Last October 25th, I put up a post entitled “Income Inequality”. It generated pretty good readership as well as quite a few comments to me. There was little disagreement with my post. One long time MR reader surprised me, however. He dared me to read a book entitled THE UPSIDE OF INEQUALITY, How good intentions undermine the middle class, by Edward Conrad (Penguin, 2016). It author, Edward Conrad, was an original partner at Bain Capital (of Mitt Romney fame) and now is a visiting scholar at the American Enterprise Institute. His e-mail to me was not strident but he challenged me as I have said more than once in MR that I make a regular practice of reading material that I generally disagree with simply to question and test my currently held beliefs. His approach was a brilliant piece of mind-manipulating gamesmanship. How could I not read the book as I said reading opposing opinions had been my method of operation for decades?
Hence this post.
The book is not an emotional diatribe at all. If any, to use Federal Reserve speak, it is almost entirely data-driven. What I did like about it was that he mouthed the same top line statistics that one sees and hears across all major media but then he dug deeper with a special emphasis on the demographics. He truly proved that one can drown in a river with an average depth of six inches. In the introduction, he states: “If you take nothing else away from this book, I want you to remember this: Higher payoffs for success increase the supply of properly trained talent, and these higher payoffs motivate innovators, entrepreneurs, and investors to take risks. These two effects loosen the current constraints on growth, which frees the economy to grow faster.”
He then goes on to make a spirited defense of the 1% in American society. The argument is not new but he argues that the super wealthy, even after taxes, do not spend a large part of their incomes. After taxes and charity (which can be substantial among the 1% and especially the .1 of 1%), they reinvest a great deal of their income. This stimulates growth and creates jobs. Those who are fans of income distribution do not seem to grasp that basic truth according to Conrad. He is kind to immigrants and is especially fond of the approach that Canada has taken in recent years of recruiting ultra-high-skilled young people as a way to accelerate economic growth.
Do I buy the whole story? His arguments are well reasoned but he makes one big error in my view. Conrad states that if we raise taxes on the 1% they will not be incentivized nearly as much as now. Observing some very wealthy people over my fairly long life, I beg to differ. Serious financial players tend to love “the game.” Yes, if taxes became confiscatory (60-70%) as a few are now touting, some may slow down or vote with their feet and leave America. I feel it would take a lot to really kill incentives among the Uber-rich. Even modest private investors including myself, enjoy the action and would not walk away from it unless the tax bite and regulations became extremely draconian.
He also makes no mention of possible class warfare or civil unrest if income inequality continues to grow. Again, most of his comments are interpretations of real data that is carefully researched so sociological prognostication does not find its way in to the text.
His admiration for entrepreneurs is sincere. What I really like is that he did not sugar coat the process. Most will fail and, especially in tech, the payoff to those who succeed will often generate a lottery sized windfall. These innovators will trigger significant growth. So, in essence, he is saying that by leaving the 1% alone, we can lift many up in our society as their investments in innovative ideas and technologies will create new jobs, new industries and wealth. Also, to his credit, he admits that crony capitalism does exist in our society but those with connections are hurting growth by using their political influence to keep the playing field anything but level.
Most of us would agree that in a free market society there will always be income inequality. As I have written before in MR, some people work harder, some are smarter, some are luckier than most of us and some are unknowingly well positioned just as their industry is leaving the station. He clearly agrees with this and also takes on current French economic icon Thomas Piketty whose CAPITAL IN THE TWENTY-FIRST CENTURY a few years back was a clarion call for aggressive income distribution. Piketty attacked the wealthy saying much of their income came from passive income (dividends, bond interest, rents). Well, where did the money come from to generate the income? From savings. We all know a number of well off mature people who live largely on dividend income. They are not the idle rich a la the British aristocracy in the 19th century. They worked hard, saved, and invested.
As I mentioned, I do not buy his entire thesis. Inequality is growing which concerns me. Yet Conrad states his case with careful statistics and inarguable demographic data. Do I blame the media for not reporting on this topic in detail? Not really. We live in a world of 30 second sound bites, and, sadly, tweets. How do you cover a topic as involved as this for mass consumption?
I thank my reader for challenging me to read THE UPSIDE OF INEQUALITY. The book did not sway me completely but it made me think. You cannot ask for more.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Monday, January 14, 2019
Wednesday, January 2, 2019
Advanced TV and Reach & Frequency
Over the last several weeks a few readers and two members of the Media Realism (MR) panel, have asked me to weigh in on Advanced TV and OTT (Over the Top) TV. There is not much that I could add to the current discussion but then, like the Disneyesque bolt out of the blue, came a request from an enthusiastic and erudite MR reader to discuss these growing “TV” options in terms of performance estimates (Reach & Frequency) and frequency distribution patterns. Those questions were centered directly in my wheelhouse—hence this post.
To refresh you memory, or if you are no longer active in the broadcast/advertising game, let us define terms for a moment. Advanced TV is really an umbrella term. It encompasses all forms of TV not included through a broadcast, cable or satellite connection. Over the Top (Ott) is placed by many under the same large umbrella and is video provided over the internet.
