Trust is the currency of wealth.
Stock markets this week or month could free fall. We really could be plunging into the Great Depression Mark II.
And, it is Europe’s collective of national leaders fault.
Here by regions are some history and, then signs of what may happen.
Australian Stock Market
I live in Australia.
For a long time I have held the view, and expressed the view that the true value of the Australia stock market is 4,500 points. I predicted the fall in October 2007, and shortly thereafter the bottom as 4,500.
3,700 to 3,800 was the range I gave as the ‘overshoot’ with true value of the index at 4,500.
I also have not changed this prediction over the last few years.
Right now, this prediction is stable. Unless Europe falls. And then we are in my view looking at 1,700 points. Or in an armageddon 100 points. Yes 100 points.
Normally this would be so unlikely as not to warrant discussion, but Europe is serious.
USA Stock Market
Although not published my analysis of the true value of the Dow Jones is 9,500 to 11,500. I still think this is the case.
It has been my view that both are likely to move sideways, and not up.
The Dow(n) Jones however would move up, if the USA was left to it’s nascent recovery I started seeing in October 2011 this year.
Here I see a rise. Unless Europe falls. Then black hole like 5,000 maybe down to 3,400 or so.
Armageddon — I don’t know. Perhaps not as low because South America is more significant, and so is Canada — so trade can continue. If I was selecting a range 500-700 points for 1 year.
Note that, once again, economic armageddon is not permanent. As recovery (assuming benign leadership) almost always recovers.
Assuming Europe doesn’t really mess up.
1930s USA stumbled, Europe kept it down
Europe has form here. It was the British currency decisions, and removal of gold backing in part that created the darkness of the Great Depression.
Arguably, the punitive nature of war debts in Germany (inflicted by France and Britain) — really plunged the continent into darkness.
And it was the massive debt of the foolish World War I that Europeans refused to pay (default on debt again) — that really worsened the crisis of the 1930s. It’s often forgotten that Germany, France and Britain did not pay their full war debts to the USA.
Without a European debt black-hole the free market system of the USA recovers. Quickly.
Asia
Is dependent on Europe then USA, Canada, Australia (and ultimately trade with each other). So take out the biggest slice (Europe) and the it’s like losing a third of your income before the flow-on effects. Europe is more than the E.U.
So, let’s say – blood bath on the Asian stock markets if European debt show rolls into the abyss.
Europe
Europe arguably caused the Great Depression with their own internal issues, and inability to resolve long-standing cultural rivalries.
It was the removal of the gold standard (or at least the way it was done) and those war debts — that largely caused the Depression to reoccur in the early 1930s.
Both were based on a nationalist not a ‘love thy neighbor’ sentiment. Both decisions were based on transferring the problem, and dealing with other countries in a win-lose mindset.
As I argued in 2007, this makes no money for no one. The British, of course, never learn this lesson and persevere in a zero-sum mentality. Other Europeans are hardly much better (although arguably some European responses are protective.)
Europe what I said
So in our Innovation Cities Analysis Report, I have maintained a prediction from 2009-2011 that Europe will continue to function. It will resolve the debt crisis. Europe (and the E.U.) will do the right thing.
Fire-walling the debt, defacto de-valuation, debt haircuts, banking bailouts, and other measures should work. I remained optimistic, based on believing that the common market/EEC, E.U., Euro and to some extent Lisbon, had rendered Europe as ‘pan-European’.
Either view will win — the pan-European view, or the nasty nationalistic view.
But as it seems now, this positive view may simply not work. Mainly because the Europeans won’t (once again) let it work.
European History
And as usual, the realpolitik and elitism of Europe that led to Versailles, and before that the Napoleonic Wars rears its head again.
Commerce is based on trust. And it seems once again nobody in Europe trusts each other, and each country is still too busy trying to give their rival economic powers the short end of the stick.
Did Europe learn nothing from World War I and World War II? These were economic wars, as much as political wars.
