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Monday, June 10, 2013

Are Things Improving?

A long time ago, I was a graduate student at Boston College. One day before class, I visited the main library to get some reading done before a two hour seminar.  Two aging professors were talking and one said in a stage whisper, “History. It is nothing but a chronicle of human misery.” His companion nodded and said something to the effect that human history was a veritable cesspool of war, violence, ignorance, malnutrition and disease. I had just finished a wonderful article about the prospects for the home computer industry and was quite upbeat (wow, was the forecaster correct! ).  I packed up my things and scrambled over to the business school library where I found more positive company.

Every now and then I think of those two old academics. They were so sour and, if they were historians, they were poor ones who did not look at the facts. As the human story progresses onward things tend to get better for more people almost every year. I still monitor lifestyle progress around the globe and I have observed that many analysts oversimplify it. They focus solely on median income and/or GDP as the only real indicator of progress in a nation. So East Asia performed a miracle in the last quarter of the 20th century with GDP growing at 6-7% compounded. I vividly remember the day when the Wall Street Journal reported that Singapore passed Italy in wealth.

To me, the money issue is important but it does not capture everything. Even countries in Africa that have shown almost no significant income gains in my lifetime have made big strides in education and healthcare. Infant mortality has been halved across the world, 80% of children globally now get diphtheria shots and diseases like polio and smallpox are very limited and being snuffed out thanks to generous western donors.

Education is more widespread. I was surprised to learn that the first places in the world with free universal education were Connecticut and Massachusetts in early colonial America (circa 1640). Now, in Africa, some 48% are in school which is a huge improvement over the 9% of earlier decades. Even where income has been stagnant for 40 years, health and education continue to improve.

At the end of the day, people always report that the bottom 10% of the world’s people earn only .6% of the global income. This does sound out of whack but may well improve in the years to come. Corruption in many countries also holds a billion or two back as the few on top take a great deal for themselves. Despite this, countries with the lowest quality of life are making the fastest progress. Although not consistent many are getting civil and political rights for the first time in history and also more access to infrastructure as many leave rural areas for the cities.

Also, to trot out the old cliche, money isn’t everything. Take Southern Europe, for example. Right now, Portugal, Spain, and a certain degree, Italy are struggling economically. Yet a Southern European laborer or farmhand still has love, endless sunshine, music, wine, laughter, and recreation that is far more within his reach than a middle income U.S. functionary in Detroit. Who is really living better?

When you look at lifestyle data some strange things emerge. The weirdest that I have ever found was looking at comparative health care. About seven years ago, the United States was spending $5711 per capita on health care while Costa Rica was spending approximately $305. Median income in Costa Rica was one-fifth that of the United States. Yet, Costa Ricans live two years longer than Americans even though we earn five times as much and spend at least 20 times as much on healthcare. Is it that people there have less stress than Americans or that their air is purer? Or, is our diet that is heavily laced with soda-pop, doughnuts and fast food partially responsible? Go figure.

Ask an economist about all this and he may give the cynical answer that if you want to be rich someday, be born to rich parents in a rich country. It is hard to argue about the leg up that can give one.

All of this means good things for advertising and marketing going forward. As we have said several times in this space as the middle class grows globally, established US brands, especially iconic ones will have the wind at their backs. Global ad agencies will prosper as will well positioned media companies. American-only agencies will be fighting for a smaller share of the global marketing pie and need to be prepared for it.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

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