Okay, what does this mean? Well, several readers have e-mailed or called me saying how Advanced TV advertising has helped them. Great! You can reach cord-cutters or cord-nevers not reached by cable or satellite and the handful that have no conventional TV of any kind. There is a basic problem to me with this. Clearly, you pick up more viewers to your advertising by going this route. BUT, do the same rules apply as with conventional TV, cable, and satellite? What is the level of viewer attentiveness? I have struggled with this for more than 40 years and felt like some sort of pariah for telling the absolute truth. Way back in the 1970’s, we told people that we REACHED 90+ % of the target with our TV campaigns. Did we really? The issue to me was always that even the best models at the time only provided EXPOSURE OPPORTUNITIES not verifiable delivery. By the late 80’s, unless you were speaking at an annual sales meeting to rally the troops, you avoided saying that reach was in the stratosphere (Reach is the percentage of your target audience exposed to the message and frequency is, of those “reached”, how many times were they able to see the message).
Today, the issue has become far more extreme with advertising avoidance at an all time high. When people watch TV today or any video format for that matter, many have another device going. If you are young, the odds are overwhelming that a Smartphone or Laptop or Tablet is in use and gets special attention during commercial breaks. So, providing performance estimates (i.e, reach & frequency) was always a dicey game at best but now wildly overstates real world delivery. So while Advanced TV does help an advertiser pick up new prospects, never forget that viewing via streaming options still has commercial attentiveness issues that are very real.
The second topic brought to me was the integration of the delivery between conventional TV and Advanced TV. My honest answer is that I am clueless regarding how to integrate the two to come up with a reasonably reliable reach projection. Additionally, it seems anecdotally that there is a greater chance for advertising wear out with Advanced TV as it is not monitored as closely as is over the air or cable rotations. That leads to the last issue which is the integration of the frequency distributions of conventional and Advanced TV campaign delivery. To date, I have asked quite a bit but no one seems to have captured this with much precision. Where you can, response is always a nice indicator. Reach & frequency projections to me were always overstated and, in recent years, often wildly exaggerated, but trying to blend the frequency distributions of the two types of TV in today’s world seems way above every analyst’s pay grade at this point (A frequency distribution is how many people were exposed to the message 1+, 2+, 3+, 12+ times, etc).
Is this an arcane discussion? Absolutely. Yet, how are most people determining the right mix of conventional and Advanced? Right now, it seems to be trial and error and far more art than science.
Welcome to 2019! I hope the year is prosperous for all of us. Also, I want to thank the MR readers from all over the world. At present, some 54% of readers are based outside of the United States with particularly strong growth in Western Europe during 2018. Welcome!
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
To refresh you memory, or if you are no longer active in the broadcast/advertising game, let us define terms for a moment. Advanced TV is really an umbrella term. It encompasses all forms of TV not included through a broadcast, cable or satellite connection. Over the Top (Ott) is placed by many under the same large umbrella and is video provided over the internet.
Okay, what does this mean? Well, several readers have e-mailed or called me saying how Advanced TV advertising has helped them. Great! You can reach cord-cutters or cord-nevers not reached by cable or satellite and the handful that have no conventional TV of any kind. There is a basic problem to me with this. Clearly, you pick up more viewers to your advertising by going this route. BUT, do the same rules apply as with conventional TV, cable, and satellite? What is the level of viewer attentiveness? I have struggled with this for more than 40 years and felt like some sort of pariah for telling the absolute truth. Way back in the 1970’s, we told people that we REACHED 90+ % of the target with our TV campaigns. Did we really? The issue to me was always that even the best models at the time only provided EXPOSURE OPPORTUNITIES not verifiable delivery. By the late 80’s, unless you were speaking at an annual sales meeting to rally the troops, you avoided saying that reach was in the stratosphere (Reach is the percentage of your target audience exposed to the message and frequency is, of those “reached”, how many times were they able to see the message).
Today, the issue has become far more extreme with advertising avoidance at an all time high. When people watch TV today or any video format for that matter, many have another device going. If you are young, the odds are overwhelming that a Smartphone or Laptop or Tablet is in use and gets special attention during commercial breaks. So, providing performance estimates (i.e, reach & frequency) was always a dicey game at best but now wildly overstates real world delivery. So while Advanced TV does help an advertiser pick up new prospects, never forget that viewing via streaming options still has commercial attentiveness issues that are very real.
The second topic brought to me was the integration of the delivery between conventional TV and Advanced TV. My honest answer is that I am clueless regarding how to integrate the two to come up with a reasonably reliable reach projection. Additionally, it seems anecdotally that there is a greater chance for advertising wear out with Advanced TV as it is not monitored as closely as is over the air or cable rotations. That leads to the last issue which is the integration of the frequency distributions of conventional and Advanced TV campaign delivery. To date, I have asked quite a bit but no one seems to have captured this with much precision. Where you can, response is always a nice indicator. Reach & frequency projections to me were always overstated and, in recent years, often wildly exaggerated, but trying to blend the frequency distributions of the two types of TV in today’s world seems way above every analyst’s pay grade at this point (A frequency distribution is how many people were exposed to the message 1+, 2+, 3+, 12+ times, etc).
