By the time I hit high school, in the early 1980's, this is what thought our future really might be like. This shows the "post-apocalyptic, Mad Max, wander the ruins and fight with crazy people over gasoline" scenario. As I mentioned earlier, my friends and I joked about this being our future while in high school. We said, "The apocalypse better happen, soon, or else we'll all have to get real jobs."
But Mad Max 2: Road Warrior was just a movie that put some young buck, Australian actor, named Mel Gibson, on the map here in U.S. theaters. It wasn't real life. But we don't live in post apocalyptic ruins in the United States, as we head into 2020. Or do we...
Rolling Acres Mall- October 2016
Abandoned Car factories in Detroit
Abandoned subdivision in Florida
The Cincinnati subway
Abandoned nuclear missile base in Colorado
Abandoned prison in Nevada
You get the idea. There are tons of these places across the U.S., and around the world. We have had an Apocalypse of sorts, just not the nuclear apocalypse everyone was worried about in the post World War II decades. Instead, we had a financial apocalypse, a "Factory Apocalypse," the closing down of thousands of factories, from the late 1970's into the 2000's. This was caused by new industrial technologies and outsourcing of jobs. In reality, this was caused by Disruption. New technologies made new business models more profitable, and a huge number of American factories closed down as a result. A new business model became possible, and people creating that new model disrupted the older business models.
By now, if you've read the previous chapters, you know that's the Toffler's Third Wave concept in action. An idea for an Information Age business takes root, entrepreneurs get to work, raise some money, and the new business suddenly disrupts the Industrial Age business model in that industry. The older businesses begin to lose market share. A few business owners see the writing on the wall, and adapt to the new conditions. But most are too set in their ways, disregard the young upstart companies as not being threats, and eventually go belly up.
Disruption is a dominant theme in today's world... and it's not done yet
Change happens. In the the truest sense, we, as human beings, are change. With every breath we inhale billions of molecules of air. These molecules, which have been circulating through the Earth for eons, go into our lungs, seep through into our blood streams, and replace other molecules being eliminated. Our bodies are in a continual state of change. But we feel like the same person day after day, and rarely think about these processes. Unless you smoke some really good weed, or you're just naturally a geek who thinks about crazy stuff, like me.
My point is, our physical bodies, and every plant and every animal, and even the mountains and lands and oceans, are all continually changing. But most change happens at a micro level we can't easily see, or at a longer term level, so slow we don't notice. So in our day to day lives, things appear largely stable and unchanging. The McDonald's I'm sitting in right now looks pretty much the same as it did yesterday, as does everything I walked by on my way here. But it has all changed in minute ways overnight, at some level. The tide in the harbor I walked by rose and fell a couple of times. Continual change is the nature of the universe. But we cling to things that seem stable, because that makes living our daily lives possible. But sometimes large waves of change come, and we have to adapt, like it or not.
But there are longer term changes, a group of converging, ultra long term cycles, that are creating opportunities for new business models, new forms of communication, and news ways of living day to day. Smartphones are an integral part of everyday life for nearly everyone now, but they became widespread only about 12 years ago. But they are one of many technological changes rippling through society, and those ripples are causing other changes, less noticeable day to day. This kind of change upsets old businesses, old ways of doing things, old ideas, old beliefs, and old power structures. And that messes with, and pisses off, a lot of people.
Yet, that's where we are now. The way society functions day to day is much, much different than when I first started noticing the world around me, as a little kid, nearly 50 years ago. The same is true for most people alive today, regardless of what generation they're a part of. This continual, fast-paced change, is a lot for all of us to deal with. That's my point in writing this book/blog thing. There's a bigger picture to it all. If we can step back, look at the larger picture of what's going on, I think it all makes a little more sense. The bigger picture I'm working to show here, gives us a context for the myriad of changes we get hit by at a more personal level.
A standard, black, rotary dial phone, the kind that was in nearly every house in the 1960's and 1970's. If you remember these, and want to have some fun, find one of these, and tell a kid to dial a phone number for you. It's hilarious. Public domain photo.
Change Happens
A range of new technologies coming into fruition in the 1950's, 1960's, and 1970's paved the way for the Factory Apocalypse, the shift to industrialized robots, loss of human assembly line jobs, and outsourcing of jobs to countries with much cheaper labor. That was a major disruption to the Midwest I grew up in as a kid, after I moved away. It was a huge hit to the way of life that people my age, or older, felt was "normal." But it was something that was going to happen, no matter how hard anyone fought it. Technology was evolving. Inventors and R&D departments were seeking new products to market to businesses and consumers. This fact is what so many people are still struggling with, that somehow this disruption by new technology was a personal attack, or one group of people attacking the lifestyle, or belief systems, of another. It was simply a wave of technological inspired change sweeping across society.
If I had been born in the same area of Ohio, 80 years earlier, we would have been riding horses or driving horse drawn wagons, and the people would be bitching about "them new-fangled automobiles" ruining their way of life. If I had been born in that same region of Ohio 150 years before that, I would have been part of an Iroquois, or similar tribe, fighting the white settlers ruining our lifestyle.
Change happens... like it or not. I personally have a real struggle with change. But I also realized that it's going to keep happening, and that there's a lot more on the way. So I gave up my Luddite ways back in 2008, and started learning what it would take to be a successful writer, creative person, and entrepreneur, in our 21st century world. This is an ongoing process, but I'm now pretty stoked on the possibilities of using tech in today's world, and working to find the best niches for me to become more successful financially as I move forward.
My Firsthand Struggle with Disruption
I know technological job disruption firsthand. In 1999, after an injury, I quit my good paying job as a Hollywood-type lighting technician (basically a roadie), and became a taxi driver. I just couldn't do the heavy lifting required at the lighting job anymore. It took a few months, and I lived in my cab for a while, but I learned how to make a living as a taxi driver. Taxi driver's don't make a hourly wage or salary, they rent the cabs, pay for gas, and operate as a one person small business. We actually paid the company we worked for more money than we took home, most weeks. By the spring of 2000, I could pick up a cab on Thursday afternoon, work long hours all weekend, and drop the cab off with about $300 to $350 in my pocket, most weekends. I lived in Huntington Beach, California, renting a cheap room. I had four days a week off. I liked driving a cab, and life was pretty good.
