Baby Boomers financing retirement with debt

A pair of reports out at the end of August 2013 show that Baby Boomers are woefully short of their retirement savings goals and debt among seniors is growing faster than other age groups.

"The traditional golden years that retirees anticipated have not become a reality as debt loads rise for those over 65,” says Henrietta Ross, CEO of the Canadian Association of Credit Counselling Services. “With reduced incomes, often coupled with increased expenses, these individuals are accumulating more debt to boost income through credit so that they can continue to enjoy a pre-retirement lifestyle that they may no longer be able to afford.”

But before you go lecturing a senior citizen about their spending habits, consider the responses to the BMO survey, where 71 per cent of Boomers said they plan to work part time in retirement to earn extra income. Also, 44 per cent will sell off their valuable goods, such as antiques or possessions they don’t use. About one-third plan to sell their home to help make ends meet.

Read the full article here. (Finanical/Yahoo)

Housing’s Cassandra

By Jim McNiven

Back in the middle 1990s, a onetime federal Cabinet Minister and financial advisor, Garth Turner, wrote a book on the future. He predicted that as the Boomers grew older, they would find that the younger generation that followed after them would be too small to buy up the Boomers’ houses as these older people moved to seniors’ residences, apartments and left the suburbs for the services in the central cities. The result would be price depreciation in outlying suburbs and general price stagnation across the housing market.

If true, Turner’s prediction would mean the decline of the housing construction sector, lower banking profits due to a decline in new mortgages and general economic difficulties. In fairness, he did not extend his prediction this far, but he clearly noted that having enough housing was not good for the economy, but Canadian demographics, being what they were then and are now, made such a future probable.

In 2013, this has not happened as he predicted—yet. Turner is still looking for indications of the ‘Fall’, but he has tended to focus on the Toronto market, which in terms of this kind of doomsaying, is a laggard.

Let’s explore what is going on in the rest of Canada to bear out his idea.

There are a number of reasons for the delay. First, while the overall demographic reality is really real, there have been some changes in peoples’ behaviour as they have aged. In particular, many couples have opted to have more than one residence. Let’s ignore whether these are condos or homes or rental apartments: the point is that they control more than one housing unit and probably live in both, part-time. Some emulate the very wealthy and may have three. 

Some of this multiple housing behaviour is based on the feeling that another residence is a better store of value than stocks and bonds. Another motivation is associated with people living active and healthy lives longer. Average life expectancy may not increase that fast, but people are living better longer within their terms. They hang on to their residences longer.

Next, the average age at first marriage has increased to 30 years, a bit higher for men and a bit lower for women. There are examples of 22-30-year olds living with mom and dad after graduating from University, but generally these people tend to have their own spaces, stereotypically a downtown apartment, or at least one on a transportation route. Each.

Then, in rural Canada, many retirees want to move nearer to their child or children, as the case may be, and find it difficult to impossible to sell their houses, involuntarily ending up with two residences. Some may also opt to hang on to them in hopes the ‘family home’ will become a vacation place for their children and grandchildren. Once in the city, these older people may live in seniors’ housing or in with their kids.

Finally, as Canada keeps admitting a quarter of a million (or so) immigrants each year, these people need housing as well. Regardless of whether they or their relatives already here can afford to put them up in good housing or they have to struggle upwards on their own, they still need some of Canada’s housing stock.

At some point, however, Turner’s prediction of 20 years ago will start to come true. Today, the average Boomer is 58 and the oldest is 67. By the time Boomers start into their 70s, much divestiture of housing should take place. It gets harder to take care of that big house and lawn in the suburbs or on Lake Wobegone and, barring pressing a grown child into this service , finding other people willing to do this work will get more difficult because of the small size of the 20s age group.

