The Future and Promise of “The Middles”
by Don Libey

There is a season for all things. We all know this ancient wisdom to be true and timeless. Applied to the future, however, I am convinced that “The Middles” are the place of opportunity. This is a futurist’s discussion of the philosophy, constructs and applications of “The Middles.” What are “The Middles?” “The Middles” is my term for a place at the center. In observing our industry over the past twenty-five years, and having foreseen the influences of the convergences of the catalog and on-line worlds, and having then offered perspectives equally about caution and opportunities, I am fully persuaded that, ultimately and unfailingly, we all seek a place at the center. Those who lead at the outer edge of change seldom maintain their position; those who follow at the bitter end of grudging change seldom remain immobile for long without a heroic spurt into the present century. Ultimately, all endeavors and initiatives seek the benefits and security of the center. We need the center. It is a safe place and it is where the Great Bell Curve of All tells us to be if we want to succeed and survive. Observing many corporations as I do, I can fairly report that most are operating at the centers of the primary realms of operations: markets, marketing, management, money. The bulk of these businesses are neither leaders nor losers; they are, indeed, centered and middled in their niches. Only a few are perched at the edge of ruin; only a few are perched at the edge of genius; most are solid businesses operating quietly and respectedly at “The Middles.”

For almost two years, I have been receiving increasing wafts of the future carried in the scent of the prevailing westerly winds. There is a Renaissance brewing; the Hundred Year Revival is beginning. I smell it, I know it, and I am acting on the opportunity of “The Middles.”

Look at the activity in the markets. Securities, bonds, commodities, currencies all are seeking the middle ground. The S&P 500, a far better measure of the corporate world than the Dow, has returned to its middles, a place where value and reality begin to achieve parity and, consequently, economic survival and continuance for the future. Look at work attitudes. The “lifetime employment at the same company” model was replaced by the “dot.com weekly job hopping” model, only to be revised to the “job security for the intermediate future” model we are seeing today. Look at infrastructure. The infrastructure of the east coast is old and worn-out and too expensive to replace. The infrastructure of the west coast is new and too expensive to maintain. Only in the middle of the U.S., in the heartland, is the infrastructure solid and affordable. Look at family migration. The suburban family is fed up with traffic, fear, and taxes. Many are beginning a long migration back to the rural areas, back to “The Middles.” Look at business valuations. The high flying multiples of the 90s are over. Business valuations are returning to the middle where they have, actually, always been for real companies. A valuation of 5 to 6 times EBITDA is a fair, middle-ground for valuation. Any seller who can achieve a 6 time or better yield on a company sale today is an absolute fool for not taking the money and running given the socio-political and economic climate being driven by the national and, likely, global unrest and surge to “The Middles.”

Perhaps you can begin to see what I have been scenting on the breezes. There is a move towards a consolidating, centrist position in nearly all realms of American life. Personal finances are returning to a centrist position because the 401Ks are only 101Ks now. Spending will return to a “middle” position. Big, honking SUVs will shrink to be, once again, nice 4-door sedans with “middle” attributes and 40 miles to the gallon. Wine with dinner at the restaurant will be $18 a bottle, not $64. A serviceable shirt will return to the middle at $28, down from the ludicrous $48 we are offered now. The “Wal-Martization of America” I have recently spoken and written about is having even deeper influences in these emerging trends than first thought. It’s not only price, it’s a whole new way of life and a changing cultural norm. The Middle is the new America.

The Geographic Middle

Close readers will have noticed something important over the past several years. The Midwest has been, by and large, quite stable in my economic evaluations and extrapolations. The economic conditions in most Midwestern states have more promise than in many eastern, northeastern, western and southern states.

A closer examination of the core Midwestern region reveals reasonable property values, reasonable costs of living, reasonable insurance costs, reasonable health care costs, reasonable wage levels, and reasonable taxation (even though all taxation is onerous). The Midwest is, as you might expect, firmly positioned in “The Middles.”

A local examination of towns and cities in the Midwest reveals even more interesting perspectives. Much of the infrastructure has been quietly enhanced. Much of the urban landscape has been improved in places like Des Moines, Iowa, Fort Wayne, Indiana and Elgin, Illinois. There is a freshness and newness, as well as a well-tended look, to much of the Midwest. It’s as if Paul Bunyon and Babe The Blue Ox came through with a huge broom and swept it clean and made it all neat. Compared to the decay and squalor of the Northeast Corridor on the Amtrak route between Washington, D.C. and Boston, the Midwest is absolutely pristine. Even the corn fields seem more orderly now than in years past.

When one observes these hundreds and hundreds of small details, one is left with a sense that this place in the middle of this country is well-positioned for something to come. The Midwest has retained a strong work ethic. People want to work and do a good job and they want to participate in the success of the larger organization, not in just their own success. To that end, there exists a caring and compassion for people that may be muted elsewhere. And, with only one or two notable exceptions, there is an integrity of doing business and transactions among the owners of direct marketing companies whose word is still their bond in the Midwest.

The agricultural aspects of the region lend themselves to a conservative financial base. There may be nothing more enduring than a local, well-managed bank in central Iowa. Risk is defined differently in the Midwest than on the east or west coasts. It has less downside and more of a “middle-ground” approach. And there seems to be a whole lot less of it in evidence.

The Rise

My conclusion is that the Midwest will rise in a great Hundred Year Revival. The turn of the nineteenth century saw a rush to the cities; the turn of the twentieth century will see a rush to the country. The long wave change cycle of the nation is undulating once again and quality of life concerns and costs of living concerns will precipitate an exodus to the vast, empty middle of the country. The young as well as the aging population will seek a place in the middle where it is better, cheaper, safer and where life at least appears more simple.

Plus, my conclusions lead me to believe that future costs on the east coast and west coast are unsustainable. A small, two-bedroom home in a retirement community in New Jersey is over $200,000 and the taxes are over $5,000 a year. And they are not going to go down. The same house in Nebraska is $90,000 to $110,000 and the taxes are $1,200. And with all the 401Ks depleted by rampant greed, it’s becoming clear that few people will be able to sustain the base costs of these infrastructural-challenged eastern communities. People will seek the middle. People will go where their money buys more.

During my lifetime, the population of the U.S. has more than doubled, from 110 million to 260 million. Most of that doubling was shoehorned into the east and west coasts where it was already crowded and land values were high. The population is expanding and the only place where there is land that is affordable is in the middle of the country, top to bottom. Nobody will ever live in northern Maine and it’s all owned by paper companies anyway. It’s the heartland that is available and where expansion is cheap. That should tell you something. And, in case you haven’t noticed, we are in the midst of one of the largest expansions of immigrant population the nation has ever experienced. Even the immigrants are avoiding New York, New Jersey and the east; they are going to North Carolina, Kansas, Iowa and “The Middles.”

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