Ad People and Mobility

Not a month goes by where I do not hear from a reader who is a young person, usually in media, at an agency who wishes to talk or e-mail about his or her future. Generally, they work at small or mid-sized firms and they tend to be in the back roads of American advertising meaning smaller cities rather than advertising hubs. They often ask how they can stay current with the rapid changes going on, ask what they should be reading, and where they think they can learn the most.

Generally, I suggest that they ask their boss to send them to media and digital conferences. They can learn a lot, make a contact or two, and prove its worth by writing a report to management or doing a power-point on what is happening in the marketplace. If one is a thousand miles from an advertising mecca, this could help your entire shop. Most say their CEO says that it is too expensive. Well, at that point, I suggest that they move to an advertising hub if they want to continue to grow.

The response is interesting. If someone is in their 20’s and single, they tend to be open to the idea. Some find the idea of New York intimidating while others say they want to own a house not far from the office. That pretty much kills New York.

Mobility is something that demographers have looked at for some time. Since the time of the Alexis de Tocqueville’s analysis of America in the first half of the 19th century, U.S. citizens have been the most mobile people on earth. It has always fascinated me how when Southeastern England boomed during the Margaret Thatcher era, many unemployed in the north of England stayed on the dole or lived marginal lives when a move a few hundred miles away could have guaranteed some gainful employment. In continental Europe, it is often but not always more extreme. 
There is evidence that in some smaller Italian cities, it is not unusual for a young adult to stay in their hometown and often rent or purchase an apartment in the same building as their parents. This is great for family life and a sense of community but it does limit employment opportunities for some very talented people. I have witnessed the same thing in Portugal.

So Americans will move but there are caveats. As a general rule, the higher your level of education the more likely you are willing to move for a good job. If you have not finished high school, you are not apt to leave home even if you are unemployed. One reason for this is that you cannot afford to travel to a new location and look for work. So, if you live in rust belt town in rural Pennsylvania and are poorly educated and out of work, you do not have the resources to go to Texas and search for work there.

The ad people whom I have discussed this topic with often ask for a town with a VERY low cost of living and a vibrant advertising agency community. Well, there are not any if you are honest about it. The least expensive places to live in America are metros areas such as McAllen-Brownsville, TX, Johnson City, TN, Johnstown-Altoona, PA and Anniston, AL. They are surely some talented people living there but those metros will never be ad hubs.
Shift to the most expensive metros and you find San Jose, CA, Stamford, CT, San Francisco, Boston, New York, Washington, DC and Austin, TX. While Stamford is a magnet for money managers, the rest are high tech hubs that should be hubs for the new world of digital advertising.

When people ask me why go to a big city, I give several reasons:

1) Peer pressure. You can learn from many pros around you. If you are a lone media planner or writer in Duluth, you may have unlimited potential. Yet, even your boss and coworkers do not realize how good you are or could be. In a more competitive and larger environment, you will grow by necessity.

2) Stability--the ad business has never been stable and there are no guarantees. If you are in an ad capital and your company goes south, there are other places to work. Or, you can do a start up yourself. In a small city if your shop is king and has problems, you may have to shift careers.

3) New Media--people in outlying markets say they are 100% up to speed on the changes going on in the industry. They know it is nonsense. If you work in an ad hub you are in the middle of what is going on today. Several markets are the “Silicon Valley” of advertising.

4) Chance for advancement--many 10-20 person shops are places that are great to work in, lots of fun, allow you to do good quality work and build lasting friendships. At some point, unless you own the place, you will hit a brick wall regarding growth. In a major advertising center, you may max out but at a higher plateau than if you stayed in the small town.

What if you try the big city and hate it? Go back to a smaller market! All of us deserve to be happy and, if you lower your sights, you may be content out of the mainstream. There is nothing wrong with the quiet life.

Yet, if you do not try to reach your full potential, you could wind up old and bitter as many that I have met over the years. So, when you are young, go for it!

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

Job Geography

Several months back, I was watching a morning news show on cable and a governor was talking about his plans to create more good paying jobs in his state. He muttered something about tax incentives and said over the next several years it was likely that on his watch the state would become a hi-tech leader. I just had to laugh. It is simply not going to happen in his political lifetime.

I will not name the man or his state but he seems more than a bit out of touch with the new world of job geography in the United States. I have done more than a little research on this topic and job growth other than in natural resources tends to lean heavily on two major factors--education level of the local population and the degree of innovation going on in the business community.

To explain, let’s back for a minute. A few years ago, I was playing a verbal game of trivial pursuit regarding businesses. Someone threw up the question, “Where was Microsoft founded?” One said Redmond, Washington and everyone else but I said Seattle. I said Albuquerque. “How do you know that,” our lead questioner asked without hiding his annoyance. I told him that I had followed the fortunes of the company for over thirty years and remembered that Paul Allen and Bill Gates, the founders, were Seattle born and wanted to move back home very early on in the game.

At the time, Seattle was not doing all that well as a metropolitan area. Once Microsoft took off and eventually went public, the Seattle metro started to do better. After going public, many Microsoft employees became instant millionaires. So, a number of them cashed out and started their own businesses locally. They started a few thousand new businesses and most stayed in the area. Two prominent firms led by Microsoft alumni are Real Networks and Expedia. Why stay in Seattle? Well, the talent pool is full of very smart people. Demographers often refer to it as a “thick labor market.” If you look at these “thick” markets such as Silicon Valley, Austin, Boston, Denver, Atlanta, and increasingly, little Boise, you see them generating a hugely disproportionate share of patents relative to the size of their population. The number of patents taken out is an excellent surrogate for measuring innovation from my perspective.

