Not-So-Urban Dwellers

This is a partial transcript from "Your World with Neil Cavuto," September 29, 2004, that was edited for clarity.

NEIL CAVUTO, HOST: Do you think you have to live in the big city to live the big life? My next guest says think again. And he's a pretty big, important guy. He wants to prove that it's really an urban myth that you have to spend millions to enjoy an urban (search) life or even the good life.

Rich Karlgaard's latest book, "Life 2.0" tells you the best places in the country to do just that. Rich, of course, is the publisher of "Forbes" magazine, so he hangs around with very important people. He joins us right now.

Rich, good to have you.

RICH KARLGAARD, PUBLISHER, "FORBES" MAGAZINE: Thanks, Neil.

CAVUTO: I guess, you know, we all think that we're kind of trapped in our little worlds. We're afraid to break out of our little worlds, and there's a bigger lesson I think you have going on here.

KARLGAARD: Yes and it's a lesson that's really under girded by economics right now.

The cost of housing in the urban northeast and coastal California versus inland America is the widest gap it's ever been since people measured this. Certainly the widest since the Great Depression (search).

And yet, technologies like cable TV, overnight delivery services and broadband Internet have tightened the information gap. And people can arbitrage this difference and really live a great life for a lot less cost in inland America.

CAVUTO: But what if their companies aren't there?

KARLGAARD: Yes, but you know, more and more people are cutting deals with their employers and employers -- you know, we're living in an economy that is good. And yet people aren't getting the raises that they got in the '90's. And you can get the equivalent of a raise by lowering your cost of living.

CAVUTO: Absolutely, people forget that. But let's talk about some of the areas where you can move to where you can find some of this.

KARLGAARD: Yes.

CAVUTO: And sort of one at a time here. Lincoln, Nebraska.

KARLGAARD: Yes, Lincoln, Nebraska, put in a category called porch swing communities. Not only is it a university town, University of Nebraska, but very family-friendly: great K through 12 education, great health care, low cost of living.

CAVUTO: And I love that city, by the way. It's a beautiful place.

KARLGAARD: If you like red.

CAVUTO: If you like red, by the way.

Let's go on to look at some of the other cities on the list here. When we look at, like, Oregon and Pennsylvania -- one surprised me -- but you're picking places that are not necessarily really near super urban centers. Is there a risk to that?

KARLGAARD: There's a risk, I suppose, that -- that you can -- you feel like you are cut out of where the main action is. But, again, all these technologies I mentioned make it so easy for you to stay in touch. And if you've missed "The Wall Street Journal" or Forbes, you can catch up with your show on cable TV, you know...

CAVUTO: But that's the problem, and this is where you and I slightly part company.

You know, a lot of bosses are willing to put up with telecommuters, that sort of thing, to a degree. How do you deal with this when your boss or prospective employers are saying, "I don't mind two or three days a week, but this is too much"?

KARLGAARD: You know, I think we're undergoing a sea change and a new generation of managers are going to be more tolerant of that. No. 1, they're going to have to arrive at these bargains with employees in lieu of giving raises.

I have a story about a Cisco manager, he and his wife live in a $600,000 -- that's right, no typo -- 1,000-square-foot condo in Palo Alto, California. She got pregnant, stopped working. A thousand square foot condo is pretty small with a crying baby.

And he talked his boss into moving to the Midwest, where he has a 6,500 square foot home for about the same price. And he's not a solo operator. He manages 35 people, but he can do it with the tools he has today.

CAVUTO: All right. But we're becoming a nation of businesses that people don't talk to each other in person, though. Isn't there a flip side risk to that?

KARLGAARD: No, you know, I think that was the trade off you had to make up until about five years ago. I think broadband makes communication pretty seamless, even if you're not...

CAVUTO: But there's a limit to what you can do via broadband.

KARLGAARD: Sure, sure. But then you get on the plane once a month.  What I would maintain is face-to-face is probably overrated on a daily or weekly basis and I...

CAVUTO: And the idea for you is -- we were showing some of these, you know, smart campuses to be in, but to be where there is this energy and this eclecticism where you can...

KARLGAARD: Yes. Yes, in fact I think the No. 1 place that people trying to get out of high-cost areas like Boston, New York and San Francisco will go to will be college towns.

In fact if I can leave viewers with one real estate tip it will be invest in college towns, particularly towns that are strong in science and engineering, the Madison, Wisconsin, Columbus, Ohios.

CAVUTO: Why?

KARLGAARD: Because right now, they cost about 1/5 of what it costs to live in San Francisco or New York. They have all the intellectual talent that you would want if you were starting a company in information technology, biotech, nanotech.

And, if you're moving out of New York or San Francisco you're going to feel the same -- you're going to run into the same kind of coffee houses and book stores that make life stimulating in the big city.

CAVUTO: And Starbucks is ubiquitous.

KARLGAARD: And Starbucks.

CAVUTO: That's everywhere, right?

KARLGAARD: It's everywhere now.

CAVUTO: It's in Nebraska. It's in New York.

KARLGAARD: Organic vegetables in Bismarck, North Dakota. Life has changed.

CAVUTO: That's your world.

KARLGAARD: Life has changed.

CAVUTO: Thank you very much, Rich Karlgaard. He's a publisher of "Forbes" magazine. "Life 2.0," it's the book. It's racing up those best-seller charts.

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