Surely leaders learnt that scorched earth and bloody mindedness does not work. It did not work in war, and it won’t work in economics either.
It seems the British, French and Germans are too busy thinking of each other’s relative position. Although, as in the 1930s, Britain’s strategy will not work — nobody can compromise to find one that will (instead of whingeing)
Austerity is a failure
Austerity has never worked. And will never work. You cannot (as corporate failures attest) cut your way out of crisis.
But because the creaking machines of state lack the intelligence, foresight and dare I say it — common sense – to really look at the problem honestly, this European buck-passing continues.
I just cannot understand why they let the same old usual suspects (who lack courage) make the same old narrow decisions.
Maybe someone will step-up, and champion the cause of a positive vision, and positive solution to the European debt crisis. But it looks doubtful anyone will have the numbers. Is it time to merge or separate European nations to stop the ridiculous voting record?
Democracy a casualty
And, as if history was forgotten, democracy is suspended and ‘technocrat’ centralists placed in charge. It seems we trust the crowd, as long as they vote for whom ‘we the elite like’.
FD Roosevelt and the Socialist experiment did not fix the USA, nor did the other ‘European’ experiments.
The longer this volatility continues the worse it gets.
And still everyone kowtows to an economic elite, emperors with no clothes. Surely it is time to look to innovation.
Europe can recover (still)
For what it’s worth, Europe can recover, with a similar dose of medicine to the USA, and a co-operative approach amongst neighbours. However, it seems resentment and bitterness, and nationalist lack of trust may win.
And it is trust which is the currency of wealth.
So Europe, don’t (again in my view) plunge us into a mess.
The probability on the first band falls, is shifting to 50%/50% in my view (from 60-70%), and the trend is down.
Europe use your much vaunted intelligence to get us out of one. Because, all you get is a decade until the next crisis. So why waste a decade or two?
Europe. Go to church (or mosque, or temple). Love thy neighbor!
I’ll say it again.
Trust is the currency of wealth.
Europe it’s history calling: Are you listening?
Keep (or start) innovating,
Christopher Hire
Christopher Hire is Executive Director of 2thinknow, innovation agency, and publisher of the Innovation Cities Index and Innovation Cities Analysis Report. He predicted the first GFC, dot-com bubble, and owns no shares right now (except through superannuation – which next week he may convert to cash).
It seems rather old-fashioned to see airline travel as luxurious. Perhaps in the 1950s or 1960s, it was.
Airlines perform a much more important role in innovation.
Airline problems are now a every-man problem, and a business problem. Airlines have become like buses in the sky, and the availability of air travel is an operating assumption of business and families.
But with security probes, x-rays, long queues, lost baggage, re-routed planes and an unpleasant taxi journey airport — airline travel is anything but pleasant. (This poster above captures the lost glory of travel!) Partly this loss of glamour is due to the inevitable move from expensive elite experience to mass transit air-bus.
Now there is the Qantas lock-out. Whatever your views on who is to blame, from an innovation and development view it is troubling for Australia — or any other island nation. It’s also troubling for Qantas shareholders.
Why airlines and innovation?
Innovation is driven by exchange and connection.
In my Innovation Cities Index and City Benchmarking Data work for 2thinknow, I have worked with other analysts to examine the linkages.
Without giving away a professional detailed analysis, a general simple analysis would be as follows.
Primary airline with leading market share (Qantas) chooses not to participate in market. This has a limited direct economic impact. However, as Qantas is the default safe choice (monopoly), this creates tension and leads to reduction in pricing premium. This pushed Qantas air ticket prices down as demand falls at current price. This results in declining performance in Qantas.
There is a limited (approaching zero) probability of improved Qantas performance, as Qantas have significantly damaged the value of their brand to mid and upper-tier customers. If those customers have a choice (Emirates, Singapore, etc) they may choose that.
