Sunday, May 17, 2015

The Retail Revolution--An Update

As online sales have grown, it seems that retail forecasts have gone from one extreme to another. One camp simply says that retail is essentially dead while the other much smaller group claims that conventional retail will bounce back when our sluggish economy starts hitting on all cylinders again. To me, they are both a bit off the mark.

Recently, Forrester Research, the new media watchdog, has forecast that by 2018, online sales will be 11% of all retail sales. This would mean that over the next three years online would grow by 9-10% each year compounded. That is slower than in previous years for sure but keep in mind that online now starts each year at a significantly higher base than it did several years ago. Also, few are forecasting very strong growth in our GDP. Most analysts would be happy with 3% in 2015 and 2016 and right now it looks as if we might not get that.

Online sales have grown in amazing ways. For years many thought that Amazon would thrive selling only books and music. Well, many of us had it completely wrong. Sales keep soaring as increasingly people are using online as their new mall.

Speaking of malls, I have seen talking heads on both CNBC and Bloomberg say that all malls will disappear in the next 15-20 years. Cooler heads say that many are in trouble but about half will survive. A long time ad agency executive who has covered the retail beat for a generation said this about mall closings: “Yes, many will not survive. Those that will are the malls that cater to the upscale. Here is my acid test for the probability of a mall’s survival--if a mall has a Neiman Marcus, Sak’s or Nordstrom as their anchor store(s), the odds are good they will survive. Some will even get stronger.” He went on to quote a statistic that many of us have heard repeated a great many times recently--”The top 10% of American households in terms of household income are responsible for 45% of total consumer spending. Malls that cater to them have solid prospects for the long haul.”

I asked another outspoken analyst about Wal-Mart and its struggles of late. He said simply “About 50% of Americans are REALLY struggling financially right now. They are what people call the Wal-Mart nation. About 20% of Wal-Mart’s base in currently on food stamps. Sadly, these people just do not have any money. So, amazingly, Wal-Mart has gotten too expensive for them. That is why I believe the “Dollar Stores” have seen a big uptick in growth. They are the default option for the bottom portion of the bottom 50%.

Besides the high end stores, another source told me that Home Depot and Lowe’s should do well as some people no longer “underwater” on their homes will begin to put some money in to them. He also said TJ Maxx has a bright intermediate future in apparel.

One issue that I have observed of late is that analysts often are not totally in tune with the habits of the young adults. A young lady told me that she loves shoes. She literally visits Zappos (the online shoe store owned by Amazon) daily and every two weeks has them send her 6-7 pairs of shoes with a free return policy. When I asked if she thought they might be annoyed with her she smiled and said, “I buy at least two pairs per month. I am a great customer.” Showing my age I asked her if her boyfriend/fiance is comparing her to Imelda Marcos. She scrunched up her face and said, “Who is that, sir” (If you are over 50, you probably get it).

Another young adult told me that she orders all household cleaning products, toothpaste, even soap online. Every couple of months a case of Dove soap arrives at her doorstep. When I asked why she just did not go to Target or another big box retailer she said, “Why should I waste the time? They deliver right to my door and often I beat the sales tax.”

These young adults grew up on the web. Yes, some people like to shop and some do not. Getting basic items like soap or detergent online can certainly save you time. Younger people who are addicted to apps now often order coffee on Starbucks Mobile in several cities. Delivery men on scooters often take a fresh cup of java or cappacino right to you. Uber is now experimenting with delivering restaurant meals in a few cities. Very few of these millennials will ramp up their mall or store visits once they have completed most of their early purchases online. So, the brick and mortar base is aging.

All this has several implications for the retail landscape:

1) Many thousands of service jobs can be eliminated as online buying gains more traction. You also do not have to pay people as much in a warehouse fulfilling an order at 2:30 am as you do someone working on the floor of your brick and mortar store. No commissions to pay either.

2) Entrenched brands have to benefit from the online trend. Unilever must be thrilled with the young lady who buys her Dove by the case. She never does comparison shopping. Her lifetime value to them has to be huge. If they do line extensions, they can send her an online coupon in with her bi-monthly Dove order. So, as online grows, it may be harder for new products to enter many categories. The big will likely only get bigger.