Then, there are finances. The construction going on in today’s era of cheap mortgages will slow, simply because mortgages won’t be that cheap any more.  Soft demand will creep from rural farms and villages to McMansions in the suburbs. And since many of the Boomers will need to free up the equity in their residences just to live in the manner to which they are accustomed, more housing will come on the market. It should not be surprising that the banks have noted a real rise in borrowing by older people. Inadequate pensions, little savings and small public pensions (CPP+OAS today will get you about $16,000, perhaps 25% of the average family income in Canada.) mean that alternative sources of extra income have to be explored.

This is not the same thing that happened in the US. There, greed and fraud prompted lenders to give mortgages to people who could not afford their terms once the easy payment initial deal wore off. As well, others were encouraged to take out loans, essentially second mortgages, backed by the increase in value of their existing homes. When the mortgage market crashed and money for new mortgages became tight to impossible, prices for homes almost everywhere declined. Many found themselves ‘under water’ and lost their homes to foreclosure. The situation was complicated when many of these people were also laid off from their jobs.

No, we Canadians will see further price pressure on rural and far suburban markets due to a surplus of housing there caused by rural out-migration and the Boomers’ need or desire to liquidate their assets. In the cities, downtown prices should maintain themselves, but the suburbs could see varying situations depending on whether the city is growing in population. Much of this could depend on the location preferences of youths and immigrants. In any case, prices may not move upwards a lot.

Turner’s timing may be off a bit, but placing confidence in the Canadian home, or a second one, as a sure store of rising value is probably going to lead to disappointment in the not-so-distant future.  

 

Living with Moore’s Law

By Jim McNiven

Last week, a 25-year old Texas man, who heads up a virtual company called Defense Distributed, successfully tested a plastic pistol, all of whose 16 parts, with one exception, were made by a 3-D printer. This is a machine that ‘prints’ solid plastic objects by laying down coat after coat of a liquid plastic according to a computer-program ‘blueprint’. See:

http://news.nationalpost.com/2013/05/06/worlds-first-plastic-gun-made-with-3d-printer-successfully-fired-in-the-united-states/

The inventor then put his blueprints on the web, taking them down after the US Government claimed he was violating an arms export law, but not before 100,000 people had downloaded the program. Welcome to the newest adaptation of Moore’s Law.

In 1965, Gordon Moore, the inventor of the integrated circuit silicon ‘chip’, gave a speech where he noted that, since the invention of the chip in 1958, it seemed that the number of transistors on a chip could be expected to double every two years or so. And thus it has happened, to this very day….See:

http://www.wolframalpha.com/input/?i=Moore%27s+Law

Doubling the computing capacity of a chip doesn’t sound like a big thing, but I would argue that ‘Moore’s Law’ is the single most important force in global society. The practical spinoffs have transformed how all 6 billion of us live and how we behave. It has created and wrecked industries, given us all means to talk to each other, threatened religious beliefs and practices, changed medicine, globalized the planet and made some people fabulously wealthy. Yet, most people have never heard of Gordon Moore and his Law.

The implication of Moore’s Law is that computers will be able to do twice as much two years from now as they can today. So, we went from the first email in 1972 to instant text messaging today. We went from ‘Pong’ in 1981 to using gaming software in simulations and to guide drones. We download newspapers and blogs like this one, helping the bottom to drop out of the forest industry. We went from Canadian manufacturers in 1990 to Asian outsourcing in 2000 to, come tomorrow, 3-D printing at new Canadian parts companies.

Most of the things we can do today are things we could not do yesterday, not because we were stupider or less inventive yesterday, but because we did not know how to make them real. Leonardo da Vinci could lay out the principles for a helicopter and a diving suit in the early 1500s, but the ability to turn these ideas into reality was 400 years off.

Today, that process in a lot of fields is drastically compressed. As fast as chip capacity expands, somebody finds a way to either meet a new consumer need or to drive down the cost of existing retail outlets, movie film consumption, want-ads, and a host of other services. No one knows when we will reach the limits of Moore’s Law and chip density will taper off: some say maybe in 7-10 years or so.