Is this an arcane discussion? Absolutely. Yet, how are most people determining the right mix of conventional and Advanced? Right now, it seems to be trial and error and far more art than science.
Welcome to 2019! I hope the year is prosperous for all of us. Also, I want to thank the MR readers from all over the world. At present, some 54% of readers are based outside of the United States with particularly strong growth in Western Europe during 2018. Welcome!
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Sunday, December 16, 2018
Make Your Career Robot Proof!
Sometime back in the late 1970’s, I was on a plane traveling from Detroit to Baltimore. A fellow roughly my age was assigned the seat next to me, sat down, and we talked a bit. He told that he worked in a General Motors (GM) plant in Michigan as a welder. When he asked what I did, I told him that I worked in advertising. He said that was a bad choice as someday I could get fired, maybe more than once. He, on the other hand, did a vital job at GM and had job security forever. At the time, I did not think much of what he said until perhaps 10 years later, I began to read about how automation was slowly taking hold at auto plants all over the world. So, it is a good bet that my seat mate never made it to retirement as industrial robots can always outperform a human, no matter how skilled, when doing a REPETITIVE task.
I bring this up as I firmly believe that there is a serious misconception going on among many regarding the future of robotics and employment. In recent months, I have read dozens of articles and viewed countless interviews about the automation revolution. All too often, the “expert” talks about how thousands of cashiers at supermarkets and Wal*Mart will disappear. Some project that six-nine million blue collar jobs will evaporate in a decade. Others discuss how driverless cars and trucks will smash the job security of taxi drivers and truckers and things will be delivered safely and on time as insurance rates for companies plummet. And Amazon Go stores scheduled to sweep across America will eliminate all but a small staff at thousands of locations. I do not have a serious issue with any of these forecasts.
What I do find disturbing, and a tremendous oversight, is that several million “white collar” jobs will evaporate as well as Artificial Intelligence and Robotics take hold. If I had to find the most vulnerable area a decade or so from now, I would bet that it would be “middle management.” Yes, the role of a middle manager can be complicated at times, but, be honest, much of it is routine and repetitive. Software has steadily improved over the last 20 years that is making these roles obsolete at worst and far less important at best. Remember, companies are always looking for ways to cut expenses. Imagine the profit windfall to organizations if a substantial number of their staffers earning low six figures could be eliminated with no decline in product quality or service. Enterprise software is getting databases together than can look at precedent and historical data and cut the number of people needed for a firm to function smoothly.
Changes have been going on for years but, as they do not happen overnight, many are blind to them. Remember travel agents? How about your friendly stockbroker? Millions now trade online and young upscales are piling billions into low cost index mutual funds and by-passing brokers forever. The cost savings over 40 years often will total well over six figures in most cases. We are over lawyered in the US and people are brushing and flossing more aggressively these days and a dental practice is no longer a sure thing. New sensors can spot macular degeneration and cataracts and the tests are run by a technician. Yes, ophthalmology will still exist but we will need far fewer eye surgeons going forward as a variety of programs can handle routine exams and spot trouble. This will be true across all medical areas.
What to do? Some people suggest that everyone should be prepared to become entrepreneurs. Sounds great but remember that most entrepreneurs make it on the third or fourth try and most fail. And, roughly one in seven people ever go out on their own. Some are simply not psychologically equipped or physically able to handle the pressures and challenges of being a one person band. Mathematically, everyone cannot be a chief.
So wither does one flee? Sometimes staying where you are may be a viable option but with a twist. For years, I have read very carefully everything that Berkshire Hathaway mavens Warren Buffett and Charlie Munger say and write. Both have said when you buy shares in a company, view yourself as a part owner of the enterprise (even if you merely have a few hundred shares). Well, the same thing can help you at your place of work. If you think like an owner, you mindset changes. You eschew politics and look at efficiency and take a long term perspective. Also, you may start to come up with creative solutions to many problems (some very small) at your place of work. Higher ups who are not asleep at the switch will likely take notice and, over time, you may become indispensable to the enterprise in top management’s eyes. You are an entrepreneur with the confines of your company.
We are at a transformational stage in our economy. I know, people have said this since the steam engine arrived two hundred years ago. Now, the difference is that no new industry appears to be emerging to sop up the lost jobs due to robotics and artificial intelligence growing at a rapid pace. Interestingly, if you look at economic history, unconventional characters always seem to be the ones who survive and prosper during times of industrial or market upheaval.
Anyone who has survived in the business world for decades has always needed to shift gears and reinvent themselves decade to decade. Now, with robotics et al on the march for real, the change will likely need to be more dramatic. We are not all visionaries. Yet, we can all be more organized, better communicators, and courageous. Robots lack courage and imagination and human kindness. It takes courage to deal with changing conditions and that is what you will likely need.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
I bring this up as I firmly believe that there is a serious misconception going on among many regarding the future of robotics and employment. In recent months, I have read dozens of articles and viewed countless interviews about the automation revolution. All too often, the “expert” talks about how thousands of cashiers at supermarkets and Wal*Mart will disappear. Some project that six-nine million blue collar jobs will evaporate in a decade. Others discuss how driverless cars and trucks will smash the job security of taxi drivers and truckers and things will be delivered safely and on time as insurance rates for companies plummet. And Amazon Go stores scheduled to sweep across America will eliminate all but a small staff at thousands of locations. I do not have a serious issue with any of these forecasts.
