Sep 24 2009

How President Obama is Creating the New Space Age

Fear not. The Augustine Commission and Congress notwithstanding, President Obama is setting the stage for the next Space Age. And below I examine 2 specific, well-constrained scenarios, and their dynamics, showing how this is likely to occur.

Norman Augustine, former Lockheed Martin CEO, states we need $ 3 billion more per year to have a viable Moon program. Click augustine.jpg.

It is true that chair Norman Augustine — who’s becoming known as “the 3 billion dollar man” — insists, “The current program that’s being pursued is not executable,” because a return to the Moon requires $ 3 B more annually. It’s also true that in response to an Arizona Congressman (who’s married to an astronaut) who accused Augustine of presenting “a set of alternatives that look almost like cartoons,” Augustine retorted, “I respect your feelings, but I must question your facts.”

But this is all just the usual short-term political stuff.

In reality — as the last 200+ years have shown — extraordinary pulses of activity in exploration and engineering are enabled by reliable, long-term business cycles. And all indicators suggest we’re sneaking up on the edge of another Golden Age of Prosperity, Exploration, and Technology(GAPET).

Typically, during the twice-per-century upswings of the long economic wave and within a decade after a major financial panic (such as the Panic of 2008) and its major recession, we emerge into an ebullient, transformative decade known as a Maslow Window. Perhaps the most ebullient one followed the Panic of 1893 and was led by Theodore Roosevelt: the Peary/Panama Maslow Window from 1903 to 1913. But before that the mid-19th century Dr. Livingstone/Suez Maslow Window produced the “technological jewel of the 19th century,” the Suez Canal, and the famous Lewis and Clark Maslow Window opened the Great Northwest to the world in 1805.

Our most recent Maslow Window — the stunning 1960s Apollo Moon decade — was unique in the last 200+ years in that it wasn’t immediately preceded by a financial panic or great recession. But the approaching Maslow Window, expected to open near 2015, resumed the much more “normal” sequence of the last 200+ years when the Panic of 2008 heralded its impending arrival.

So one key lesson of the last 200 years is: The Panic of 2008 supports our expectation that the next Maslow Window — the next Golden Age of Prosperity, Exploration, and Technology — will open near 2015.

And President Obama is playing a key role in triggering GAPET, although there is understandably a lot of confusion about that, especially among those unaware of the long-term forces that govern the ebullient, large-scale human affairs of Maslow Windows.

For example, shortly after the Panic of 2008, Reagan economist Arthur (“Laffer Curve”) Laffer complained that President George W. Bush “will be remembered like Herbert Hoover…(and that) the age of prosperity is over,” (WSJ, 10/27/08). And others — including Obama — have compared Obama to Franklin D. Roosevelt who was president during the Great Depression. Surprisingly, Keynesian economists George Akerloff (a Nobel-winner) and Robert Shiller don’t think FDR (or Hoover) went far enough:

“Confidence — and the economy itself — was not restored until World War II completely changed the dominant story of people’s lives, transforming the economy.”

In reality, 21stCenturyWaves.com has identified the Great Depression as an example of panic/recessions that occur 16-18 years after a Maslow Window (another is the Great Victorian Depression of 1873); they tend to be very long and severe as the long wave descends. Conversely, the Panic of 2008 is typical of upswings in the long wave that precede, by less than a decade, the transformative GAPET of Maslow Windows. While still an economic crisis characterized by major suffering, the Panic of 2008 had only a small chance (e.g., WSJ, 9/1/09; Allan Meltzer) of ever evolving into a true 1930s-style Depression (e.g., 25% unemployment).

Given the high likelihood of our next Maslow Window materializing near 2015, the key question is: How will Obama create the exceptional prosperity that is the hallmark of such Camelot-like times?

There are basically 2 options:

OPTION I: Obama becomes a 2-term President: He becomes the new John F. Kennedy without the Vietnam-style baggage of LBJ.
Historical/Economic Model: The 1960s Apollo Maslow Window.

