The surprise victory of Donald Trump has brought into sharp focus a big idea for the 21st century.
Life is local-Business is global
Here are some things to think about from observing “local life” in America:
- Local Newspapers are alive: In the US only small town newspapers are still around. The regional and national newspapers and magazines are having a hard time. Just see how thin the Time magazine now has become. Low circulation means less advertising. The outstanding quality of articles in magazines like Time don’t seem to count.
- Plumbing,electricians etc: Since people live local they need to hire specialists occasionally. Generally Americans believe in D-I-Y (Do it yourself) more as a matter of pride and self reliance.If you have reasonable handy-person skills, YouTube can today guide you to avoid calling in a professional plumber for less complicated jobs. Most people do not hire painters ($30/hour) and try to paint as well as they can. All this to the detriment of the local trades-person.
- Of Wine Stores,Restaurants and Nail Spas: Any strip mall on Main Street will primarily have wine stores,restaurants and nail spas, businesses that need the customer and product to be at the same location. All these businesses have reasonable margins but involve very hard work, difficulty in financing and very much dependent on the fluctuating fortunes of the local people. See a previous post on the growth of the nail spa industry.
- Black Friday in-store sales decline : As consumers Americans have taken to online buying and there is sharp decline in mall sales even with “Black Friday” deals. All deals are available online today-great news for US consumers but bad news for malls. In fact-one third of US Malls are expected to close. While US consumers might benefit with lower online prices, this is not good for locals who “live local” with a local mall job.
- Saturday after Thanksgiving is Small Business Saturday: Amex launched Small Business Saturday in 2010 to try and promote foot traffic into local businesses just as big Malls and online stores take away most of the big purchases. The main theme is to “support” small local businesses. Is one Saturday in the year enough to support small business on main street?
Trump recognized that there were huge swathes of Americans ( including different races, ethnicity, gender etc.) who lived local.Also voting is strictly local in the electoral college system in the US. At the local level the average American has been hard hit because of globalization and technology. If you are trained as a welder, there is no local factory that can hire you for a sustained period. It’s hard to go back to college as you left studies after high school to get into a trade that paid well. For college involves learning to write and do math and also appreciate history,philosophy etc. before you can even start a professional course in say engineering or business. Even in engineering you have to be an excellent student to be able to get those high paying jobs involving say aircraft design.
On the other hand, a US consumer is happy to buy a freezer for $148 from Walmart. This is probably a great freezer from the good Chinese brand Haier. It turns out that other competing brands of freezers are also made in China,Mexico etc. Similarly many service occupations are outsourced to technology or countries like India,Philippines.
In America, just as you prepare to eat turkey “locally” for Thanksgiving keep in mind that the turkey might some “global” components as this New York Times article suggests. It also turns out that almost everything sold in the US during this holiday season and in stores today, is mostly imported from a very efficient global supply chain. These include clothing,electronics and toys.
The challenge for the Trump Government will be to find “local” work for millions of Americans. It turns out that leaders of all countries have exactly the same challenge. Provide work for their citizens as they live and vote local.
A recent book on Re-skilling America by Katherine S. Newman and Hella Winston suggests that the German apprentice system is working. The German Government encourages co-operation between high schools, industry and unions to put large numbers of high- school students into paid apprenticeships. Instead of trying to push everyone to college.
America has comparatively much weaker links between trade training or college education and industry. In any case, that could be a more medium term solution. For the older workforce immediate work is probably only in re-building the run down infrastructure, till trade deals are figured out.
All in all the stock market thinks that there is growth ahead, and global sales and purchases for US businesses are factored into the record stock market levels.
We wish our dear readers a very Happy Thanksgiving! [Bonus tip: avoid talking politics this Thanksgiving dinner, just to go beyond the election !]