Then, the weekend before Christmas of 2000, I went to pick up a cab, and found out my driver's license had been suspended. That was a big hit, I lost my car and my job on the spot, right before the holidays. It was apparently a clerical mistake at the DMV, but it took me a couple of years to get it all worked out, and start driving a taxi again. By Labor Day of 2003, I was back in the cab, this time working 7 days a week. In a month, I had learned which bars and clubs were the best on which nights, and was just starting to make about $400 to $450 a week, after paying my taxi lease and for gas.
Unfortunately, I got back up speed right when technology disrupted the taxi industry. I got a call to bring my cab into the shop one day. The mechanic took out my CB radio, and put in a new dispatch computer. He showed me how to work it, and I headed back out to work. The management of the company said it was just an improvement, and that it wouldn't change things much for us drivers. But we had all talked to driver from other companies who had switched to computer dispatching, we knew life was about to get tougher. The drivers at other companies all said the same thing, the computers favored new drivers, and hurt the older, experienced, good taxi drivers. Does that sound familiar truck drivers?
The change from CB radio dispatching to computer dispatching changed everything, and it literally happened overnight. One day I got $70 to $90 worth of fares from the dispatch system, on average, each day. I would find the rest of my business myself, maybe $50 on a Monday, and $150 to $250 worth of fares on a Saturday. But the very next day, with the computer, I only got about $20 worth of fares from dispatch. The next day was the same, for me, and for all the other street drivers. I still had to pay $550 every Monday morning, to lease my cab for the week. I still had to buy about $300 worth of gas each week. Because of the shift from the radio dispatching to computer dispatching, I went from getting about $500 to $600 worth of fares from the taxi company each week, to getting about $150 to $200 each week. The same was true for the rest of the street drivers.
It's a long and involved story, but the computer dispatch system allowed the taxi company to take fares away from us street drivers, and feed those calls to the airport drivers at our company, who were always complaining about not making enough money. In addition, the computers allowed the company to put far more taxis on the road, which meant less business for each driver. In addition to that, the computer system was GPS based, so people calling for taxis suddenly had to give a full, accurate street address to get a cab. At the time, most of the bars in Orange County called our company. But suddenly, the bartenders had to say, " I need a taxi at 1925 Newport Boulevard in Costa Mesa," and the cab might take an hour to get there, because the new phone people sucked, and had trouble with the new system. For years, those bartenders could pick up the phone, call our company, and say, "Need a cab at Goathill Tavern," hang up, and the dispatcher would get that call out in 3-4 minutes. Our service suddenly sucked for the bars, so they stopped calling our company.
Business dropped to almost nothing, and all of us experienced street drivers struggled to just survive and pay for lease, gas, and buy food each week. Since I was living in my taxi, working 7 days a week, quitting meant losing my "house," my car, and my job, all at once. That made it pretty much impossible to get any "normal" job to replace cab driving. So I just kept working more and more and more hours. I burned out, and eventually almost died in my cab from cellulitis, a severe leg infection. In late 2007, I quit. I went straight from working 100+ hours a week as a taxi driver, to living on the streets with no income. The point is, I UNDERSTAND TECHNOLOGICAL DISRUPTION. It sucks. I'm not some PhD theorist talking hypotheticals. I know how tough losing your job to new technology can be. But that's the world we live in now. DEAL WITH IT. It's better to look ahead at what may happen to your job or industry in the next few years, and at least try to prepare for it, than to be completely blindsided by a big change.
Apocalypses past
The Factory Apocalypse
As I've mentioned several times now, a whole range of new technologies, largely computer and telecommunications related, really began to hit average Americans, in the 1960's, 1970's, and 1980's and has continued ever since. This led to the closing of many of America's factories, what could easily be called a Factory Apocalypse. I think the Toffler's Third Wave concept best describes the underlying forces and reasons why this happened, as I have explained. It's part of the shift from an Industrial Age world into an Information Age world. That loss of factories was a huge hit to many towns and cities across the U.S.. Many have never come back. Many more continue to struggle to attract businesses that will provide good jobs for their population. This is our "Dystopia," this series of major changes continuing to sweep across the U.S., and other developed countries.
The Phone Apocalypse
When I was a kid, in the 1970's, phones had rotary dials, and nearly every house had one on the kitchen wall, with a long cord. The older people today remember those, and maybe even earlier versions. There was usually another one in the parents bedroom, black, with a shorter cord, sitting on a nightstand, like the one pictured above. There was one phone line in the house, everyone shared it, and we never knew who was calling. The closest a person could get to a private conversation on the phone was by stretching that long cord around the corner, into the next room. If anyone picked up the other phone receiver in the bedroom, they could listen in. People paid a monthly fee to "Ma' Bell," the local part of AT&T. People got charged a basic fee, and charged per phone call. Local calls to our city were cheap, but long distance calls, outside the immediate area, cost much more per minute, and those calls had to be kept short. Then the Telecommunications Apocalypse began. Phone conglomerate, AT&T, got broke up in 1982, into several smaller companies. That must have seemed apocalyptic for a company that traced its roots to Alexander Graham Bell, back in 1885.
Soon, car phones were invented, costing about $1500 each, plus monthly service, they appeared in the mid-1980's. Then came pagers, remember those? Then cell phones appeared, the big brick-sized ones, in the early 1990's. Cell phones got smaller, and more widespread as the years passed. New, amazing, flip phones became the rage. They had cameras, so people could suddenly text photos of their genitals to each other.
I got my first cell phone, to use as a taxi driver, in 2000, I think. The rise of the Blackberrys and texting came in the early 2000's, along with PDA's. The first "smartphone" was invented in 1992, and hit the market in 1994. But it really wasn't until the Apple iPhone in 2007, that smartphones really became universal, and used by virtually everyone. That's only 13 years ago, iPhones are only in 8th grade, to think of it that way. But it's nearly impossible to imagine the world without them now.
I don't have an activated one, right now, but I'm in a small minority of people who don't. That's because I've been struggling with homelessness, and still struggling ot make a decent living in today's fast-changing world. Now the "smartphone zombie" has become a cliche', the people we see (or are) everywhere, doing everything, while staring down at their phone, and not paying attention to what's happening around them, like these goofballs.
