Part of our methodology at The Sentinel in making forecasts is to use our social cycle model to anticipate changes in human behavior. Since human behavior is integral to markets, having this understanding affords us the opportunity to understand where trends might develop. A couple of changes in human behavior deal with social polarization and authoritarianism. Social polarization will accompany manifestations of more authority.
As we approach the 10th anniversary of September 11th, we should observe that the U.S. Government became more authoritarian with the introduction of the TSA and the Patriot Act. The TSA was in the public crosshairs earlier this year when their body scan technology came under severe criticism. The formerly wild frontier of the Internet enjoys less freedom. For example, President Obama furthered some provisions of the Patriot Act allowing government,
“to obtain roving wiretaps over multiple communication devices, seize suspects’ records without their knowledge...and conduct surveillance of someone deemed suspicious” (Christian Science Monitor, 3/1/2010).
This year also saw the installation of a new intrusion detection system called Einstein 3 which the Department of Homeland Security assured did not compromise privacy. In France, there is now legislation that allows unprecedented control over the Internet. Google knows better than anyone what internet censorship means given their battles in China. They noted,
“The number of countries that censor the Internet has grown from a handful eight years ago to more than 40 today.”
The reassertion of authority by governments is a response to increasing fear on the part of its citizens. When 9/11 occurred, the U.S. rallied around the President who went looking for the perpetrators in Afghanistan. A later incursion into Iraq was associated with the fear of weapons of mass destruction finding their way to U.S. soil. The U.S. public accepted the TSA and the Patriot Act to feel more safe. None of the military events nor the erection of more authority structures in the U.S. could have come about without the public fear component. Prior to 9/11 we still had the potential terrorist threats and yet no one called for the Patriot Act or the TSA. There was no fear prior to that date.
The rise of authority will create more polarization in society as there will be those that strongly support the authorities and others who will view incursions into privacy with increasing hostility. Our forecast for the reassertion of authority is as follows:
1. As the economy’s performance continues to disappoint, there will be the formation of groups with polarized views on what needs to happen. The Tea Party is one such expression. The Tea Party platform is based on an idea of smaller government. A smaller government is of necessity less intrusive.
2. The formation of these groups will foster derision and ridicule by the establishment. Witness a member of Congress calling the Tea Party, Hobbits.
3. Some elements of society will grow to accept authoritarian action in small doses each in the name of keeping society safe.
4. Government will continue to clamp down on the Internet especially since the emergence of Wikileaks.
5. Never have Americans been as dependent on government. When government withdraws from this level of support, it will fuel unprecedented anger since people will have nowhere to turn. This reaction will create more authoritarian policies.
6. This is not a prediction but a consideration. As government finances become more strapped, there may be calls for a change in retirement plans with government taking a more active role in sponsoring annuities (The Sentinel Financial Report Volume 2, Issue 12) or outright financing of government debt with retirement plans (Escaping Oz, page 272). Such government action is not without precedent.
Who wins this battle of authority versus individual freedom is a matter of conjecture. One obstacle to greater authority will be the financial condition of governments. A heavily indebted government won’t have the resources to apply the same level of control with our current economic structure (capitalism). For government to assert ultimate authority will require a new economic and political system. The formation of a new economic or political system will face significant challenges. Technology will also challenge governments. As we have said before in these pages, politics and economics will become inseparable in the years ahead. Don't count on the government Wizards to provide a rescue from the economic malaise. They will have many other challenges besides the economic ones.
Jim Mosquera is the author of Escaping Oz: Protecting your wealth during the financial crisis and is the editor of The Sentinel Financial Report.
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