Fear of the Robot Economy….

A couple of articles I came across recently made for quite depressing reading about the future of the economy. The first was an opinion piece by Greg Jericho for The Guardian on an IMF Report about the economic impact of robots. The second was the AFR’s annual Rich List. Read together, they don’t inspire me with confidence that we are really embracing the economic opportunity that innovation brings.

In the first article, the conclusion seemed to be predicated on the idea that robots will destroy more “jobs” (that archaic unit of economic output/activity against which we continue to measure all human, social and political achievement) than they will enable us to create in terms of our advancement. Ergo robots bad, jobs good.

While the second report painted a depressing picture of where most economic wealth continues to be created. Of the 200 Wealthiest People in Australia, around 25% made/make their money in property, with another 10% coming from retail. Add in resources and “investment” (a somewhat opaque category), and these sectors probably account for about two-thirds of the total. Agriculture, manufacturing, entertainment and financial services also feature. However, only the founders of Atlassian, and a few other entrepreneurs come from the technology sector. Which should make us wonder where the innovation is coming from that will propel our economy post-mining boom.

As I have commented before, the public debate on innovation (let alone public engagement) is not happening in any meaningful way. As one senior executive at a large financial services company told a while back, “any internal discussion around technology, automation and digital solutions gets shut down for fear of provoking the spectre of job losses”. All the while, large organisations like banks are hiring hundreds of consultants and change managers to help them innovate and restructure (i.e., de-layer their staff), rather than trying to innovate from within.

With my home State of Victoria heading for the polls later this year, and the growing sense that we are already in Federal election campaign mode for 2019 (or earlier…), we will see an even greater emphasis on public funding for traditional infrastructure rather than investing in new technologies or innovation.

Finally, at the risk of stirring up the ongoing corporate tax debate even further, I took part in a discussion last week with various members of the FinTech and Venture Capital community, to discuss Treasury policy on Blockchain, cryptocurrency and ICOs. There was an acknowledgement that while Australia could be a leader in this new technology sector, a lack of regulatory certainty and non-conducive tax treatment towards this new funding model means that there will be a brain drain as talent relocates overseas to more amenable jurisdictions.

Next week: The new productivity tools

Infrastructure – too precious to be left to the pollies…

With its 3-year Federal parliamentary cycle and fixed 4-year terms in each State and Territory*, Australia is never too far away from an election. South Australia and Tasmania are both currently in full election mode. Victoria doesn’t go to the polls until later this year, but the informal campaigning (rather like a phony war?) is already underway. And although the next Federal election is not due until 2019, the stump speeches are already being wheeled out.

Fiction imitates (or even predicts) fact in ABC TV’s “Utopia” (hard hats obligatory)

With so much focus on “infrastructure”, it’s going to be a bumper year for hard hats, hi-viz vests and photo opportunities in front of big “stuff”. It’s just such a shame that even with the real life Utopia, Infrastructure Australia (and respective statutory and quasi-independent bodies in each State), so much of the decision-making is left to politicians. Because this “stuff” is far too important to be left to the short-term priorities, self-serving tactics and party preservation shenanigans that most of our elected representatives are forced to succumb to.

Hot infrastructure topics this time around are energy (especially in South Australia), water (Murray Darling Basin), resources (what do we do after the mining boom?), and the call for “jobs” linked to putting up or digging up “stuff”.

I understand that we need employment opportunities both sparked by, and as a driver for, economic stimulus. But there has to be more than simply creating short-term jobs on unsustainable projects (Adani, anyone?). Of course, one could argue that the powerful construction and mining unions (and their infrastructure owning superannuation funds) have a vested interest in maintaining this trajectory.

But if these projects need to take on long-term debt, with the 3 or 4 year election cycles, you can see how difficult it becomes to manage budget priorities. Worse, incoming governments may strive to cancel, overturn or curtail projects of their predecessors, which won’t endear them to the private sector companies (and their banks) who have successfully bid on the contracts.

Roads represent a large chunk of the infrastructure “stuff” in my own State of Victoria, and are already shaping up to be a key election issue (at least in the minds of the parties). For a major city that still doesn’t have a dedicated train service connecting the CBD to its ever-growing international airport, Melbourne probably needs fewer roads, and more planning (especially as we move to ride-sharing and self-driving vehicles). Besides, while we are in an urban and population growth cycle, given the rate at which some of the current new roads are being built, they will be under-capacity before they are even finished.