If you look at economic history an interesting pattern develops as an industry begins to take hold. First, in the baby stage, the innovators can be scattered all over the place. Take the auto industry. In 1920, there were over three hundred car manufacturers, many in the Midwest but in a large number of states. Many went bust and some were swallowed up by bigger players. When an industry starts to hit its potential, a consolidation takes place and the players become more concentrated, e.g., Detroit for cars and Hartford for insurance. Finally, as you mature, you may move to cheaper markets to operate in and the clustering is gone.

Interestingly, most of our high tech areas tend to be very expensive places to live and to do business. Silicon Valley has a very high cost of living and especially so in housing. Why do startups continue to go there? I think that it is very much a function of the thickness of the labor market mentioned above. If you operate in Silicon Valley, you can attract great people with great ideas. Also, the best and the brightest love the social interactions. Think of the learning opportunities in a community like Silicon Valley where literally hundreds of tech companies are operating and many flourishing. Innovation and higher productivity have to come from such an environment. Many foreign giants have large offices in hi-tech cities for the same reason.

Also, and very importantly, is availability of money. Many venture capital (VC) firms still operate there and use what has been called in the industry “the 20 minute rule.” When a  20 something techie in a hoodie passes muster after their brutal cross examinations in their presentations for seed money, the VC pros do not simply write the checks and patiently wait. They usually want the new venture to open locally. This allows them to offer hands on advice and often help with hiring. Techies may not know how to run an accounting department or find a good general manager while they dream up the next life-changing new product. The VC leaders, who money is on the line, know just the men and women to help fill in those needed posts.

The growth of tech has caused some interesting pay discrepancies across the nation. In the brainiac markets, salaries are higher for ALL workers not just the tech savvy pros. In fact, people with high school diplomas in thick labor markets generally make more than college graduates in places that are struggling such as Flint, Michigan or Johnstown, Pa. Standard of living is another matter. Housing is very inexpensive in the lower income areas but so is pay. Increases tend to be much higher and faster in the high growth tech areas.

Surprising people are reacting to innovation. In 2013, Wal*Mart, yes, Wal*Mart, opened up Walmart.com in San Bruno, CA (Silicon Valley) rather than in corporate headquarters in Arkansas. Why? How many sharp online marketers and designers want to live in Bentonville, Arkansas? The talent pool is in Silicon Valley and if they are to beat back Amazon (a tall order), they need the best people in the business to do it.

So, ad agencies ought to look at this trend look and hard. People often have told me over the years how their mid-sized market would one day become an advertising mecca. It did not happen. Now, a new danger seems to be emerging. What if Apple, Google, Amazon and few others take their online and mobile advertising in-house? There will certainly be a talent pool nearby to handle the speciality jobs required. You probably have noticed that a large number of media assignments for billion dollar global advertisers are under review this year. As they shift away from conventional media (largely TV) over the next several years, will agencies be able to hang on to most of the digital assignments? Or, will they too have offices in Seattle, Silicon Valley and Austin? It will be interesting.

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

Recovery, what recovery?

Depending on which talking head on cable business channels you are listening to, we are in the 6th or 7th year of recovery from The Great Recession of 2008. Everyone cheerfully admits that the economy is recovering at a painfully slow rate, but almost all appear cheerful that things will turn out just fine in the near future.

On Friday, after a brief vacation, from my laptop, TV and most cellphone messages, I was hit with two pieces of downbeat data:

1) The official government figures were readjusted. Originally, GDP growth for the first quarter of 2015, was placed at -.2% but was not said to be -.7% owing to bad weather in the 1st quarter plus the muscular U.S. dollar making American goods less attractive overseas.
2) The US Federal Reserve, hardly a subversive organization, released their report on The Well Being of US Households. The report, as usual, had disturbing statistics for those among us who eat demographics for breakfast. A few highlights were:

--Some 47% of Americans could not cover a $400 emergency or sell something to cover the amount owed. (several of us wondered about whether they could go to friends or relatives)
--31% have gone without some form of medical care in the past year as they could not afford it.
--53% of those earning under $40,000 per year described themselves as “just getting by.”
--Despite the distance from 2008-2009, some 14% are still “underwater’ on their mortgages ( amount owed is great than what they could sell the dwelling for).

I ran these stats by some successful people who said it was “nonsense” or “impossible”.

Then I looked toward less obvious choices. I contacted a broadcaster whom I have known for years in a rust-belt DMA. He said, “Don, of course, the data are accurate. Car advertising has perked up here because the fleet is old (over 10 years) and people’s cars are falling apart and they need to get to work. But, the increases are far lower than most recoveries in the past. The dealers are using alternative media and there is little that we can do. Also, our retail business is awful. Two of our biggest clients closed their doors in the past year. People in our town are not spending--they do not have much money.”

Retail analysts are focusing on companies such as Tiffany’s which recently reported blowout earnings despite the stronger dollar discouraging some European buyers. Their target is not simply the often mentioned to 1% but really covers the top 5% of households who are doing just great. Yet, both Michael Kors and Coach disappointed with earnings lately and their stocks got hammered. Change in consumer tastes? Perhaps.

What is going on? If you want to be entertained and hear some straight talk, google or go on You Tube and watch retail analyst Howard Davidowitz. Unlike the talking heads on the mainstream media, he gives you the unvarnished truth as he sees it. When asked why mid-level retailers are largely struggling he states: “The people do not have any money.”

So, look beyond the New York, Boston and San Francisco’s of the world. Most people are struggling despite stock market strength and strong Tiffany earnings. As a mountain state broadcaster wrote to me, “Recovery, what recovery?”

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

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 doncolemedia@gmail.com

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 doncolemedia@gmail.com

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 doncolemedia@gmail.com

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 doncolemedia@gmail.com