But think, in 7 years, this capability could increase by nearly 10 times over what it is now. Driverless cars are being tested now, mechanical systems in planes and automobiles are beginning to be replaced by electronic systems while postal systems across the world are beginning to collapse. And political statements are being made by characters testing plastic pistols made by a 3-D printer. What else will one be able do with a 3-D printer, 2023-model?

The critical consideration for anyone involved with Boomerswork is that one of the valuable skills needed in any organization is the ability to perceive and manage the changes wrought by Moore’s Law. Whether one is looking to hire a person or is looking for a project or task to take on, management people have to bring an understanding that comes with experience along with a sensitivity to what is new and changing in the organization’s environment. Young people can adapt to the new capabilities that come along with every new generation of chips and will be able to work with them, but there will be that continuing management need to understand their implications so as to take advantage of the opportunities they present.

The next time you think to use the terms ‘high technology’ or ‘new technology’, bite your tongue. Moore’s Law is almost 50 years old now and has been a normal part of all young people’s lives. It ain’t ‘new’ and it ain’t ‘high’. It is the basic, though invisible, rule that has governed us all for a long time—and will continue to do so. Figure out what it can do for and to your organization.

  

    

Trains and Trucks

By Jim McNiven

The simple notion underlying international trade is that every country has to have a balance. Only three things are counted in this balance—goods, services and capital. Canada tends to run a surplus in goods, a deficit in services and capital inflows or outflows make up the difference. We export cars and oil and import films and travel. Yes, I know it sounds odd, but our snowbirds ‘import’ their sun and even take themselves and their money down to the ‘exporter’. Capital is imported to build mines and factories and exported to buy US banks. Exporting stuff is vital for us.

This came to mind when my wife and I spent 8 months at Michigan State University in 2010-11. I was the Fulbright Professor attached to their Canadian Studies Center. Early on, I noticed that there was a railroad line going through the East Lansing campus and on into Lansing, the State Capital. It turned out to be the CN line that started in Halifax and went through to Chicago. It was a busy line and I soon realized that most of the rail traffic was coming from the Port of Montreal and going straight through to Chicago. Both Nova Scotia and Michigan were left out. We Nova Scotians watch the cargo ships go by while Michiganders hope for the trains to stop and unload some of their cargo. Later, back in Halifax, a couple of interested friends and I tried to develop a relationship between these two places to maybe find some way to help each other out, but the effort fizzled. That’s another story, someday.

While I was at Michigan State, I ran across another goods export transportation story. In 1929, a bridge connecting Detroit to Windsor, called ‘the Ambassador Bridge’ was completed. Eighty-odd years on, this has become the busiest international crossing in North America, if not the world. A serious chunk of Canada’s goods trade is tied up in the movement of autos, trucks and parts from Michigan to Ontario and back. The 20/401 expressways following the St. Lawrence watershed to Detroit has become Canada’s eastern ‘main street’. Today, the bridge is too small and too old to perform its intended function. Up to this point, everyone agrees, but then things get sticky. Really sticky.

The Ambassador Bridge is privately owned, unlike most others which are part of the public road infrastructure. The owner, Manuel Moroun, a Detroit businessman, has been interested in adding a second span right next to the original bridge, which exits into the University of Windsor campus. As well, the connector from there to the 401 is one of the City’s main shopping streets. Nobody on the Canadian side wants the existing traffic coming through this route, let alone more. The Canadian governments (federal and provincial) have proposed an alternative location downstream on the Detroit River that can easily be connected to the 401 and, on the other side, to the US Interstate network.  Some householders would be affected, but nothing like the miles of homes and businesses were the existing bridge exits to be upgraded.

In 2010, a new State legislature and Governor were elected. Many or most of the new Republican legislative majority enjoyed campaign contributions from Moroun. The new Republican Governor is a former Gateway Computer CEO and has a commitment to bring jobs to a State that had never recovered from the recession of 2000-1, let alone that of 2007-8. By and large, the Michigan corporate community, and especially the auto industry, backed the the Detroit River International Crossing (DRIC).

