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The diminishing importance of brick-and-mortar

Posted by John T. Reed on

Interesting column by Greg Ip in today's WSJ. "Virus Hastens Shift to Asset-Light Economy."
It us about businesses like Carvana and Vroom which have no traditional brick-and-mortar high-visibility stores.
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I have been writing for decades about what I call dispersion. That is the ability of businesses to move to cheaper locations like the suburbs or exurbs or the middle of nowhere.
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The event that triggered that to me was Citicorp moving their credit card operations our of NYC to SD. That was enabled by satellite communications which and toll-free phone service which made SD equal to NYC in terms of location.
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I read a book with the title The Death of Distance back then. The book sucked but the title was right. In real estate, the big rule was the three most important things were location, location, and location.
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The death of distance is the death of location. Satellites and fiberoptic connections to the Internet make all locations equal.
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So I devoted most of career to real estate investing. Does technology end real estate? No. Another phrase I have been using for decades is "the care and feeding of people, their pets, and vehicles." You need a house and a car and a doctor and a dentist and social interaction with other people. You need variety.
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But the work from home thing is sort of saying that my dispersion theory---which was about brick-and-mortar buildings moving to cheaper land---may need to give way to an end to much brick-and-mortar.
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There is a political angle to this. Liberals love to tax the rich. But increasingly, the liberals move out of high taxing jurisdictions. Bye bye NYC, CT, NJ, IL, hello FL, ID, TX.
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Cities have become blue bastions, but they cannot be governed by liberals. Density requires rules. Rules must be 1. reasonable, 2. clearly explained, and 3. strictly enforced. Liberals cannot do 3. And they are not so hot at 1 or 2 either.
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They are Robin Hoods. They make their living robbing from the rich and giving to the poor and themselves in return for political power.
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But does their business model work outside of the big cities? Apparently not. Look at a blue and red map of the US. The blue is urban and suburban. The red is exurban and cities that do not dominate their state.
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The Asset-Light economy of which Ip writes may be politically red and blue flight may increase red power and diminish blue power. There is also the issue of numbers
If the left can turn most voters into victims who are dependent on Robin Hoods, they might have the votes to become a sort to urban parasite on the less dense red areas. But I am not sure even a national majority can pull that off.
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I think the hope now is that Americans are too conscious of their rights under the Constitution and too mobile and asset-light to go quietly onto the Democrat plantation or concentration camp.

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