Additional References
The Elliott Wave Principle of Human Social Behavior
Electoral Consequences of Social Mood Trends
The social psychology that accompanies a bull or bear market is the main determinant not only of how voters select a president but also of how they perceive his performance. Correlation with the stock market, consumer confidence, economic performance and other measures suggests that social mood is by far the main determinant of presidential popularity.
What a leader does is mostly acausal with respect to the public’s opinion of him. There are two reasons for this fact. First, his actions, despite their endless analysis in the press, do little to affect his popularity. Second, his popularity is dependent upon a social mood and economy over which he can exercise no countertrend influence. If you are new to these ideas, they may be hard to swallow. Aren’t some presidents fools or rogues and others statesmen? Don’t some presidents affect the economy for good or ill? As to the first question, the answer is, certainly there are presidents of high or low character and ability. However, that does not affect their popularity. For example, President John Kennedy blew the only military conflict in which he engaged the country, attacked the steel industry out of pique to no result, and continually committed adultery. He is revered. Why? Because the country was in a state of euphoria for all but a few months of his term, euphoria that morphed three months later into Beatlemania. As to the second question, the answer is, certainly presidential actions affect the economy. However, the president is not the one who is in control of his social efficacy. For example, the laissez-faire and low-tax policies of President Ronald Reagan helped spur the economy in the early 1980s, but they did not help spur the economy in those ways in 1979 because he was not elected in 1976. Social mood called the shots on when it was time for a change. When most of the population wanted lesser taxes and regulation, they got it.
First we will examine the electoral fortunes of some U.S. political figureheads both at extremes in social mood trends as well as in more moderate times. As we shall see, social mood determines their perceived efficacy, legacy and fate.
Near lows of major bear markets, incumbent presidents have suffered their greatest defeats. Apparently, the populace blames the rapid mood change toward the negative and its associated events (such as economic contraction) on the incumbent, so voters overwhelmingly reject him and the party he represents.
For example, Martin Van Buren was ousted by a landslide in 1840 near the low of wave a of (II); Herbert Hoover was ousted by a landslide in 1932 at the low of wave (IV), Jimmy Carter was ousted by a landslide in 1980 near the low of wave 2 in nominal terms and a major low in constant-dollar terms. An interesting victim of dramatic market change to the downside was Richard Nixon. He was elected by a landslide in 1972, two months before the price peak of wave IV in nominal terms, then had to resign his office amidst a barrage of social hatred two months before the price low of wave IV less than two years later.
The extent of the political reversal is related to the degree of the bear market. The most dramatic defeats of incumbent U.S. presidents have occurred near lows within Supercycle degree bear markets. Lesser ones have occurred near lows within Cycle degree bear markets.
The larger the degree of the market reversal, the longer the party newly elected at its end holds power afterward, since that party is credited with causing the turnaround. After the Supercycle wave (II) low of 1859 when a Democrat had been in office, Republicans won six elections in a row. After the equivalent Supercycle wave (IV) low of 1932 when a Republican had been in office, Democrats won five elections in a row. The one-degree-smaller Cycle low of 1828 gave Democrats a comparatively lesser three elections in a row, just as the similar lows of 1896, 1920 and 1980 each gave Republicans three elections in a row. The key determinant is not the politics of the party, but which one is blamed for the preceding downward social mood trend.
The second election in a new bull market produces a landslide in favor of the party, and typically the candidate, already in power. In 1832, a landslide retained Andrew Jackson in office. In 1864, a landslide retained Abraham Lincoln in office. In 1924, a landslide retained Calvin Coolidge in office. In 1936, a landslide retained Franklin Roosevelt in office. In 1956, an electoral landslide retained Dwight Eisenhower in office. In 1984, a landslide retained Ronald Reagan in office. Every one of these was a retention in a new bull market.