"Phones" are now complex computer driven devices. They can take photos and videos, send texts, access the internet from nearly everywhere, play games, watch TV, videos, and movies, and order products of all kinds, to be delivered to you in a couple of days. People, average individuals, can communicate, in several different ways, directly, to probably about half of the 7 billion people on Earth. That fact alone sets our current world apart from 200,000 years of human history (except maybe during Atlantis, if it actually existed). Oh, and you can make phone calls on them , too.
An average smartphone today not only has more computing power than the entire mission control room for NASA's Apollo moon missions in 1969, it has more computing power than all of NASA then. Really, check this article out. While everyone relies heavily on their phones, for so many things today, most businesses still don't understand just how much these devices have changed consumer behavior, culture itself, business models, advertising, and marketing. Tens of billions of dollars are still spent advertising with magazine ads no one sees, and TV commercials no one watches. Then someone like Kylie Jenner comes along, with a huge social media following (due mostly to her family's reality show), and builds a billion dollar company in a few years. She didn't use the traditional media outlets like TV or even fashion magazine ads, she simply didn't have to. She leveraged her enormous social media following.
Today's smartphones, and the level of communication they make possible, is one of the biggest factors in Disruption in today's business and social worlds. Big business still has a long way to go to catch up to these changes. Traditional small businesses, by and large, have an even longer way to go, thought a lot of newer small businesses are based on these new media dynamics. More Disruption.
The Music Industry Apocalypse
In the 1990's, digital music hit society, with the adoption of CD's, replacing the analog recordings on "vinyl" records and cassette tapes. Then MP3's came along, though not too popular at first. Those were quickly followed by Napster and other file sharing software. This completely disrupted the music industry, practically overnight, in 1999. Ultimately Steve Jobs and Apple, always pioneers when working together (remember, Steve Jobs got fired from Apple years earlier), and iTunes revolutionized the music industry.
The music industry before Napster consisted of a relatively small number of mega star musicians going on tours that lost money, to promote albums that made hundreds of millions of dollars, collectively. The music industry after Napster is that one where nearly all music is available for free (legally or illegally), and concerts are now really expensive and a bigger money maker. High end physical items, like box sets also make some money, rather than sales of singles or albums. Now we have streaming services, MP3's on phones, iTunes, and other platforms in a still evolving music industry. But there is an exponentially larger amount of music widely available, much cheaper, or free, to people. And you know what, most of us are really happy about that.
Today's technology also makes music distribution possible for virtually every musician or band, worldwide, with the internet and today's media platforms. But making money takes some entrepreneurial skills, as well. Musician Amanda Palmer has become an prime example of how to build a hardcore, but relatively small fan base (compared to a Taylor Swift or a Justin Bieber, for example), and make a good living from that fan base. In 2012, Amanda raised $1.2 million to record an album, in 30 days, crowdfunding from less than 25,000 fans. She became the first musician in history to raise over $ 1 million using crowdfunding. She ultimately spent all of that money producing the album, and then flying around the world to personally meet many of those who contributed, in a series of concerts and events. Those personal appearances, and other perks, were part of what she offered to fans, in exchange for helping to fund her project. She now uses her Patreon support from her diehard fans to tour the world and share her music to very enthusiastic crowds.
The Publishing Apocalypse
As the music industry was reeling from the Napster effect, the print media apocalypse took shape. Us older generations grew up in a world where nearly every house had a local newspaper delivered to its front door, every day. Adults ate their breakfast flipping through its pages in the morning. A couple dozen large magazines came out monthly, available through subscriptions, or at local newsstands. A few thousand or so different books were published a year, back in the 1960's or 1970's, published by large printing houses, and distributed through thousands of bookstores spread across the U.S. and the world. The number of magazines and books being published rose dramatically in the 1970's, 1980's, and 1990's, and a few large bookstore chains grew into behemoths.
Then came Web 2.0, morphing the original world wide web over a few years time, around the year 2000. This transformation of the World Wide Web, from websites meant primarily to be read or viewed, to a hyperlinked world, full of user-created content, and much more interactive websites, all of this cross-networked to social media platforms, hit the magazine and publishing world by storm in the early 2000's. First Amazon.com rose up from obscurity in the late 1990's, making hundreds of thousands of hard to find books available to buy online. This ultimately helped put many book stores, large and small, out of business. Then came faster bandwidth, much better websites, and websites built for all kinds of niche interests. These sites could be published instantly, and updated daily. This was a huge hit to newspapers and magazines. More people could access the websites, often for free. Magazines have a 2 to 3 month lag time, from writing to printing and publishing, and instantly were relegated to old news by the time a magazine hit the newsstands. Now I'm an Old School BMX freestyle guy, I love magazines, and I worked at three, and freelanced for a few more. But websites allow publishers to get much more information out much faster, to a much bigger potential audience. So magazines were largely doomed. They are still really cool for special editions, in my opinion.
Then came the rise of ebooks in the 2000's, and then new devices like the Amazon Kindle in 2007, which seriously disrupted traditional book publishing, taking huge chunks of reader market share. Again, like the other Industrial Age to Information Age media shifts, the digital age allows far more people to publish information, allows them to make a profit on a smaller number of sales. That allows a much wider range of topics to be explored, so people can find ebooks on their favorite topic, whatever that may be. The is the de-massifcation of media in the digital age, the splintering into millions of small niches, where blogs, websites, and ebooks can be published very inexpensively, on every topic imaginable. Newspapers, magazines, and physical books won't completely disappear, but the digital versions have taken, are taking, and will continue to take, huge chunks of the market share. All this digital publishing has led to entire new markets, as well, which leads to new businesses, new business models, and sometimes entirely new industries.
These are not the only industries that have faced Disruption already, but the telecommunications and media examples of Industrial Age to Information Age Disruption give us good models of how technological Disruption will ripple through other industries.
