Time to build a new tree

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We have gone too far. Now we have a choice: continue until everything collapses or try to do something different building upon the best of what we have while leaving the rest behind.

It might be said that it is too hard to change to less from more. It will lead to deflation, people will postpone purchases and the economy will shrink. The absurdity of such a fear is readily apparent when a reduction is what you want. An obsession with growth has been the anomaly. It has always needed to be propped up.

It is not enough though to tinker with what we do, we need to rethink our fundamental beliefs – root and branch. To move beyond efforts that leave the primacy of the economy and the need for growth intact. Quality of life should be put front and central and the focus be on what contributes to that.

How do we do this? No idea. But a start is to ask some questions and think about what options there could be. And it may be that when we get into the details they will often be intertwined – just as they are now. Thus a change in one area may suggest natural changes in others.

As an example lets consider education. This has grown to be an increasingly profit driven business that takes up more and more of a person’s life. For 50% of us it already extends well into our twenties. But to what benefit for the student. We are taught when we do not know what we will need in our lives. Why not get the basics, enter into the world, decide what else we need to know and then return to learn it. What are those basics? Much of education now appears to be about pushing competing ideologies. We have so much information at our fingertips but increasingly it is dressed up in opinion and we do not know what to trust. Can we get back to agreed upon facts. What if we were to start to re-build a safe source. It could be like Wikipedia – accessible to all, editable by all, but one version. Facts take root while opinions get weeded out. How long to get the basics? Maybe 6 years, probably not 16. If we go back for more later, it will be as motivated, focused learners and take less time with better results.

The time freed up by rethinking education might prompt us to consider other aspects of our life. What can be done with the remaining  two stages of the current educate-work-retire lifecycle? We spend much of our lives planning and saving for the retirement phases. But why plan for life when we are at our weakest rather than living when at our strongest? Could we instead take a mid-life break or work less for the whole period?

A search for balance

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Society for a long time has thought that the key to improvement has been economic growth. This is unsustainable in a finite world. Winners mean that there are also losers. The winners though are largely reluctant to make any meaningful sacrifice to their perceived quality of life and thus change is difficult or impossible. 

A solution may be found when shocks, or shifts, in the external environment compel, or invite, action. This can be as a result of catastrophes but can also come from changing the institutional framework – rules of the game – which govern people’s activities determining what is, or is not, permitted and encouraged. 

One, perhaps the most, important facilitator of economic growth has been improvements to communication – land, sea, air and information. This has enabled the movement of assets, resources, activities and people reshaping the places we live in. 

Identifying, and reflecting upon, the numerous facets of communication may surface modifications to the institutional framework that would promote non-growth focused societies which can improve overall real qualities of life. The search for growth is replaced by one for balance.

A changed world

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What next? Mankind has had a shock. It is not certain yet what will be worse, the virus, or the actions taken to address it. What is clear though is that our world has changed. We are currently trying to go back to the way things were, spending to boost consumption and production. Yet what if we were to take the opportunity to embrace the change? A society where you have to keep growing to succeed is not sustainable in a world with limits[1]. The game is zero sum and if something is won something is also lost. Many people were starting to realise this. Changing what we do though is difficult. Each of us is wired to behave in a particular way, and to do something different requires an enormous, unnatural, and quite possibly impossible, effort. That is why we seek to address issues such as climate change or inequality without really giving anything up. We are not wired to bring a “worse” life upon ourselves[2]. The current virus induced shock represents an opportunity. Our environment has changed and our natural behaviour in this new environment can lead us down a new path. That new path appears to be pushing us to be more local than global, shrinking not growing. It looks to include fewer new immigrants, tourists and students, fewer new buildings, fewer opportunities to spend. Perhaps we should embrace it? We will still all be the same and act the same as previously, but the impact of our actions will be more circumscribed. After all a bull in china shop does less overall damage if it is a small one in a small shop.

[1] Raising living standards by increasing productivity requires ever larger markets to soak up the resultant production.

[2] We are what we are. 90% or more of our actions may be governed by our unconscious (Hoffman,2019).

Why are luxury brands part of the solution to climate change?

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Anthropocentric climate change is a symptom not a cause. The cause is people – too many of us, consuming too much. Essentially there are three possibilities for how this problem can be addressed. Births, deaths and what we do in-between. The first two are going in the wrong direction and appear to be largely off limits for change. Efforts are being made to increase the birth rate. These range from financial incentives for child bearing to scientific advances that extend the ability to have children to those previously excluded (eg IVF). The reverse is true with the death rate where we seek to extend lifespan and reduce the incidence of so-called premature death. That leaves us with only the in-between to work with. Unfortunately much of the momentum here is also in the wrong direction as the rich world seeks to promote its way of living and everywhere else seeks to catch up.  It is probably too much given such a context to expect people to radically change their current way of life but are there ways in which the natural resource impact of consumption can be reduced? There are glimmers of hope in some emerging changes. One concerns the ancillary aspects of a product, such as reductions in packaging. A second, perhaps more profound innovation, are modifications to the essence of the core product. There are at least three ways in which this is occurring, each of which results in less resource intensive consumption. The first involves substitution, for example moving to flesh substitutes such as BEYOND MEAT. The second emphasises image. Branded items such as Chanel handbags typically require only limited, if any, extra natural resources to produce. Yet their purchase soaks up a disproportionate increase in financial resources.  The third concerns the virtual. As with image consumption, virtual consumption, for example buying players in an online soccer game, is beneficial because it has a high financial to natural resource ratio.