Things got stickier when the new Governor went off to Washington and came back with a commitment from the Obama Administration that they would count half of the DRIC bridge expenditure as credit toward Michigan’s share of other federal-state highway expenditures. Round One to DRIC.
Republicans like roads, especially rural Republican legislators, but they didn’t want the bridge. Moroun was a friend. Round Two to Moroun.

Then Moroun hired Dick Morris, a bare-knuckled Republican ‘strategist’ to help out. His people began a campaign to tell people that there was a secret agenda that would cost Michigan taxpayers serious money for DRIC, even though the Canadian government had agreed to finance the whole thing and recover the cost from tolls. Morris’ people also went to the downstream neighborhood that would be affected by DRIC and posted fake ‘eviction notices’ on all the houses. Round Three to Moroun.

The Governor then found some legislation passed for other purposes that allowed him to declare that a facility or piece of infrastructure was vital to the interests of the State and go ahead without legislative approval. Round Four to DRIC.

The Governor met with the Ontario Premier and the Canadian Prime Minister in the summer of 2012 to sign on to the deal. Round Five to DRIC.

By now it was run-up time to the 2012 election and Moroun sponsored a ballot initiative to prevent the construction of any significant infrastructure facility without taking it to the people in a referendum. He got the Koch brothers’ ‘Americans for Prosperity’, one of the most powerful conservative organizations in the country, to back his fight against DRIC. Round Six to Moroun.

In the 2012 elections, Obama won and this sealed the roads deal he had made with the Governor. Surprisingly, in spite of a serious funding mismatch, Moroun’s ballot initiative was soundly defeated, 60-40. Round Seven to DRIC.

On April 12 of this year, the US government issued a presidential permit that allows the construction of DRIC, renamed the New International Trade Crossing, to proceed. Round Eight to DRIC.

Moroun is continuing to oppose the project through the courts, claiming he has a ‘perpetual and exclusive right’ to build a bridge across the River, but this is seen by the Governor as a delaying tactic. Construction of the DRIC/NITC is expected to begin in 2015 and be completed in 2020. Round Nine to DRIC.

There is probably another round of this battle left to go. It would not be surprising to see a move in Republican circles to try and replace the Governor in 2014, though this may only give the election to a Democrat. There may be more ballot issues and even hope that a new Administration in Washington in 2016 might overturn the NITC permit, but these are long shots.

Canada’s ability to move its Eastern goods to market has been strengthened by the victory for the NITC. Now, we have to see if its rough equivalent in the West, the Keystone XL Pipeline, will also get Washington’s approval.
 




 

Don’t Worry, Be (Demographically) Happy!

By Jim McNiven

Back in the early 1980s, when the entrance of the Boomers (b.1946-64) was reaching its peak in the Canadian economy, youth unemployment was seen as a major crisis. A whole generation, probably including yourself, was predicted to end up on the trash heap of the economy. Governments created programs to employ youths, initiated training programs to make youths ready for the job market and pressured employers to add young people to their workforces. Universities added extra years to things like teacher education, not really because this might produce better teachers, and community college work hour requirements for advancing from apprenticeships to journeymen were increased, not because higher skill levels were needed, but because these kept students out of the job markets for an extra year. A student is defined as not being unemployed—get it?

As well, governments and the media touted the joys of retirement, especially early retirement. Remember ‘Freedom 55’? With every economic slowdown in the 80s and 90s, workers were given financial settlements to go off to the golf course or the beach and live in bliss during their ‘golden years’. Only farmers and corner store owners stayed on until they died, but these were seen as eccentrics.