Here's a good news segment on how the new, Information Age technology, and a new business model, disrupted the taxi industry in New York City, which had a well known Medallion system. As I mentioned above, I, too had my life disrupted while working as a taxi driver, by new technology. In my case, it was the computer dispatching system, that wrecked it for us in Orange County, CA, a decade before Uber and Lyft disrupted things in New York City. I don't feel any pity for this driver, he made bad business decisions when Uber was becoming known around the world. He should have seen it coming. But that's how disruption works. It's easy to ignore or blow off the competition until it's too late, if your business is doing well.
The Taxi/Town Car/Limo Apocalypse
As I mentioned above, I wound up homeless and living on the streets, after computer dispatching disrupted the taxi business here in Orange County, CA, back in 2003. I struggled, and got really fat from long hours followed by stress eating, until 2007, and finally had to walk away. Yes, it sucks. But I now realize it was my own damn fault for not keeping an eye on emerging technologies.
The new, computer, GPS, smartphone, and app technologies made ridesharing possible. Uber sprang up in 2009, and Lyft in 2012, and the idea was so much better for the end customers, that they quickly began to disrupt the entrenched, and incredibly corrupt, taxi industry in the U.S. and around the world. It's the same idea I keep repeating here; new, Information Age, Third Wave technology, makes a new business model possible. Some young (usually) entrepreneurs see the opportunity, get a business plan together, find an angel investor to ante up front money, and they go to town. Most of these ideas suck, but a few turn into really viable (if not immediately profitable) business models, and a new version of an old industry is born. The old, Industrial Age business in that industry gets disrupted, and starts losing market share. In most cases, the old, established businesses don't see the young bucks (or does) as a threat, and ignore the new competition. The new idea, if fundamentally better for customers, and managed reasonably well, spreads like wildfire. The old businesses don't know what hit them , suddenly they lose money, old assets lose value (like taxi medallions), and a lot of people bitch, moan, whine, and want a bailout. A few smart business people may move into a new market, or take their business experience into some other industry.
Uber and Lyft didn't just take fares from taxi drivers, they pulled business away from Town Car services, limo businesses, and airport shuttle van businesses. In France, the taxi/Uber war actually got violent at times, and wrecked travel days for many business travelers and tourists, even Courtney Love, as you can see in this news segment.
That big Uber/Lyft vs. taxi/limo/Town Car company brawl was in 2013-2016 or so. Yeah, you can still call a taxi or a limo, but Uber and Lyft won. Period. That's Disruption. The Big Transition is this paradigm shifting level of Disruption, happening to every single industry, every single business, and every single institution in our society. If we survive that, and don't veer off into serious war or something really bad, then, and only then, does our society actually enter the true Third Wave, the true Information Age. For a really serious business take on Disruption, check out this video by Gary Vaynerchuk. He's one of the best known guys in Disruption, and most knowledgeable on Disruption. His company, Vaynermedia, killed Mr. Peanut last week, which got all kinds of free press for Planter's nuts, and then they brought Baby Peanut back during the Super Bowl, and that got Gary on CNBC the next day. More free press.
These examples listed above are not the only industries that have already been through full scale disruption, but they are some of the best examples that we have all seen. These are good story arcs to study on how Disruption works its way through an industry. Now we have several models to look at, to get an idea how Disruption will play out in other areas.
Apocalypses Now
The Retail Apocalypse
This is the first of the major industry disruptions that actually got labeled an "apocalypse." That name popped up in 2017. While some retail stores closed in the 2000's, it was in the years since 2010 that large scale store closings, of major retail chains, escalated dramatically. Sears department stores were a mainstay for American buyers since early in the 20th century. Sears was one of the behemoths of the retail industry. According to the Wikipedia entry "Retail Apocalypse," Sears had 3,500 stores and 355,000 employees in 2006. By the time they filed for bankruptcy in October 2018, Sears Holdings had approximately 687 stores (Sears and Kmart), and 68,000 employees. That's a stalwart, American icon business brand, as American as Ford, Chevy, baseball and apple pie, that closed 2,813 huge stores, and laid off 287,000 people, in 12 years. There are a whole bunch of reasons this happened. But, as you now realize, the main, underlying reason, was the paradigm shift in retail sales from a Second Wave, Industrial Age goods distribution system, to a Third Wave, Information Age goods distribution system.
Amazon gets much of the blame for this in the press, the same press that made fun of the little retail book seller, Amazon.com, in the late 90's and early 2000's. Business people scoffed at Jeff Bezos and his crazy dotcom idea. Until they didn't. Again, new technology made new forms of retail sales possible. Jeff Bezos at Amazon, Pierre Omidyar at eBay, the people behind Etsy, Wayfair, Wish.com, Shopify, and many other businesses, also saw the opportunity to build new ways to shop online and get goods delivered to you door. It took a while, but it eventually caught on with consumers, and spread quickly. Now, even before we enter the next recession, 9,300 retail stores closed in 2019, and over 20,000 total in 2017, 2018, 2019 combined. Several thousands stores, probably another 20,000, closed from 2005 to 2016, as well. This is the Retail Apocalypse.
Sears is bankrupt. J.C. Penney's is struggling. Many major chains like Radio Shack, Toy-R-Us, Payless Shoes, and several others, are out of business completely. Dozens of other major retail chains have closed large numbers of stores. You can see lists of retailers who have closed down stores on the "List of Retailers affected by the Retail Apocalypse" Wikipedia page, and Clark Howard's website regularly chronicles them, as well.
It's February 5th, 2020, as I write this chapter, and Macy's just announced 120 more store closings this year, the first big Retail Apocalypse announcement of 2020. Keep in mind, the 30,000 or so store closings in the past 10 years happened when we were not in a recession. Expect a lot more store closings, when the next recession becomes apparent. Again, the fundamental, underlying cause of all these store closings, is the shift from an Industrial Age goods distribution business model, to an Information Age goods distribution model. Jeff Bezos at Amazon, and other early internet retailers, were simply the people who saw the future opportunities, and acted on those ideas. They saw the Information Age coming at them, and built a part of its infrastructure. That's the opportunity everyone else has, in all the remaining industries now.