What I do find disturbing, and a tremendous oversight, is that several million “white collar” jobs will evaporate as well as Artificial Intelligence and Robotics take hold. If I had to find the most vulnerable area a decade or so from now, I would bet that it would be “middle management.” Yes, the role of a middle manager can be complicated at times, but, be honest, much of it is routine and repetitive. Software has steadily improved over the last 20 years that is making these roles obsolete at worst and far less important at best. Remember, companies are always looking for ways to cut expenses. Imagine the profit windfall to organizations if a substantial number of their staffers earning low six figures could be eliminated with no decline in product quality or service. Enterprise software is getting databases together than can look at precedent and historical data and cut the number of people needed for a firm to function smoothly.
Changes have been going on for years but, as they do not happen overnight, many are blind to them. Remember travel agents? How about your friendly stockbroker? Millions now trade online and young upscales are piling billions into low cost index mutual funds and by-passing brokers forever. The cost savings over 40 years often will total well over six figures in most cases. We are over lawyered in the US and people are brushing and flossing more aggressively these days and a dental practice is no longer a sure thing. New sensors can spot macular degeneration and cataracts and the tests are run by a technician. Yes, ophthalmology will still exist but we will need far fewer eye surgeons going forward as a variety of programs can handle routine exams and spot trouble. This will be true across all medical areas.
What to do? Some people suggest that everyone should be prepared to become entrepreneurs. Sounds great but remember that most entrepreneurs make it on the third or fourth try and most fail. And, roughly one in seven people ever go out on their own. Some are simply not psychologically equipped or physically able to handle the pressures and challenges of being a one person band. Mathematically, everyone cannot be a chief.
So wither does one flee? Sometimes staying where you are may be a viable option but with a twist. For years, I have read very carefully everything that Berkshire Hathaway mavens Warren Buffett and Charlie Munger say and write. Both have said when you buy shares in a company, view yourself as a part owner of the enterprise (even if you merely have a few hundred shares). Well, the same thing can help you at your place of work. If you think like an owner, you mindset changes. You eschew politics and look at efficiency and take a long term perspective. Also, you may start to come up with creative solutions to many problems (some very small) at your place of work. Higher ups who are not asleep at the switch will likely take notice and, over time, you may become indispensable to the enterprise in top management’s eyes. You are an entrepreneur with the confines of your company.
We are at a transformational stage in our economy. I know, people have said this since the steam engine arrived two hundred years ago. Now, the difference is that no new industry appears to be emerging to sop up the lost jobs due to robotics and artificial intelligence growing at a rapid pace. Interestingly, if you look at economic history, unconventional characters always seem to be the ones who survive and prosper during times of industrial or market upheaval.
Anyone who has survived in the business world for decades has always needed to shift gears and reinvent themselves decade to decade. Now, with robotics et al on the march for real, the change will likely need to be more dramatic. We are not all visionaries. Yet, we can all be more organized, better communicators, and courageous. Robots lack courage and imagination and human kindness. It takes courage to deal with changing conditions and that is what you will likely need.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Wednesday, December 5, 2018
Rule #1
In recent years, people increasingly ask me what the most important habit or attribute is for success in the business world. I have given it a great deal of thought and have dismissed the platitudes such as hard work, doing something you love, and following the golden rule. All of these are vital and necessary. To me, however, there is something else. It is what I call Rule #1.
What is it? It is simply this—If you say that you are going to do something, do it. No exceptions. Early on in my life and career, I would not always follow through sometimes and would try and rationalize a missed deadline or a minor promise broken by saying that I was ungodly busy or too tired. It did not hurt me much but I hated it. So, about 30 years ago, I shifted gears forever. If I made someone a promise, I kept it. Sometimes it meant working until 9 pm or coming in for several hours on a Sunday, even though I knew a long nap would have done me a world of good.
Today, I am cautious about what I promise but, when I do, you can make book on it. Several years ago, I was talking with a client about the magazine world. He was waxing poetic over the quality of writing in SPORTS ILLUSTRATED. I agreed and told him that in the publication’s early days, they hired Ernest Hemingway to write a series on bullfighting. He was intrigued and I told him the Hemingway pieces were in a book that featured his work and that of other memorable articles from the magazine. I then said I would mail him a copy of the book.
The next day, I hurried to the post office at lunch and shipped the book to the client. As I returned to the office, I ran in to the account executive who attended the client meeting with me. I told her that the SPORTS ILLUSTRATED collection was winging its way to the client. She said, “You actually sent it? I thought you were just making conversation.” I must have been visibly annoyed as she said, “Did I say something wrong?” “Yes, you did” was my icy reply.
Interestingly, it continues to surprise me how people are surprised when you follow through on commitments, large or small. Over time, you begin to be viewed as a serious person. You are dependable which is a very soothing attribute in today’s world.
So, when young people ask me my #1 Rule, my answer is always the same. If you say that you will do something, do it!
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.
