Europe’s Uncertain Future

 For a number of years, I have kept an eagle eye on demographics. Trends in demography often remind me of compound interest. Once they get going, they are virtually impossible to stop. With the drop in birth rates across the Western world, Europe could be in for some difficult times going forward.

With many people marrying later than in the past and women experiencing significant self-actualization in the workforce, it is no surprise that birth rates have declined. One powerful way that the trend could be altered quite a bit is with immigration. Allowing others to settle in your fair land eases demographic pressures significantly. Without it, virtually the entire continent of Europe’s native population will fall very sharply for the rest of this century.

The United States has often been described by political scientists as a “center-right” country. Europe’s political mix is a great deal more complicated and many countries (due to the relatively large number of political parties) rule with a coalition government comprised largely of center-right and center-left parties. My reading of what these coalitions seem to be favoring is a need to ease long term demographic realities with an increase in immigration.

This consensus is under pressure in several countries where some right-wing parties (a few extreme) are insisting on big cuts in immigration. They whip up bad feelings against immigrants and ignore that, over the long run, the economy will be stronger with more working-age immigration.

Today, most European countries have what we Americans refer to as “the provider state.” A few disparagingly refer to it as “the nanny state.” 

In the U.S., healthcare costs are a big worry for most Americans as is paying for college tuitions. In Europe, life is largely a less precarious existence as healthcare tends to be universal and college is often free or with very low fees (far fewer Europeans attend university than in the US, however). To cover costs for healthcare and education, Europeans may income taxes at significantly higher rates than Americans.

So, in the decades to come, much of Europe will face a huge problem. With no or few immigrants and a low native birthrate, the working population will grow much older. How can the provider state be maintained? Put simply, it cannot.

Right now, Eurostat, the official statistics agency of the European Union, projects that the EU will see a population drop from 447 million today to 419 by 2100. Eliminate immigration (admittedly extreme), and the population is projected to fall to 295 million by the turn of the next century.

The biggest declines would likely be in Germany, France and Italy where anti-immigration politicians are currently getting significant traction. 

As I type, some 21% of Europe’s population is 65+. Depending on the degree of limits on immigration that figure will soar to 32-36%. 

Taxes as a percentage of GDP tends to be high NOW in those three large European countries but will have to soar to keep the provider state relatively intact. 

Older people will often require care. Some are saying that, with fewer children, you need fewer teachers, so there will be job shifts over time from caring for children to assisting the elderly. 

Europeans, at present, want to have their cake and eat it too. Politicians have gotten a hostile reception when they try to raise retirement age or streamline transfer payments to the elderly.

Clearly, something will have to give. 

Why do I bring this up as an American citizen? We have a longer fuse than much of Europe has regarding dealing with elder programs (Social Security and Medicare/Medicaid). If we do not reform those programs soon, our problems will hit a wall much like Europe will before us.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.

Forecasting

 The late Sam Goldwyn was a major film producer in the golden age of Hollywood studios. He was famous for making very funny comments about a variety of topics. One of the most frequently quoted is: “Forecasts are difficult to make—particularly about the future.”

As witty as that comment seems to be, the great producer put his finger on a very serious topic. 

The standard definition that I have seen for the last 50 years goes something such as this: “Forecasting is the systematic process or creative estimates about future conditions, relying on historical and current data.”

Short term forecasts rely on historical patterns and current data and are used to forecast the stock market over the next week, outcomes of imminent elections and sporting events. It amazes me that media outlets such as CNBC and Bloomberg Business give airtime to “analysts” who provide remarkably short-term estimates covering only a week or a month. They are generally wrong. I am always willing to hear forecasts of a financial heavyweight looking out over a few years, but very near-term estimates are worth very little.

Long term forecasting is a VERY tricky business. Some look at past trends and do direct mathematical extrapolation which is generally not reliable. The more sophisticated players add qualitative issues to the mix and often provide several multiple futures. Others use the Delphi method which solicits opinions from a panel of experts and often publishes a consensus of the opinions and promises anonymity to participants. Such averages have a rather weak batting average. 