The Political Party Apocalypse
I started chapter 12 with a video of Jeb Bush, to remind you readers just how much the trajectory of the 2016 U.S. presidential election changed, after it began in 2015. Jeb was a shoe-in for the Republican presidential nomination, and Hillary Clinton was a shoe-in for the Democrat nomination. Then Donald Trump came out of the woodwork and became incredibly popular on the political Right, and Senator Bernie Sanders came out of the woodwork and became incredibly popular on the political Left. Why? Trump blew Jeb out of the water, despite two former presidents in his family, and a $100 million "war chest" to spend on the campaign. Oh, and all the political connections in the world. Donald Trump did this, because his brand of speaking, his persona, connected with millions of people who felt left behind by the Republican Party. The same thing happened with Bernie, on the Left. Hillary managed to fight him off, reportedly with shady dealing behind the scenes. But Bernie's popularity can from his message, the same message he's been touting for 40 years, connected with people who felt left behind by the Democrats. We'll never know all the behind the scenes details, but it all ended with neither major, establishment candidate in the White House. How and why did that happen?
In my opinion, this ties into both of the underlying concepts I've mentioned. On one hand, we had the Third Wave technological transition, and that has created younger generations of digital natives, many now of voting age. They simply disregard traditional media like newspapers, TV, and magazines, and they get news and ideas online, or from friends, social media, or in college. So the older, establishment candidates, both with Industrial Age mindsets, spent most of their time, effort, and money, using traditional media, and projected traditional attitudes and ideas. Same ol', same ol'. Boooooring. Yes, they both used Twitter, Facebook, other social media, and online avenues. But they didn't use them like a digital native, like a younger person would. They seemed old, and out of touch with the world the younger generation grew up in. So that's one part of it, Industrial Age/Information Age mindset difference. Jeb, Hillary, and the more mainstream candidates had trouble connecting with many younger voters.
But I think the main reason the 2016 election went completely off the rails of normalcy ties into the other big shift, the mentality shift of P. R. Sarkar's Law of Social Cycle. As the underlying corruption of the late Acquisitor Age increased, the U.S. had a huge shift of wealth away from the American Middle Class, that wealth moved upwards, to a smaller and smaller number of large businesses, and uber-wealthy individuals. The quality of life for average Americans continuously declined, for roughly 40 years now.
While the well off lived in their social bubbles among other wealthy people, including the mainstream political candidates, average people got more and more pissed off, as life for most got harder and harder. By the early 2000's, mainstream, establishment political candidates were completely out of touch with average Americans. As this happened, it became more and more obvious that career politicians were very heavily beholden to special interest groups.
Everyday working Americans saw extensive gerrymandering, the controversial and ridiculous election process of 2000, widespread voter suppression, and a nationwide, declining standard of living for millions of people. They saw politicians at every level, who did not represent them well, if at all. As I mentioned in a previous chapter, the wildfire fast spreading of the Occupy Wall Street movement, literally nationwide in days, told me the Populist uprising, predicted by the Law of Social Cycle was beginning.
By the 2016 election, millions of people were ready for change... any change. Senator Bernie Sanders, with his social democratic views, and Donald Trump with his business first views, and his blatant racism and xenophobia, were candidates for change. Hungry for some kind of political leader, if not a full blown savior, people were drawn to these two candidates on the extremes. They had very different views, but they were drawing people who were suffering form the same underlying issue. Tens of millions of average Americans had lost hope in politicians, had to struggle harder and harder to survive day to day, and they wanted to follow someone who represented hope to them. That appearance of hope came from the political extremes, in the persons of Donald Trump and Bernie Sanders.
In effect, the Republican Party split into the establishment arm, and the new, far Right arm, the "Trump Base," as they have come to be called. The Democrats also splintered into two main factions, the traditional establishment Democrats, and the Far Left, the Progressive/social democrat, (potentially full Socialist) arm, now the Bernie Sanders/Elizabeth Warren camps. The centrists, of both parties, have been left in the dust.
Another aspect of the 2016 election that people forget is that the fringe parties got more votes than ever, in most cases. The Libertarian Party got 3.28% of the total U.S. presidential vote, the Green Party got 1.07% of the vote, an Independent presidential candidate got .54% of the vote, and Native American, Faith Spotted Eagle even managed to get one presidential delegate. My point is , a lot of of Americans were just plain sick of the status quo, and looking for someone they thought at least somewhat represented them.
Where does the Political Apocalypse go from here? I think we now have multiple factions, varying degrees of Left leaning, in the Democrat party. I think the same is true of the Republicans. I don't think White Supremacists who like to openly carry their Glock and AR-15 to the local grocery store accurately some up today's Republicans. But they are a visible aspect of the party at the moment. So are traditional business people who are much less controversial. But we are still highly polarized as a country, much farther Left and farther Right, than in 2015. We basically have four main political parties at this point, with degrees within them, and degrees separating them. We have the Far Right Republicans, and traditional Republicans. We have far Left Democrats, and traditional Democrats, and we have more people interested fringe parties than in previous decades. We may end up with 3, 4, maybe 5 smaller parties in a few years. Or we may all get sick of fighting so much, and drift back towards the center to a more stable two parties, but much different versions of those two main parties.
As I write this, President Donald Trump was acquitted by the U.S. Senate today, on two counts of Impeachment, after the Senate's refusal to actually hold a true trial, with the necessary witnesses and documents and testimony. When a branch of the legislature tells a known narcisscist, with documented totalitarian ambitions, that no one will check his power form now on, history tells us things could get ugly. So, at the moment, it's entirely possible that the U.S. could devolve into a Russian-like corrupt oligarchy in a few years. In that case, business pretty much dies for a generatio or so, we hand China our Sole Superpower crown, and political parties lose meaning. Hopefully that's not how hings will play out, but it is a possibility at the moment.
The Economic Apocalypse
As I write this, in early February 2020, the U.S. stock markets have just reached all time highs. Many people think of the stock markets as kind of the "pulse" of the economy. Fair enough, I've watched the stock markets for 30 years myself, largely for that reason. We think, "Hey, the business news says the stock market hit a new high, so the economy is kicking ass, right?" But when you go talk to a bunch of everyday people, most of them say they're struggling, usually paycheck to paycheck. Poverty here in the U.S. has been getting worse, real wages have been largely stagnant for 40 years, the homeless population has been exploding in major cities, these are pretty commonly known things now. You can look them up, or just look around.
