The Paradigm Model

Introduction

Previously, I presented an empirically-backed historical cycle in American history that has run since 1720 that I called the political-economic (PE) cycle. I developed a periodization for this cycle which is shown in Table 1. This cycle was approximately aligned with the Strauss and Howe saeculum cycle. It is not unlikely that the PE cycle and the saeculum are simply different representations of the same underlying cyclical process. Both the empirical cycle and the saeculum have shortened since the early 19^th century. This change in cycle length suggests different mechanisms were operative before and after the early 19^th century.

In another paper I presented empirical data in support of the idea that the Kondratiev cycle extends back to the 12^th century. .The Kondratiev cycle is an economic cycle approximately fifty years in length. It is most easily seen in prices and is usually characterized as alternating periods of rising and falling prices called the upwave and downwave, respectively. It can also be characterized in terms of alternating high and low price levels. This approach was used for the pre-modern cycle. Up to the mid-17^th century the periods of high prices were associated with high levels of popular unrest and poor economic conditions as indicated by the frequency of construction starts. A Malthusian mechanism in which population exerts a lagged negative feedback effect on itself was advanced as the cause of the Kondratiev cycle from 1176-1650. Strauss and Howe turnings corresponded to Kondratiev half-cycles over this time (Table 1) and the cycles are same length.

Table 1. Empirical cycles compared to Strauss and Howe turnings

Price Cycle	Turnings	K-waves*	PE cycle**	Turnings
1176-1202 (L)	--	1650-1689 (D)	--	1649-1675 (U)
1203-1230 (H)	--		--	1675-1704 (C)
1231-1254 (L)	--	1689-1720 (U)	--	1704-1727 (H)
1255-1282 (H)	--	1720-1747 (D)	1720-1747 (A)	1727-1746 (A)
1283-1305 (L)	--	1747-1762 (U)	1747-1769 (I)	1746-1773 (U)
1308-1328 (H)	--	1762-1790 (D)	1769-1792 (A)	1773-1794 (C)
1329-1352 (L)	--	1790-1814 (U)	1792-1824 (I)	1794-1822 (H)
1353-1381 (H)	--	1814-1843 (D)	Length = 26.0	Length = 24.7
1382-1405 (L)	--	1843-1864 (U)	1824-1842 (A)	1822-1844 (A)
1406-1435 (H)	--	--	1842-1860 (I)	1844-1860 (U)
1436-1459 (L)	1435-1459 (U)	--	1860-1873 (A)	1860-1865 (C)
1460-1487 (H)	1459-1487 (C)	--	1873-1896 (I)	1865-1886 (H)
1488-1520 (L)	1487-1517 (H)	--	1896-1919 (A)	1886-1908 (A)
1521-1557 (H)	1517-1542 (A)	--	1919-1930 (I)	1908-1929 (U)
1558-1579 (L)	1542-1569 (U)	--	1930-1946 (A)	1929-1946 (C)
1580-1602 (H)	1569-1594 (C)	--	1946-1964 (I)	1946-1964 (H)
1603-1626 (L)	1594-1621 (H)	--	1964-1981 (A)	1964-1984 (A)
1627-1650 (H)	1621-1649 (A)	--	1981-2008 (I)	1984-2008 (U)
Length = 26.3	Length = 26.8	Length = 26.8	Length = 18.4	Length = 18.6

*Kondratiev waves From Goldstein,¹ and this US producer prices. U = upwaves, D = downwaves

**A = active periods; I = inactive periods

Before the Civil War the PE cycle roughly aligned with Kondratiev waves, so these are shown for the 1650 to 1864 period. Active periods in the PE cycle and Straus and Howe social moment turnings (A & C) roughly matched up with Kondratiev downwaves. Before 1650, social moments and high unrest (active periods) aligned with the high-price portion of the Kondratiev cycle. Over the 1650-1720 period the pattern shifted from active times during periods of high prices (reflecting food scarcity) to periods of falling prices. Over this period three turnings fell into two Kondratiev waves.

The average length of the periods in the three cycles are also shown. From the 12^th century to around 1820 the average length of all three cycles is consistent with a fifty-year Kondratiev cycle and a century-long saeculum. Two causal mechanisms appear to have been operative over this period, the population-based on up to 1650 and a different one after. Since around 1820 the length was consistent with a 74-year saeculum length implying a third causal mechanism. This paper proposes the paradigm model as this mechanism.

The paradigm model is another lagged negative-feedback mechanism like the population model. In this model, the role of population is taken by the zeitgeist or spirit of the times. Like population, zeitgeist oscillates between high and low values and current values are influenced by past values. The structure of the model is quite different, however. Zeitgeist is not a continuous variable. It falls into two categories, active and inactive, which are associated with active and inactive periods in the PE cycle. An active zeitgeist serves the same role as did high levels of price stress in the population model: it produces elevated unrest and calls for political change that manifest as an increased incidence of liberal political events.