Whenever I have looked at long term projections I have noticed they do not consider external shocks which forecasting models cannot see. Such Black Swans, popularized by Nassim Taleb in several books, upset the applecart of almost all projections.

Today, in finance, many people have put their savings in index funds. They do not try to pick individual winners among securities. The whole market is purchased. Your never do better or worse than the total market performance.  And, fees are extremely low which over a lifetime make a huge difference to long term performance.

Another huge factor in my view that limits long term forecasting is that the rate of change in today’s world is much faster than in the 20th century.  Look at the media business where many MR readers have spent their careers. It was clear that advertiser supported cable channels were going to grow but streaming video caught many of us alleged futurists flat footed. I remember spending quarter after quarter breaking down the balance sheets and income statements of Netflix and wondering how and when they were going to become very profitable. Google’s You Tube has become something of a stealth bomber taking up more usage than futurists could have seen a decade ago.

With the emergence of Artificial Intelligence (AI), change will be more sweeping than we have seen in the past. Yet my feeling is that the growth may not be as quick as some people are now forecasting. It will, however, come and it will be huge.

Okay, I just made a forecast using the Delphi method. Check back in 5 years and see if I was correct!

I started this post with a Sam Goldwyn quote about forecasting. Here is a great one to end with— “Ninety percent of the art of living consists of getting along with people you cannot stand.”

If you would like to contact Don Cole directly, you may reach him at www.mediarealism.blogspot.com or leave a message on the blog.

Mitt Romney on Social Security

 Former Massachusetts governor and Utah Senator Mitt Romney published a guest editorial in the New York Times on Friday, December 19, 2025, in the New York Times.

The entire article ---https://www.nytimes.com/2025/12/19/opinion/romney-tax-the-rich.html

While I do not agree with all of Senator Romney’s solutions, I applaud his raising the issue in a widely read forum. 

In brief, he raised the issue that I and other deficit hawks (alarmists) have been talking about the last 15 years. If we do not reform social security soon, the system, as we now know it, will have to cut benefits to all recipients by approximately 23% across the board by 2034. 

When I first saw this statistic some years ago, I realized it would be annoying but would not affect my lifestyle all that much. When I broke down the demographic data, however, I realized that it would be devastating to millions of the Americans who now depend on Social Security as their primary income source. I even wrote about it in MR on 4/25/22 in a post entitled “My Final Entitlement Rant.”                  

Romney’s thesis was that for wealthy people such as he, the benefit should be cut more than 23% if not eliminated. In recent years, I have talked to several people in the 5–25-million-dollar net worth range about a possible cut in THEIR benefits. A few agreed that it was a reasonable idea given the crisis that the nation will someday be facing. Somewhat surprisingly, the idea was met with outrage by the wealthiest people in my informal and unscientific sample. Comments included— “I contributed for 45 years, and the money is mine” or “What are you, a socialist in your old age.” 

Well. If you know me, it is quite clear that I am not a socialist. I applaud Senator Romney for bringing up the issue and, as a charter member of the elite 1% of Americans, he is accepting that something must give in the current system to protect millions of Americans in their old age in the future. 

As I have written in the past, this is not sophisticated math. It is simply arithmetic. Yet, years trickle by and not much has been done.

I sent a draft of this post to a long time MR reader who told me that I worry too much. He conjured up the famous quip from the great Winston Churchill— “Americans always do the right thing, once all other alternatives are exhausted.”

Perhaps old Winnie was correct. But, when the political hacks on both sides of the aisle finally get around to doing the right thing, will it be too late?

If you would like to contact Don Cole directly, you may send him an e-mail at doncolemedia@gmail.com or leave a message on the blog.

Agglomeration Economics and The United States

 Back near the end of the 19th century, one of my heroes, Alfred Marshall, spoke of a concept that is now known as Agglomeration Economics.

