 83 Levittown, 58 Lewinsky, Monica, 87, 101 Libby, Scooter, 118 Liberty Generation, 150, 182 LIFE Magazine, 7
207
Life stages, 24 Limbaugh, Rush, 143 Lincoln, Abraham, 5, 20, 57, 68, 114, 141, 150, 154–155, 183 Linux, 168 Lost Generation, 2, 5, 26–27, 29–30, 36, 57, 66, 139, 150, 166 Madison Avenue, 14 Madoff, Bernard, 103 Mansfield, Mike, 66 Mantle, Mickey, 91 Manufacturing, 84, 96 Maslow, Abraham, 60–62, 103, 179 Mathias, Bob, 64 McCain, John, 26–30, 36, 76, 141 McCarthy, Eugene, 79 McCarthy, Joe, 65 McCovey, Norma (Jane Roe), 83 McGwire, Mark, 91 McNamara, Robert S., 82 Medicaid, 52–53, 134–135 Medicare, 35, 39, 47, 52, 54–55, 126–127, 134–135, 138 Me Generation, 25 Mergers & Acquisitions (M & A), 94 Merrill-Lynch, 41 Met-Life Foundation, 148–149 Mickey Mouse Club, 64 Middle East, the, 13, 47, 53, 108–109, 113, 136 Military draft, 79 Military Industrial Complex, 30 Milken, Michael, 103, 143 Millennial Cycle, the, 30, 32, 57, 69, 86–87, 94, 103, 116 Millennial Generation, 5, 12, 18, 28, 36, 48, 54–55, 120, 166, 176–177, 183–184, 191 Minimum wage, 97 Mini skirt, 74 Minneapolis, 49 Missionary Generation, 2, 5, 24–27, 29, 36, 56, 120, 139, 150, 159, 183 Mission Impossible (TV program), 73 Montana, Joe, 143 Mortgages, sub-prime, 4, 32–33, 40, 41, 51, 99, 100, 150 Muhammad Ali, 66, 122 Munich Re (reinsurance company), 53 Municipal solid waste (MSW), 156–157 Murphy, Thomas, 63 Musial, Stan, 63 My Lai massacre, 78, 80
208
Index
National Aeronautics & Space Administration (NASA), 175 National Bureau of Economic Research (NBER), 37, 87 National Center for Education Statistics, 146–147 National Center for Health Statistics, 142 National Climate Data Center (NCDC), 117 National Coalition on Healthcare, 137 National debt, 4, 35, 41–42, 46–48, 95, 125, 132, 138, 165, 167, 191 National Education Association (NEA), 173–174 National Geographic (magazine), 34 National Guard Arkansas, 68 Ohio, 80 National Oceanic & Atmospheric Administration (NOAA), 117 National origins quota, 4 National Security Agency (NSA), 71 Nation of Islam, 66 Natural disasters, 35, 53 Nazis, 151 Nazism, 114 NBC-TV, 73 Nelson, David and Ricky, 65 Nelson, Ozzie and Harriett, 72 New Boomer Generation, 188, 191 New Deal, the, 75, 124, 154, 162, 165 New New Deal, the, 123, 128, 159, 166–167 New Silent Generation, 24, 36, 114, 166, 191 Newsweek (magazine), 23 New York Times, the, 16, 189–190 Nextel, 127 Nissen, David, 34 Nixon, Richard M., 12–13, 66, 79, 81–82 Nobel Prize, 143 No Child Left Behind, 108, 173 Non-Governmental Organization (NGO), 167, 171 Nordhaus, William D., 37–38 North American Free Trade Agreement (NAFTA), 96 North Vietnam, 78, 82 Obama, Barack, 5, 13, 26–28, 36, 46, 118m, 132–133, 138, 143, 150, 155, 165, 183 Office of Management and Budget (OMB), 46, 130–131, 139 Off-shoring, 50, 97