An active zeitgeist of the past produces an active zeitgeist in the present. The interval between successive periods of active zeitgeist is directly related to the average age of societal leaders or A_L. Active zeitgeist occurs when conventional government policy irritates the electorate. This happens when the paradigm (see next section) of the rulers is not a good fit for the present reality resulting in policy that either fails to address problems or makes them worse, generating political discontent. Note that the model requires a broad-based electorate that reflects all social classes and walks in life. The conditions necessary for this to happen did not arise until around 1830, and so the mechanism only began to operate then.

The paradigm

I define a paradigm as a model of the world that people use to make sense of the political and economic world they inhabit. It is created by the coming of age experience and so reflects the perceived condition of the world at that time, which for most leaders is decades in the past. Policy intended to deal with present problems is based on a roadmap that itself is based on what seemed to work in the past. That is, the past feeds back into the present, much as it does in the population model. The disconnect between paradigm and reality results in policy that creates political stress which in turn gives rise to increased popular unrest and political pressure for policy change (which is manifested as an increased incidence of liberal events). This is the negative feedback, and the time between paradigm acquisition and paradigm expression provides the lag. The result of the operation of the model is the creation of a political moment, a period of active zeitgeist during which the old paradigm is replaced by a new one. Political moments are like Strauss and Howe social moments* except the emphasis is on politics. A suitable definition would be:

A political moment is an era, typically lasting about a decade, when people perceive that historical events are radically altering their political environment. There are two types of political moments. During progressive political moments politics focuses on institutional change and public behavior. A progress paradigm is created in the generation coming of age. During libertarian political moments, politics focuses on individual freedom and private behavior. A freedom paradigm is created in the generation coming of age.

During the political moment policymakers are winnowed by Darwinian competition (those perceived to be out of touch with the zeitgeist lose elections) with the survivors eventually making more zeitgeist-compatible policy by trial and error. The political moment ends as the generation holding the old paradigm ages out of power, or policy arises that is perceived to address the zeitgeist issues effectively. In either case, political stress and social unrest dissipate; conservatism rises and the zeitgeist becomes inactive. It remains so until the new paradigm fails to deal with a changing world and a new active period begins.

As an example of paradigm, consider the fiscal stimulus versus austerity issue that is present in politics today. This same issue arose during the Depression, and it is instructive to look at those times to see a paradigm in action. During the severe 1920-21 depression policymakers did not pursue fiscal stimulus: state, local and federal spending declined as a percent of pre-recession GDP. Such a policy is called austerity. The outcome from austerity was a sharp rise in unemployment in the first year of the recession, followed by a rapid restoration of prosperity over the next two years. Austerity appeared to be quite successful in dealing with the 1920-21 depression. After the crash in 1929, Treasury Secretary Andrew Mellon, who had been one of the policymakers in 1921, proposed a similar approach:²

The government must keep its hands off and let the slump liquidate itself. Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. When the people get an inflation brainstorm, the only way to get it out of their blood is to let it collapse. A panic is not altogether a bad thing. It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people.

Mellon has often been criticized from for these views. Yet what he proposed for the 1929 depression was essentially a repeat of policy that had been pursued successfully in 1921. The same policy, based on the same understanding of the world (paradigm) gave a very different outcome after 1929.³ Unemployment rose strongly after the 1929 crash, but not as rapidly as it did in 1921. Yet at a time when recovery had been underway a decade earlier, the economy sank ever deeper into depression with unemployment reaching levels never seen before or since. Policymakers in the Hoover administration were baffled, and so they did little as the political zeitgeist soured on Republican ideology and the party lost 49 House seats and 8 Senate seats in the election of 1930. Still they appeared not to act, and were crushed in 1932, losing 101 additional House sets and 12 Senate seats as well as the presidency. Republicans would not win back Congress until 1946 and then for only one term. They would not regain the Presidency until 1952. The 20 years between 1932 and 1952 include the New Deal era, World War II, and the beginning of the Cold War, during which enormous structural changes were made by the dominant Democratic party. The 1932-52 period thus constitutes a political moment.

A political moment will strongly imprint the new paradigm on those coming of age at that time, binding them together into a common political generation. People coming of age just before and just after the political moment will fall into different generations. Political generations that come of age during a political moment are called dominant generations. Those coming of age outside of a political moment are recessive. When a dominant generation ages into the role of societal leadership it replaces a recessive generation with a different worldview. This recessive generation had come of age when the discredited old paradigm was still operative. They had been forced to adapt their ways of thinking somewhat to new realities during the previous political moment, which encouraged a more cautious approach to governance when they came to power in the post-political moment era. In contrast, the ascending dominant generation holds a paradigm that has not been discredited--yet. More certain of themselves, they will be bolder in implementing policy informed by that paradigm. And this is where problems develop as the new paradigm, developed to address the issues of the previous political moment, is not likely to be as well-suited to the issues of the present.

As an example of this consider the generation who came of age during the 1932-52 political moment. The departing generation had come of age in the period around WW I, when the lesson of the times was the problems associated with crusading abroad in search of monsters to destroy, and who had sought to avoid getting entangled in European politics before Pearl Harbor. After the war isolationism was discarded and policymakers came to support permanent mobilization and a much expanded American role in the world. But this did not translate to an unchecked expression of American power during the fifties.