In brief, it states that proximity has it advantages. He said that some industries seem to cluster in certain geographic areas. This was due to three basic factors:

1) A skilled labor force locally

2) The spillover of local knowledge

3) Local supply linkages

He often used the example of Sheffield cutlery makers and how many competitors clustered in a relatively small geographic area. He described it as “the mysteries of the trade became no mysteries; but are as it were in the air, and children learn many of them unconsciously.” A bit flowery, for sure but I firmly believe this is happening in the United States as I write and will continue for some time to come.

Much has been made of the urban/rural divide and how as small towns across the country are emptying out and job prospects for young people have all but disappeared. Many towns in the plains are closing schools and suffering from an acute shortage of doctors and close by hospitals. 

Yet also happening but without a huge amount of press is that mid-sized cities are also dying (some rapidly) and there is little hope that promised industrial revitalization will succeed in most localities.

Over the last few weeks, I have spent much time on You Tube watching economic development videos from a wide variety of cities. The message is always upbeat and the promises big. Visit some of these cities and what you see, sadly, is despair and a hopelessness especially among the young people. 

It is not their fault. The local kingpins are sincere, but the odds are steeply stacked against them.

Consider the Marshallian concept of Agglomeration for a few moments. It is not new. Many of you, like I, worked in advertising. Why did Madison Avenue thrive as an advertising mecca for so long? The talent pool was there. I worked at the old NW Ayer agency in the New York in the mid-70’s. Two other substantial agencies were in the same building (Marshalk and Marsteller). Twice I caught co-workers getting on the wrong elevator. They were much more carefully dressed than normal, telling a youngster like me that they were going for an interview at a competing agency in the same building. 

Why did the TV networks keep their sales teams in New York even though programming came out of the West Coast? Easy. The ad agencies spending the network big bucks were largely in New York.

In the financial world, Wall Street dominated and real shooters in the money management game at the time were New York based.

Detroit was the auto capital, Houston ruled oil and so it went.

Nowadays, we have long been in a post-industrial economy. The information age rules but the same Agglomeration effect has taken hold. 

Microsoft was headquartered in the Seattle area. Some say Paul Allen cajoled Bill Gates to leave Albuquerque and come home to Seattle. The company took off and created thousands of jobs and was a magnet for tech people.

Silicon Valley in Northern California also became a tech hub and Venture Capitalists gave the hungry and brilliant founders of hundreds of startups the funds they needed to launch. Since then, some tech hubs have emerged throughout America. The leaders are Silicon Valley, Seattle (greatly helped by tech savvy Microsoft alumni), Boston, and Brooklyn. Lesser lights but impressive are Boise, Idaho and Anne Arundel County, Maryland among others.

We have all read how Jeff Bezos started selling books from his Seattle area garage. What you may not have considered how lucky he was to have an enormous pool of locals who helped him to achieve scale and unfathomable growth as he expanded the product line for Amazon. Seattle had the three variables that Alfred Marshall outlined a century earlier. 

Interestingly, Amazon is often building their distribution centers in areas that were once vibrant manufacturing towns. Many of these localities were located on railroad, highway or river inks that allowed them to ship their products quickly and inexpensively. In fact, Amazon has warehouses in abandoned factories or locations of the former manufacturing sites.

I wish all the smaller cities and towns well. However, as their base had eroded, airlines have drastically cut the number of flights to and from their home. Major 21st century companies look for airline hubs for headquarters.

This is the new reality and turning it around is a herculean task. 

I wish all my United States readers a Happy Thanksgiving.

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

The Billionaire Myth

 These days one reads and hears a great deal about billionaires. Some seem to be admired tremendously for their accomplishments while others are pilloried as they are considered to be 21st century amoral robber barons. 

To me, I see both sides of that coin, but one thing surprises me. In a world of nearly 8.3 billion people, estimates are that there are only just over 3,000 of them. Recently, I spent a few hours talking with a very pleasant and successful man. He described someone whom I know of but had never met. My newfound friend said, “he is a billionaire these days.”

