Immense amounts of ink have been spilled talking about the Tea Party and the causes of the Republican victory - economic distress, Democratic legislative priorities, poor "communication" of initiatives, lack of youth voters, and the like. What you haven't heard about is a changing of the guard, generationally. This will have profound implications for politics and the economy (and macro investment factors) for the next several electoral cycles.
America has at times had major elections which have seen a change in the age of its officials. We tend to notice this more directly when presidential generations change, such as in 1960 or 1992. But Congressional elections have also been subject to generational change, and with it a change in the political tenor of the country.
The Generational Divide
Many people would argue that the boom runs until 1964, when the US Census declared an end to the (demographic) Baby Boom. But researchers Strauss and Howe have made a compelling case that the Boomer psychographic ended at 1961, and that those born after are actually part of a different generation, too young to remember the Kennedy administration or his assassination, and too young to have participated in the counterculture movements of the late 1960s (either affirmatively or in awestruck horror).
Thus, those born after 1960 are part of the famous, and maligned "Generation X". Barack Obama is part of this generation, which has different attitudes towards political warfare: less ruthless and much less committed to destruction of one's enemies. Instinctively, younger voters understood when Obama talked about "change" in politics and about a "post-partisan" climate, that he meant that he was not going to continue fighting Boomer culture wars, he was not going to try and remake the country in his own image, and he wasn't committed to the utter destruction of his opponents.
In short, he wasn't going to engage in the shrill histrionics of Rush Limbaugh or Keith Olbermann: classic Boomers. Instead, he was going to be analytical, thoughtful, reasoned and practical, all classic Xer traits. A welcome change, quite frankly. The one commentator to pick up on this was E.J. Dionne, who noted that Obama's campaign was "waging a subtle fight against a generation - my generation, the Baby Boomers".
The brilliance of the subtle campaign was that most Boomers didn't recognize it. Boomer journalists, too self-focused, and still seeing themselves as the drivers of American culture, and perhaps terrified of the implications for their own longevity, failed to cover it. Thus, many Boomers on the left voted for him, thinking that he endorsed their ends and means, and rejected the symbol of their own generation, Hillary Clinton, who both loved engaging in the politics of personal destruction and who was a classic culture warrior. In fact, much of the anti-Hillary vitriol was aimed at preventing her from becoming a symbol of the cultural change her own generation wrought.
Thus, it is no suprise that much of the frustration with Barack Obama on the Left (or as his own Press Secretary said "the Professional Left") is that he doesn't share Boomer attitudes towards political methods and means, even as he espouses fairly leftist policy. Obama's actual policies and policy priorities were a liberal wish list, and yet the Left is totally frustrated, even as Obama has delivered for them. What he seems to lack is the passionate hatred for people who disagree with him, and the Boomer Left, which controls much of the official political media, see the lack of hatred as weakness, even a betrayal of the cause.
The 2010 Election
If the 2008 election saw the Boomers lose the executive branch, 2010 saw a sharp rise in the number of nationally elected officials born after 1960, particularly in the House.
Entering the election, Boomers controlled most Governors mansions, had a narrow majority of Senate seats (though the Silent Generation held most of the committee chairs), and a solid lead in the House, with the other two generations, Silent and Xer approximately equal in size.
As the nearby chart shows, the Silent generation, which has held political power out of all proportion to its size, suffered major setbacks in Congress, losing 1/6th of its House seats and 8 Senate seats, out of 15 it was defending. Just wait as the next 2 electoral cycles see 20 more members up for reelection: I predict that they will lose more than 60% of those seats.
The Boomers fared better, losing a few governorships and actually gaining Senate seats from the Silent, but Xers made gains across the board, governorships, Senate seats, and big gains in the House, putting them well ahead of the Silent there.
Three additional facts are worth noting:
First, is that the Boomers lost share of offices. The generational research done by Strauss and Howe generational power waxes, then wanes, but once it begins waning, it does not wax again. This suggests that Boomer shares of all three institutions will likely decline in each election going forward. The 2010 election signifies that the high-water mark for Boomer power has passed.
Second, the House usually has the lowest average age of all three institutions, and is therefore the first place that a new generation gains power. While the Xers do not yet have a majority, it is reasonable to believe that they will continue to gain seats in all three areas in each of the next several electoral cycles. Much of this will come at the expense of Silent generationl lawmakers getting very long in the tooth, but as the House races show, it will also come at the expense of Boomers.
Third, while Xers will increase their share of government offices, Boomers may get one more crack at the Oval Office. Governorships are still largely in Boomer hands, which means that despite calls for Xers like Chris Christie and Bobby Jindal to run in 2012, Obama will likely face a Boomer challenger in the general election, and possibly in his primary.
Nevertheless, Generation X is now entering midlife and as the Boomer slide into dotage we will increasingly be confronted with Xer America. It has different outlooks, and different politics, and different economics. It will fall to this generation to decide how to confront America's most pressing problems, and their solutions will have big implications for all of us, not least in our investment strategies.
In future posts, we will examine the quintessential Xer political movement, the Tea Party and will also look at how probable Xer policy will affect the macro environment.
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