When the dominant New Deal generation came to power in the mid-sixties there was an expansion of the role America was to play in the world. The first president to have come of age during the 1932-46 political moment was John Kennedy, who had this to say in his 1961 inaugural address:⁴

Let the word go forth from this time and place, to friend and foe alike, that the torch has been passed to a new generation of Americans--born in this century, tempered by war, disciplined by a hard and bitter peace, proud of our ancient heritage--and unwilling to witness or permit the slow undoing of those human rights to which this Nation has always been committed, and to which we are committed today at home and around the world.

Let every nation know, whether it wishes us well or ill, that we shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe, in order to assure the survival and the success of liberty.

This speech heralded change, which began slowly, but then picked up rapidly when vice president Johnson came to power after the Kennedy assassination. The first paradigm-informed overreach was the Vietnam war. Having learned the lessons of Munich sixties Democratic elites were determined to prevent all of Southeast Asia from falling like a row of dominos to Communism. Instead they stood up to Communism by pursuing an ill-advised war in Vietnam which produced massive antiwar protests that split the Democratic party. President Johnson decided not to run for re-election and his vice president, forced to defend an increasingly unpopular war, lost to former vice president Richard Nixon. Opposition to the war created an anti-war Democratic wing whose 1972 candidate was crushed by Nixon at the polls. Republicans then went on to win three of the next four presidential elections including another landslide victory against an old-line New Deal Democrat in 1984.

Another overreach was in economic policy. The success of Democratic economic policy during WW II led most Democrats to embrace Keynesian economics, which called for fiscal stimulus during downturns to fight unemployment and balanced budgets or even surpluses during good times to prevent excessive inflation. Things went well for nearly a quarter century after WW II during which the Fed kept real interest rates low, while steeply progressive tax rates and investment regulation kept speculative forces muted. The result was strong economic growth and no financial panics. This system had no built-in inflation control features, however. Any step towards significant deficit spending during prosperity had the potential to create an inflation spiral. For two decades after the war, large peacetime deficits were avoided and inflation remained low.

Kennedy proposed a tax cut as a means to provide Keynesian stimulus in the aftermath of the 1961 recession, which was enacted in 1964 and took effect in 1965. By 1968 the deficit had reached 3% of GDP. Inflation, after running at 2% since the end of the Korean War, was approaching 5% by the beginning of 1969. Congress reluctantly passed a surtax in 1968, which produced a slight surplus in 1969--the last one until end of the century. Inflation slowed after this, reaching 3% in 1972, by which time big deficits were back since the surtax had been abandoned during the 1970 recession. Richard Nixon, the first Republican president to come of age during the 1932-52 period, commented that he was now a Keynesian in economics in January 1971.⁵ Later that year Nixon was forced to end exchange of dollars for gold due to the accelerating depletion of US gold reserves caused by building inflationary forces during the sixties. This ended the Bretton Woods system of fixed exchange rates which created a vast new financial market in currency speculation and sent the price of gold skyward, creating inflationary expectations. At the same time Nixon imposed wage and price controls in order to temper inflation while fiscal stimulus was pursued to bolster re-election chances in 1972.⁶ The policy worked as intended in the short run, inflation remained subdued all through 1972 while growth was strong. But in 1973 inflation took off, and as the economy fell into recession over 1974, inflation soared above 10%, where it remained until the end of the recession in early 1975. Thus was born stagflation.

The Democrats had one last time to impose fiscal austerity under president Carter, but by this time inflationary expectations had become built-in and large fiscal surpluses would have been required. By 1979 deficit spending had been reduced but the fiscal balance was far from surplus and inflation had reached 10%. An inflation spiral had taken hold. Carter appointed Paul Volcker as Fed chair with the goal of employing high interest rates to combat inflation. This policy was very likely to reduce inflation, but it did so by increasing unemployment, transferring bargaining power from workers to employers and so suppressing wage growth. Lack of wage growth led to a more slowly rising demand for consumer goods and so less inflation in consumer prices. Such a policy was understandably problematic for a party who represented labor. The new Republican president had no problem with suppression of wage growth and gave Volcker carte blanche. Volcker hiked interest to levels exceeding 16% in 1981 and inflation fell from its peak rate of 14% in 1980 to about 2% by 1986.

Fed policy came to be made based on a notion called the NAIRU, which held that when the economy was running above its effectively-full capacity, a positive output gap existed, which would drive down unemployment, increasing the bargaining power of workers leading to wage increases, which in turn led to inflation. The unemployment level at full capacity was the NAIRU, the rate at which inflation rate did not change.⁷ The replacement of Keynesian-based fiscal policy with NAIRU-informed monetary policy over the 1968-1986 political moment is a good example of the replacement of one paradigm with another.