I paused and did a rough back of the envelope calculation based on his holding of a public company. To me, it looked as if he was worth something close to $30 million, not even close to a billion. Yes, he was well off but certainly not super-rich.

What people have not wrapped their head around is what a billion really is. A billion is one thousand million. Let that sink in for a few moments. Many of you, much like the gentleman I described above are millionaires meaning that you net worth (assets-debt) exceeds one million dollars. It probably took many long years to get there. A billionaire, however, has at least 1,000 times that as a net worth and 20 people worldwide have a projected net worth of $100 billion +. So, they have a hundred thousand million or more. Pretty amazing.

Forbes Magazine, who monitors the ultra-rich each year, projected last April, that there were 3,028 billionaires globally up from 2781 in 2024. It is a safe bet that the number has ticked up a bit as I type given the bull market in equities through October 2025.

The US has the highest number at 902, followed by China at 450 and 205. Some estimates are that nearly 100 live within a 10-block radius in Manhattan.

Small but wealthy countries show up well. For example, Switzerland has a projected 42 billionaires and, per capita, their incidence of the super-rich is nearly twice that of the United States. Little Monaco, the size of New York’s Central Park, has the highest per capita billionaire rate in the world.

Okay, this is a moderately fun read for many of you, but what is the point? The billionaire term is used far too loosely today. Only a tiny group of people have reached or will reach this milestone. Yet social media appears to be full of billionaire mentions.

One thing is true—authentic billionaires have wildly disproportionate political clout compared to their numbers. They can persuade politicians of all stripes to vote for their interests. Tax policy is never even handed allowing the wealthy to evade confiscatory or even reasonable taxes via loopholes or carefully crafted trusts. The old saw of “he who has the gold, makes the rules” remains a relevant comment.

Old continental money is quieter than the billionaires who make the headlines today. You rarely see families that have had high wealth for centuries on lists of the world’s richest. Some placed their money in offshore accounts eons ago; others buried some wealth in art or other low-key assets. They also shun headlines and lead a relatively low-key existence. Some mention European royalty but keep in mind that jewels, castles, and some art are owned by the government so many royals are custodians of great wealth but not outright owners.

The emphasis on publicity for billionaires and the exaggeration of many who are not has only led to more emphasis on income inequality. It is a real thing that can only shift if loopholes are closed and tax laws enforced. I have been hearing that forever in my long life but the status quo remains in place and gets worse as the middle class shrinks and half of Americans and most of the world is left behind with no piece of the action.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.

The Nobel and AI

 Last week, the Sveriges (Swedish) Riksbank awarded their Nobel Memorial Medal in Economics to three professors: Joel Mokyr of Northwestern, Philippe Aghion of the London School of Economics and Peter Howitt of Brown University.

The trio shared the prize shared the prize for their extensive research that illustrated the link between technological progress and long-term economic growth which leads to higher standards of living globally. 

John Hassler, the chairman of the prize committee said: “Sustained economic growth, driven by a continuous stream of technological innovations and improvements, has replaced stagnation.” Most of our historic growth has been in the last 200 years and important discoveries lifted whole societies. 

Hassler went on to stay that radical innovation is often described as “the theory of sustained growth through creative destruction….an endless process in which new and better products replace the old.” 

Creative destruction was popularized by 20th century economist Joseph Schumpeter, a colorful, brilliant but controversial character who was from Austria but spent his last years at Harvard. **

Professor Howitt of Brown tipped his hat to Schumpeter but stated in an interview that there “was still conflict at the heart of economic growth” as innovation often leads to significant job losses. Dr. Howitt stated that the conflict still needs to be dealt with going forward.

Well, what does all this have to do with Media Realism? Pretty simple to me. The biggest wrecking ball to hit the status quo over the next several years is Artificial Intelligence (AI). As positive and efficient as it will likely be it should also lead to some profound job losses. Here is where I believe the mainstream media is really missing the boat.

