MarketWatch, January 15, 2008, Tuesday

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MarketWatch

January 15, 2008, Tuesday

SECTION: PERSONAL FINANCE; Life & Money; Shades of Green

HEADLINE: U.S.'s 36-year cycle means major political, economic change ahead

BYLINE: Chris Pummer

BODY:
SAN FRANCISCO (MarketWatch) -- That voter sentiment suggests a desire for change should come as no surprise. In fact, the country's overdue for a political and economic shake-up.

In a little-noted historical pattern dating to 1788, America has cycled through progressive and conservative periods every 36 years with Swiss-timepiece accuracy. Driving the cycle are economic disturbances and issues of equity and justice the likes with which we're grappling now.

"There are certain values we're supposed to honor that are in stark contrast to, say, our present use of torture or 50 million of our fellow citizens lacking health insurance," says Clete Daniel, a labor history professor at Cornell University.

"We're often unable to articulate the change we're seeking; there's just an emotional conviction that things have stayed the same for too long," Daniel says. "We're called to account to measure our perspective of ourselves against our performance, and hopefully get us aligned with our professed ideals."

Consider what transpired in each of the 36-year periods, from start to finish, and it's abundantly clear how past is prologue and the pendulum swings in remarkably steady fashion.

1788 -- Birth of a nation

The start: The re-invention cycle begins appropriately in the year in which states ratified the Constitution and paved the way for George Washington's swearing in as president in April 1789. The founding fathers then built the institutions upon which democracy grew and won another war against their former colonial master that firmly established the na-tion.

The finish: Disaffection set in with the Panic of 1819 - the country's first financial crisis that sparked bank failures, foreclosures and a manufacturing and agricultural slump. On its heels came the sense the nation was run by wealthy patricians and moneyed interests whose democracy was far from all-inclusive.

1824 - Jacksonian Democracy

The start: This year's national election marked the first in which all white men - not just landowners -- gained the right to vote in most states, but Andrew Jackson had to wait four years to take office. In a foreshadowing of 2000, the "people's president" won the most popular votes but not a majority, and the House voted in blue-blooded presidential son John Quincy Adams in the contested 1824 race.

The finish: A series of weak presidents employing a hands-off regulatory approach to business led to the Panic of 1837, a five-year-long economic collapse rivaling the Great Depression, and the Panic of 1857 that produced a three-year downturn. Their failure to reconcile the increasingly divisive issue of slavery literally broke the nation in two.

1860 - Lincoln and the Civil War

The start: Following Lincoln's election and the devastation of the Civil War, rapid industrialization and Western expansion propelled the country toward becoming the world's leading economic power and gave us mega-rich "captains of industry" such as John D. Rockefeller (oil), Andrew Carnegie (steel) and Andrew Mellon (banking).

The finish: Organized labor emerged as workers sacrificed life and limb to build the industrialists' monopolies and massive wealth, with an estimated 35,000 workplace deaths and 500,000 injuries annually by the late 1880s. Spurred by a run on gold, the Panic of 1893 sent unemployment skyrocketing, saw 500 banks and 1,500 companies fail -- including the mighty Northern Pacific and Union Pacific railroads - and ended this cycle with a four-year depression.

1896 - Busting heads

The start: The Democratic presidential candidacy of 36-year-old Williams Jennings Bryan, and his renowned ora-tory condemning banks, railroads and eastern financial elites, legitimized the union movement's message and provided the catalyst for corporate trust-busting a few years later. One-by-one the great, abusive monopolies were broken up and a growing number of workers gained collective-bargaining rights and greater workplace safety.

The finish: World War I established the U.S. as a leading global power that displayed its industrial might with the 1920s economic boom. Greed became the nation's undoing as the Crash of '29 saw the country suffer the same short-sightedness that produced economic collapses at the close of the prior, three 36-year periods.

1932 - A New Deal

The start: A member of the eastern elite that Bryan railed against, Franklin D. Roosevelt's genius following his election was employing some of socialism's soundest practical ideas while rejecting radical solutions to heal a crippled economy. As in the last cycle, a world war further raised the nation's global stature and heralded a similar post-war pe-riod of prosperity and economic expansion in the 1950s.

The finish: Not everyone shared in the growing largesse. And when the nation became mired in its first widely un-popular war, this cycle ended with civil rights and anti-war rallies that soon gained support of the its moderate majority.

1968 - The Great Society

The start: President Johnson ushered in this cycle a few years before this pivotal date with his Great Society pro-grams, yet the spirit of change continued with Nixon's engagement of communist China and creation of the Environ-mental Protection Agency. Nixon's 1974 resignation ended progressive initiatives, as the country struggled to get its bearings amid soaring interest rates and unemployment that ushered in a conservative backlash.

The finish: Despite a seemingly prosperous economy in the 1990s, U.S. workers lost ground as the two-income household became an economic necessity, not a choice, and jobs flowed overseas by the millions. An obesity epidemic attests to the nation's mentally if not economically depressed state. This cycle ends with a recession, albeit a mild one, and a war that diminishes rather than elevates America's standing on the world stage.

2004 - Where to now, St. Peter?

The cycle might have restarted on time had the winner of the popular vote won the 2000 presidential election, got-ten energy-policy and climate-change reforms underway and avoided a now five-year-old war in Iraq. Instead, the citi-zenry has the lowest regard for their president and Congress in recorded history, such that the 2008 election may serve as an enema that clears the nation's constipated bowels.

Since America was founded on strong principles of egalitarianism and individualism, it is bound to swing back and forth in a Sisyphean exercise in pursuit of each.

"Our egalitarian and individualistic values are in many ways irreconcilable," Daniel says. "We want freedom, but we want security; we want affluence, but we don't want poverty. It's our continuing struggle to reconcile that conflict that's made America a force for change in the world for more than 200 years."

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