In each developing fifth wave of Cycle degree, that candidate’s party also won a third election. In 1836, within one year of the peak of wave V of (I), Martin Van Buren was elected by a substantial margin (though smaller than his predecessor, since the peak had occurred a year earlier), securing a third consecutive term for the Democratic party. In 1928, within one year of the peak of wave V of (III), Calvin Coolidge wisely declined to run (he would have won the election but lost the respect of history), and Herbert Hoover was elected by a substantial margin (a landslide, since the uptrend was still in force), securing a third consecutive term for the Republican party. In 1988, in wave V of (V), George Bush was elected by a substantial margin (though smaller than his predecessor, since a temporary peak had occurred a year earlier), securing a third term in a row for the Republican party. These examples show that fifth waves of Cycle degree to date have guaranteed two additional elections to the recently elected party, usually by large margins. Fifth waves of Primary degree appear to guarantee one additional election.
Presidents are also retained by landslides in elections that take place near major stock market tops. Grant won a landslide in 1872. In 1964, Lyndon Johnson, who had presided since Kennedy’s death, won in a landslide. In 1972, Nixon won reelection in a landslide.
The implication is clear: In the first case, nervous voters want society to “stay the course” in its new-found good fortune. In the second case, they want to maintain the euphoria that they feel at a social mood peak. In both cases, they think that reelecting a president or maintaining a political party will have the desired effect. The cause-and-effect relationship, however, is in the opposite direction.
Nuances
Once again, I will explore nuance briefly, just to communicate how closely history repeats at similar times in the wave structure. As one example, Cycle degree fifth waves have produced a remarkably similar sequence of elections and background conditions in the past two hundred years. Wave V of (I) occurred from 1828 to 1835. Republican Andrew Jackson was elected by a large margin (178 to 83 electoral votes), was retained in office by a landslide victory (219 to 49), enjoyed an endearing nickname, “Old Hickory,” and presided during a debt-fueled speculative boom in stocks and land. He was succeeded by a member of the same party. Wave V of (III) occurred from 1921 to 1929. Republican Warren Harding was elected by a large margin (404 to 127); Calvin Coolidge took over when Harding died in office, was retained in office by a landslide victory (382 to 136 and a margin of 1.9:1 in popular vote, the largest ever), enjoyed an endearing nickname, “Silent Cal,” and presided during a debt-fueled speculative boom in stocks and land. He was succeeded by a member of the same party. The liftoff portion of wave V of (V) occurred from 1982 to 1987. Republican Ronald Reagan was elected by a large margin (489 to 49), was retained in office by a landslide victory (525 to 13), enjoyed an endearing nickname, “The Great Communicator,” and presided during a debt-fueled speculative boom in stocks and land. He was succeeded by a member of the same party. 1988 was the first time that a sitting Vice President was elected since 1836 and the first time that the Republicans had won three in a row since 1928, each of those being near the previous fifth wave peaks of Cycle degree.
If an uptrend in social mood persists for a long time, it eventually becomes taken for granted. Then voters’ patterns change because they no longer assume that they must keep a particular person or party in power to maintain what they now regard as normal conditions. However, they change exactly in a way that reflects their increasing ebullience and confidence as the positive mood reaches extremes. A typical result is the election of politicians more willing to express social feelings of abundance by supporting or initiating social programs. For instance, after electing the conservative Eisenhower twice during the initial phase of a long bull market, the public voted in a moderate Kennedy and then a liberal Johnson near the top. Similarly in the 1980s, after electing the conservative Reagan twice during the initial phase of the bull market, the public voted in a moderate Bush and then a liberal Clinton.
Given that Cycle wave V of (V) is ending a much larger Grand Supercycle, a second president, Bill Clinton, has enjoyed the benefits of an extension of wave V’s debt-fueled uptrend in stocks and land. As befits the relative weakness of a fifth wave of a fifth wave, the quality of the luster is off substantially. He did not win his second term in a landslide, and his nickname is a far less endearing “Slick Willie.” (To see my comments and forecast regarding President Clinton’s fortunes, see Chapter 17.)
There may be a connection between fifth waves of Supercycle degree as well. 1998 has marked the first year since 1928, near the end of wave V of (III), that each of three consecutive elections has produced Republican domination of both houses of Congress.
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