Each time that we have had a dislocation in the economy due to a tech or industrial breakthrough, job losses tended to be at the bottom end of the skill scale. And, new doors always opened as the emerging industries picked up much of the economic slack.

With AI, it, in my opinion, will be quite different. As AI grows, many white-collar middle management and even senior management jobs will likely disappear in my opinion. These men and women will not adapt well to becoming baristas or Uber/Lyft drivers. The business media is full of questions as to whether AI stocks are in a bubble, but very little is said about the AI revolution may really upset the employment status quo. 

As Bette Davis said in “All About Eve”, “fasten your seat belts, it is going to be a bumpy flight”.

**For more on Creative Destruction, see Media Realism, Schumpeter lives in 2009 media (1/30/2009) and Schumpeter revisited (8/22/22).

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.

Will America’s Population Decline Soon?

 In recent weeks, I have received requests from several Media Realism (MR) readers to address the issue of a possible imminent decline in the US population. 

I am a media and especially business news junkie and I did not see anything about the issue. The people who made the request are what I would deem to be serious people and not alarmists. So, I did some digging, and they appear to be on to something.

In several MR posts over several years, I have discussed how the entire Western world was getting older. A big issue to me was that many European countries had developed a “provider” state that had health care and old age issues covered for everyone in the nation. As the population aged, a smaller number of people would be supporting a growing group of seniors who contractually had several expensive benefits. Taxes were high by American standards but would have to spike upwards to keep the benefits intact. Something will have to give.

In the US, we had nowhere near the benefits of many nations, so the situation did not seem drastic. Yet, like much of Europe and Japan our population is aging. Also, the fertility rate was dropping. To keep population flat, the average woman must have 2.1 children. As I type, we are 1.6-1.7. In America, we have made up the shortfall with of immigrants visiting and staying in our country. Well, I have seen a few articles saying that this year, for the first time, America will have a slight decline in population as early as this year. This will be the first time a drop in population has happened.

What I first saw that in print, I was dismissive. What about the Civil War? Some 700,000 people perished, and the population base was much smaller then. Yet, it was true. The population of the United States went up during the Civil War as immigration, particularly from Ireland, was very high at that time. 

So, there are two ways for the population to grow. The first is through what demographers called natural increase—more births than death in a year. The second is via net immigration—more newcomers than people leaving. 

With fertility rates at an all-time low in the US plus a government policy to close much of the immigration door and force some non-citizens to leave, it is mathematically possible that we could have a decline this year and certainly next year in the US population. 

Some people have told me so what? A few others tell me that I worry too much, and things will work themselves out. 

Here are my concerns that emerged when I examined data largely from two solid sources—Pew Research and the American Enterprise Institute.

If we have a smaller workforce, it follows that we will have lower output. A labor shortage is inflationary as it pushes up wages. We could have a return of stagflation, the horror of the 1970’s economy.

Big cities will be affected. There will be fewer riders for public transit which is already struggling financially. Restaurants, coffee shops, fast food, hotel staff and Lyft and Uber drivers are likely to be young immigrants. 

How about construction? The majority of roofers, painters and drywall installers are immigrants. In major states such as New York, Texas, Florida and California immigrants tend to dominate construction crews of all kinds. 

Do not forget the rural areas. Roughly 2/3 of agricultural workers are immigrants. Fruits and vegetables have a very labor-intensive harvesting, and need large teams to bring the food in. Without enough workers, some foods could rot on the vine and prices at the supermarket would spike. 

An aging population such as ours needs medical professionals. According to the Kaiser Family Foundation, 27% of our doctors are immigrants. We need doctors and we need them now.

Financially, throughout our history immigrants have been a huge engine of growth. They tend to be fearless, hard workers who live simply until they make it, and they have appreciated the freedoms which American offers. They tend to be young, and they can contribute for a long time to Social Security, Medicare and Medicaid all of which face some financial and demographic headwinds in the not-too-distant future. 

I have no problem with immigration reform and understand the importance of bringing people to America legally but if we let our population stagnate or decline, the American dream may cease to be.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.