Social Mood Conference  |  Socionomics Foundation

In the years to come, “local” will be the name of the game

Remember when those bright-green “Local” t-shirts first became popular about 10 years ago?

To some people, they gave a weird vibe. Sure, I get it, you’re a “local” and you prefer locally-grown veggies, but I’m from out-of-state… are you wearing that because you don’t like the non-locals?

Turns out, in a way, yes.

To be sure, people in “Local” t-shirts never told anyone to “get out of my town.” But the message on those t-shirts reflected a growing mindset that “local is good, and foreign is bad,” to put it in simplified terms.

Well, today, this mindset seems to have grown to start affecting global trade. Reports the New York Times:

“…despite the noisy debates, which have reached new heights during this presidential campaign, it is a little-noticed fact that trade is no longer rising.

“The volume of global trade was flat in the first quarter of 2016, then fell by 0.8 percent in the second quarter…

“The U.S. is no exception… The total value of American imports and exports fell by more than $200b last year. Through the first nine months of 2016, trade fell by an additional $470b.

“…there are…signs that the slowdown is becoming structural. Developed nations appear to be backing away from globalization.”

Socionomics helps explain why this is happening. As usual, it’s the kind of perspective you won’t read anywhere else.

This excerpt from a study published in the September 2016 Socionomist explains.


Welcome to a Larger World with Fewer Friends: A Reversal in the 500-Year Trend Toward Globalization

By Alan Hall

Socionomists saw the de-globalization trend coming. The June 2008 issue of Progress in Socionomics reported:

Scientist predicts a reversal of the trend toward globalization. Dr. John L. Casti’s presentation at the Cycles and Patterns in Business and Finance Conference depicted and expanded upon Elliott Wave International’s forecast of a reversal in the trend toward globalization.

He explained that as the global mood turns increasingly negative and nations grow more antagonistic toward one another, globalization will wane as trends toward protectionism and nationalism take over.

Social mood regulates our perceptions of other people and our willingness to cooperate with them. Benchmark stock indexes are our best metrics of social mood. When mood trends positively at large degree, stock prices rise and cooperation, inclusion and free trade grow stronger. When mood trends negatively at large degree, stock prices fall and opposition, exclusion and protectionism grow stronger.

The September 1992 issue of The Elliott Wave Theorist described this perennial fluctuation:

Major bear markets are accompanied by a reduction in the size of people’s unit of allegiance, the group that they consider to be like themselves. At the peak, there is a perceived brotherhood of men and nations. … In other words, at a peak, it’s all ‘we’; everyone is a potential friend. At a bottom it’s all ‘they’; everyone is a potential enemy. When times are good, tolerance is greater and boundaries weaker. When times are bad, intolerance for differences grows, and people build walls and fences to shut out those perceived to be different.

A multi-century trend toward positive social mood impelled a widespread vision of the world as an integrated, inclusive, culturally tolerant marketplace. This “everyone is a potential friend” attitude helped produce the greatest level of global interconnectedness and trading activity in history. The phenomenon earned its own name — “globalization.” Globalization may be history’s largest manifestation of positive social mood.

Elliott Wave International’s long-term Elliott wave count suggests that a transition from positive to negative social mood is under way at large-degree. … Negative expressions include closed borders, trade barriers and sanctions, and overt desires for exclusion, isolation, nationalism and populist and authoritarian leaders. Brexit is a recent example. The trend toward negative social mood is darkening the formerly rosy vision of globalization, and groups of all sizes increasingly find fault with the whole idea.

Elliott wave analysis of a 500-year metric of globalization…indicates a major setback is approaching. In fact, social expressions suggest it has already begun. [This] graph depicts world trade activity adjusted for total economic productivity, which is a good proxy for globalization.

globalizatio-chart

We’ve added Elliott wave labels and an Elliott trend channel to Figure 1. Wave I peaked in 1912, and wave II descended until 1946, through both world wars and the devastating Spanish Flu pandemic, all of which were social manifestations of negative mood. Wave III probably peaked in 2008. The Elliott wave model suggests a 38% to 45% decline for wave IV, which would carry the index into the area of the fourth wave of one lesser degree, a common Elliott wave retracement area.

Bottom line,

Large-degree trends toward negative mood [produce] protectionism, isolationism and “the decline of liberalism and the rise of nationalism” mentioned above. If EWI’s long-term outlook is correct, globalization is due for a large setback.


 

Socionomics can offer you a powerful context in which to understand — and forecast — trends like these.

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