The most difficult thing I deal with day to day is coping with the accelerating pace of economic change. The constant ‘whatever I said last is out-of-date now’ cycle of business life is stressful. We tend to focus our attention on financial change but of course there are always other significant forces driving the financial change.
This past weekend provided sharp examples. I’ve been talking about shock price increases for several years now. Yet to most people this kind of talk was just ‘noise’. We focus our talk on real estate prices and gasoline prices. We largely ignore the larger fundamental infrastructure changes that impact our lives. This effect is felt everywhere but is probably most shocking and disruptive here at the New Jersey bayshore. This is a region recognized as being among the most economically depressed in the nation. Yet a surge of new investors is beginning to alter the local economy. Meanwhile, dramatic cost increases triggered major multinational companies to cancel and renegotiate government-funded infrastructure. Our local township halted plans to install water and sewer systems this year due to increased costs. Local people are now furious and I expect even greater struggles ahead.
This weekend I took on an urgent unplanned accounting project for a small business here at the bayshore. It came up suddenly as a crisis for them and I wanted to help. I worked late Friday night, most of Saturday and until noon on Sunday. I significantly underpriced the work. Yet it cost them almost as much as what they spent on all other accounting services for the entire year. That’s not the worst of it. I need to have a meeting with the owners the week to say that if they do not commit to increase their spending on overall financial management by four times more than in 2023, then I will resign at the end of the year. The good news, however, is that they tripled their sales over the past year and bought a building. Rapid business growth sounds great to an outsider, but the change is often financially stressful to the owners.
I spend the rest of this past weekend cleaning up and making repairs at the marina. The marina is closed and won’t reopen for years. In the meanwhile, a small number of people and businesses use the facilities. Before the marina closed, a boat slip cost $1,000 and dry dock spot cost $400. That doesn’t work for new investors. Now slips are ‘owner only’ and dry dock is $1,000. Real estate prices went from $30,000 for an unbuildable lot and $150,000 for a waterfront cabin to $200,000 for an unbuildable lot with dock and $450,000+ for a waterfront cabin. Even more surprising, the price increase is derived by corporate investors, not individual buyers. When the marina reopens, it will likely cost as much as $50,000 for a single custom boat slip uses technology that is very different than in the past.
Some people want to dismiss this economic change this inflation. In fact it is much more than inflation -as we most commonly use the word. It is a fundamental realignment of our society’s wealth and income distribution. It has been going on for years, and is happening at a faster pace now than ever before.
My business adviser and social media manager suggest getting the word out to the local community about shock price increases sooner rather than later. Local boaters are already outraged. I feel personally torn about this. I have longtime, older, working class neighbors who think that I am expensive when I charge them $300 to prepare their tax return. They would be shocked to learn that the minimum fee for a new client is north of $12,000. Meanwhile at the marina, we spent over $20,000 on a single new boat dock and do not even have an estimate on the total price of the project. Dry dock prices rose from $400 in 2018 to $1000 in 2023. A few older friends and neighbors offered $100 for various marine services that would cost $1,000 or more at current market prices. I arrange the deals and handled the other costs myself just because I don’t want to upset them. A few local boaters expressed frustration on social media yesterday when a premium boat dry dock spot was listed for rent at $2,000. This has been a pattern here and in other communities;. local people express frustration with increasing prices through social media. I expect that this negative social media trend will continue but I don’t feel informed enough to draw any conclusion on the real world impact.
For all of our adult lives (1978 was the nation’s economic turning point that coincided with my high school graduation), we have been living in a world where the rich get richer, the poor get poorer, and the middle class get squeezed. Until now, this has been mostly expressed by voter dissent, anger directed towards immigrants, and middle class hostility toward the upper class. Our local South Jersey region drew national attention in 2020 when voters replaced the most experienced senior senator with a truck driver. It was a reaction that caused much disruption and harm to our rural bayshore economy. Sixteen years earlier, I was threatened, targeted, and physically assaulted for warning local residents about the financially damages that environmental changes would bring to our community. The long recovery from those injuries cost me almost a decade of lost earnings. But these are rare examples of exceptional behavior in response to the force of economic change. For the most part, the changes over the past 50 years caused frustration but triggered no disruptive societal reaction. But as the pace of change continues to accelerate, I wonder if this will still be the case.
Perhaps I am more sensitized to the disruptive effects of accelerating change than most people. It altered my career and affects my life daily. But I suspect that the majority will not be able to ignore this force much longer