I have written a lot about the state of the US economy, especially as it pertains to the multiple industries undergoing painful disruption and related to this, the lack of catalysts for job creation in America (see HERE, HERE, HERE, HERE, and HERE).
What follows is a guest post from a conversation post election night with Richard Knight of Korts and Knight, a kitchen and cabinetry design firm. Richard has a unique perspective, being a business man in a true "brick and mortar" segment that been been dually impacted by the rise of "showrooming" (see my piece 'Retail Needs a Reboot') and the weakened housing market.
Plus, having lived through many economic cycles over a 40 year career, his narrative and sensibility is both basic and profound:
"Quite a night last night. Glad that the campaign is finally over. Seeing the election map it is all too apparent that the country is really two countries, and that it is very hard to talk about it in one breath.
Those red states are all over the middle and the South. And then there is the blue West Coast. We are the multi ethinic, racial, diverse country that believes in the future, and is willing to embrace the holy trinity of Globalization, etc.
Then there are those undereducated white men and women, who are looking for some magic pill to restore the good old days. If we just cut back on everything, start saving, cut off the medical to poor people, and send the foreigners back home, everything will be OK.
Seems to me that it is hard to bring the entire country into the future and that whatever solutions we find will continue to add to the polarization of the country.
Regarding an engine for growth and for job creation, your example of Uber and Southwest (in my post on 'The Age of Indivisibility') are two fine examples.
And surely we will see more of this. But its kind of like my gardener. He provides a personal service for me, and his job is safe from globalization. It is the globalization that seems to me to me the immutable fact of the future.
Uber and Southwest avoid that issue by providing a local service. There are so many people in this world who are willing to work so much harder than us, for so little money, that it is hard to deny that they will provide the products that we need. Seems that either way manufacturing jobs are gone forever. Either they are made in this country with highly automated factories, or they are made abroad with millions of little fingers.
The US is not the first to find that changing times see great cities degrade and crumble. Cairo is a typical example. It was once a very fine and Western (maybe European) city. But time has passed it by and it is a crumbling as its infrastructure has long sense been overwhelmed.
You will see the same all over the world. The ascendent cities of China represent the new and shiny and awe inspiring result of a rising culture. I think the USA is headed down the same road as Cairo. We have stopped dealing with maintenance.
Now, I see that very clearly in the suburbs. There was a time when personal pride kept everyone's home a source of pride. Green lawn out front, the painted porch, etc etc. If you take a ride into the suburbs, you will see quite a mess. I live in what I will call a typical middle class neighborhood, and you will see that people are not keeping up.
Lawns have died, fences are falling down, and there are more and more cars parked on the streets. And if you go into the heartland, something we did this summer when we motored across the country, Ohio is really third world. Once great neighborhoods, boarded up, overrun, abandoned.
We have seen a slow degradation of life in America. In order to keep up our "standard of living" we have resorted to working longer, putting Mom to work, and living off our equity line to finance our lifestyle.
Now, it is becoming a case of, "Where can we cut further?" I think there is a lot of "hidden" belt tightening going on. We don't quantify maintenance, but houses are starting to fall down around people. We finally did some work around our house, I hired out some painting of gutters, some fences, and little stuff, and quickly spent 10k. It looks better, was overdue, but I could have just left it alone too. My guess is that people give up on insurance, don't go to the dentist, and cut back in lots of invisible ways.
So much of what consumers want to spend their money on, represent things to "improve" their life experience. We define that as a new sweater, or a new gadget, (iPad mini). These are the things that are highly promoted, and we are convinced that we need. And these are the things that are made abroad, and where our money leaks out of the economy.
And so my grand idea is that what we need is more maintenance. If Americans would spend their money to paint the gutters, and learn to find satisfaction in that, (rather than a new gadget) then that money would have a multiplier effect on our economy. That painter could then have the money to spend on his own house.
Now the idea is actually much bigger than that. The recent storm on the East Coast has exposed the vulnerability of our cities to calamity. Huge amounts of money needs to be spent to "fix" the problems that we did not see coming.
Global warming, rising sea levels have changed the game from "it would be nice", to "we NEED to go to work on it."
Take NYC. Seems that electrical grid is largely underground or in basements. Seemed like a good idea when it was conceived, but not so much now. Buildings all over need to think about moving things to the roof, or to the second floor, in order to protect themselves from being put out of business by a flood. In a million ways, our cities need to reinvent themselves to deal with the climate and to refresh themselves. The 100 year flood seems to be happening every 10 years.
And so I understand that at one time, the initiative to build the interstate highway system was a great engine of prosperity. Lots of jobs, improved prospects for commerce, and sold lots of cars, too. Our economy managed to commit lots of money to this, but it did not put a product into someone's hand. But it improved our quality of life nonetheless.
Today, we know that the roads, the bridges, the infrastructure is badly in need of repair. I think this is the place that we will find the jobs to replace the manufacturing jobs that have gone away. And this is an example where global location matters. This has to happen on our terra firma. And this money that gets spent will circulate back into our economy.
It would be nice to see money spent to make our cities shiny and new and to find a way to take pride in that, and to enjoy that rather than to seek satisfaction in products made in China.
The ramble is over, time to get moving. Your trinity of change is real enough. The solutions may not have enough scale to solve the nations problems. Too many people need work.
So my word for the future is "maintenance". Its local, cannot be digitized, and is largely not a commodity."
- The Age of Indivisibility, and the Rise of Integrated Systems Design (GigaOM)
- Retail Needs a Reboot to Survive (GigaOM)
- HP, Dell and the Paradox of the Disrupted (GigaOM)
- Assessing the Internet: Great Creator or Better Destroyer (GigaOM)
- The Great Reset: Why Tomorrow May Not be Better than Today (O'Reilly)