What is it? It is simply this—If you say that you are going to do something, do it. No exceptions. Early on in my life and career, I would not always follow through sometimes and would try and rationalize a missed deadline or a minor promise broken by saying that I was ungodly busy or too tired. It did not hurt me much but I hated it. So, about 30 years ago, I shifted gears forever. If I made someone a promise, I kept it. Sometimes it meant working until 9 pm or coming in for several hours on a Sunday, even though I knew a long nap would have done me a world of good.
Today, I am cautious about what I promise but, when I do, you can make book on it. Several years ago, I was talking with a client about the magazine world. He was waxing poetic over the quality of writing in SPORTS ILLUSTRATED. I agreed and told him that in the publication’s early days, they hired Ernest Hemingway to write a series on bullfighting. He was intrigued and I told him the Hemingway pieces were in a book that featured his work and that of other memorable articles from the magazine. I then said I would mail him a copy of the book.
The next day, I hurried to the post office at lunch and shipped the book to the client. As I returned to the office, I ran in to the account executive who attended the client meeting with me. I told her that the SPORTS ILLUSTRATED collection was winging its way to the client. She said, “You actually sent it? I thought you were just making conversation.” I must have been visibly annoyed as she said, “Did I say something wrong?” “Yes, you did” was my icy reply.
Interestingly, it continues to surprise me how people are surprised when you follow through on commitments, large or small. Over time, you begin to be viewed as a serious person. You are dependable which is a very soothing attribute in today’s world.
So, when young people ask me my #1 Rule, my answer is always the same. If you say that you will do something, do it!
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.
Sunday, November 18, 2018
Nomadland
Very recently, I read NOMADLAND, Surviving America in the Twenty-First Century by Jessica Bruder (W.W. Norton and Company, 2017). It tells the story of increasingly large groups of people who have left or abandoned their homes and taken to living in their cars or RV’s. They are often getting on in years, are financially challenged and tend to move several times per year.
Now, these people are not whom you might think of at first blush. They are not the many thousands of people in their 60’s who buy Recreational Vehicles (RV’s) that they have paid six figures for and they take off across the continent to see North America close-up. Those folks often pay $100+ per night for a campsite, and in some rural areas, would save money staying at a hotel. The new Nomads have come to a difficult, painful and sad decision—the cost of maintaining a permanent residence is so onerous that they find that their only option is to find a used RV, refurbish it a bit and hit the road to look for seasonal work and a place where they can park or hide their vehicle for free.
The Nomads may serve as guides in the summer at national parks with the added perquisite of being able to park their RV within the facility safely and free of charge. Others gathered sugar beets in North Dakota which is physically exhausting work that pays a little above minimum wage. Finally, despite other jobs mentioned, a big employer is Amazon distribution centers where the Nomads, usually senior citizens work seasonally at an exhausting pace.
Rural areas are a magnet for these struggling seniors as they are far from highly concentrated population centers. Desert areas in Arizona, Texas and a few other locations are popular choices for these passing strangers. Hundreds, perhaps thousands, gather at Quartzsite, Arizona each winter and are welcomed by the locals. Needles, California also sees a lot of these individuals as well. Given their age and their “camping” far from cities and towns, the police tend not to hassle the Nomads. If they stay too long at a location, the police simply tend to “suggest” that they move on out of their jurisdiction.
Ms. Bruder is a very engaging writer and she spent parts of three years studying and, at times, living with the Nomads. The story is heart wrenching at times and beautifully written. There is the occasional gaping hole in the plot. Most of these people are not destitute. They collect transfer payments such as Social Security in many cases and, many work from time to time as mentioned. I listened with great interest when Ms. Bruder was interviewed on National Public Radio (NPR). When asked how many people were living this lifestyle, she replied thousand and thousands. Okay, but how many thousand? With some 327 million people living in America today, is this really a groundswell or a tiny group who are dealing with hard times in a unique way relevant to 2018? Many have Wi-Fi, write blogs and stay in touch with a wide range of acquaintances.
To me, this is simply a sign of the times. Unemployment is low and markets are stuttering a bit but remain at all time highs. Yet, as mentioned before in this space, nearly half of Americans have been left totally behind in the current strong economy. This small subset who may have worked and worked hard for 40+ years is reduced to living in aging vehicles and struggling to survive. Let us hope when the next inevitable downturn comes their numbers do not swell.
I recommend that you read NOMADLAND. Candidly, I wonder if these people truly exhausted all options before hitting the road. Some may be estranged from family members and others may want a last bit of true freedom. One last point. Ms. Bruder mentioned that at one time she returned home to Brooklyn and saw a few vehicles parked in an industrial area one night. She wondered if they were NOMADS. Last week, I drove by a Wal*Mart and saw two RVs parked in a corner of the lot. An elderly man stepped out of the vehicle looking down on his luck. Two days later, I drove by and they were both gone. Coincidence?
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Now, these people are not whom you might think of at first blush. They are not the many thousands of people in their 60’s who buy Recreational Vehicles (RV’s) that they have paid six figures for and they take off across the continent to see North America close-up. Those folks often pay $100+ per night for a campsite, and in some rural areas, would save money staying at a hotel. The new Nomads have come to a difficult, painful and sad decision—the cost of maintaining a permanent residence is so onerous that they find that their only option is to find a used RV, refurbish it a bit and hit the road to look for seasonal work and a place where they can park or hide their vehicle for free.
