The eternal debate over the economic future of North America has raged for years and seems to grow more intense every year.

On one side are those who believe technological development and demand-side economics can rescue America's and Canada's economies from the destructive force of the economic long-wave. On the other side are those who contend that no amount of government spending or central bank intervention can stop the damaging effects of the long-wave's final descent.

Can the negative impact of the long-wave downswing be mitigated through interventionist economic policies? If so, then how? And what exactly causes the economic long-wave's upswing and downswing to begin with? These questions and more are among the many topics up for discussion in Edward Cheung's fascinating tome on North American long-waves, "Baby Boomers, Generation X and Social Cycles." (Vol. 1, Long Wave Press, 2007; 300 pgs).

There exists much confusion as to what exactly constitutes the long-wave (which some erroneously call a "cycle"). The Kondratieff Wave is perhaps the best known of the long-waves. Kondratieff's version of the long-wave is normally between 50-60 years in length when measured from trough to trough. Cheung's recently updated book, which was first published in 1994, is the first book to relate the Kondratieff long-wave to demographics.

As he writes on page 249, "The primary driver of the long-wave is demographics, as demographics is the driver for social, economic and political change." Indeed, Cheung's book is an in-depth look at the changing demographic profile of North America from the late 1700s through today.

Cheung identifies four long-waves in North American history. The first wave begins ca. 1789 and peaks in 1814 before bottoming in 1843. The second wave begins in 1843, peaks in 1864 at the same time as the U.S. Civil War and ends in 1897. The third begins in 1897, peaks in 1920 and troughs in 1932. The fourth (and current long-wave) begins in 1932, peaks in 1974 and has been on the downswing since then, according to Cheung.

Cheung maintains that each wave can only be understood and properly analyzed within the context of demographics. For instance, the upswing of any give long-wave is labeled Generation B (or Gen-B for short). Gen-B represents the youthful, burgeoning population of any given nation and is characterized by idealism and innovation in the fields of industry, technology, music and the arts. It's also typified by social activism.

The aging Gen-B group and their children, Gen-X, are the dominant population along the downswing of the long-wave. Cheung observes that population declines on a rate of change basis during the downswing of most long-waves. That is especially true of the fourth and current long-wave in North American history (a subject with profound long-term economic implications). Gen-X is also characterized by its emphasis on philanthropy but with less emphasis on industry and greater emphasis on services and investments.

Cheung points out that a substantial part of the down phase of the long-wave is known for its economic prosperity. Contrary to what some long-wave analysts believe, the downswing is when most of the financial speculation and material wealth is manifested within a given population. This is in consequence of Gen-B having worked hard and saved during the upswing of the long-wave and now it seeks a return on its accumulated riches. Interest rates are known to increase on a sustained basis during the long-wave upswing. Conversely, interest rates decline for much of the downswing and equity prices increase.

It's during the final downward phase of the Gen-X long-wave that economic decline sets in. The economic decline that many have predicted to begin with the retirement years of Gen-B between 2010 and beyond is of obvious concern to long-wave analysts. Cheung also weighs in on this important subject and provides suggestions for how the negative economic impact of retiring Baby Boomers can be mitigated.

Besides being a good analyst of economic and social cycles, Cheung is also an able historian. He walks the reader through some of the most intriguing epochs in North American history, providing context for these historical peoples and events within the various phases of the long-wave. Among the wide array of historical topics covered by Cheung are prohibition, wars, religious crusades, social movements and musical trends.

Of course the most notable aspect of the long-wave is its inflationary and deflationary impact at different times along the wave. The upward phase of the long-wave is marked by rising inflation, while the declining part of the wave is marked by deflation. The inflationary aspect of the long-wave coincides with population growth, the defining characteristic of the long-wave upswing according to Cheung. Inflation is seen in the form of increasing wages, interest rates and wholesale prices, as he points out.

One of the most provocative aspects of long-wave history is how monetary authorities always seem to be living in the previous phase of the long-wave. During the inflationary period of the long-wave, economic policy tends to be geared toward combating inflation. During the deflationary phase of the wave the focus is invariably on fighting inflation. In other words, monetary policy is always backwards and tends to focus on the problems of the *previous* phase of the long-wave instead of the current phase!

Cheung observes, "For nearly two and a half decades after the Great Depression, economic policy's central theme was one of preventing depressions. After the inflationary bout of the 1970s, fighting inflation has been the priority of economic policy for nearly three decades. Currently the inflation rate, interest rates and wage increases are at the lowest level in many decades....As long as wages and the economy retain the current growth rates, those that are employed will continue to have a rising standard of living."

Now that we're in the deflationary phase of the fourth long-wave identified by Cheung, we're witnessing effects typical of the downswing. Most disturbing, according to Cheung, is the trend toward population decline on a rate of change basis. "The birth rate and marriage rate are currently the lowest in recorded history in North America, which does not bode well for our future or our economy," Cheung predicts of the period beginning with the Baby Boomers retiring in 2010 and beyond.

"With the long-wave," he writes further, "we have precedent for understanding historic relationships and for understanding the future....The long-wave is a powerful tool for understanding social change and the hundreds of seemingly disparate events in dozens of countries over thousands of years. In the absence of controlled scientific tests in the social sciences, the long-wave ranks among the best of the social science methodologies." Cheung notes that the primary driver of the long-wave is demographics. Demographics in turn are the driver for social, economic and political change.

"Increasing population growth supports a technologically and politically progressive society," writes Cheung. "Declines in population growth are followed by conservatism and economic decline." He continues, "A stable or declining population will mean less demand for products and services and consequently no need to build new factories, downward pressure on prices and wages and a lower standard of living."

If there is any shortcoming to Cheung's work it is in the absence of a detailed discussion of the global economy and what it could mean for our standard of living in the years ahead. More importantly, what effects will the nascent international economy have on the North American long-wave? Will it change the "rules of the game" so to speak? Or will its effects be largely negligible in the face of long-wave deflation in 2010 and beyond? A more detailed discussion of the wave-altering economic impacts of immigrant populations in North America in relation to our current position in the long-wave would have also been welcomed.

On the whole, Cheung's broad survey of North American history within the context of the long-wave is a powerful statement of the cyclicity of events as governed by the waves. It is a validation of Solomon's wise observation in Ecclesiastes, "That which hath been is now; and that which is to be hath already been; and God requireth that which is past."

Or as Cheung puts it, "Not all society will follow the same cycle, but all societies will have a dynamic within their demographic composition. The cycles themselves will ebb and flow, appear and disappear, as societies move from new to old."