Most likely upshot is more Asian / Mid-East airlines enter, selling tickets at lower prices (if allowed by Australian government). There are a series of possible scenarios, including the growth of Virgin branded airlines. A possible BA/Qantas or U.S. airline / Qantas takeover may occur. Qantas may be broken up.
This has a variety of impacts on which cities Australian tourism should be targeting, and which operators will succeed (and which will fail), as likely there is a shift to different cities and differing economic connections (based on new airline hubs).
Simply put, this changes the winners and losers in tourism, and has impacts on business co-operation as well.
Innovation, Airlines and Island Nations.
The default airline into Australia also has various national roles. Australia is 23 hours from Europe, and 14+ hours from the USA.
It makes sense to ensure the primary national carrier of an island can (like British Airways for U.K.) deliver the services needed, and provide the capacity to move people and vital goods.
For an island, this exchange and movement matters. In a networked world, people and things still move. Mail may fall, but shipping of boxes and people increases. And tourism has a strange way of leading to business deals.
It is a pity to burn more advertising dollars on advertising without a national airline. In innovation terms, it’s all unfulfilled ideas and promise.
Nationalization of Qantas.
Now there have been some sneaky news stories op-ed pieces floated lately about nationalizing Qantas, and if we see any structural change in growth rates, then the economic basis of a full service airline becomes shaky.
And when the economics become shaky, nationalization sometimes occurs (see railways).
Airline innovation.
That is not to say that it is not possible to run Qantas the business at a profit. It is.
It’s just that without imagine and vision Qantas will be turned into a loss-making enterprise. And when we have loss making enterprises, markets cannot support them. So then you hear about nationalization.
In many cases there are people able to do something, it’s just that the system creates gridlock. Staff, Board Members, Managers, Unions, Politicians. All are responsible.
I believe that with innovation in services, seating, aircraft delivery, lounges — Qantas could revenue grow (not cost cut) the way to success. I believe there are some trends that allow Qantas to make a greater profit.
But it requires re-imagining airlines and the airline business.
Sovereign airlines.
It’s worth noting that most airlines have sovereign (national) ownership — so this means that there is an inbuilt pricing assumption that tourism benefits are part of the profit of an airline for the government. Private shareholders don’t see this investment return (so don’t care about tourism except in a warm and fuzzy way).
Bear in mind institutional investors (a majority) do not do warm and fuzzy. So sovereign airlines can lose money, because their shareholders (government) see returns from the tourism.
In some ways though, this is unimaginative (and anti-common sense). You must not turn a profit making enterprise into a less efficient hybrid political enterprise – if you have the choice. Which the leadership does.
However, they lack the ideas, and it seems unlikely that the old neolithic approaches will create better outcomes.
I still believe Qantas is a viable business — and doesn’t (yet) need nationalizing.
But will we get innovation? Not if this gridlock continues.
Keep innovating,
Christopher Hire
Christopher Hire is Executive Director of 2thinknow, innovation agency.
Are supermarkets efficient markets ? Or are they crowding out innovation?
All the evidence I have seen is that large monopolies prevent the development of new innovative small and mid-size companies. My thesis is broader however. That certain monopolies in consumer exposed sectors can actually block the development of new products and services, reduce opportunities and slow job creation in the economy.
My experience of the supermarket.
When I was a kid, in NSW partly, but also Melbourne and Tasmania I remember fondly our second supermarket.
The first was Woolworths. Although a noble attempt, this was an early 80s supermarket, and never quite delivered on the multitude of goods, glistening on the shelves. We then had a Franklins (discount groceries) which was good for cheap stuff, not so good for quality.
Finally we got our second. A large Coles supermarket (which a decade or so later, expanded). In many ways, this reduced our cost of living, as bonuses, freebies (steak knives and Bohemia Crystal), stock choice and variety made the Coles supermarket super fun, and super value.
Coles forced our green grocers to change. Our local grocers like to put their thumb on the scales. The main local butcher sold a mish-mash of meats, some aged (but not in a good way). So Coles seemed clean and safe, and to a kid — magical (and fun).