3) Conventional media especially local TV and radio stations have to lose here. If speciality stores in malls (who pay most of the rent) continue to go under and retail continues to stumble, where will their revenue come from going forward? I think and have said for years that TV in particular will become much more of a direct response medium than it is today.

Are retailers aware of all of this? Ignore what they say and watch what they are doing! I have poured through a number of annual reports of publicly traded retailers and all are devoting a great deal of R&D funds to online business development.

Finally, whenever you look at the issue, remember to do fair comparisons. Total volumes of retail dollars can be deceiving. People who buy cars do not (yet) buy them online nor do they buy the gasoline that they put in them via their laptop or phone. Yet, figures for those two items are often included in retail sales. We will likely sell 16.5 million cars and light trucks in the U.S. this year. That is great but they are not competing with online as malls and specialty shops are. So, be very careful when doing comparisons.

Retail has always been a tough game. It is about to get a lot rougher.

If you would like to contact Don Cole directly, you may reach him at

Saturday, May 9, 2015

Demographics and The Global Economy

As many regulars readers of Media Realism know, I have spent a good part of the past few decades keeping an eye on demographic trends. To me, demographics are an unstoppable tidal wave that determines a great deal of future events. In this post, I will address an issue regarding the global economy that I have hesitated to discuss until now. Essentially, it is that due to demography, there will be a glut of workers globally going forward.

How did this happen? Way back in 1980, there were approximately 1.7 billion people  around the world getting paychecks. Most of the rest of the world lived as subsistence farmers. They were living lives similar to medieval peasants. Some 48% of the global population had never had so much as an aspirin. And, forget about cell phone penetration.

With the fall of socialism particularly in Russia and China, there was an economic liberalization. By 2010, there were 2.9 billion workers drawing paychecks. Urbanization grew like wildfire especially in Asia and 900 million new non-farm workers entered the labor force (see Media Realism “Urbanization, Globalization, and Media, 5/22/12). Some 400 million were in Russia and China alone. As people streamed to the cities, many millions were lifted out of poverty and many joined the global middle class.

Many companies did very well with this new urbanization. Personal care product companies had an especially strong run as the amazing lifestyle changes for individuals who went from farm laborer to factory or office worker allowed them to use heavy quantities of soaps, toothpastes, and cosmetics. Yet, consumption of goods never seemed to match the forecasts of many economists.

Why? Here is my theory. In all of these countries that have exploded in worker growth--China, Russia, India, Indonesia, Philippines, Malaysia, Vietnam and others, there is no government safety net that most western nations have had for decades. Unemployment insurance, welfare, food stamps and other transfer payments largely do not exist in the emerging world. So, when a young person moves from the rural farm to the big city, they are very conservative with their spending. They know that they could lose their job and would then be on their own. In some recent years, China has experienced a savings rate of over 20% and Chinese companies have retained earnings that are much, much higher. This reality of a high savings rate is not without precedent. If you look at savings rates in the United States going back to 1789 and all through the 19th century, rates were often in the 10% plus range. Americans knew that employment was tenuous and they saved as a hedge against bad times. Also, in the late 19th century, when earnings went down, factories or industrial companies often cut wages of their workforce on a temporary basis.

Today, with globalization continuing to march (see Media Realism “Globalization and Advertising”, 9/9/2011), more workers are entering the work force daily. As these millions of largely unskilled workers enter the workforce, they are a real drag on global wages. Long term, this has to exacerbate income inequality even more as business owners can move plants to markets with a friendly wage climate. By 2030, THE ECONOMIST magazine has projected that 3.5 billion workers will be seeking weekly paychecks. This fierce competition among laborers for a slot in the middle class world has to put a damper on wages.

Adding fuel to the fire is the robot revolution. Increasingly, companies are using robots to do jobs that have previously been handled by unskilled labor. In mining, an industry will some skilled workers, big players are experimenting with robots which will lower costs and add to safety. It will also eliminate hundreds of thousands of good paying blue collar jobs.

In the U.S. and other parts of the western world, we have faced a dilemma since the Great Recession of 2008. Politicians rail about how education needs to be upgraded so our youth will have skills that will prepare them for the future. A lot is said but little has been done.

