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The issue is that the method of government delivery of services is outdated and ineffective in some areas.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 Because this method of implementation of innovation is outdated and wrong.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