The Nomads may serve as guides in the summer at national parks with the added perquisite of being able to park their RV within the facility safely and free of charge. Others gathered sugar beets in North Dakota which is physically exhausting work that pays a little above minimum wage. Finally, despite other jobs mentioned, a big employer is Amazon distribution centers where the Nomads, usually senior citizens work seasonally at an exhausting pace.
Rural areas are a magnet for these struggling seniors as they are far from highly concentrated population centers. Desert areas in Arizona, Texas and a few other locations are popular choices for these passing strangers. Hundreds, perhaps thousands, gather at Quartzsite, Arizona each winter and are welcomed by the locals. Needles, California also sees a lot of these individuals as well. Given their age and their “camping” far from cities and towns, the police tend not to hassle the Nomads. If they stay too long at a location, the police simply tend to “suggest” that they move on out of their jurisdiction.
Ms. Bruder is a very engaging writer and she spent parts of three years studying and, at times, living with the Nomads. The story is heart wrenching at times and beautifully written. There is the occasional gaping hole in the plot. Most of these people are not destitute. They collect transfer payments such as Social Security in many cases and, many work from time to time as mentioned. I listened with great interest when Ms. Bruder was interviewed on National Public Radio (NPR). When asked how many people were living this lifestyle, she replied thousand and thousands. Okay, but how many thousand? With some 327 million people living in America today, is this really a groundswell or a tiny group who are dealing with hard times in a unique way relevant to 2018? Many have Wi-Fi, write blogs and stay in touch with a wide range of acquaintances.
To me, this is simply a sign of the times. Unemployment is low and markets are stuttering a bit but remain at all time highs. Yet, as mentioned before in this space, nearly half of Americans have been left totally behind in the current strong economy. This small subset who may have worked and worked hard for 40+ years is reduced to living in aging vehicles and struggling to survive. Let us hope when the next inevitable downturn comes their numbers do not swell.
I recommend that you read NOMADLAND. Candidly, I wonder if these people truly exhausted all options before hitting the road. Some may be estranged from family members and others may want a last bit of true freedom. One last point. Ms. Bruder mentioned that at one time she returned home to Brooklyn and saw a few vehicles parked in an industrial area one night. She wondered if they were NOMADS. Last week, I drove by a Wal*Mart and saw two RVs parked in a corner of the lot. An elderly man stepped out of the vehicle looking down on his luck. Two days later, I drove by and they were both gone. Coincidence?
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Thursday, October 25, 2018
Income Inequality
A few weeks ago I put up a post entitled “Is It Really Social (In)Security? It, to my great surprise, generated more mail than any of the other 400 posts that I have published since starting Media Realism. Some called me a socialist and others an alarmist. I do not believe that I am either. Several, however, asked me to double back on the theme hinted at in the post and address the issue of Income Inequality in the United States.
I must confess to being a bit hesitant to write about this topic. It is very hard to thread the needle and not veer off into partisan politics or give social engineering suggestions when one covers such a hot button topic. I will do my best to limit the discussion to demographics and some financial data but at times will editorialize a bit.
Emanuel Saez, an economist at University of California, Berkeley monitors income and wealth disparity perhaps better than any academic in America. A couple of years back he calculated that income inequality was at a level not seen since 1928. Back then, the top 1% garnered 23.9% of the income and the bottom 90% some 50.7%. With the stock market run-up in the last few years, the number for the top 1% has to be higher than that now. How come? Easy. Only about half of all Americans have any stake in the equity markets. So, with every all time high we hit in the Dow or S&P 500, those on top by default have to be garnering a larger share of US wealth.
Internal Revenue Service data is not current as it takes a while to gather it all, paints the picture for 2015:
AGI* % of Returns % of all Taxes Paid Average Effective
Tax Rate**
$2 million + 0.1 20.4% 27.5%
$500k-2 million .8 17.9 26.8
$200-500k 3.6 20.6 19.4
$100-200k 12.3 21.7 12.7
$50-100k. 21.8. 14.1 9.2
$30-50k. 17.6 4.0 7.2
Under $30k 43.8. 1.4 4.9
* Adjusted Gross Income. It is Taxable Income after deductions
**Pew Research Center projections based on Internal Revenue Service Data
I would bet that you have probably never seen anything quite like the above table. The first question might be if the top tax bracket were 39% in 2015, how come those making over $2 million only averaged 27.5% as an effective tax rate? Well, much of their income in a given year can be from capital gains (sale of long term stocks or real estate) and a handful benefited from carried interest which treats short term gains as long term. The rich can and do hire clever lawyers and accountants to arrange their affairs in a way to minimize tax exposure. There is nothing illegal about it; they simply have the means to do it.
I have avoided all terms such as upper class and upper middle class on purpose. Someone living in Youngstown, Ohio or rural Arkansas with an income of $100-200k would be doing great and a family in Manhattan, San Francisco, or the DC suburbs would be middle class at best with twice that income. So where you live is a great driver of lifestyle and purchasing power.