With regard to the economy, governments including ours in the U.S., seem to be relying on monetary policy to correct problems. Most of this is with interest rates near zero along with some money printing by the Federal Reserve. To me, this is a lot like fighting the last war. We are in a tight spot. The world has changed and globalization is very real. For example, if the Federal Reserve starts to ratchet up interest rates and make them more realistic (not at near zero), what may happen? Europeans, who now have negative interest rates, will flock to the dollar and bid the price of it up. That is fine for those of us who like to vacation in Europe. American multinationals will get hurt as American products will become more expensive across the world and they will not be able to compete as effectively as in the past.

What to do? That is way above my pay grade. Here is one idea that is discussed but little has been done. We need to make America and Americans more competitive. One thing that is clear is that the U.S. infrastructure is in very bad shape. Roads, bridges and airports are in disrepair (my last several trips overseas were telling as virtually every airport I have used was in better shape than any American counterpart). Municipal water  facilities are in terrible condition and need an upgrade.

Interestingly, China spends about 9% of Gross Domestic Product on infrastructure while the U.S. spends approximately 3%. Admittedly, the Chinese are starting from zero in some provinces yet the gap in alarming.

I have never been a fan of deficit spending but it is going to happen anyway. So, why not upgrade our American infrastructure? Candidly, despite comments from some of my libertarian friends, this has to be done by government at all levels with the exception of an occasional for profit toll road. A massive effort such as winning World War II or putting a man on the moon in 10 years is needed. America would be much more competitive with a total infrastructure overhaul. Additionally, millions of jobs could be created and many young people could learn marketable new skills. And, being fiscal rather than monetary policy, it would not have a detrimental effect in global markets.

The global workforce glut is not coming. It is already upon us. If we do not acknowledge it, things will get even worse over the next 15 years.

If you would like to contact Don Cole directly, you may reach him at

Wednesday, April 29, 2015

Demographics, Ad Folks, and Real Estate Prices

There are currently approximately seven billion people on earth. The wealthiest 9.5 million (less than .2%) control about 26% of the assets given recent prices on global bourses. Many people will rail about moral issues for allowing so much of the wealth being controlled by so few. Today, given some recent mail that I received, I would like to address it regarding real estate prices.

When you travel at all, you find that marvelously attractive places to live have become very expensive. London and Paris apartments or homes are sky high in price. Foreigners often swoop in and buy apartments as a hedge against political unrest at home. It is one thing to freeze a bank account but quite another to take back foreign real estate. This scenario is playing out in North America in New York and in Vancouver.

Have you ever read the polls on great cities to live and work? Often, they highlight Geneva or Zurich, Switzerland, Sydney, Australia and Singapore. Check out the cost of a house or a decent apartment in those cities. Those places have become havens of the rich or lucky locals who have been there forever.

A number of Media Realism readers have mentioned to me in e-mails in recent months how they are struggling to find an attractive place to live with job possibilities and lifestyle appeal that is also affordable. With their permission here are a few highlights:

From New York a mid-30’s creative writes: “I am tired of living like a graduate student. My bandbox of an apartment is costing me a fortune. New York is great culturally but there are many things that I cannot afford. I want to get out and work in a city where I can buy a decent home. My career will not progress as well but I have been marking time financially for a dozen years. I also love the outdoors. It takes too long to get away here.”

A young German ad man wrote to me recently saying that he was weary of living in his small apartment and paying high rent for it. He was seeing if he could relocate to an agency in either Berlin or Vienna where he could live better and finally accumulate some capital.  I had heard that Vienna was a relative bargain for apartment rentals but Berlin came as a surprise. The truth is that Berlin has been aging for years, has a stumbling infrastructure and a low cost of living by European standards even including food. Other Europeans say that northern Portugal is the best value in western Europe but there are not good agency or marketing jobs there.

A just retired midwesterner says: “For years I bounced around Chicago, Milwaukee, and Minneapolis. I am looking for some place warmer. Property taxes are killing me as are fuel bills. I want to sell my place here and live in a milder climate. Florida has little appeal to me and neither does rural Arkansas or Louisiana. I just would not fit in there. What I am willing to do is live in a place with fewer amenities if I can find a handful of like minded people for friends. Maybe a Texas town would work. I just do not understand why kids pay so much for a roof over their heads.”