Eventually you and your peers found work and prospered. Now, as the first Boomers reached 65 in 2011, a different tune has been starting to play. Seventy is the new sixty: pensions weren’t meant for the young-old of today, because they live too long and cost too much. Bismarck set the first public pension age at 70 in 1889 because it looked like something was being done for the elderly, even though few German workers made it to that age. Clever politician, that Bismarck. We are told today that we need to raise our retirement age from an absurdly young 62 (partial) to 67 and maybe higher (70-75?) and get back to his example. You have to be almost dead to qualify.

You might wonder what all of  this is about. It is simple. In the 1980s we had youth unemployment and in the 2010s, we have a youth shortage, a result of 40 years of not producing enough kids. So Canada has to keep its 1980s youths in those jobs that opened up when a lot of the Boomers’ elders were forced or enticed out of the workforce. There’s no bliss hanging around the golf course anymore. It all resides in the fun and friends you have in the office. Just look at today’s stories of people who are working into their 80s. Those farmers and corner store owners had it right all along.

Around 1995, the proportion of people over 65 in the Canadian workforce hit a low and it has gradually been rising. That is why Boomerswork.ca is in business. A couple of the reasons for the rise are physical and social: people in their 50s and 60s are in better health and nobody is giving them weird looks because they want to continue working. As well, strictly by coincidence of course, pension plans are being changed and not to the advantage of the pensioner. The old defined benefit pension is being phased out in favour of the defined contribution plan. Returns on savings are so low that companies and governments are beginning to shed these old obligations in favour of workers assuming the risk for their own retirement income. Sounds like the ‘nanny state’ is backing off in favour of personal responsibility. Oh yeah. The point is that crappy pensions mean people will have to work longer now, just when the Canadian economy finds itself on the edge of a decline in its workforce numbers and needs them to keep working. The Japanese showed us the way. They have the oldest society in the world and the largest proportion of a workforce made up of 65-70 year-olds. And they have a crappy pension system to boot.

So, the youth unemployment crisis of the 1980s will be mirrored by the youth under-replacement crisis of the 2020s, or before. We will dump the remnants of the 1980s programs and incentives to get rid of World War II Vets and replace them with vigorous young people with new ideas. Then we’ll develop new programs and incentives to keep on the savvy, experienced workers who are really not all that old and who bring discipline and a 9-5 work ethic to their jobs.  Let the young people be the eccentric entrepreneurs with their artsy and electronic start-ups. Once the Boomers pass through their 18-year cycle in 2030, these younger ones can take over nd the story will change.

I know this sounds cynical—it is. But there’s a ‘bad moon rising’ if we don’t get this transition right in Canada and keep playing around with nostrums. Go back and read one of my February blogs, ‘Who’s a Boomer?’

If you want to see what a mess Canada could get itself into by papering over its similar demographic problem, spend an hour on Japan with hedge fund manager Kyle Bass. He gave a lecture recently at the University of Chicago. He got the 2007 crash right, and the commodities boom right and I wouldn’t bet against him. Consider along with him what ignoring demographics has done to create two lost decades of flat economic performance and a crushing debt in Japan.

Watch lecture here:

 http://media.chicagobooth.edu/mediasite/Viewer/?peid=f15d95d054e8442ab0cc1c60321383101d

Canada needs a more sensible discussion about this problem than we get through advertising spin and government social marketing, or we risk imitating the Japanese ‘lost decades’ and their probable result.

A Tale of Four Islands

By Jim McNiven

Let’s pretend that Nova Scotia is an island. Part of it is an island, of course, but the rest is attached to the North American mainland by a strip of land less than 10 miles across. Having pretended that, let’s look at some of the financial messes that islands are having and compare them to Nova Scotia.

We don’t have much to fall back on, economically—no big resource wealth to tap for extra added income, a small economy and a small population. In fact, we represent perhaps 1/500th of the North American economy. We have a sizeable public debt, though not as bad as it was a decade and more ago, but the social safety net is wearing thin and the desire to improve it by borrowing is strong.