But it's not just a big part of working people here in the U.S. that are struggling, it's the same in much of the world right now. A couple weeks ago, the top economic leaders of the world met in Davos, Switzerland, for the World Economic Forum. World leaders, business leaders, central banks heads, financial industry leaders, and top economists, meet there every January, and talk about the world's economies, and the global economy. It's where these people talk on many subjects around money, learn from other people in that world, and make plans for the coming year.
There are always themes, and you can see these people talk about many of these issues by looking up "Davos panel discussions 2020", or whatever year, on You Tube. Us normal folks can't see the behind the scenes conversations, but there's a lot in the official discussions. Big themes this year (2020), were climate change, the U.S./China trade war, and the issue of low/negative interest rates on treasury bonds worldwide. But there was another huge issue that was the elephant in the room this year. That issue is that the global economy is slowly grinding to a halt. The various central banks around the world have been trying every trick they know to jump start the economies of the different countries, since the The Great Recession of 2007-2009. The ultra-low government bond interest rates are part of that effort to spark growth in the global economy. Yes, China is still growing fast, and a couple of other places. But even China's crazy growth is slowing down to a more "normal" rate. The best minds in the world, in economics, can't really explain why this is happening. They can't figure out how to get the world economy back up and growing either. They're stumped. They say this politely, and delicately, in the panels, but they've saying it a lot.
By now, you probably know where this is headed. I think a big part of the problem is that, while we have added all kinds of amazing technology to the world's financial system, underneath, it is an Industrial Age financial system. The Third Wave of technological advancement has made all kinds of new things possible. Many of these technologies have been added to our financial system. But the roots under it all, and even the science of "economics" itself, is Industrial Age thinking.
Like every other "apocalypse" in this list, the "institutional Katrinas" that Alvin Toffler predicted in the interview at the top of Chapter 10, our Industrial Age economic system needs to be intentionally reinvented. This has been done in many areas. You can buy stocks of companies in Brazil or India, from a laptop on a kitchen table in Omaha, for example. Or people on a laptop or smartphone in Brazil or India, can buy stock in a company in Omaha. That's amazing. That's completely different than how stock markets worked 40 years ago. But the underlying system hasn't taken all of this new technology into account. We have big parts of the Information Age economic system built, but it's sitting on top of an Industrial Age infrastructure. That infrastructure is being run by people still using the economics science from the Industrial Age. The whole world's economic system, the global Industrial Age system of economics, is breaking down. The old ways to pump it up and jump start, it don't work well anymore, if at all. Bits and pieces have been replaced by new models. But the rest of it has to break down and be rebuilt, for us to have a fully functioning Information Age economic system.
A huge part of today's economic growth, comes from knowledge and new ideas. As Alvin Toffler explains at 2:26 in this interview from 2007, ideas are not a "scare resource." He says, " I can use arithmetic, and you can use arithmetic," but the total amount of arithmetic doesn't go down. If I use a piece of aluminum to make a product, there's a little less aluminum available in the world. Traditional economics has models for how that use of aluminum, a finite resource, fits into our economy. But if I, as an artist, draw a picture to sell, using a creative idea of mine, there aren't less creative ideas in the world. In fact, my drawing may inspire you to have an idea, so by using my creativity, I actually can create more creativity, that's the opposite of economic theory. As Toffler explained in the 2006 book Revolutionary Wealth, knowledge is not a finite resource. Ideas are not finite resources. Creativity is not a finite resource. So how do we measure and quantify its use, and build models to predict how it affects other aspects of the economy? How does an economist figure out the supply and demand of a resource (knowledge, ideas, creativity) that has an infinite supply? So the whole science of economics, needs to be revamped, and re-thought, to provide new ideas that will help explain the Information Age economy. That's just one little piece of how things have changed, and are changing, in the world of economics.
Another way things have changed is the hyper-connectivity of people, and the fact that money can move at the speed of light, from one of the 7 billion people on Earth, to most any other one, over phone lines, the internet, or satellite transmission of signals. addition, this transfer can take place in U.S. dollars, Euros, other currencies, or one of dozens of cryptocurrencies. Yes, many of these facets have been around a while, but smartphones and and crypto, for example, came into use after most of our top economists got their PhD's. They learned economic theory and models in a world where many "everyday" technologies we use today, didn't even exist.
So why would their types of monetary policy and actions be expected to work in an economic world that has changed, dramatically, since they left school? My point is that in this transition from the Industrial Age institutions, to Information Age institutions, change is happening so fast, that we don't have functional economic models, there just hasn't been enough time to study this new way the world works. In addition, the pace of change is increasing, so it will be quite a while before studies can even be done, that will lead to theories that will hold over a long duration of time. A future PhD economist, starting college right now, will see all kinds of change while they're in school, which will change the understanding of economics, after they get their advanced degree. That will be followed by more change, after they graduate, that will change the whole science of economics even further. Then it will have to be studied, theories put forth and tested, dogma shattered, and then, decades from now, those new theories will be in textbooks (or maybe uploaded straight into our brains, by then).
So right now, we have very intelligent economists and others, at high levels of government and business, using concepts they learned, from textbooks 20-30-40 years ago, based on Industrial Age theories and ideas, that made sense (maybe) in 1975, or 1985. But we expect these policy makers to be able to manage an economy, that has completely changed, in very fundamental ways, in the last 15 years. And all of that is assuming that every economist has the best intentions, and isn't influenced by this special interest, that special interest, or totally set in a certain theoretical dogma from 75 years ago. So it's no fucking wonder the economy is in a "Never Never Land" of negative interest rates, a surging U.S. stock market, and widespread stagnation, all at once. We're in completely new territory, and it's changing daily.
Another thing about the economy, it effects everyone. A minor policy change in one industry may affect 50 businesses in a certain supply change. But changes in economics affect nearly everyone, often in a very short period of time. I think we're on the verge of worldwide, major, economic Disruption. And that will effect everybody, and it will get ugly. So that's another, major "apocalypse" we're going through right now.
Apocalypses soon
The College Apocalypse
The next Third Wave Apocalypse I see coming down the pike is the College Apocalypse. I know a full scale Disruption of our entire university system seems pretty ridiculous right now. But so did all of these other major Disruptions a few months, or years, before they hit critical mass. I also know thee are probably a few readers mired in a tremendous amount of student debt who read those last couple of sentences, and thought, "Yeah, I could see that happening." We all know college debt is a huge issue in the U.S. right now, and the fact that there's over $1.6 trillion in student debt now, is insane.