A Bay Area ad guy writes, “About 10 years ago a buddy asked me to join an agency in Seattle. I believed all the nonsense about rain and stayed here. Now I can barely cover my studio apartment. The city is great but I will never own a house here. And, today, I missed the boat on Seattle real estate as well. I would like a bit of “elbow room” and I doubt if I can ever get it. Marrying a rich woman is my only hope.  :)

“I now commute 45 miles in horrendous Atlanta traffic,” a sales pro writes. It is exhausting. The work is fine and I really like my boss but my quality of life is miserable. By Friday night I am totally wiped out. I need to move to a smaller city where I can afford a nice house close to work. Are you listening Cleveland companies?”

As income inequality grows, this issue has to loom larger. There is considerable cheap housing in America but how many marketing professionals would be comfortable living in rural areas of West Virginia, Mississippi, or Nebraska? True, in the digital age, some people can work from afar but not everyone can. One young writer tells me he has been trying to work out a deal where he can live in upstate New York and buzz in to Manhattan every few weeks for a day. That sounds great for him but he must have a proven track record for his company to even be able to consider such an approach.

Retirees seem to be in the same boat. Besides my midwestern friend above, several have written to me saying they want to cash in on their home equity and move someplace far less expensive. They all appear to have one thing in common--they do not care about great healthcare (surprising) or schools (their kids are grown) or even much in the way of cultural activities. They simply want a bit more money in their pockets each month. With cable or a satellite dish and a few friends, they seem to think that they can manage.

This is a trend that is worth watching. We all read or hear stories about the joys of moving to Mexico or Costa Rica. When you dig a bit, it is a mixed bag. Many Californians who live within 100 miles of the US border in Mexico have found that life in demonstrably cheaper there. Other worry about crime and some say it is how you behave with the locals that is what makes a difference.

Where will these people young and old go who want a bit more living space and will cheerfully give up some amenities? It is a big country and there are bargains out there relative to New York, Boston, Los Angeles, San Francisco and Washington, DC. It will be curious if tele-commuting will accelerate a trend away from our expensive cities over the next few years.

If you would like to contact Don Cole directly, you may reach him at

Monday, April 27, 2015

I Am Not Pro-Business

Several years ago, during the worst weeks of our economic crisis, I was discussing the difficult financial situation that America was in with a business man. At one point, he said, “You have to agree with me on this. We are both pro-business.” I smiled and said, “Maybe you are, but I am not. What I am is pro-free market.” My acquaintance said, “They are the same thing.” A lively exchange followed and he just shook his head at me.

What was going on? Some of this may seem like semantics but I sincerely believe that it is a big part of the problem these days. A free market or pro-market person such as myself wants a society that fosters free and open competition and free entry and exit in all industries.

Pro-business, to me, in recent years, has sometimes taken on a connotation that is incompatible with free markets. The great Nobel Laureate Milton Friedman put it succinctly when he wrote, “Business corporations are generally not defenders of free enterprise.” Friedman went on to say that many corporations have become addicted to some form of corporate welfare.

Large established corporations have significant lobbying presence in Washington, DC. Lobbying is considered as being pro-business but I would argue that it is not often pro-market. Most of the time it is arguing in support of existing well entrenched businesses and asking for special favors. Sadly, often the support they desire from government is to throw up barriers to competition, both domestic and foreign.

In a free market, if you continue to lose money, you go out of business. You either get better or a lot better at what you are doing or some other entity comes along and takes your place. Free marketers are often called hard hearted when they talk of the “cleansing effect” of recessions. What they are saying is that inefficient producers or service providers are weeded out in a weaker economy. The fact is that most new businesses fail and it has always been that way. A free market if truly free does not protect a company from losses, competition or even bankruptcy.

Former Federal Reserve Chairman Paul Volker (a man whom I admire greatly) said of financial institutions after the 2008-2009 debacle, “If you are too big to fail, you are too big.” Will America learn? Or, will the next time we hit crunch time the established players with their well oiled machines lobby hard for support under the guise of being “pro-business”?

Capitalism or the free market is not failing. What is not successful is capitalism as we now know it which is a pro-business agenda that props up the large and often inefficient players.