 

 

 

Australia: From eternally emerging to falling behind

I remember being told in 1994 – when it was not totally politically incorrect – that Australia was a third world country that thought it was first world. There is a thin veneer of sophistication and development but underneath the country is pretty basic.

Coal in 2018 was the number one export, iron ore number two and Australia is set to become the biggest producer of LNG in 2019. A further 15% of Australia’ exports are agriculture related. Construction represents another 8% of GDP. And it is these primary sectors that underpin much of the rest.

So perhaps Australia to date could best be classed as a developed emerging economy – and to be fair it has done very well out of this. The world is changing though and the country risks falling behind if it gets stuck in the hubris of admiring the developed bit of the classification and ignores the necessity of addressing the problem of the emerging bit.

Some suggest that we are entering a new age – of artificial intelligence – that will change the very fabric of our world creating a few very big winners and a lot of very big losers. For a scare – or wake up call – read Kai-Fu Lee’s AI super powers. He suggests AI will add $15.7 trillion to the global economy with 70% of the value being split between China and the USA.

If it is to continue to thrive in this age, Australia needs to rethink its economic drivers, overhaul its government system and learn to move fast.

Coal is becoming a pariah. Immigration may falter as a key driver of growth. Access to space is a primary factor attracting people yet a rising population requires increasingly vertical cities.  Perhaps worse, the key funnel for immigration is a University system that favours subjects such as accounting which are largely irrelevant to AI innovation.

Government is dysfunctional. Six changes of PM since 2007. A proportional representation system that sees Tasmania (population 0.5m ) have as many representatives in the upper house of parliament as New South Wales (population 7.5m) and the possibility of being elected with only 430 voters choosing you as their first preference.

Finally Australia is so slow to act. As an example, locally it took 12 months to bury the electricity supply for fewer than 600 homes and close to 9 months to replace a single bridge. By contrast China in 10 years went from having no high speed rail lines to having more than the rest of the world combined!

 

Balance

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Over time we tend to go from one extreme to another – from owning technology to accessing it via a cloud, from buying games to spending on in-game purchases, from paying for applications to them being funded by advertising or, even, from a Valley of startups to one of giants. As we oscillate we do not go back to where we started. Things getter better – faster, cheaper, more capable. But they can also get more complicated – or even complex. We might not notice because at the surface level everything gets easier. But underneath we might get more and more dependent upon the technology. Not only do we need it  but we have less and less understanding of how it works and, worse, of the fundamental skill it started off supporting and ultimately is increasingly replacing. And this can occur at both ends of the pendulum’s arc. This raises three questions. First, are we ready to swing back? Two, what happens if we ever go too far and topple over? Three, do we need to ensure fundamental skill sets are preserved?  Finally what happens if this phenomenon applies not just to technology but to other aspects of our lives ..

Unstoppable BAT FANGs

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Collaboration is good. You do what you are best at and leave the rest to others. In one sense they provide the infrastructure you rely on. Yet it has not worked out this way with the BAT FANGs (Baidu, Alibaba, Tencent, Facebook, Amazon, Netflix, Google). With their infrastructure they have captured the value. Network effects and resultant size may mean they, or their ilk, have become unstoppable. Governments are increasingly trying to tax and regulate but they may be too late. Many of the companies are bigger, and stronger financially, than the countries they reach into. Overstep and they, or more worryingly the country’s citizens, may react. A company can abandon most individual countries easily and with limited consequences. Worse though is that motivated, networked, citizens, operating outside traditional formal structures, can bring a country to its knees if they object – as President Macron is discovering with the Gilets Jaunes. Which companies persist may change – incumbents may move from operating in largely different realms to competing in winner takes all struggles and Uber is a potential entrant as it spread and dominates logistics – but will the dominance of such savvy “infrastructure” providers?

City transport: Not just bikes or cars

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Transport should be seen as multimodal not one mode or another. Some places are getting it. Use an electric scooter to get to a taxi rank in Singapore then fold it and put it in the boot. Cycle to a bus stop in San Diego then attach your bike to the front of the bus. Check in your bags at Central in Hong Kong for an easier trip to the airport. Sydney is not. Billions and years are being spent building specialized trams and tunnels. Regular arguments arise between car owners and bike riders about the wrongs of the other. The city is schizophrenic wanting to be part Copenhagen, small, compact and bike focused, part Los Angeles, sprawling and car dependent and part Singapore, dense, high and with an excellent meshed public transport system. Yet it is none and its aspirations are backward looking to other places and times. The world is moving forward and there are many more transport needs, uses and choices emerging. Battery powered scooters, human powered bikes and drone powered deliveries.  Sydney could defend existing players and fall behind. It could let large corporations sneak in, define the field in their interests and build out, as Uber is from ridesharing to food delivery to scooter hire. Oh they get the future! Or it could plan for a complex, multimodal future. What rules are needed to facilitate freedom safely. How do we avoid knee jerk reactions, like the banning of electric scooter rentals in Madrid when an accident happens. Restricting scooters to bike lanes and single lane roads, as they were, seemed eminently sensible and still does. Tweak if necessary but do not turn away.   The future is only going to get more complex.