I would argue that there is just as much demand to upgrade and refurbish existing infrastructure, (which will probably generate just as many employment opportunities) rather than feeding the insatiable demand for shiny new toys. Or revisiting (and even restoring) some “old” ideas that might actually make sense again today, such as the orbital railway concept connecting Melbourne’s suburban hubs. Sure, we have the new Metro Tunnel project under the CBD, and this may lead to extensions to existing suburban services, and even the airport itself. But future projects have not been scoped, and are subject to prevailing party ideologies (not to mention the NIMBY brigades…) – rather than serving  the interests or greater good of the population (and environment) as a whole.

Finally, some sobering news came out of the UK recently, where London is actually experiencing a decline in passenger numbers on public transport. There have been a variety of explanations for this drop (the first in more than 20 years) – from the threat of terrorism, to new work patterns (more people working from home); from changing lifestyles (more Netflix, less Multiplex), to the “on-demand” economy (more Deliveroo, less dining out).  With fewer people likely to commute to the CBD (40% of the population will have self-directed careers), governments, their infrastructure boffins and their policy wonks will need to think about what this does actually mean for roads and rail…. and how much longer must I wait for the NBN in my suburb of Richmond (and will it already be obsolete by the time I have access)?

* For the breakdown see here.

Next week: Blockchain, or Schmockchain?

 

End of Year Reflection

As we reach the end of 2016, I can’t help thinking: “What just happened?“. It’s been a year of unexpected (and far from conclusive) electoral outcomes. Renewed Cold War hostilities threaten to break out on a weekly basis. Sectarian conflicts have created levels of mass-migration not seen since the end of WWII. Meanwhile, there have been more celebrity deaths than I can recall in a single year. (And a Scotsman is the #1 tennis player in the world.)

Old Father Time, Museum of London (Image: Chris Wild)

Old Father Time, Museum of London (Image: Chris Wild)

The Brexit and Trump poll results are being cited as either examples of the new populist/nationalist politics, or proof that our current democratic systems are highly flawed. Either way, they are indicative of a certain public mood: anger fueled by a sense of despair at not being able to deal with the rapid changes brought about by globalisation, multiculturalism, modernisation and the “open source” economy. Ironically, both the Brexit and Trump campaigns relied heavily on the global technologies of social media, 24-news cycles and internet-driven soundbites (plus they surely benefited at various times from fake news, false claims and belligerent rhetoric).

As I write, I am in the UK, which is heading for a mini winter of discontent (with high-profile strikes in the rail, mail and airline sectors). The last time I was here about two years ago, there was a general sense of public optimism; now, post-Brexit, it feels very subdued, even depressed. Whether this is a delayed response to the Brexit result, or uncertainty about the exit process itself, it’s hard to tell. While the governing Conservative party leadership is struggling to implement the outcome of a referendum that many of them did not want (or expect), the opposition Labour party (whose own leadership was highly ambivalent about the Brexit vote) is busily re-enacting the 1970’s and 1980’s….

Speaking of the 70’s and 80’s, the return to Cold War hostilities has felt like an inevitability for the past few years, and if it weren’t so serious it might be the suitable subject of a satire by Nikolai Gogol. While the primary fault lines are again between the USA and Russia, there are some complications and distractions, that don’t paint as clear a picture compared to the past: first, the relationships between the US President-elect and Russia confuse matters; second, the ideological war has shifted from capitalism vs communism, to liberalism vs autocracy; third, the role of “satellite” states is no longer to act as proxies in localised disputes – these supporting characters might now provide the trigger for all out hostilities between the super powers.

The ascendancy of this new nationalism (within the USA as much as in Russia) and the increased autocratic leadership on display in democratic, theocratic, oligarchic and totalitarian regimes alike is a renewed threat to enlightened liberalism and classical pluralism. Hence the significance of failing democratic institutions and political leadership in the west – the vacuum they leave behind is readily filled by the “certainty” of dictatorship and extremism. With China added to the mix via recent maritime events, plus ongoing strife in the Middle East, the potential flash point for a new Cold War conflict might be in the Spratly Islands as much as Syria, Ulaanbaatar as Ukraine, or Ankara as Aden.