But now supermarkets have changed.
Once their purchasing power made them the cheapest.
Now it seems supply costs make them the most expensive.
Where once you went their for range, now it’s dominated by questions such as ‘what happened to XYZ product?’
Where once they were mid-size floor-plans, now supermarkets are huge floor plans.
Supermarkets are also empty more than I recall.
Let’s flesh out the last observation. The number of people per square metre in the local supermarket is lower than the number of people per square metre in the local market, one wonders whether free market theory works at all in this case.
Does the supermarket ‘compete’? As the duopoly now creep from 40% towards 50% of recorded Australian retail transactions, isn’t it time to ask is there a benefit here? Where?
One of the reasons for Victoria’s dominant retail sector is that small retail businesses continually introduce new suppliers to the market. Retail small markets represent the best way to do this — as argued by the market holders themselves in this the Age article.
Monopolistic bureaucracies on the other hand like to deal with bureaucracies. They can slash supplier margin, and make all products more the same (for economies of scale).
From an economic view we may have a collusive monoposony of sorts (in this case, 2 buyers that indirectly set prices for sellers).
In Australia, the government appointed ‘watchdog’ the ACCC have attacked the opposition to the duopoly (IGA-Metcash), but have done nothing against the duopoly.
This is an economic problem, and explains why the retail sector is less dynamic in areas where giant shopping malls or only market stalls dominate.
Reduced transactions.
My own experience of supermarkets is I regularly walk out without buying the products I want. Mainly this is because they replace more and more with pre-packaged fattening pseudo foods. Ice cream without much cream or milk. Meat pies with little meat. Lower price milk of inferior quality.
Value is an issue. Bread that costs 200% more than a baker, and verges on inedible. Expensive vegetables regularly 100-300% more than market prices.
So if the supermarket wanted more of my dollar, it loses around 40-90% every week to the markets, IGA or Aldi.
But it seems the supermarket does not want that money? It would rather decide which products I can or cannot buy, rather than providing it’s presumed mission of being a ‘one stop shop’.
This is flawed analysis by supermarkets. Because the supermarket is not serving customers, and is leaving transactions (and thus GDP) behind.
It is also not rewarding suppliers that develop innovative products. The monopsony only rewards cost reduction of supply, and only temporarily (all suppliers forced to reduce costs). This is a Walmart model.
Are supermarkets creating GDP?
It does seem that the duopoly strategy is more about maintaining a monopoly by occupying real estate, than actually competing in the free market sense on products. And as this is the main motivation, the supermarkets are not maximising sales or national GDP contribution (except by raising prices of targeted goods, but this significantly reduces demand).
It seems that current supermarket strategy also destroys shareholder value mid-term, and customer value right now.
There is a profit and social food opportunity here. Rarely those are aligned.
Trade creating innovation.
Luckily for me, there is a local market or an Aldi nearby.
But in most Australian cities except Melbourne, Hobart and Adelaide, there are no markets.
And where there are no markets, there is little retail innovation.
Keep innovating,
Christopher Hire
Christopher Hire is the Executive Director of innovation agency, 2thinknow.
UPDATE: Following publication of this analysis, on 29 August 2011 Heinz indirectly confirmed the problems outlined within at a US analyst briefing. Heinz pointedly attacked the supermarket industry for creating a inhospitable environment for suppliers, due in part to white label products impacting available consumer choices.
Read here: http://www.theage.com.au/business/heinz-blasts-supermarket-power-20110829-1jie4.html
Policy implementation problems of the Left and Right, much needed new ideas and innovation.
Innovation is often found in the over-lap between silos, and sometimes even diametrically opposed views.
Convergence of policies of major parties on the centrist Left and centrist Right, has been a story that has played out in Australia and U.K. elections. The U.S.A. political climate has diverged equally. An excellent analysis of this is found here in the Independent.
Blue Labour, Big Society, Red Tory.
