Our old pen-pal Jack Lessinger has a new book out: CHANGE
Jack is a rare economist. He studies social trends and connects them to economic trends…and, finally, figures out how they affect the property market.
His book outlines the development of the US property market over the past two centuries in terms of what he calls, “paradigmatic economic changes”. He notes that the shrewd investor always had to stay ahead of the trend. That meant, looking beyond what the then-current paradigm had raised up to what people were likely to want in the future.
Instead of investing in the old colonial regions along the East Coast, for example, an investor in the early 19th century should have looked to the frontier. There, he would have found cheap land…and could have watched it soar for the next 50 years. He should have seen the huge development that would take place in Chicago and St. Louis, for example.
Later, after WWI, the landscape changed dramatically. New technology had created a new idea about how people should live – in the suburbs. For the next 50 years, fortunes could have been made simply by anticipating the growth of the suburbs – further and further out from the urban centres.
Our consumer economy did not exist before 1900, says Lessinger. Since then, it has grown and grown – “Sexy young women, smiling from the billboards, urging strait-laced and penny-pinching citizens to save less and spend more. Buy, buy, buy screamed the advertisers. Buy Coca Cola and be happy. Buy Dentine gum and be kissable. Buy Camels and be manly. The consumer economy blossomed. Houses grew bigger and more lavish, cars roomier, faster and more comfortable. What a great time to be alive!”
But buy, buy, buy is going bye-bye, says Jack. The consumer economy is unsustainable. People don’t have the money for it. It is based on cheap energy and cheap credit, both of which are running out. He thinks it will disappear by 2020.
“Get ready for an existential leap…” he warns.
The next Big Thing in American society will be a huge interest in downscaling, downshifting, and simplifying. When the baby boomers realise that their houses won’t allow them to Live Large, says another friend, they’ll begin to appreciate Living Small.
Jack comes at the subject from a different direction than we would, but his book made us think.
Markets and Money