Model construction

Table 1 shows the PE cycle and periodic American critical realignment elections⁸ in the first two columns on the left. Critical elections are those which feature significant changes in issues, party power, and the regional and demographic bases of power of the two parties, resulting in a new political power structure that lasts for decades. Scholars largely agree on the first five critical elections. Both 1968 and 1980 have features that make them candidates for a critical election. The 1968 election began a lengthy period of Republican dominance at the presidential level. Had the Watergate scandal not happened, it is likely Reagan would have won in 1976 and Republicans might have enjoyed a run of four or five straight presidential victories which would make 1968 a clear-cut realignment election. As it happened, many of the fundamental policy changes and new paradigm formation resulting from the political moment occurred after the 1980 election, making that election a better fit in terms of changes in issues/policies. The 2008 election may or may not be a critical election,

The next column shows the political moments. Political moments begin with a critical election. The last one begins in 1968, the first of the two critical election candidates. The ending dates of 1840, 1912 and 1952 reflect the end of the period of party dominance that began with a critical election. The 1992 date is based on the idea of 1980 as a critical election. Republican political dominance after 1968 is entirely the product of the 1980 and 1988 victories. The first denied second term to Democratic president Carter while 1988 was a third presidential victory in a row, something shared by five of the six previous critical elections. The 1992 election ended the Republican presidential dominance that was a consequence of the 1980 critical election. The twin critical-like elections of 1968 and 1980 make the 1968-1992 political moment the longest such moment. The 1876 ending date reflects the tied 1876 election, in which Democrats actually won the popular vote, but the election was decided in favor of the Republican candidate. Democrats acquiesced to this in exchange for the end of Reconstruction, which formally ended the Civil War era. The first political moment is special in that it did not occur in the midst of an active era, nor did it produce the typical unrest. This was because it was the first political moment and served to form the first paradigm but was not itself caused by the paradigm model. This will be discussed in more detail in the next section.

Table 2. Political moments defining paradigm-forming periods.

PE cycle	Critical Election^11	Political Moment	Paradigm Type
1720-1747 (A)	NA	NA	NA
1747-1769 (I)	NA	NA	NA
1769-1792 (A)	NA	NA	NA
1792-1824 (I)	1800	1800-1816	Progress
1824-1842 (A)	1828	1828-1840	Freedom
1842-1860 (I)	none	None, recessive leader generation
1860-1873 (A)	1860	1860-1876	Progress
1873-1896 (I)	none	None, recessive leader generation
1896-1919 (A)	1896	1896-1912	Freedom
1919-1930 (I)	none	None, recessive leader generation
1930-1946 (A)	1932	1932-1952	Progress
1946-1964 (I)	none	None, recessive leader generation
1964-1981 (A)	1968/80	1968-1992	Freedom
1981-2008 (I)		None, recessive leader generation
2008- ? (A)	2008?	?	Progress

Given a political moment, the timing of the next one can be approximated as follows. The political moment creates a generation holding the appropriate kind of paradigm. I assume that paradigm acquisition occurs around ages 21-25. Subtracting 23 from the political moment gives the approximate birth years for this generation. These cohorts will come to power when they collectively reach the average age of leaders or A_L. A_L is calculated as the average of three average ages, those of senators, congressmen+governors, and Supreme Court Justices. Its value over time is given in Table 2. The period when a dominant generation is in power is simply A_L - 23 years after the preceding political moment. Denote the beginning of this period as L₁ and the end as L₂. The period between L₁ and L₂ provide an estimate for when the next political moment will happen. These periods are shown in Table 2.

Table 3. Previous political moment feeding into next political moment through political stress

Political Moment	Leader Avg. Age (AL)	Dominant Generation in Power (L1-L2)
1800-1816	52	NA
1828-1840	54	1829-1845
1860-1876	58	1859-1871
1896-1912	60	1895-1911
1932-1952	58	1933-1949
1968-1992	64	1967-1987
2008 begin?	--	2009-2033

Figure 1 shows a plot of the age distribution for political leaders in 2004. The data are reasonably-well represented by a normal distribution with A_L as the central value and a standard deviation of 10 years. A simple expression can be written for the fraction of total political power held by the dominant political generation as follows:

1. Dominant generation fraction = DGF = Norm( L₂, t, 10) − Norm( L₁, t, 10)

The terms Norm(L₁, t, 10) and Norm(L₂, t, 10) refer to the fraction of the normal bell curve with standard deviation 10 and centered on year t that is to the left of years L₁ and L₂, respectively. Figure 2 displays a graphical description of what equation 1 calculates. It shows leader age distributions for 1926, 1939 and 1950. For each of these years, DGF is the fraction of the curve that falls between the vertical dashed lines that mark the years L₁ and L₂.

The model output for a given year is the number of political stress events (N_PS) that are generated in that year. The model assumes four opportunities to produce stress events occur each year and the probability that stress will be generated is proportional to the square of DGF:

2. Probability of stress event = 1.5 DGF²

A random number is generated and if it is less than the probability value one stress event is obtained. This is done four times for each year and the results summed. Figure 3 shows a plot of what the model output looks like. Stress events occur in clusters associated with the L₁-L₂ period when a dominant political generation is in power. These clusters represent the active zeitgeist defining the political moment. The actual clusters obtained vary in detail, representing alternate histories.