Ogilvy, David, 7 Ogilvy & Mather, 7 Ohio National Guard, 80 Oil crisis, 34–35, 47, 111 Oil shocks, 34–35, 46, 150 OPEC (Organization of Petroleum Exporting Countries), 34 Oscar, the (award), 143 Oswald, Lee Harvey, 83 Ozone layer, 49 Page, Marianne E., 88 Pakistan, 39, 113 Palmolive, 60 Pandemics, 35 Parents, types of, 29 Paulson, Henry, 41 Pearl Harbor, 2, 33, 39, 72, 110–112, 151 Pension Benefit Guaranty Corporation (PBGC), 98 Pensions, 98 Pentagon, The, 131 Pepsi Generation, 25 Pepsodent (toothpaste), 7 Personal Consumption Expenditures (PCEs), 84 Peter G. Peterson Foundation, 39 Peters, Bernadette, 143 Pew Hispanic Center, 97 Pew Research Center, 145 Pharmaceutical companies, 49–50 Pirnie, Alexander, 12 Pork-barrel spending, 128 Poverty, 52, 75, 110, 121 Powell, Colin, 66 Power grids, 166 Prescription Drug Bill, 161 Prices food, 51 gas, 33, 45–46, 50, 111, 163 oil, 45–46, 111, 163 Procter & Gamble, 8, 134 Product development, 92 Productivity, 15, 18, 54 Progress International Reading Literacy Study (PIRLS), 48 Progressive Generation, 150 Proposition 98, 173 Protectionism, 4, 153 Public-Private Partnership (PPP), 118 Pulitzer Prize, 143
Index Quality of Life (QOL), 6, 15, 144, 176, 180–188, 190–191 Quotas, national origin, 4 QVC (Quality Value Network), 190 radio, 31 Raid, 7 Reagan, Ronald, 13–14, 85, 95, 101–102, 109, 145 Realty-Trac, 51 Reasoner, Harry, 73 Recession, 22, 32, 95, 113 Red Cross, 151 Red September, 41–42 Red Sox, Boston, 64 Re-engineering, 15–16, 92, 94, 126, 129–136 Republican Generation, 150 Republic Services, 156 Revolutionary Cycle, 30 Revolutionary War, 30–31 RFK (Kennedy, Robert F.), 78–79 Rhodes, Governor James, 80 Rightsizing, 157 Risk Management Solutions, 53 Roaring Twenties, 6 Robinson, Jackie, 64 Roe, Jane (Norma McCovey), 82 Roe v. Wade, 82–83 Rolling blackouts, 164 Roosevelt, Eleanor, 10 Roosevelt, Franklin Delano (FDR), 1–6, 19–20, 25–27, 29, 32, 36, 40, 54, 56–58, 60, 75, 107, 111, 113–114, 120, 123–126, 130, 139, 145, 150, 154–155, 158–159, 161–162, 165, 171, 183 Roosevelt, Theodore (Teddy), 150, 162 Rosenfeld, Dr. Alvin, 89 Ruby, Jack, 83 Rusk, Dean, 72 Russert, Tim, 150 Ruth, Babe (George Herman), 116 Sales promotion, 92 Salmonella, 51, 157 S & P 500, 86 S & P/Case-Shiller Index, 99 Savings & Loan Crisis, 41 Schwarzenegger, Governor Arnold, 173–174 Schweitzer, Albert, 2 Selective Service System, 12, 79
209
Self-actualization, 9 Self-Storage Association, 156 Seniorfare, 136 September 11 (2001), 39, 72, 102, 111, 150–151, 165 Service economy, 84 Shareholder value, 91 Silent Generation, 5, 26–30, 36, 60, 76, 85, 119, 141, 147, 166 Simpson, O.J., 143 Six Day War, The, 34 Six Sigma, 92 Skilling, Jeffrey, 87 Slavery, 57 Sloan-Kettering, 151 Small Business Administration (SBA), 175 Smith, Governor Al, 123 Smith, Howard K., 73 Social Insurance Taxes, 134–135, 137, 139 Social networks, 167–168 Social Security, 35, 39, 47–48, 52, 54–55, 108–109, 120, 124, 126–127, 132, 135–136, 138–139, 148, 150, 165 Social Security Act, 158 Social Security Administration (SSA), 47, 132, 135, 137, 161 Societal cycles, 22–24 Son of Sam (serial killer), 143 Southeast Asia, 69, 71, 75, 77, 82 South Vietnam(ese), 73, 78 Soviet Union, 65–66, 95 Spanish-American War, 125 Spielberg, Steven, 143 Spitzer, Eliott, 103 Spock, Dr. Benjamin, 8–9, 61 Sports Illustrated (magazine), 92 Stamp Act, the, 33 Standard of Living (SOL), 6, 15, 122, 144, 178–188, 190 Stand By Me (movie), 178 Stanford University, 151 Steel, 31 Stevens, Ann Huff, 88 Stewart, Justice Potter, 111 Stewart, Martha, 103 Stiglitz, Joseph E., 53 Strauss, William, 23–25, 29 Strauss & Howe, 23–25, 29, 120 Sub-prime mortgages, 4, 32–33, 40–41, 51, 99–100, 150 Suffrage, 67