If you would like to contact Don Cole directly, you may reach him at

Tuesday, April 21, 2015

Musings on Online Education

Online education has been getting attention lately and many people ask me about it. So, today, I will give my take on it (on the college level) which may vary a bit from what you have generally read or heard.

There is no question that online learning is going to grow. It is very inexpensive for colleges and universities to get in to it especially compared to the current standard classroom courses. Imagine the operating leverage that a school gets! One could add 100 students to a course who are paying full tuition and all that the school might have to do is add a graduate teaching assistant to help grade papers. No use of tight classroom space, no heat, no electricity in that scenario either. The sales pitch is that many people live too far from a university to attend class in person or are consumed by their jobs during the week. So you may still obtain a degree in the discipline that you desire and you can work where and when you want often at your own pace. The appeal is clearly very strong for cash strapped institutions to get involved in a big way by providing a wider net for their universities. Here are a few of my views on online education that I have not heard much about from others:

1) Online education is a godsend to VERY motivated students but not to indifferent ones. Imagine this scenario. A young man from North Dakota gets an economics degree from school in Wisconsin. While there he takes an elective in History of Economic Thought and loves it. He badgers his advisor who arranges for him to take an independent study that allows him to dig deeply in to the work of Adam Smith, Thomas Malthus and David Ricardo (all early Classical Economists with Smith being the giant). The next semester he graduates, returns home, and helps Mom and Dad run their ranch in rural North Dakota. He would like to pursue study of History of Economic Thought but there are only six or seven schools left who confer graduate degrees in the discipline and several are outside the U.S. He continues to read omnivorously about the topic and spends a vacation in London sitting in on a symposium on the work of Carl Menger, considered the father of the Austrian School of Economics. His mother thinks that he is nuts but his father encourages him and the young man’s work at the ranch, which, he will one day inherit, is exemplary. To his great delight, one of the schools that he would like to attend suddenly offers an online graduate program in History of Economic Thought. He is accepted and loves it. The professors are amused by his constant questions and e-mails and more than floored by how much background reading that he has done on his own and continues to do for their courses. For this lad, online education has been great and he is the perfect candidate. He can continue to be an emerging wealthy rancher while he simultaneously becomes an economics scholar. Without his online education, he would be self taught but there would likely be gaps in his learning unless he put forth an absolutely Herculean effort.
2) Recently, while walking the halls of a university classroom building, I overheard two students talking. One asked the other how the semester was going. “Great”, the young man replied. “I am taking three courses online, am not doing a damn thing, and so far I have all B’s.” Clearly, he is not as motivated as my mythical North Dakotan and few are. He sees his online courses as a great way to be a slacker. If one does not sit down at the screen and stay a while regularly, the online experience will not be worthwhile.
3) Some people tell me that the existing faculty at most schools will put up roadblocks to growth in online courses as they fear for their job. True, if online really catches on in education, fewer professors will be needed. This may especially true in foreign languages where introductory courses lend themselves to video and audio presentations that resemble programmed learning. Yet, on balance, I feel that these attacks on faculty are largely mean spirited and made by people who have never taught a college level course. There will be adjustments, however. Professors who lecture with notecards yellow with age will have to adjust to a new way of teaching. A bigger and trickier roadblock with be with accrediting bodies. Will credits be transferable to other institutions are among the issues that need to be sorted out and carefully.
4) Professors, and many will hate this analogy, will have to become “coaches” or Chief Motivating Officers in students lives as online education gets more traction. The caliber of online materials is constantly improving but the students still need direction and guidance even from people whom they may never meet in person. Ideally, professors should be major motivators now.
5) How will elite institutions react to online education as it grows? Some were involved in early experiments but will they embrace online learning significantly? Consider Ivy League giants Yale and Harvard. Or, how about our best liberal arts elite colleges such as Amherst and Williams? There is tremendous cache to going to these four schools largely due to the exclusivity of each. Graduates tend not be simply big donors--they are often huge donors. Contacts made at these schools help people for their entire lives. Will the alumni who write the six and seven figure checks continue to donate if THEIR schools become democratic and have thousands of enrollees from developing countries or a handful who never leave their holler in West Virginia? Look at what Starbucks is doing with Arizona State University. Thousands of baristas who stick to it with true dedication will get degrees largely financed by their generous employer. And, some will never have to leave Dayton! It is those type of schools, not in the top tier, that may use online most for the  immediate future.