By running the model through several iterations, I was able to choose the random output that resembled what actually happened in a given era fairly closely, at which point I froze the model output for that era. I then repeated this procedure for the next era until the model outputs fairly closely approximated each actual political moment. Although the most likely stressful period is one that closely matches the L₁-L₂ period, the model is capable of generating outputs that are somewhat different from the L₁-L₂ period, but not excessively different. Political moments would simply not be generated in the nineties, for example, because the average DGF value of 13% translates to less than a 0.4% probability per year of a two or more events being recorded. The amount of variation allowed was sufficient to closely match political moments like the Civil War era, precisely because the actual moments did not occur in low-DGF eras.

How the paradigm mechanism got started

The first political moment (1800-1816) is anomalous because it was not a part of a larger active period in the PE cycle, unlike all subsequent political moments. As the first political moment there was no dominant generation with a paradigm that was out of step with the times that spurred a revolt against it. Rather, the 1800-1816 political moment was more like an experiment testing a different approach to governance that ultimately failed.

Freedom and Progress represent two visions that came of the Revolutionary War era. Thomas Jefferson saw America as a nation of self-sufficient yeoman farmers. He believed government should be limited to only performing those tasks that the individual could not do on his own so that individual freedom would be unnecessarily compromised. Alexander Hamilton saw America as a modern nation and future great power. Hamilton favored policy aimed at making progress towards this goal. After the Constitution was ratified America had a second chance at national governance after the failure of the Articles of Confederation. As Treasury Secretary, Hamilton was able to try out his program.

The Continental Congress had amassed huge war debts during the revolution, but lacked the taxation power necessary to service them and so had resorted to printing money and bills of credit which rapidly became worthless.⁹ Lacking options congress shifted the financial burden to the thirteen states, who at least possessed taxation powers. When they failed to raise sufficient funds, the Continental army turned to confiscating supplies in exchange for IOUs of questionable value. By the end of the war, over $90 million in state debt was outstanding, much of which was still unresolved in 1790.⁹

Hamilton wished for the government to assume this debt because doing so would require that the government create institutions such a central bank in order to manage it. He believed this would promote American prosperity and national unity.¹⁰ To this end, Hamilton was able obtain passage of the Funding Act of 1790 in which the Federal government would assume this debt, to be serviced through the taxation powers now possessed by the Federal government by virtue of the new constitution.¹¹

Hamilton was able to achieve this despite Southern opposition including such founding fathers as Representative James Madison and Secretary of State Thomas Jefferson. Through the Compromise of 1790: Hamilton got his Funding Act and its mostly Southern opponents got the Residence Act, which established a southern capital in the newly created District of Columbia.¹² Hamilton proposed a central bank in 1790 as a way to manage this debt and fund internal improvements such as roads and port facilities necessary to promote the economic development Hamilton believed necessary to fulfill his vision of America as a modern nation and rising power. He faced opposition from mostly Southerner politicians led by Jefferson and Madison. They believed this centralization of power away from local banks was incompatible with sound money and mostly benefited northern commercial interests at the expense of southerners. As the principle generators of foreign exchange, Southern agricultural interests would pay the tariffs that made up much of government revenue. From these economic issues arose the first American parties, the Federalists, who sided with Hamilton and the Democratic-Republicans, led by Jefferson and Madison.¹³ When Congress passed an excise tax on whiskey to raise revenue needed for debt service, armed resistance to collection of the tax developed that has come to be known as the Whiskey rebellion.¹⁰

In 1792 the US experienced its first financial crisis. The crisis had been preceded by an expansion of credit by the newly formed central bank as well as by rampant speculation on the part of William Duer, Alexander Macomb and other prominent bankers.¹⁴ Deft financial management by Secretary Hamilton brought about the stabilization of the securities market and prevented a recession. Despite the minimal impact the panic fed the Democratic-Republican opposition:¹⁵

In the United States, financial and economic wounds resulting from the crisis of 1792 healed quickly, but the same cannot be said of the political fallout. A Republican opposition led by Jefferson and Madison to the Federalist administration, which was led by Washington and Hamilton, had already formed by the time of the panic, and was emboldened by it. The Republicans would hound the two Federalist leaders to the ends of their days. When they assumed leadership of the U.S. government after 1800, the Republicans even undid elements of the Federalist financial revolution, only to come to regret the folly and to reinstitute what they had allowed to be undone.

Popular opposition to Federalist policies eventually rose to a point at which the Democratic-Republicans defeated the Federalists in the election of 1800, the first of what would become a repeating series of critical realignment elections. The Democratic-Republicans were opposed to a whole range of Federalist policies including high tariffs, the federal debt and the central bank, a standing army, strong navy, and a foreign policy oriented towards Britain and away from France.¹⁶ Once in power they frequently found their libertarian ideals did not comport with the requirements of governance. Although opposed to governmental extravagance,¹⁶ Jefferson in his first year in office spent a vast sum to acquire the Louisiana Territory from France. Opposed to a blue-water navy, Jefferson found one useful in prosecuting the Tripolitan War.¹⁷ Although Madison did not renew the charter of the first central bank in 1811, he soon regretted this decision when he had to fight a war in against the leading great power in 1812 without the means to finance it. In 1816 he would re-establish a central bank, and pass a high tariff to protect domestic industry that he had encouraged to counter the loss of imports during the war. Coming to power espousing an agenda consistent with a Freedom paradigm, the lesson learned by Democratic-Republicans during the 1800-1816 political moment created a Progress paradigm amongst the rising new Republicans like Henry Clay and John Quincy Adams.