I came to this issue as a reasonably smart guy, who thinks about weird stuff like economic trends, and ask myself questions like, "When will the next recession start?" and "What does the next ten years look like, when I blend the Third Wave concept, the Law of Social Cycle concept, my Big Transition concept, with what's actually happening in our world today?" I came to the College Apocalypse scenario as someone who never went to college, but was wondering 1) why student debt is so high in the first place, and 2) how will the student debt issue fair during the next recession?
To start with, the U.S. Debt Clock has U.S. student loan debt at $1.666 trillion right now, as I write this (red rectangle, bottom left, on that link above). That's disconcerting on many levels, particularly because only $1.3 trillion in subprime mortgage debt was a trigger in The Great Recession. So there's more than $350 billion more student debt now, than there was subprime mortgage debt in 2008. That subprime debt was bought, and then repackaged into derivative investments called CDO's. When enough people defaulted on their mortgage loans back then, the CDO's that were bought by pension funds, small countries, and other big, but unsophisticated, investors, lost value. That created a house of cards like collapse, and we had The Great Recession, which, of course, wasn't "great" at all. The whole thing was ridiculously complicated, but here's Margot Robbie in a bubble bath explaining it pretty concisely.
If you watched that Margot Robbie/The Big Short clip, you have a basic idea of what happened in 2008. So after that mess, the U.S. let Wall Street know that they had to quit doing this subprime mortgage scenario. Only people with good credit should get mortgage loans. Cool. That makes sense.
So one day I started looking up the student loan mess, to try and figure out why there was so freakin' much student loan debt these days. It took about 5 Google searches to discover that, after 2009, student loans were being bought, and repackaged into things called "SLABS," or Student Loan Asset Backed Securities. Those were then sold to big, institutional investors, just like the CDO's, full of sub prime loans back in the mid 2000's. Here's a sales page for SLABS, which makes them sound amazing. It's a sales page, so it's supposed to make them sound amazing. As long as nearly all students are paying back their loans in a timely way, SLABS are solid investments.
So it was time for a few more Google searches. Next question, how many students are not paying back their loans on time? I found this NerdWallet page, with stats from early 2019. If you scroll down and do the numbers, you'll find that 16.8% of federal student loans are in default, and 1.46% of private student loans are in default. OK, that 16.8% is kind of scary. So then I added up the number of student loans in default, deferment, and forbearance, that's all the loans where payments are not being paid on them right now. In Quarter 1 of 2019, 36.6% of federal student loans were not being paid at the time, and 22.05% of private student loans were not being paid at the time. Uh-oh.
So my thinking went like this. As of right now, this doesn't look good, but the student loan system doesn't appear to be in a crisis. But it's definitely not in sold standing, either. But when we drop into the next, inevitable, recession, a crisis in student loans seems likely, at some level. So how does that play out? More students stop paying their loans, the SLABS lose value before too long, and we get some quite unpleasant situation in the financial world. Maybe not 2008 bad, but still, not good. Then credit markets tighten, it becomes much tougher to get student loans, and this big fire hose of loan money pouring into colleges nationwide slows down. Less students sign up, and colleges lose a big chunk of their income. Again, not good.
Next bit of thinking on this. So where are all of the hundreds of large and small colleges in the U.S.? A lot of them are in our second and third tier cities, the ones that are not major tech hubs, like the San Francisco Bay Area, Seattle, Boston, or New York City. Most of these smaller cities and towns lost their good paying manufacturing jobs during the factory shut downs, 20-30-40 years ago. A lot of these towns and cities are now called "Eds and Meds" cities. The main employers in those Eds and Meds cities and towns now are the local colleges and universities, and the local hospitals, which are often tied to the colleges. I just spent ten years living back east in cities that depend heavily on their college culture for jobs, income, tax revenue, and city sustenance. If the student loan system goes south, even say a 20% reduction in income to the colleges, a lot of them will be struggling, quick. This scenario would have a really bad ripple effect through 100 or 150 American towns and cities, many of which are already struggling after the loss of their manufacturing base 20-30-40 years ago. That's not good. This was my initial thinking on the subject of student loan debt.
If you Google "student loan debt crisis," you'll soon find the colleges and universities have another line of thinking on the issue. According to this U.S. News & World Reports Article from last year (2019), "The Higher Education Apocalypse," college administrators in Massachusetts, and other parts of New England, are worried about another issue. College admissions have been dropping in recent years. There was also a demographic shift after the great recession, and for about 5 years, a lot less babies were born. When that group hits college age, there will be as much as 25% fewer students looking to attend colleges in New England then. So the college administrators there are already looking into that issue.
According to this list, at least 91 small colleges have already gone out of business, or merged with other colleges, just since 2016. That's a lot. So the College Apocalypse has already begun, but it's small, and off the radar of mainstream society, for now. If you combine my thinking about the student loan debt issue, and the already declining numbers of students enrolling, we get a coming College Apocalypse that will likely play out something like the Retail Apocalypse. It has started small and slow, on the fringes, with smaller colleges. But a financial crunch will amplify that, and we'll probably see a growing number of colleges going out of business, and merging with other schools, over the next 5 to 10 years. How many? That's anybody's guess, at this point. Nobody predicted that 20,000 major chain retail stores would close, just in 2017-2019. I think the total number will surprise all of us.
We need colleges for quite a few necessary jobs in society. Doctors, lawyers, scientists, engineers, teachers, nurses, and several other careers need degrees to go to work, and so we need colleges. Colleges and universities are also a major force in research and development for medicine, high tech, business, and the world in general. But as the Third Wave sweeps across the U.S. business world, the college system itself will meet Disruption, and a newer version of a college and university system will have to evolve. It will have to be one that works for the Information Age world, and one that works in a world where nearly all information is already free, in one form or another.
