|Originally published in the Nov. 2010 Socionomist|
As a recent issue of The Elliott Wave Financial Forecast pointed out, the U.S. elections generated multiple results expected from a partway-down mood. A “throw-the-rascals-out” theme prevailed in the U.S. House of Representatives as the Republican party decisively—even historically—defeated the Democratic House majority. In addition, voters in California narrowly rejected a referendum to legalize recreational marijuana use; who would have anticipated such a referendum just a few years ago? And the Mama Grizzlies led a record number of women candidates to run for Congress. The Elliott Wave Theorist has long noted that successful women in politics, first explained in 1985’s “Popular Culture and the Stock Market,” are often a manifestation of depressed social mood.
Socionomics alone anticipated these types of results years in advance. As mood waxes increasingly negative, we’ll see many more such “surprises” —many of them far more pronounced—in the years to come.
A Major Sea Change in the House
As it was two years ago, “throw the rascals out” was the name of the game in the November elections. This time, however, the shoe was on the other foot. Mood cares not for political parties; what matters is the hunger for change. Such a high number of incumbents leaving office is historically unusual; the last time this many Congressmen were ousted was in 1948, in the midst of a three-year bear market.
Decline in Progress Paves the Way for Women
This year was a banner for women as well, as 298 females made runs for the Senate and House—the most ever. The intensely negative mood near the early 2009 low opened the door for the record number of women candidates. The rally in mood since kept many of them from actually winning, but it won’t be that way once the negative mood trend really gets going. Robert Prechter first noted in 1985 that women often rise to power during periods of increasingly negative social mood. If the trend continues, women should become even more politically visible.
Close, but No Cigarette
Perhaps the most fascinating result from November was the narrow rejection of the marijuana referendum in California. Our call for an end to the Drug War goes back a decade and a half; Robert Prechter first predicted the eventual abandonment of the campaign back in 1995. We have published several articles since then explaining our reasons for the forecast: Negative mood first prompts more prohibition-associated violence, which leaders meet with increased enforcement. As costs and violence increase, society’s enthusiasm for the enforcement gives way and the people begin demanding that the bloodshed end.
Time magazine interviewed the Institute’s Euan Wilson about Proposition 19 a few days before the vote. Regarding the referendum to legalize recreational pot, Time reported, “Wilson says he expects Prop 19 to pass too, noting that although the market has been rising lately, Californians are still feeling the effects of the crash and are feeling ‘desperate, angry and broke.’” The vote was close—54 percent to 46 percent—and many polls ahead of the election showed legalization comfortably ahead. But when push came to shove, Californians just weren’t ready for it. Mood spiked up in the 40 days prior to the election, as evidenced by stocks closing up 25 of those days and registering a stirring net 7.71 percent gain.
Another probable reason that Proposition 19 failed has to do with an egregious provision in the bill: “No person shall be punished, fined, discriminated against, or denied any right or privilege for lawfully engaging in any conduct permitted by this act or authorized pursuant to Section 11301.” The stipulation would have illegalized firing someone for being a drug user. Perhaps a Prop 19 opponent inserted the measure to help kill the bill.
In any case, the referendum itself was a huge step toward the fulfillment of our forecast. It also marks the beginning of the end for the Drug War. Wilson points out, “Even to have a ballot like this—and for it very nearly to become law—is a testament to the powerful change in social mood.” The Institute’s forecast remains: The government will abandon its Drug War during or shortly after the end of the long-term bear market.■
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Most economists, historians and sociologists
presume that events determine society’s mood. But socionomics hypothesizes
the opposite: that social mood regulates the character of social events. The
events of history—such as investment booms and busts, political events,
macroeconomic trends and even peace and war—are the products of a naturally
occurring pattern of social-mood fluctuation. Such events, therefore, are not
randomly distributed, as is commonly believed, but are in fact probabilistically
predictable. Socionomics also posits that the stock market is the best available
meter of a society’s aggregate mood, that news is irrelevant to social
mood, and that financial and economic decision-making are fundamentally different
in that financial decisions are motivated by the herding impulse while economic
choices are guided by supply and demand. For more information about socionomic
theory, see (1) the text, The
Wave Principle of Human Social Behavior © 1999, by Robert Prechter;
(2) the introductory documentary History's
Hidden Engine; (3) the video Toward
a New Science of Social Prediction, Prechter’s 2004 speech before
the London School of Economics in which he presents evidence to support his
socionomic hypothesis; and (4) the Socionomics Institute’s website, www.socionomics.net.
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