That’s how I see it. I would love to hear your take on it.

If you would like to contact Don Cole directly, you may reach him at or leave a comment on the blog

Sunday, April 12, 2015

Things I Have Learned and Observed

A few weeks ago, a young adult approached me after a lecture and asked me a provocative question. He said, “Could you tell me the most important things that you have learned over the years?” I tried to put him off by saying something to the effect that  the older I get, the more I realize how little I know. He was persistent and I told him that I would get back to him. So, over recent days, I have mulled over the question very carefully. I will avoid the cliches such as “honesty is the best policy,” “to thine own self be true,” and “work hard, it pays off.” The cliches are all true but here is a list that you may not have thought about:

1) Markets always go to extremes--as l look back it does not matter if one is talking about the real estate, stock, commodity, oil, or broadcast marketplaces, they always seem to go from one extreme to another. I vividly remember 1974-1975 recession when we suffered through inflation, interest rates and possible impeachment. TV prices plummeted but in 1975 roared back with 50+% gains in some spot TV markets. Jump to 1999; radio broadcasters were stamping availabilities saying that their rates were valid for only five days and strange new tech companies were appearing on billboards in top 10 markets. I remember remarking in a client meeting that, “the media market was a balloon in search of a pin” (not original with me, of course) and was met with a roomful of people all shaking their head no. Several weeks later in early 2000 I had relocated to Atlanta and The Super Bowl advertising that year had many new entries among national advertisers that had recently completed Initial Public Offerings (IPO’s). Some of the commercials were so obtuse that you had no idea what the company did. That was the last straw for me. Soon after, the dotcom bubble burst. It was years before you could bring the internet up with smaller clients as many had lost personal funds in the debacle. So, the moral is regardless of market, to get skeptical when people say it can only go higher or, when it has fallen sharply in value, some will say that it can never bounce back. Asset values will fluctuate--always.
2) Demographics drive the bus in most cases--To me, this is the most powerful trend in existence. It is, to me, a tidal wave that cannot be held back. Many people tell me that Europe will bounce back from their current malaise. I agree that rallies can occur but many countries have severely aging populations who will put a damper on growth and strain finances with enormous increases in entitlement expenses. Declining populations have consequences! China faces the same problem with their one child policy in many provinces and Japan is also getting very old. Governments can try to stimulate business, tax less, tax more, even encourage having more children. Yet, the die is cast for many countries. As nations get older there will be fewer entrepreneurs and fewer opportunities for vibrant growth.  So watch Asia ex Japan and selected countries in Latin America and perhaps parts of Eastern Europe. That is where the action is going to be. It seems inevitable.
3) Strategists--everybody and his brother seem to be positioning themselves as strategists. In the last 40 years, I have only met a handful of people who deserved that title and they were worth their weight in gold. Many dubbed as strategists do not know the difference among a strategy, objective or a tactic yet they are called marketing or advertising strategists. Truly, titles do not make the man or woman!
4) Geniuses--people often ask me what it must have been like to be surrounded by geniuses having worked in advertising and marketing for so many years. The truth is that I worked with smart people, clever people, many quick with a line or an ad-lib but I never worked with a genius. There was never anyone that I was in awe of despite my long years at the game. The atmosphere was invigorating and fun many times but genius? I just did not see it. Sad but true.
5) Read and read some more--I tell this to all young people who will listen. There is truly great material out there and, if you are willing to put the time in, you can learn and understand a great deal. It still stuns me how little people in business read about their industry even though they are committed to spending decades in it. If you have no interest, get out and do something you enjoy. Charlie Munger, Vice Chairman of Berkshire Hathaway, was once asked what people might find surprising about his business partner, Warren Buffett. Munger said, “You would be amazed at how much Warren reads.”  I also tell young people that if you keep on top of your industry, you will likely have great success as most people will not read much. You do not have to be overtly competitive in most businesses. Being better informed gives you a huge edge. To people who tell me that they have no time to read, I always suggest that they unplug the TV.
6) Superficiality--it is rare for marketers or ad agency people to do a really deep dive on a topic. And, the few who do are often stifled because their management may say, “Just give me the bottom-line.”  If you boss is older, put your ideas in a report or lengthy e-mail. They will likely read it. I learned the hard way to give 30 second answers to a tough question and then followed up with a detailed response in writing. Some issues and problems are just plain complicated. The one minute manager approach is not always the best.

