Part of being an informed investor is to understand the influence of cycles on trends. These trends can be financial, or what often drives financial trends, they can be social. In The Sentinel Financial Report, we discuss our social cycle model to give investors a sense of what lies ahead with those factors that influence trends, people. Our anticipation is for a darkening social cycle and one aspect is how government projects its authority.
Societal polarization will manifest with greater displays of authoritarianism. The TSA has been in the crosshairs lately with criticism of the body scan technology. September 11, 2001 will certainly be a day that will live in infamy. That day also marked the start of a more authoritarian U.S. Government with the birth of the TSA and the Patriot Act. The formerly wild frontier of the Internet will see 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.” London is probably the most watched city in the world with over 10,000 cameras watching its citizens.
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. If you think about it, prior to 9/11 we still had the potential terrorist threats and yet no one called for the Patriot Act or the TSA.
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 and the pain of smaller government will be felt by all.
2. The formation of these groups will create a certain degree of “groupthink” with dissenting opinions dismissed.
3. Society will grow to accept authoritarian action in small doses each in the name of keeping society safe.
4. Government will clamp down on the Internet especially in light of recent Wikileaks publications.
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).
Now more than ever, it is important for investors to hang on to what they have in the safest possible vehicles.
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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