Make no mistake. If you have a free society, there will ALWAYS be some level of income inequality. Some people are smarter, work harder or simply are luckier than others. Others were in the right place at the right time and benefited from their industry taking off like a rocket. So, the Marxian dreams of a truly egalitarian society are just that—a dream.
Yet, today, things seem to be getting increasingly polarized. As noted in the Social Security post, the Federal Reserve reports that some 40+% of Americans do not have the liquidity to cover a $400 repair bill or an emergency room visit. Telling someone who lives paycheck to paycheck and sometimes payday loan to payday loan to maximize their 401k contribution is an absurd fiction. Horatio Alger’s young heroes may have pulled themselves up with energy and ingenuity in early 20th century America but they did not have to cope with the 21st century millstone—student loan debt. Also, artificial intelligence, robotics and advanced software will cut the need for labor substantially over the next few decades. The top 10% will benefit as they own the means of production. Job training can help alleviate some of the problems but will you truly need as many workers as we have today?
Solutions? Soak the rich, some say. Well, a re-writing of the tax code to require those making over $2 million annually to pay 35%+ regardless of loopholes would make people feel good but you can see in the table above that there are not all that many of them. So, making a dent in the budget deficit simply would not happen. Expand transfer payments and entitlements? Would help smooth things out a bit but our deficits are huge already. Tax people earning more than $100k somewhat more? That would help but might not be politically viable as virtually all of those citizens vote.
Over the long haul, I have some concerns about the inequality trend. Will it cause social instability if it continues to accelerate? Separately, what about personal responsibility? When does a person have to take full responsibility for where they are in life? 21, 35, never?
Things seem to be eroding. Since 1790,when rough data was first gathered here in the USA, each succeeding generation made more money than their parents. Now, Deutsche Bank projects that only 50% of children will earn more that their parents. Amazingly, it is also true of low income people. The American Dream seems to be evaporating.
The late comedian, satirist and social critic George Carlin put it this way—“The reason they call it The American Dream is that you have to be asleep to believe it.”
I will have more about this topic and related issues in future posts.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
I must confess to being a bit hesitant to write about this topic. It is very hard to thread the needle and not veer off into partisan politics or give social engineering suggestions when one covers such a hot button topic. I will do my best to limit the discussion to demographics and some financial data but at times will editorialize a bit.
Emanuel Saez, an economist at University of California, Berkeley monitors income and wealth disparity perhaps better than any academic in America. A couple of years back he calculated that income inequality was at a level not seen since 1928. Back then, the top 1% garnered 23.9% of the income and the bottom 90% some 50.7%. With the stock market run-up in the last few years, the number for the top 1% has to be higher than that now. How come? Easy. Only about half of all Americans have any stake in the equity markets. So, with every all time high we hit in the Dow or S&P 500, those on top by default have to be garnering a larger share of US wealth.
Internal Revenue Service data is not current as it takes a while to gather it all, paints the picture for 2015:
AGI* % of Returns % of all Taxes Paid Average Effective
Tax Rate**
$2 million + 0.1 20.4% 27.5%
$500k-2 million .8 17.9 26.8
$200-500k 3.6 20.6 19.4
$100-200k 12.3 21.7 12.7
$50-100k. 21.8. 14.1 9.2
$30-50k. 17.6 4.0 7.2
Under $30k 43.8. 1.4 4.9
* Adjusted Gross Income. It is Taxable Income after deductions
**Pew Research Center projections based on Internal Revenue Service Data
I would bet that you have probably never seen anything quite like the above table. The first question might be if the top tax bracket were 39% in 2015, how come those making over $2 million only averaged 27.5% as an effective tax rate? Well, much of their income in a given year can be from capital gains (sale of long term stocks or real estate) and a handful benefited from carried interest which treats short term gains as long term. The rich can and do hire clever lawyers and accountants to arrange their affairs in a way to minimize tax exposure. There is nothing illegal about it; they simply have the means to do it.
I have avoided all terms such as upper class and upper middle class on purpose. Someone living in Youngstown, Ohio or rural Arkansas with an income of $100-200k would be doing great and a family in Manhattan, San Francisco, or the DC suburbs would be middle class at best with twice that income. So where you live is a great driver of lifestyle and purchasing power.
Make no mistake. If you have a free society, there will ALWAYS be some level of income inequality. Some people are smarter, work harder or simply are luckier than others. Others were in the right place at the right time and benefited from their industry taking off like a rocket. So, the Marxian dreams of a truly egalitarian society are just that—a dream.
Yet, today, things seem to be getting increasingly polarized. As noted in the Social Security post, the Federal Reserve reports that some 40+% of Americans do not have the liquidity to cover a $400 repair bill or an emergency room visit. Telling someone who lives paycheck to paycheck and sometimes payday loan to payday loan to maximize their 401k contribution is an absurd fiction. Horatio Alger’s young heroes may have pulled themselves up with energy and ingenuity in early 20th century America but they did not have to cope with the 21st century millstone—student loan debt. Also, artificial intelligence, robotics and advanced software will cut the need for labor substantially over the next few decades. The top 10% will benefit as they own the means of production. Job training can help alleviate some of the problems but will you truly need as many workers as we have today?