As I mentioned in "The Big Transition" chapter, I believe every business, every industry, and every institution in our society will have to deal with a major Disruption cycle, and evolve into a new version of itself. We are in the midst of this huge, 80 or 90 year long, period of continual, fast-paced, and downright annoying, and frightening, change. But we still have a long ways to go. Many things that seem normal now will go away. But Disruption itself, that's here to stay, for at least 15 or 20 more years.
Let's recap...
Earlier in the book/blog thing, I told you that I think there are three social theories, or concepts, that really help explain why society seems so crazy today. The first concept was the Tofflers' Third Wave concept. That's the huge societal shift from from an industrial-based society to an information-based society. I refer to it as the shift from the Industrial Age to the Information Age. The late Alvin Toffler, brainstorming with his wife Heidi, first put this idea out in his 1980 book, The Third Wave. Their last book, going deeper into this idea, and related ideas, was Revolutionary Wealth, published in 2006. Much of what they forecast in 1980, all the way until 2006 and beyond is still playing out.
The more I thought the Third Wave idea, through, I could not think of one aspect of U.S. society that should not be seriously affected by the Third Wave transition. My poorly named concept, The Big Transition, piggybacks on the Tofflers' huge idea. I simply think that the Third Wave still has a long ways to go, there are huge aspects of our society that haven't made the transition from the Industrial Age into the Information Age yet. That means that much of our society still has to make the transition, that's what this whole chapter was about. I also believe that in addition to the Third Wave, there are other transitions happening now, along with with the technological-driven Third Wave, and the social shifts caused by that. The Big Transition is simply my extending the Tofflers' idea forward in time, since they focused on their lives' work on the changes form the 1970's up into the early 2010's. The Big Transition is my name for those continuing Third Wave tranformations (like the Retail Apocalypse), blended with other large scale, long term transitions, happening now as well. My thinking is like a sort of "software update" on these other theories, looking ahead into the 2020's, and the 2030's.
That brings us to the second big social concept, P. R. Sarkar's Law of Social Cycle. This idea, from 20th century India, says there are four basic mentalities in any society, and that at any given time, one of these mentalities dominates that society. That dominate mentality shapes all of that society to some degree. Economist Ravi Batra took Sarkar's concept in the late 1980's, and applied it to the United States. He decided that we were then in the late stage of the Acquisitor Age, the time when the businessmen (the major power payers were still nearly all men in 1989), dominate. These eras, these ages of a mentality, can last for hundreds of years. The late Acquisitor Age is a time when business, and often government, get more and more corrupt, until a breaking point is reached. As the society hits peak corruption, the everyday working people, The Laborers, get the shaft, their standard of living declines over many years. The Laborers get more and more disgruntled as time passes, and eventually they erupt into a major Populist movement of some sort. In Sarkar's concept, this is known as the Acquisitor cum Laborer Age. It's crazy, and it's chaotic, and it can end civilizations, or lead to a takeover by another country or people. If those don't happen, the Warrior Mentality rises up to power, and the Warrior Age begins. The Warrior mentality is the people who aspire to courage, physical skills, and often daring.
That's where we are right now. The first spark of populism that "caught fire," in my opinion, was the Occupy Wall Street protest, which turned immediately into a movement, and was nearly as quickly stomped out. That gave us the terms, "The 99%" and "the 1%," still widely used nearly a decade later. Everyday working people, now decades after the loss most high paying factory jobs, are still struggling to make ends meet. Roughly 50% to 70%, depending on what poll or survey is our lately, seem struggle to pay for housing, soaring health care costs, child care costs, and "normal" expenses.
Many of these people are working a service job, or two, maybe even three service jobs. Many others work gig jobs, like for Uber of Lyft, or online gig jobs, maybe freelance web design, eBay selling, Amazon reselling, or something of the sort. So this frustration of tens of millions of working class people, led to another wave of the Populist uprising, in the 2016 presidential election, with both Donald Trump on the political Right, and Bernie Sanders on the political Left. The U.S. has swerved hard to the Right over the last three years under President Trump. While the stock markets surge in financial markets as I write this (February 2020), fueled by ultra low interest rates, central bank money printing, and debt levels never seen in human history, most Americans are not getting rich off of it.
Nearly 2 1/2 years into President Trump's presidency, according to this article, based on a New York Fed survey, 27% of Americans surveyed would have to sell something, or borrow money, to cover an unexpected $400 expense. Another 12% wouldn't be able to pay for the expense at all. That's 39% of those Americans surveyed that would be hit hard by a rogue $400 bill they didn't see coming.
Yes, the rise in stocks has helped out many Americans, but it has primarily helped a small percentage at the top of the financial food chain. But the majority of Americans still seem to be living largely paycheck to paycheck. For service workers, about half of working Americans, it's largely a struggle to pay for housing, food, healthcare, utilities, transportation, and other normal living expenses. When you go up the financial ladder a bit, another big chunk of Americans are also living paycheck to paycheck, though doing it with much larger paychecks. In addition to traditional expenses, these are the working people who share the $1.6 trillion in student loan debt, credit card debt, auto loan debt, and maybe mortgage debt.
If you don't believe me, go across the nation, ask random people where they plan to go on their two week vacation this year. Most people, anywhere, will laugh at the mere notion of a two week vacation, let alone have the spare time and money to have one planned. Forty years ago, a one or two week family vacation each year was a standard thing. The point is, a huge part of the United States, and many other industrialized nations, struggle to pay for "normal" expenses in today's world. And they ARE NOT happy about it. This continues to fuel the Populist sentiment, whatever part of the political spectrum you're in.
This is the world we're living in now, as I see it. These two societal concepts, The Third Wave idea, and The Law of Social Cycle, help to put today's fast-moving, weird, and often chaotic feeling world, into context. That brings us to the third big theory, or social concept, that I think helps to explain why our current world is the way it is. That is the work of Professor Richard Florida, and the rise of the Creative Class.
The political views, when expressed in this book/blog, are mine (Steve Emig), and don't reflect those whose theories I am shining light on, or anyone else mentioned in this work.
There's an upside to all this, coming in a future chapter, I promise...
Blogger's note- 9/12/2023- I have not changed anything in these posts since I wrote them in 2019-2020, except these notes at the bottom. I even left in the typos I initially missed. As of late summer 2023, I'm doing most of my writing on Substack. Check it out:
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