The embrace of neo-Federalist policy by Democratic-Republican and the collapse of the Federalists leaders was followed by a period of one-party rule called the Era of Good Feelings because it seemed that the goal of effective and just governance had been achieved, making political parties obsolete. This consensus was disrupted by the Panic of 1819, which, unlike the panic of 1792 did result in a hard landing for the economy:¹⁸

In August 1818, its credit dangerously overextended, William Jones ordered BUS branch offices to reject all state-chartered bank notes, with the exception of those used as revenue payments to the US Treasury. In October 1818, The US Treasury demanded a transfer of $2 million in species from the BUS to redeem bonds on the Louisiana Purchase.

State banks in the West and South, unable to provide the required species, began to call in their loans on the heavily mortgaged lands they had financed. Cash poor farmers and speculators found their land values dropping 50% to 75%. Banks began foreclosing on the properties and transferring them to their creditor: the Second Bank of the United States.

The apparent involvement of the central bank in the ensuing economic misery resulting in political grumbling that led to a renewal of factions within Democratic-Republicans. The old republicans (soon to be the Democratic party) led by Andrew Jackson, favored a return to (an updated) version of the libertarian principles of 1800 whereas the new republicans (later the National Republicans) believed that the policies their party had adopted in over the years were just part of good governance. Of course the mismanagement of the 1819 panic cast doubt on just how good the governance had been.

These ideological differences came to a head in 1824 election in which vice-president William Crawford, Secretary of State John Q. Adams, Speaker of the House Henry Clay, and Andrew Jackson threw their hats into the ring. None of the four gained a majority. Jackson was the biggest vote-getter, reaping 42% of the popular vote compared to 32% received by Adams.¹⁹ Clay threw his support behind Adams in return for the Secretary of State position, the traditional stepping stone to the presidency (Adams and the three preceding presidents all were former Secretaries of State). Jackson, outraged at what he called a corrupt bargain, soon began campaigning for 1828.

After 1824 two political parties existed, the Democratic and the National Republican (later called Whigs) who in 1828 were divided along lines similar to those present in 1800. With the creation of a viable two-party system, it was now possible for differing ideological viewpoints to prevail in a critical election, beginning a political moment. The emergence of the new Republicans, whose Progress paradigm which promoted industry and finance in an agrarian nation, was by its very nature an overreach--particularly after the debacle of 1819. Furthermore, the electorate swelled as property requirements for suffrage were gradually removed. In 1820, during the era of good feelings, only 1.1% of the population had voted, in 1824 this had risen to 3.4% and by 1828 it was 9.5%. By the end of the 1828-1840 political moment over 14% of the population were participating in presidential elections. This influx of poor largely rural voters made selling Whig progress much more difficult. When the Whigs finally won in 1840 their candidate, war hero William H. Harrison, largely avoided talking about the issues.²⁰ Harrison, a wealthy man who had enjoyed a comfortable upbringing, ran as a war hero and man of the people, the log cabin and hard cider candidate from the rough-and-tumble West.²⁰

It did not take long before the parties, in the never-ending requirement to secure electoral victory, ceased to be exemplars of one paradigm type or the other. Instead, each political moment created a new paradigm in youthful voters of both parties. Paradigms came to have both conservative and liberal versions. Depending on the paradigm type the expression of ideological and party identity would change. Hence Freedom-paradigm holding Jacksonians when they came to power would come to support secession and war on the grounds of upholding slavery because as Southerners they saw slavery as fundamental to their agricultural way of life and the war as a contest between the forces of Northern oppression against liberty-loving American patriots. In contrast Freedom-holding Republicans opposed slavery in the name of Freedom. They saw secession as abandonment of the American project and a threat to their commercial/industrial way of life.

Pushback against the excesses of a Progress paradigm had put Jacksonian Democrats in charge and imbued a generation with a Freedom paradigm. Decades later, when it had over-reached, pushback against its assumptions about the world gave the 1860 critical election and the civil war it precipitated. The Republican victory then imbued a generation with a Progress paradigm built around industrial development which neglected the interests of a huge majority of the population, small farmers, industrial workers and most Southerners. Pushback against the progressive order began with Jim Crow and populist politics, and flowered into the Progressive era that sought to preserve laissez faire capitalism by softening its impacts on people through anti-trust and consumer protection legislation as well as financial regulation through the Federal Reserve, which had all the functions of a central bank. Although it is called the progressive era, the goal was to establish a way to preserve maximum economic freedom by moderating the effects of such freedom on ordinary people in order to prevent calls for more radical reforms. So it imparted a Freedom paradigm. The progressive era reforms were woefully inadequate as the Great Depression shows and the sweeping reforms put into place at that time amounted to a modernized program of Hamiltonian nation-building on steroids that instilled a progress paradigm. The counter to this program in the most recent political moment with its emphasis on personal freedom (be it economic through less taxation and regulation or personal through the various civil rights movements) clearly contained Freedom as a core element.