Now, let’s look at some other islands with few people and few prospects for wealth. Iceland is an independent country with its own currency and access to a lot of fish. It has a population of ½ of Halifax County, a bit more than PEI. In the early 2000s, some Icelanders figured they could tap a lot of money in other countries and put it to good use. Soon, a lot of Icelanders were seeing fortunes made from bringing in money from Scotland and elsewhere and using it to pay themselves and to buy a lot of assets all around the world, including a lot of sophisticated instruments created on Wall Street and blessed by ratings agencies. We know what happened then—the roof fell in-- and the Icelandic banks, which had assets maybe 100 times the size of the local GDP, couldn’t meet the demands of their depositors trying to get their money out, and went ‘bankrupt’. The lenders/depositors looked to the Icelandic government for compensation, but were told they were big boys and to get lost. Nobody would lend any more money to Iceland, their currency fell to a fraction of its previous value and local financial experts went back to fishing. The hangover was not pretty, but it is pretty well over now.

Then there’s Ireland. It is bigger than Nova Scotia by a factor of 3 or 4, but still small potatoes. However, it is in the EU and the Eurozone. Now the Eurozone is a strange beast. It is a common currency without a central central bank. It has as many central banks as there are countries plus a European Central Bank, which I suppose some hope will soon become a real central bank. Some enterprising Irishmen decided that the game of high stakes finance was for them and away they went. A lot of overseas money came into the country and was lent out to finance domestic real estate development. Office buildings and housing tracts sprang up, far in excess of local needs. There were fantasies that expatriated Irish and others would come to the island for summer homes. There are palm trees in Dublin, as I can attest, but it does rain a bit more than is normal for an island full of vacation homes. When it all went bust, the depositors came running and in a fit of public pride or maybe fear of their place in the Eurozone, the Irish government said it would make good the debts, which, of course were once again big multiples of the size of the local GDP. The EU was there to help a bit. There are a lot of deserted houses and neighborhoods in Ireland and the people are resignedly trying to pay the money back, but it’s a sad place now.

Then there’s Cyprus. It has a many people as Nova Scotia minus Cape Breton and an even relatively smaller economy. Nothing there but the sun that Ireland needs. Maybe there’s a decent offshore gas field, if things can get sorted out about who owns what in that part of the Mediterranean, but not much else. Cyprus is in the EU and the Eurozone as well. The bankers and the government tried a different strategy. They managed to attract a lot of fugitive money from out of Russia, billions of Euros worth, and then used the deposits to invest in some American financial instruments (remember Iceland?) along with a lot of bonds that their sterling sister government (They are all Greeks) had to offer. The Russian oligarchs and other perhaps less savoury characters from that part of the world got a place outside of Russia and in the Eurozone where they could launder their cash, with almost no questions asked. When it all blew up, the Cypriots could not just walk away from their banks’ debts like Iceland did, nor were they about to tighten their belts and try to make good on their regulatory failings like Ireland. Instead, they went right away to the EU for help. The kindly Germans and others suggested that they ‘tax’ all the banks’ depositors enough to pay up on maybe 1/3 of the money owed and the EU would loan them the rest. Of course, the citizenry, in good Greek fashion, rioted and the Cypriot Parliament backed down.  Instead of hitting everybody, they ‘taxed’ only those who had over 100,000 Euros in these banks. So much for the Cyprus safe haven laundering business.  The Russian government seems to be onside, but I doubt the Russian oligarchs are. Tricky business, grabbing money from those guys.

So, what about Nova Scotia? It has no central bank as that is part of the federation. It has the Canadian dollar, analogous to the Euro. It has some fish, some vacation property and even a (good) Russian restaurant on Lower Barrington Street. Its banking system is out of its hands and its Provincial debt is only about 40% of its GDP, not 40 or more times it, as on islands elsewhere. We never had the chance to play with the big boys like Iceland, Ireland and Cyprus did. We just have to plod along, earning our bread the hard way.