Political convergence has bred Blue Labour and Big Society movements in the UK. Big Society is the brainchild of Cameron and Respublica.These are the next stages of politics, but work differently in different societies and electorates. The definitions seem a little hazy, so need innovation analysis to be applied. I can see some possibilities in problem analysis, and solutions that I would implement.
The issue is that the method of government delivery of services is outdated and ineffective in some areas. Blair’s Labour (broadly incompetent at implementation, to be kind) did not understand how to implement policy despite buckets of money. Blair’s people spent a fortune (as argued in the Independent), but did not achieve outcomes. Because this method of implementation of innovation is outdated and wrong.
And policy implementation of change is both a Left and Right problem.
Right gave out pie slices in government boxes.
My view on the greatest failing of the Right in Australia, is middle-class welfare. Basically this is taking money, and handing back a ‘dividend’ to favourite shareholders.
The Right’s new leading house-boy Brit, Phillip Blond, founder of the UK think tank ResPublica argued some interesting ideas — as reported by Chris Berg of the decidedly right-wing IPA here. From the article:
It’s a sort of Third Way for conservatives. Blond spends a lot of time talking about “small” – big business versus small business, big, centralised government versus small, decentralised, community-focused government. There’s a strong emphasis on social capital – the benefits of community relationships – and voluntary associations. Blond calls for a new “social capitalism”.
Berg goes on to praise and counter blond with his normal fully libertarian view. Blond has a point, the small business creates the jobs. But bureaucracies in pyramids like dealing with other bureaucracies. Heavyweight goes toe to toe with Heavyweight, whilst nobody notices all the Bantam Weights moving up in class.
But middle-class welfare entrenches privilege, and makes a small win in the right segment of the economy and society a big win. This advantage gives one class a decided advantage over another. That is until the largesse runs out. Which it has.
Then you have a dysfunctional two-speed economy where no two indicators point in the same direction. Which is where Australia is now. It’s where Australia started moving towards in the last year of Howard’s government, as I have argued many times.
My hypothesis: Middle-class welfare creates asset bubbles
A useful hypothesis is that mass welfare handouts to wealthier people (basic needs met) breeds weakened economies, characterized by investment bubbles (invest discretionary income in wealth creation in classes that have high recent returns). The most favoured Australian asset class is property, followed by shares.
And the Australian property boom (a type of bubble) has been entirely fueled by negative gearing (tax benefits for property investors), renovation hype, baby bonuses and first home buyers grants.The past-government (Howard) also controlled the inputs that feed-in to the inflation band, that the RBA use to set interest rates.
This wealth transfer has created a moneyed property-class, and a working poor. Who work more and more, but get less and less ahead. It has also created massive swathes of recent migrants with higher expectations of property wealth, than available incomes.
It has lead to a disconnect between effort and wealth, which has les to negative incentives in an economy (renovating townhouses provides a better return than helping others), and I would argue — this cuts sizable money from each year’s GDP.
Tax creates winners (& losers),
I would also argue the GST (adding to the cash economy in the trades sector in my view) and way inflation has been calculated has led to the entire Australian economy becoming embroiled in a series of stock and property bubbles of varying sizes over 10 years.
But my hypothesis is that the rising property prices in Australia were created by middle-class welfare, tax favoritism and politically artificial lower interest rates (in the past). This middle class welfare is now being withdrawn, and this will have catastrophic effect for any of the middle-class who are highly sensitive to cost of living pressures.
Why is this not understood?
It’s about how people behave. And this is different to how old-fashioned economists model their behavior, in old-fashioned ways. They also used old-fashioned data, old-fashioned measures, old-fashioned collection methods — and thus economists achieve data that is past-based and ideas that are out of date.
(To declare my interest, I have been developing new technologies and current alternative metrics for measuring change in city economies since 2005 looking — future forward innovation-style. Some of my work at 2thinknow, Innovation Cities Program and you can see some of the international media coverage from Boston Globe, Reuters and others here.)
