A smart Western Australia? No thanks

No smart future for Western Australia

Most resource based economies endeavor to move up the value chain. Not so Western Australia (WA) which is happy to sit right at the bottom digging out iron ore – which must be one of, if not the, most easily extractable mineral – and pouring it onto boats bound for China. And probably the second biggest industry is not much smarter, being based on property development that sees WA’s capital, Perth, simply spread ever further North and South. Where is the desire to build a smarter future? Largely missing. It seems instead that in WA bigger is the synonym for better. WA seems to be happy with this. Why try if you can have it all anyway. WA has a Premier who is lucky enough to have a budget surplus of $5.6bn but has no vision as to what to do with it. At best are dreams of a cable car where there is no mountain, the promise of some or other sporting event, Disneyfied versions of culture or a new rail line to a distant suburb.  All well and good until bigger is no longer the same as better at which point WA may regret not taking its opportunity to build a smarter future.

Shining a light on balanced decision making

In many things there are options. Often we respond by framing the resulting choice as a question of either or. However in a world of few absolutes does this give the best result? Is there often even a right choice? There appear to be many instances where first one option is taken and later the other. This may be because unanticipated downsides become apparent or changes occur in the context within the choice sits. Consider, for example, the choice between communism and capitalism or the offshoring or onshoring of economic activities.

The choice of actions itself though is only a secondary consideration. The primary choice is that of the outcomes we value. These themselves are also rarely givens.  Seeking to maximise profit is a choice. Alternatives could be to maximise employment or minimize the number of hours worked. And profit concerns only the economic dimension of our goals. Goals may be multidimensional. Additional dimensions could relate to the health of the oceans or promoting worldwide equality of life opportunity. Adopting a perspective of balance in such a complex decision making arena of multiple goals and actions where choices are not unequivocally right for all time surfaces the potential benefits of avoiding extremes, periodically reassessing decisions and ensuring you do not get locked into a course of action. Furthermore it opens the possible importance of maintaining a tension between the available options: such that one keeps the other in check and leads to innovation in both. At the current time could having both the Chinese system and the US system in competition be good for both? And would the collapse (or worse destruction) of one leave everyone worse off?

What is this? The limits of senses and consciousness

Our senses limit what we can experience of the world and our consciousness filters even those experiences. Consequently the world exists to us only as a limited mental construct.  And yet within this reduced realm we have still managed to create numerous contradictory, nonsensical or overly complex elements. It is likely though that a much richer reality exists. We might therefore be well advised to adopt a dose of humility and tread lightly rather than continue our current approach of blundering around under a delusion of omnipotence. One possible starting point would be to reduce the importance attached to consciousness when developing our mental constructs and rely more on the direct sensual inputs (be these from the five traditional senses, our unconscious, the release of chemicals and hormones, the effects of bacteria or some other mechanism) ie think less, feel more.   

A Ponzi world

Ponzi schemes have historically related to financial investments whereby the funds deposited by the most recent entrants are used to pay the returns of those who contributed earlier. Typically higher than normal investment returns are used to entice entry.  Little, if any, of the money received is actually invested as promised. All goes well so long as an ever growing stream of new entrants can be enticed. When that is no longer the case the scheme falls over. But it would appear that Ponzi schemes, though never named as such, may have emerged in other domains.  To give three possible examples. 

At the present time the European Central Bank is the principal purchaser of sovereign debt. When that debt is due to be repaid it is instead largely reissued in ever greater quantities (looks familiar: new entrants paying out earlier ones). This has worked so far given there is excessive financial liquidity chasing limited investment opportunities. But will it fall over some day? Possibly given that only a small part of the debt is actually being used to try and generate a return capable of really paying back the debt (again looks familiar). 

A second example relates to a country’s economic growth. Growth is seen as a good thing. Increasing consumption and production, and the money flows and taxes associated with them, is held by many to facilitate an improved standard of living. Several countries though seem to have largely achieved growth simply by increasing their population. Australia is a stand out example… But it is really increases in economic activity per person that boost living standards – by developing new ways of doing things or new things to do. Population growth alone by contrast represents new citizens helping boost the economic wellbeing of existing residents – funding pensions, boosting property values etc (seem familiar?). Sustaining this approach over time requires ever increasing numbers of immigrants. Will this approach be sustainable indefinitely?  

The final example has a slightly different flavour and relates to University education. Certain jobs have historically required a minimum level of education – say a Bachelor’s degree.   However the role of University education has recently become more significant.  Firstly, some careers that previously did not require a Bachelor’s degree now do. Secondly, in other professions the number of students with such degrees has grown meaning the requirement to enter has increased to the level of a Master’s or Doctoral degree. The result has been a pot of gold for Universities. But can it last? A possible Ponzi aspect in this is that newcomers to the workforce require increasing levels of University education to enter the workforce. And naturally they would like this situation to persist or be extended for later entrants to secure a return on their education investment. The result is that Universities require ever increasing numbers of Bachelor students to ensure increasing demand for the higher level degrees, a continual increase in the number of careers requiring a Bachelor degree for entry, and ever higher degree levels (for example the habilitation as already offered by German Universities).  

Time to build a new tree


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


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

tree path 13May20

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?


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!



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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 ..