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Index
Sullivan, Ed, 64 Supply and demand, 34, 111, 163 Supply chain, 92 Supply-side economics, 14, 85 Supreme Court, U.S., 68, 83, 154 Syria, 34 Tax cuts, 43 Taylor, Chuck, 116 Taylor, Zach, 30 Tea Act, the, 33 Teamsters, the, 81 Temple University, 145 Terrorism, 3–4, 35 Tet offensive, 77 Texaco, 7 Thirteenth Amendment, 57, 120, 154 Time-Warner, 92–93 Tonight Show (TV program), 66 Tony, the (award), 143 Topo Gigio (Italian television, children’s puppet character), 64 Total Quality Management (TQM), 92 Towers-Perrin study, 103 Toyota, 45, 116 Trade deficit, 4, 35, 50 Transcendental Generation, 5, 150 Transcontinental Railroad, 31 Traub, Marvin, 63 Truman, Bess, 65 Truman, Harry, 65, 102, 132 Trust for America’s Health, 51 Tyco International, 143 Undocumented workers, 17, 54, 97, 159 Unemployment, 14, 35, 47, 110, 137, 162 United Auto Workers (UAW), 63, 98 United Nations, 51 Universal Healthcare (UHC), 133–139, 165 Urban Institute, the, 49 Urban Land Institute (ULI), 118 Urgent care, 45 United Artists, 190 United States auto industry, 45 Census Bureau, 52, 97 Forest Service, 117, 162 Savings Bonds, 46 Treasury, 41–42, 46 U.S.S. Missouri, 57
Value chain, 92 V-E Day, 2 Viagra, 19 Vietcong, 66, 78 Vietnam War, 12, 27, 30, 33, 52, 54, 65–66, 69, 71–73, 75–83, 85–86, 125, 142 V-J Day, 2, 27, 31, 58 Volunteerism, 151–152, 173–175 Wachovia, 41 Wade, Henry, 83 Walker, David, 38–39 Wall Street, 1–2, 5, 15–16, 91, 95–96, 103, 128, 144, 176, 181 Wall Street bailout, 41 Wal-Mart, 134 Washington, George, 150, 182 Washington Mutual (WaMu), 41 Washington Post (newspaper), 81 Waste Management (company), 156 Watergate scandal, 81 Water supplies, 50 Wayne, John, 60, 113 Weapons of Mass Destruction (WMD), 101 Webster, Daniel, 155 Welch, Jack, 16, 91, 129–130 Welfare, 134–135 Whitewater Scandal, 101 Wiffleball, 65 Wikipedia (online reference service), 168 Williams, Ted, 63 Winfrey, Oprah, 151–152, 158 Wise, Nicole, 89 Wisk (detergent), 7 Woodward, Bob, 81 Workfare, 132, 134–136 World Bank, 51 World War I (WWI), 58, 125 World War II (WWII), 4–6, 8, 12, 16, 26, 28, 30–32, 44, 57, 59, 65, 68, 85–86, 90, 110, 112–114, 119, 129–130, 141–142, 144, 151 World Wide Web (www), 16, 84, 167, 186 Wylie, Philip, 8 Yates, Andrea, 143 Yom Kippur War, 34 Yuppie, 14 Zero-based budgeting, 130–131 Zoellick, Robert B., 51
About the Author TOM OSENTON is an adjunct professor of marketing at the University of New Hampshire’s Whittemore School of Business and Economics. He is also a partner in the Chicago-based market research and one-to-one marketing company Customer Share Group, Inc. Previously, he held seniorlevel positions at such companies as CapCities/ABC, VNU, and the Times-Mirror Company. He is the author of Customer Share Marketing: How the World’s Great Marketers Unlock Profits from Customer Loyalty and The Death of Demand: Finding Growth in a Saturated Global Economy.