Some new ideas.
Policy programs need new innovative methods of implementation. That’s a story for another day. But for example, for creative ideas: a voucher is superior to tendering for contractors, a review of new types of industries and costs of entry can reduce costs, incentives for people smugglers can be reduced, a reduction in indirect subsidies to the wealthy (grants normally end up in the hands of another bureaucracy such as banks), political representation for new classes of the economy and how private sector techniques get monies applied to policy problems through more efficient means.
Throwing money at problems like first home buyers grant just creates bubbles, it doesn’t solve problems.
It’s no coincidence that the parties are converging, but new ideas in Australian policy are sorely needed.
Keep innovating,
Christopher Hire
@christopherhire
Exec Director
2thinknow
How has the grand coalition needed to govern Australia changed in 2011?
What got me thinking about this was a piece in the Age (for those outside Victoria — seen as a nominally inner-city Left paper, with the occasional Right balance piece) — outlining Labor’s loss of bedrock support (something I argued here, extended here, and in more length here).
After party officials finalised their numbers earlier this month they found that 2100 members in Victoria – 16 per cent of the 13,000 members of last year – had not rejoined. …
Former finance minister Lindsay Tanner has argued that the primary motivation for government is merely to look like you are doing something while not offending anyone who matters. It is “all special effects, no plot”.
Here’s Ian Munro the full article in The Age
Trend analysis (unique to 2thinknow) explains that coalitions have changed viable plans — and require innovation. Here’s a very short summary of a few more thoughts (consider this a Part 3).
In today’s economy, the Left is not the same.
I have a different interpretation. The Grand Coalition of the Left has changed, as have a few of the values. But broadly speaking, the ideal of lowering costs for those struggling, and giving opportunity to the less advantaged should still be there. But the issue is this — working men (and women) of the trades are now the most advantaged class.
In Australia — butchers, nurses, teachers, police, soldiers, scientists, clerks, I.T., call centre workers, bank tellers — these are the new lower-paid professions. Small businesses once affluent like newsagents, chemists or cafes may be screaming for relief from rising costs.
The largely contract working man or coal miner is doing very well thank you in terms of income. Quite a few earn more than a Masters-degreed manager or scientist. As I said here, a 7-11 job can pay better than entry-level / general non-specialised I.T. Specialized labor does best of all.
For anyone in the 2000s the fastest path to wealth — become a plumber, service affluent clients, buy properties renovate them, churn them — and in 10 years you can be a millionaire in Australia.
Are tradespeople really struggling because they are blue collar? Wages data supports (and also under-reports this), but see this for yourself — ask anyone at a 7-11 who spends the most discretionary money? Tradespeople. Whilst white collar types with families count out the week’s beer money, many blue collar trade-workers keep spending. The construction industry has been responsible for the property boom, so has done well from Howard’s Right, and now Rudd/Gillard/Swan’s Left.
This has reduced broad-based innovation in Australia, as I argued in interview reproduced in Chris Zappone’s article in the Age and explained further here.
It’s the destruction of a true middle class that is why the middle is screaming despite the ‘aggregate numbers’ being OK.
Lessons in changes of the grand coalitions.
The far Right Tea Party in the USA learnt that the grand coalition of Right governments has changed. In Australia, the grand coalition of Right governments — also changed with Howard. Those changes were to create a self-employed ‘White Van Class’ and favour tradespeople (even with the GST, which arguably favors self-employed cash-in-hand tradespeople above all other businesses).
Now the Left has to learn the Left coalition has changed. And it’s not the loudest voices who have the insight.
Also the technology, structures, ideas, ideals, and grand unification of any grand coalition has changed. Unless you allow new innovation and ideas into the Left — you will entrench a 3-way DLP-style (social welfare) plus hard-Left Green split.
To change, political parties must first accept change. The ideas of Demos or the last great Blair-Labor period (not great for the Left in my view, as I have argued since 2006 in many places) — are dead and buried.