Solutions? Soak the rich, some say. Well, a re-writing of the tax code to require those making over $2 million annually to pay 35%+ regardless of loopholes would make people feel good but you can see in the table above that there are not all that many of them. So, making a dent in the budget deficit simply would not happen. Expand transfer payments and entitlements? Would help smooth things out a bit but our deficits are huge already. Tax people earning more than $100k somewhat more? That would help but might not be politically viable as virtually all of those citizens vote.
Over the long haul, I have some concerns about the inequality trend. Will it cause social instability if it continues to accelerate? Separately, what about personal responsibility? When does a person have to take full responsibility for where they are in life? 21, 35, never?
Things seem to be eroding. Since 1790,when rough data was first gathered here in the USA, each succeeding generation made more money than their parents. Now, Deutsche Bank projects that only 50% of children will earn more that their parents. Amazingly, it is also true of low income people. The American Dream seems to be evaporating.
The late comedian, satirist and social critic George Carlin put it this way—“The reason they call it The American Dream is that you have to be asleep to believe it.”
I will have more about this topic and related issues in future posts.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Sunday, October 14, 2018
Is It Really Social (In) Security?
In my endless updating of demographic data, I stumbled across some social security figures this past week.
According to government data, the average recipient receives $1,404 per month. Okay, what is the big deal? Well, other data they published, admittedly a few years old, really got my attention. Consider the following:
—Some 19.7% of recipients obtain 100% of their annual income from Social Security (S.S.)
—33.4% derive 90%+ of their income from S.S.
—61.1% receive 50%+ of their income from S.S.
I knew that Social Security was a lifeline for many seniors but I found these numbers pretty jarring.
At the same time, most of you have heard or read that the Government Accounting Office (GAO) has projected that Social Security will go in to serious deficit mode in 2034. No, the Cassandras are wrong when they say the system will be totally broke. What they do say, however, is that benefits will have to be cut 24-25% unless significant changes are made in the funding meaning some combination of higher eligibility age, means testing for the affluent, or higher Social Security taxes for those with generous incomes.
Sadly, we have known about this for years but politicians do nothing. Certainly, they will act at some point but the measures may have to be really draconian if they wait until the deficit is right on top of us.
Amazingly, some people say do nothing. I read an article a few years ago by a mean spirited columnist who suggested that if we did nothing people would learn to save on their own. At the time I dismissed it as the work of a crackpot, but on a plane in August, I fell in to conversation with a fellow who said the same thing. When I asked about the pain that it would cause millions, he shrugged and said, “that is their problem.” I countered that not many 85 year olds can find steady work, but he would not budge. So, I gently (I thought) brought up the much quoted stats that over 40% of Americans cannot afford a $400 car repair bill or an emergency room visit.* So, how can millions fund a comfortable retirement when they lead a hand to mouth existence now? He got red in the face and called me a “pathetic bleeding heart liberal.” That was a first for me! :)
I would project that 90% of you reading this are in great shape for retirement. Yet if something is not done, the three stunning statistics at the top of this page will get even worse. And, video services will thrive as millions more than today will not be able to afford any other entertainment but “TV” in their retirement years.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
*Source--Federal Reserve Board--Economic Well Being of U.S. Households, 2018
According to government data, the average recipient receives $1,404 per month. Okay, what is the big deal? Well, other data they published, admittedly a few years old, really got my attention. Consider the following:
—Some 19.7% of recipients obtain 100% of their annual income from Social Security (S.S.)
—33.4% derive 90%+ of their income from S.S.
—61.1% receive 50%+ of their income from S.S.
I knew that Social Security was a lifeline for many seniors but I found these numbers pretty jarring.
At the same time, most of you have heard or read that the Government Accounting Office (GAO) has projected that Social Security will go in to serious deficit mode in 2034. No, the Cassandras are wrong when they say the system will be totally broke. What they do say, however, is that benefits will have to be cut 24-25% unless significant changes are made in the funding meaning some combination of higher eligibility age, means testing for the affluent, or higher Social Security taxes for those with generous incomes.
Sadly, we have known about this for years but politicians do nothing. Certainly, they will act at some point but the measures may have to be really draconian if they wait until the deficit is right on top of us.
Amazingly, some people say do nothing. I read an article a few years ago by a mean spirited columnist who suggested that if we did nothing people would learn to save on their own. At the time I dismissed it as the work of a crackpot, but on a plane in August, I fell in to conversation with a fellow who said the same thing. When I asked about the pain that it would cause millions, he shrugged and said, “that is their problem.” I countered that not many 85 year olds can find steady work, but he would not budge. So, I gently (I thought) brought up the much quoted stats that over 40% of Americans cannot afford a $400 car repair bill or an emergency room visit.* So, how can millions fund a comfortable retirement when they lead a hand to mouth existence now? He got red in the face and called me a “pathetic bleeding heart liberal.” That was a first for me! :)
I would project that 90% of you reading this are in great shape for retirement. Yet if something is not done, the three stunning statistics at the top of this page will get even worse. And, video services will thrive as millions more than today will not be able to afford any other entertainment but “TV” in their retirement years.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
*Source--Federal Reserve Board--Economic Well Being of U.S. Households, 2018
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