I have a fistful of other issues on this topic that I may include in a future post.

If you would like to contact Don Cole directly, you may reach him at

Thursday, March 26, 2015

American Optimism

About five years ago, I was driving on an interstate after a long conversation with a friend who is far more liberal than I (not hard).  He went on a long harangue about drought, possible global famine, income inequality, inevitable economic decline and global warming. We agreed on climate change except that I said he needed more faith in technology. Solar and wind energy were renewable and virtually pollution free and were becoming more efficient each year and the energy companies were using high tech to find fossil fuels. He shook his head and essentially said that America was doomed along with most of the planet.

Driving along, I noticed a bumper sticker on a car in front of me. It said, “Annoy a liberal. Work hard and be happy.” I laughed out loud but it made me think. People left of center tend to be more negative than those who are apolitical or center-right. Most Americans do not sit around moaning. They get up each day, do their work, take care of their families and are not bitter.

What is it about Americans? I dug up a fascinating study that was undertaken in the dark days of the Great Recession (2008-2009). The Harris Poll in a joint venture with the prestigious Financial Times of London (the salmon colored newspaper you may notice at upscale newsstands) found in December, 2008 that the French (63%), Italians (62%), Spanish (59%), Britains (58%) and Germans (52%) were pessimistic about their economic situation. What about Americans? At the time, unemployment was 11.8% which was just below one depression benchmark of 12.0%. Some 54% of Americans were OPTIMISITIC about their economic situation even though we were in the biggest economic crunch since the 1933 bottom of the Great Depression.

Recently, I ran in to a financial planner and asked him why baby boomers had not saved much for retirement. Was it because they were spendthrifts or immature? He smiled and shook his head. “Americans do not save for a rainy day because many just don’t believe in rainy days. That is why people loved Ronald Reagan so much. He ran up our debt but his sunny optimism made you feel good about the country and, more importantly, about ourselves. He was America’s cheerleader.”

Separately, I saw an interview a few years back with Richard Gervais, a British comic and sometime writer who created the popular show, The Office. The program originated in Britain and then came to the U.S. in a different format. He said when he came to America, the show had to be adjusted fairly significantly. Essentially, he said it was because Americans were different from the Brits. “Americans are smarter, have better teeth, are more ambitious, somewhat heavier, and the big difference is that you are more optimistic than us.”

Why? Well, we are nation of immigrants and I believe that helps. Someone, maybe far in to the past, came here seeking a better life and many found it. Historically, Americans firmly believe that each new generation will live better than the prior one did.

Now all that has shifted in the last 18-24 months. I see it talking to young people. In front of a large group of 21 year olds recently, nearly 90% felt that they would never receive social security. I tried to explain that to save the system at some point both social security and medicare would face means testing and the rich and very affluent would have social security taxed away and medicare benefits cut severely. Some shook their heads but many ignored me. Several have approached me and said they will never own a home as their student loans will pin them down for the next three decades. The American dream for them is disappearing.

What they fail to see is that good old Yankee ingenuity will triumph. Take three blue chip companies, for example, that some analysts perceive as stodgy. Every year Johnson & Johnson grows their income and increases their dividend via new product development and selling to new markets. 3M is a huge company that consistently comes up with new products that the public wants and their footprint in Asia is unusually large. Or, how about Schlumberger, an oil services giant, that seems to come with one oil field innovation after another and increases the yield from every well their new technologies touch?

Clearly, things are not great right now. Yet, it saddens me to see American youth so discouraged when they have their whole lives ahead of them. And, the media feeds in to it constantly with story after story about how the current crop of college graduates will often not live nearly as well as their parents did. We need to reinstate our 200+ year trend of American optimism. Positive thinking coupled with positive action really works!

If you would like to contact Don Cole directly, you may reach him at