So the New Left may need those new innovation ideas. Or, what?
ABOUT: My employer, 2thinknow provide innovative ideas, metrics, innovation training and policy advice as a service to different centrist government’s at a city, state and national level. 2thinknow do this via data, training and analysis. We also publish the Innovation Cities Index – analyzing and ranking the world’s innovation economies at a city level, for 289 cities (including major Australian cities) based on underlying 162 indicators in 2010.
Trends that work against the Labor Left, & how to rebuild with innovation. Second part of a series, analyzing the ALP in Australia. Analysis is applicable also to all parties, and Western elections to some extent.
The Australian Labor Party is generally polling (right now) in what is termed ‘sub-bedrock’ area. The numbers show the actions are not engaging voters.
Now this can change — but only if the change trends driving this shift is understood.
Electoral Trends.
The problem is not a medium or even a communication problem, it is that the process for listening and determining policy is tone-deaf to what voters really want.
1) Networked families.
Pollies act as if a single Anglo-Australia still exists. Or ‘warlord methodologies’ assume ethnic groups all vote the same, like a shop union. A networked world disrupts this pyramid.
2) Fragmented individuals
People are fragmented, communities are weaker. Therefore broadcast voting methods to gather supporters carry less weight, and distort votes.
3) Pyramids are dust
The Pyramid is broken. It’s dust. As a business model it’s not used by any exciting new companies, just old bureaucracies. When the top of the pyramid talks to the top of the pyramid — nothing changes in a networked world.
That’s why quotas and pyramid change strategies fail now.
These are just a few trends impacting politics globally, and in Australia — drawn from my trends analysis work at 2thinknow.
How change now works
Connections between nodes. Not pyramids.
Change models — original innovation models work I have done for 2thinknow — explain why politics no longer is business as usual. This is not unexpected. Airlines, hotels, books — all have been disrupted. This is ongoing.
But arguably, politics is a more critical segment in a democracy. (We divide cities and regions into 31 segments for data analysis).
Fishbowl ways of seeing.
Yet, those inside the fishbowl can’t see the world clearly (except through curved glass).
The preferred academics and poll-masters keep getting it wrong, because they lack the right data, or are stuck in ‘pyramid’ thinking. Technology adeptness is not the measure of success either.
Bias shift.
And this is not just a Left phenomenon, but the assumed bias of the Australian electorate has shifted right. Most people see business taxes passed onto consumers or shareholders (through superannuation) — so not really in their interest.
One of the answers to this is stopping wasteful projects in Government, based on old models — or at least revamping them.
But to do this, you have to understand how the world has changed. And few people do. Academic ideas are out of date — so are management consulting approaches.
2thinknow provide global comparative data on urban locations around the world, and source the best available proven policy ideas for clients.
My work for 2thinknow since 2005 research has been case studies of change, including politics and government for cities and states across the world. This can be seen at www.2thinknow.com or in our Innovation Cities Program: www.innovation-cities.com
The big trend.
Cost of living is now critical for many voters. So raising their cost of living and giving them money back seems wasteful. They don’t want the government deciding to give them a set-top box or pink batts. They want to decide themselves (a right-side idea).
So the Left needs to reshape it’s change dialogue or risk becoming a smaller party. Not healthy for anyone!
@christopherhire
COMPANY DISCLAIMER: I work for 2thinknow, and I/we have also earned fees consulting across government and business. We have at times editorialized also for a candidate on Left or Right (based on innovation potential), met Ministers of both sides, and assisted both Left and Right organizations.We do have contact government ministers, public servants and advisors.
Our innovation view is that political parties must have ‘differing views’ and that it is the tension and compromise between those views that can drives, improve and create innovation as positive change. This is the same view held by the U.S. founding fathers. At times, according to our innovation concepts, some parties and people will at times better drive innovation.
PERSONAL DISCLAIMER — My personal views are centrist — generally socially progressive who believes in business and markets, and that government action is possible in some circumstances and will succeed if based on the best data and frameworks.