Three ways Obama could trigger prosperity are:

a) The recession will end naturally and prosperity will follow.
Post-War recessions have averaged 11.3 months in length (with the longest 16 months) and the current one is 22 months old. Most economists think the economy hit bottom recently and is currently recovering.

b) Obama will “reset” his presidency resulting in prosperity.
Ted Van Dyk, a long-time Democrat and formerly Vice President Hubert Humphery’s assistant in the LBJ Whitehouse, advises Obama to cut back his proposals and expectations (WSJ, 7/17/09):

“You made promises about jobs that would be ‘created and saved’ by the stimulus package. Those promises have not held up. You continue to engage in hyperbole by claiming that your health-care and energy plans will save tax dollars. Congressional Budget Office analysis indicates otherwise.”

c) The Keynesians are right and major government spending and deficits result in prosperity.
For example, according to British Prime Minister Gordon Brown, the idea of slowing major stimulus spending would be an “error of historical proportions,” (WSJ, 9/22/09; B. Stephens). And George Akerloff and Robert Shiller (WSJ, 4/24/09) believe that,

An understanding of animal spirits — the human psychology and culture at the heart of economic activity — confirms the need for restoring the role of regulators as guiding hands in a healthy, productive free-enterprise system. History — including recent history — shows that without regulation, animal spirits will drive economic activity to extremes.

Importantly, an especially intense version of animal spirits (called “ebullience” here) is apparently responsible for the extraordinary exploration and engineering activities during Maslow Windows.

Bottom Line for Option I:
It appears that combinations of b and c are unlikely, but various combinations of a and b or a and c could occur.

In either case, Obama becomes the new JFK. He continues the brilliant, transformative lagacy of Theodore Roosevelt and the Panama Canal, that began with Thomas Jefferson and the Lewis and Clark expedition.

OPTION II: Obama becomes a 1-term president: He becomes the new Grover Cleveland (and possibly LBJ), and leads to a pro-prosperity Republican presidency.
Historical/Economic Model: The Peary/Panama Maslow Window (1903-13).

The New York Times (9/6/09; Richard Stevenson) observed that,

Nearly eight months after the inauguration, the economy … has stabilized sufficiently that the nation is no longer gripped by the sense of urgency that allowed Mr. Obama, almost without challenge, to carry out an audacious act of industrial engineering: reshaping the automobile industry from the Oval Office in a matter of weeks … On health care, he is getting no such philosophical pass … The most relevant political framework instead appears to be a more problematic one inherited from his predecesser: a general loss of faith in government.

On August 21, the Wall Street Journal (8/25/09; William McGurn) reported that,

White House spokesman Robert Gibbs said his boss was “quite comforrtable” with the idea that sticking to his agenda may well mean “he only lives in this house” for one term.

Indeed, if unemployment remains high into 2012, reelection will be a challenge for Obama.

Three things that could hinder Obama’s reelection are:

a) The Stimulus has not worked.
The Wall Street Journal (9/17/09; Cogan,Taylor,Wieland) reports that,

The data show government transfers and rebates have not increased consumption at all … and that the resilience of the private sector following the fall 2008 panic — not the fiscal stimulus program — deserves the lion’s share of the credit for the impressive growth improvement from the first to the second quarter.

And as unempoyment heads toward 10%, Obama’s promise that rapid passage of the stimulus package would keep unemployment below 8% has not been realized.

b) Obama’s economic policy may be fundamentally flawed.

Published economic research by the current head of President Obama’s Council of Economic Advisors — Christina Romer — raises doubts about Obama’s policy of major government spending to end the recession. The Wall Street Journal (8/21/09; Alan Reynolds) quotes Professor Romer’s 1999 study (J. Econ. Perspect.) that between the pre-WW I era and the era of big government (post-WW II), “recessions have become only slightly less severe…and recessions have not become noticeably shorter,” in fact post-WW II recessions are one month longer. WSJ concludes that, based on economic history since 1887, “bigger government appears to produce only bigger and longer recessions.”

If this is true, Obama’s large stimulus/bailout packages and large federal budgets will not stimulate the economy in his first term.