Implications of the paradigm model

The paradigm mechanism calls for a cycle length to be based explicitly on the average should have increased correspondingly. That cycle lengthening happened was made clear by my experience around 2000. With the stock market peak in 2000 I expected that start of the crisis turning would begin soon after 2000 and predicted in a post on the fourth turning site that this would happen.²¹ I also expected that the fall from plateau, which begins the Kondratiev winter season, would begin soon as well. When it did not I began to consider the idea that the saeculum was longer than its 72-year post-1820 length.. This led me to developing an early version of the paradigm model in 2005.²²

Table 4 presents three approaches to dating American historical cycle: the Strauss and Howe saeculum, the PE cycle and the critical elections that define the start of political moments. These three approached were averaged into a composite cycle. This composite was used to calculate the spacing between subsequent period-generating eras. This spacing is plotted against A_L in Figure 4. The regression equation obtained was statistically significant (p < 0.02) indicating that changes in A_L can explain rising cycle length since the beginning of the paradigm mechanism. In particular, the most likely date for the start of a political moment is 2009, which is very close to the 2008 fall from plateau and a possible critical election in the same year. Thus,

Table 4. Composite cycle and spacing

Saeculum	PE cycle	Critical elections	Composite Cycle	Spacing	AL
1822	1824	1828	1824.7	28.0*	52
1860	1860	1860	1860.0	35.3	54
1886	1896	1896	1892.7	32.7	58
1929	1930	1932	1930.3	37.7	60
1964	1964	1968	1965.3	35.0	58
2008	2008	2008?	2008.0	42.7	64

*critical elections only, the paradigm model was not yet active for the other two cycles.

Predictions

Given the utility of the paradigm model for explaining past cycles, what does it say for the future? The objective of any model should be successful prediction. Table 2 projects the next dominant generation in power over 2009-2033. This would be consistent with 2008 being a critical election and the start of the next political moment. On the other hand, the massive Republican victory in 2010 argues against this idea. Past critical elections did not feature the opposing party gaining control of one of the legislatures in the very next election. The 1968 and 1980 critical-like elections featured the opposing party retaining control of one or both of the legislatures so the 2010 election does not necessarily disqualify 2008 as a critical election.

The 2010 election makes 2008 look much like 1992, which was not a critical election. There are three key differences between 1992 and 2008, however. The first is electoral: President Clinton did not win a majority of the votes in either 1992 or 1996, whereas President Obama did in 2008 and 2012. The second is the size of the backlash. In 1994 Republicans won back both houses of Congress, in 2010 they gained just one. This could change in the 2014 election for which Republicans (as of January 2014) are given an even chance of re-taking the Senate. The third is policy. For 70 years universal healthcare has been a key Democratic goal. The Affordable Care Act (ACA), a weak form of universal healthcare, was passed in 2009. President Clinton attempted to achieve universal healthcare in 1993 and failed. These factors suggest a marginally stronger political environment for Democrats in the present compared to the nineties.

Figure 5 shows a very simple political indicator I call the presidential oscillator. It is simply the fraction of the previous 30 years in which a Democrat was president. Values of the oscillator above 50% correspond to periods of Democratic/old republican dominance; values below 50% correspond to Republican/Whig/new republican/Federalist dominance. These shifts correspond to the outcomes of critical elections; the last three followed 7 years after victory in a critical election won by the rising party. The idea behind the oscillator is it gives a measure of political party dominance as perceived by political actors over a 30-year career. High oscillator values means that Democratic ideas have currency with opinion makers and politicians. Low values mean Republican ideas have currency. For example, the Affordable Care Act was based on a Republican idea while Medicare was straightforward single-payer national health insurance. The former was debated and passed with an oscillator of 0.33 while the oscillator was at 0.73 for the latter.

The advantage of the oscillator is future values of it can be easily calculated based on simple assumptions. Figure 5 shows three futures. The blue line assumes a Democrat is elected in 2016 who serves two terms. The red line assumes a two term Republican president is elected. Finally the purple line shows a Republican winning in 2016 and a Democrat in 2020. Both the blue and purple lines show a sustained rise above 0.5 after 2015, indicating the start of a Democratic era and confirming 2008 as a critical election. The blue future indicates that 2008 was a conventional critical election like those in 1828, 1860 or 1932, where one party cleanly replaces another as dominant. The purple future indicates a partially critical election like 1968, in which case the 2020 election would be likely be the more consequential election policy-wise like 1980 was. In either case 2008 would be the start of a political moment exactly in line with the paradigm model. This means a Democratic victory in 2016 would establish the start of a political moment just as the fall from plateau established the economic turning point of the PE cycle in 2008.

The red line implies a shift back towards conservatism. If this happens then the PE cycle would require 2016 to be a critical election, meaning Republicans win in 2024 too. This would establish a political moment starting in 2016, or 7 years after the dominant political generation came to power. Such a large lag between the appearance of the political moment and its cause has never happened before and if it were to happen it would invalidate the paradigm model. That is, the red outcome invalidates the paradigm model, and if Republicans then fail to win in 2024, it invalidates the PE cycle as well.