Why talk of importing more I.T. people is overheated.
We often hear companies complaining there are no I.T. staff available in Australia. Often this is accompanied with talk of rising wages for general I.T. personnel in Sydney, Melbourne and Canberra.
But is this true?
I came across this advert for analysts at $23 / hr with a degree.
This is the same or less than I earned over 13 years ago for entry-level data tasks. And that was through agencies (whose margins are similar).
This also hardly seems generous as working shifts in a 7-11 will earn you a wage of $37/hr (something many graduates know).
If there really is a skills shortage, how can banks offer this pay — and fill the position? Which they do.
Small businesses will sometimes pay slightly more — the banks is selling a ‘career’. That is at least in theory — because banks and financial services have very high rates of candidate churn. But banks as key I.T. employers do ‘make the market’ — so you could argue a social responsibility clause.
The I.T. problem in Australia
If Australia wants an I.T. industry low wage, low industry skilling and over-emphasis on degrees for entry-level tasks are not the way to go.
Sounds to me like an I.T. employment policy is an area that could benefit from some new ideas.
Let me know your thoughts on twitter @christopherhire
Keep innovating,
Christopher Hire
Shaking the ground the Left stands on, & how to rebuild with innovation. First part of a series, analyzing the ALP.
First an analysis: Politics is in a pre-innovation stage in Australia and NSW.
The reason is the rise of technology, enabling new communication methods. A Kevin-Rudd 24/7 or Obama ‘yes we can’ campaign, using social media, profited from more the tools available than the contemporary alternate and regressive right approach (ie. stop the __, block the __).
This is being stood on the head by movements like the Tea Party in the U.S. are clearly orchestrated uses by a reform based party of the Right. The Greens too have benefited from social media technology, and true believers in Green Policy, who may historically know what they are against, but not what they are for. At least, until recently (thanks in Australia to Bob Brown who is a veteran politician now).
But social media is a tool. The Web is a tool. It’s a medium not a message.
Governments are in a new paradigm sparked by new communication tools, which capsized the balance between policy idea & policy implementation.
And social media is not the answer.
Innovation in politics.
Our hypothesis is that party that can implement and communicate change, and/or to actually deliver services is the party that wins.
The problem though is:
a) Poll method for measuring what voters care about is broken, when phone / mail use is shrinking;
b) Pyramid paradigm of all bureaucracies is being taken over by networked entities: e.g. GetUp! versus the Dept of XYZ. This means some public service is out-communicated and cannot respond nor implement;
c) Technology change means policies are outdated before they are implemented;
d) Finally, decision makers are reacting to old stereotypes of voters not new data metrics.
Being out-of-date it is delivering the worst results in the history of the Australian Left progressive cause.
In a time when the data would show a far stronger bedrock of support for social policies, the data break down of that support is wrong, hence the decision is wrong.
Where is the innovation?
The innovation element is missing, and voters are disengaging from Left parties, whilst being increasingly disillusioned with distribution of wealth and equity issues. A carbon tax and a resource rent tax would once have won broad support. In the Australia of my childhood, taxation and big government enjoyed big support, why not now?
Why not now?
Next in this series: Part 2: Electoral Trends — how Australia has changed and this change is forgotten.
COMPANY DISCLAIMER: I work for 2thinknow, and I/we have also earned fees consulting across government and business. We have at times editorialized also for a candidate on Left or Right (based on innovation potential), met Ministers of both sides, and assisted both Left and Right organizations.
Our innovation view is that political parties must have ‘differing views’ and that it is the tension and compromise between those views that can drives, improve and create innovation as positive change. This is the same view held by the U.S. founding fathers. At times, according to our innovation concepts, some parties and people will better drive innovation.
PERSONAL DISCLAIMER — My personal views are centrist — generally socially progressive who believes in business and markets, and that government action is possible in some circumstances and will succeed if based on the best data.
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