According to William Gale of Brookings,

The budget outlook at every horizon is troubling: the fiscal-year 2009 budget is enormous; the ten-year projection is clearly unsustainable; and the long-term outlook is dire and increasingly urgent.

Add to this White House projections of a 10-year record federal deficit of $ 9 T, and by next decade’s end the national debt will be 75% of GDP, and it’s easy to see why Obama’s job approval ratings have settled into the low 50s.

c) Afghanistan turns into Vietnam.

The New York Times (8/23/09; Peter Baker) has focused on the dangers a protracted conflict in Afghanistan could have on Obama, “The LBJ model — a president who aspired to reshape America at home while fighting a losing war abroad — is one that haunts Mr. Obama’s White House as it seeks to salvage Afghanistan while enacting an expansive domestic program.”

And despite considerable personal popularity around the world, “All that good will so far has translated into limited tangible plicy benefits for Mr. Obama … foreign leaders have not gone out of their way to give him what he has sought,” (NYT, 9/20/09; Peter Baker)

An interesting bottomline emerges:

Re: Prospects for the New Space Age Near 2015:
Based on patterns in macroeconomic data and historical trends over the last 200 years, all realistic roads lead to a 2015 Maslow Window featuring a Golden Age of Prosperity, Exploration, and Technology, although wildcards are possible.

Re: Mr. Obama’s Prospects:
Despite the fact that Mr. Obama is currently setting the stage for a robust, transformative new Space Age within the next 3-5 years, his presidential prospects remain uncertain.

Obama’s long wave timing and election circumstances (i.e., panic/recession) have more parallels with the 1893-1913 Peary/Panama Maslow Window — in which a 1-term Democrat (Grover Cleveland) was replaced by a pro-prosperity Republican — than with the 1949-1969 Apollo Maslow Window of John F. Kennedy. And Obama’s continuing challenges with high unemployment, record deficits, huge budgets, and Afghanistan, pose real dangers for him.

As the New York Times noted and as evidenced by Obama’s descending poll numbers, many Americans are again expressing skepticism about big government and the economy. Obama will have to create prosperity — the cornerstone of the 2015 Maslow Window — and given Obama’s popularity and flexibility, he’s quite capable of doing it.

One response so far

One Response to “How President Obama is Creating the New Space Age”

  1. Stephenon 24 Dec 2009 at 7:42 am

    Hi Stephen,

    It’s great to have someone from Muhlenberg College stop by and comment about the future.

    As an exploration of how the US is going to enter another space age – which is an interesting but ill-supported conclusion – this is a good read. As an explanation of economic trends leading to this conclusion, it is convoluted and somewhat misguided.

    I also appreciated the longer version of your comments but think you might be missing some of the fundamental themes of 21stCenturyWaves.com:

    1) It isn’t really about Republicans and Democrats, because as you say, the meaning of R and D is a function of time. For example, it isn’t obvious if John F. Kennedy could get nominated in today’s D party.

    2) What it is about is America’s fundamental values and prosperity. Every 55 to 60 years we enter an ebullient time of major economic growth (a Maslow Window). In addition to enabling great explorations and MEPs, the widespread ebullience has transformative effects across society, as in the 1960s. But the 1960s were only the most recent example over the last 200 years.

    3) During Maslow Windows, the leader who can best manifest prosperity and model ebullience wins. In the early 1800s it was Jefferson, in the mid-1840s it was James Polk (of all people), in the early 20th century it was Theodore Roosevelt, and in the 1960s John F. Kennedy. My sense is that the long-term economic circumstances do more to determine our leaders than the reverse. (That’s why #1 is true.)

    As I look at economic and technology history I strive to be empirical and to think long-term! Most in the media, academics, and leadership are overly focused on short-term trends and politics. They’re often amazed when the world doesn’t work the way they expect.

    If you can do those two things — stay empirical and think long-term — you’ll have a powerful advantage over others and be more successful. Hope you also keep reading 21stCenturyWaves.com!!

    Best regards,
    Bruce

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