No Going Back

By Jim McNiven

When we read about the Great Recession of 2007-11, there seems to be an assumption on the part of commentators that as soon as the economy ‘turned around’, we could get back to normal. That’s not how it is turning out and that should not be surprising. There is no going back.

When the US economy came out of the recession, one of the things most noted was that this was a ‘jobless recovery’. Somehow, companies were producing a lot of stuff, but hiring growth was dismal, unlike other recessions. The truth was that US manufacturers gained back all the sales revenue they had recorded before the recession, but they did it with 5 million less jobs. Since the softness of demand during the recession meant they could not raise prices much, if at all, there had to be some kind of productivity growth to account for this situation.

The answer, for the most part, turned out to be robotics, by and large. Different kinds of robots: big arms doing welding; little ‘saucers’ scooting palettes along a floor; advertising robocallers pestering and selling products—all kinds of machines that replaced most any function that is repetitive. Some of the machinery is so cheap to install that manufacturing is leaving Asia for North America. Robots are cheaper than Chinese.

For years, I have been spending a couple months of the winter in Arizona. That’s why I am a ‘poster boy’ for the Boomerswork concept. When I am home, I want to be busy, but when the desert calls...see ya!. Last weekend, I spent a couple of days at the Tucson Festival of Books, something like Halifax’s Word on the Street, only immensely larger. 2012’s Festival drew an estimated 120,000 people. I went there to look into what has been going on in book publishing. Clearly, with Kindles, Nooks and Kobos as well as with iPads, book publishing has been leaving paper for bytes, which has wrecked the bookselling business. The Borders chain in the US went bankrupt last year. If you go to your local Chapters, you will find the gifts section growing. Even used bookstores are moving into DVDs, musical instruments and gifts.

As I understand it, the book business, like a lot of others, consists of production, marketing, distribution and retail. E-books tend to cut out a lot of production, distribution and retailing, with the exception of producing content and putting it into an acceptable form. The big publishing houses used to act as gatekeepers on content that was sellable. Also, they did some marketing of the books they published. Now, everything is falling apart. I went to a presentation by a Silicon Valley company called Smashbooks. The Marketing Director presented some amazing facts. In 5 years (2012-5=2007, remember from above?) the proportion of e-books went from zero to 30% of the market. But these were not just electronic copies of the publishers’ paper books. A lot of these were done by ‘Indie’ publishers, namely, anyone with the software to produce an e-book or who contracted the task out to Smashbooks or its competitors like Amazon.

Unlike the traditional publishers who understand as well as possible, what sells, these e-publishers are clear that they will get your great Canadian novel up in the cloud, but it is up to you to sell it. In 5 years, Smashbooks has published a quarter of a million titles from 50,000 authors. They distribute these to the new e-retailers, the Apple Store, Amazon, even the dot-coms of some traditional publishers. Their favorite pricing point is $2.99. Half the company’s revenues will soon be coming from non-American authors. This thing has global reach.

The book industry is the latest to go through a wrenching change, but watch out for education as well, especially higher education. It is an information industry like banking, real estate and media and eventually subject to the same rules. Universities have monopolies on certification and government money, but these are dwindling.

When a Stanford professor offered a free engineering course a couple of years ago, 50,000 people from around the world signed up. The MOOC (massively oversubscribed online course) was born. Now Harvard appears to be outsourcing its basic accounting course to another university, so its faculty can concentrate on higher level stuff. The California legislature passed a law this month requiring the state universities to offer and accredit online equivalent courses where there are required courses that are oversubscribed by their students and where faculty are not available to teach them. Finally, I am reminded of a comment made by a University of Phoenix (private for-profit institution) that he saw his major competition coming, not from other universities, but from Disney.

So, the Great Recession is over, but there’s no going back. There are dozens of industries that will never be the same again. If any of you are in the vicinity of the Dalhousie Library, go in and ask to see the 3-D Printer and think what this ‘toy’ will do to manufacturing in the near future. Make your own iPhone, anyone?