A Democratic win in 2016 and Republican win in 2020 would also invalidate the model. This outcome gives a political moment that ends 13 years before the dominant generation leaves power, which has never happened before. Political moments can and often do end after the generation that causes it has left if issues are still unresolved. Ending well before the dominant generation has left could only happen if the electorate feels the problems of the political moment have been resolved satisfactorily. Based on the post-2010 experience it is hard to imagine many problems even being addressed, much less solved in the next six years. So if the model is valid this outcome can also be excluded. This means two of the four possible outcomes from the next two presidential elections would invalidate the paradigm model, making it falsifiable. Unfortunately both outcomes involve Republican victories in 2020 and so the model cannot be tested until then.

Figure 6 shows a political power index** that gives a more refined look at relative party strength. This index shows Democratic resurgence under presidents Carter, Clinton and Obama. In the first resurgence Democratic institutional control was still high; Democrats did not feel threatened and they failed to act on the inflation problem. The result was the Reagan revolution which appears in Figure 6 as a collapse in Democratic power. The second resurgence failed to bring Democratic power sustainably above the 50% level and Clinton faced considerable pressure to get economic matters right. That he did so gave him a second term, but was not enough to see his vice president elected as his successor. One can argue that the Republican Congress got some of the credit for success with the deficit reflecting the Republican-favorable oscillator. The third resurgence has seen Democratic institutional strength at or above 0.5 for the first time since the seventies. Furthermore Obama will leave office with the oscillator at 0.53.

Trends in the oscillator and the power index provide an independent assessment that argues against conservative resurgence in support of the paradigm model.

*A social moment is an era, typically lasting about a decade, when people perceive that historical events are radically altering their social environment. There are two types of social moments: secular crises, when society focuses on reordering the outer world of institutions and public behavior; and spiritual awakenings, when society focuses on changing the inner world of values and private behavior. Strauss and Howe propose a four-phase cycle characterized by a regularly repeating series of alternating crises and awakenings with calmer periods in between.²³ These phases are called turnings.²⁴

**The index is defined as the average of the Democratic or liberal occupation of the presidency, congress, Supreme Court and Federal Reserve chairman. A value 1 is assigned when a Democrat is president and 0 when a Republican is president. The legislature has a value of 1 when Democrats control both houses; 0.5 when control is split and 0 when Republicans control both houses. For the Supreme Court, the Warren court (1953-69) is given a 1, the Rehnquist (1986-2006) and Roberts courts are 0, and the Burger court as a value that decreased linearly from 1 in 1969 to 0 in 1986. For the Federal Reserve a value of 1 is used up to 1979 to represent the period when Keynesian economics still held sway. From 1979 to 2008, policy was focused on inflation at the expense of employment and wages and so a value of 0 was used. Since 2008 concern has shifted towards growth and employment rather than just inflation control. Republican chairmen get a 0.5 and Democrats a 1.0.

References

1. Goldstein, Joshua S. Long Cycles, New Haven: Yale University Press, 1988

2. Tyler Durden Liquidation Is Vital, Zero Hedge, June 26, 2012.

3. M.A. Alexander, Stimulus vs. Austerity: A tale of the long wave Safehaven, October 15, 2013

4. John F. Kennedy Inaugural Address, January 20, 1961

5. Bruce Bartlett, Keynes and Keynesianism, Economix May 14, 2013.

6. Nixon Tries Price Controls, excerpt from The Commanding Heights by Daniel Yergin and Joseph Stanislaw, 1997 ed., pp. 60-64.

7. Kevin L. Kliesen, The NAIRU: Tailor-Made for the Fed?, The Regional Economist | October 1999.

8. Wikipedia article Realigning elections in United States history

9. Wikipedia article First Report on the Public Credit

10. Wikipedia article Whiskey Rebellion

11. Wikipedia article, Funding Act of 1790

12. Wikipedia Compromise of 1790

13. Wikipedia article Democratic-Republican Party

14. Wikipedia article, Panic of 1792

15. D. J. Cowen, R. Sylla and R. E. Wright, The U.S. Panic of 1792: Financial Crisis Management and the Lender of Last Resort, XIV International Economic History Congress, Session 20: Capital Market Anomalies in Economic History, Helsinki, August 2006

16. Republican Platform of 1800

17. S. D. Lovett The Tripolitan War: A Case for Evolving Strategies, Small Wars Journal, May 13, 2013.

18. Wikipedia article, Panic of 1819

19. United States History, US History.com, Election of 1824

20. Wikipedia article, United States presidential election, 1840

21. Post at the old fourthturning site in The Future topic, in The Kondratiev Cycle and the Fourth Turning thread dated 21 August 2000.

22. M.A. Alexander, The paradigm cycle model, Safehaven, April 28, 2005.

23. William Strauss and Neil Howe, Generations: The History of America's Future, 1584 to 2069. New York: William Morrow and Company, 1991.

24. William Strauss and Neil Howe, The Fourth Turning: an American Prophecy. New York: Broadway Books, 1997.