On a (slightly) lighter note, the number of celebrity deaths reported in 2016 could be explained by demographics: artists who became famous during the explosion of popular culture in the 50’s, 60’s, 70’s and 80’s are simply getting old. In terms of dead pop stars, 2016 was book-ended by the deaths of David Bowie and Leonard Cohen. Both were experiencing something of a renaissance in their professional fortunes, and each left us with some of the most challenging but enduring work of their careers. Of their surviving contemporaries, some might argue that Neil Young and Bob Dylan continue to keep the musical flame alive, but for my money, Brian Eno and John Cale are the torch bearers for their generation.

In a satirical end of year review in The Times last weekend, the following words were “attributed” to Bowie (someone known to understand, if not define, the zeitgeist):

“Sorry to bail, guys. But I could see the way things were going.”

Next week: Content in Context is taking a break for the holidays. Peace and best wishes to all my readers. Normal service will resume on January 10.

Integrity and the Acid Test: How Would it Look as Front Page News?

We have been hearing a great deal recently about allegations of political corruption in Australia, culminating in the resignation of a State Premier. This has raised questions about integrity in public office, given the steady stream of stories concerning dubious donations to election campaigns, murky business deals involving politicians and party power-brokers, misuse of trade union members’ assets by officials who were also prominent party figures, opaque political lobbying by industry, tawdry backroom deals to preference election candidates… oh, and the gift of a $3,000 bottle of wine.

Premier Cru-elled de Chateau ICAC?

I won’t dwell on the whys and wherefores of Mr O’Farrell’s resignation, except to say this: If the Premier genuinely believed he did not receive the bottle of wine in question, and his assertion was subsequently shown to be wrong, does this amount to giving false witness? Surely, the act of giving false evidence involves the commission of a deliberate lie, either with the intention of causing a deception or creating an erroneous version of events. It seems that had Mr O’Farrell, as a Member of the New South Wales Parliament, remembered to declare the gift on his register of pecuniary interests, but later forgot about it or failed to recall it when giving evidence, he might have been made to look merely foolish. However, failing to register the gift was either a costly mistake or a grave error of judgement, and by forgetting it altogether (including his handwritten letter of thanks) it reveals a certain level of incompetence. Yet, how many foolish and incompetent politicians manage to keep their jobs, and even get re-elected?

Some commentators have suggested that the nature of the Premier’s resignation showed real integrity – but the truth is, once the facts contradicted his evidence, his position became untenable, and he realised he had no choice in the matter. (The relevant inquiry had in fact already cleared Mr O’Farrell of any suggestion of wrongdoing in the matter under investigation, but now his reputation is probably tarnished by the implication or perception of corrupt behaviour.)

The big lesson from these latest events is that when we get wrapped up in process or get sidetracked by personal, political or financial outcomes, we can easily lose sight of the need to act with integrity and to exercise our authority and powers of influence with transparency. Otherwise, we end up colluding which allows the smell of corruption to permeate. Politics is not alone in these matters – religious institutions, professional sport and corporate boardrooms have more than contributed to the current malaise.

I experienced a small but significant test of personal integrity early on in my career, when I was working as a paralegal in local government. Part of my role was to provide impartial legal advice to local residents facing housing problems. At the time, the area was undergoing intensive gentrification, and many private tenants were being “persuaded” to move out by landlords and property developers. In many cases, all I could do was advise parties of their respective rights, particularly the tenants who had protection from harassment and unlawful eviction under the relevant housing laws. In some cases, the council could mount criminal prosecutions for more serious offences, but this was rare.

So, one day, one of my “clients” (the advice service was free to the public) brought me a personal gift: a bottle of vodka and a bottle of champagne (probably no more than $50 in total value). I initially refused because I did not feel it was necessary or appropriate that he reward me in this way for simply doing my job. However, because my legal advice had enabled him to negotiate a lucrative payout from his landlord to vacate his home, and because he had been brought up to value displays of gratitude, he insisted I keep the gift and refused to take it back.

I could have just taken the bottles and not said anything to anyone, as there were no witnesses. But whether it was my conscience, or the thought that the client might have said something to a third party that may have compromised me, I immediately raised the matter with my manager. He acknowledged my honesty in reporting it (even though I wasn’t really sure what the council policy was on gifts), but said I could keep the present as it was of nominal value, and because I hadn’t sought or solicited a personal benefit. (He also said that if it was a bottle of gin, he might have taken it for himself… but I think he was joking?)

Nowadays, I’m not so sure that I would have got the same response, and over the years, having worked in some high-profile and highly regulated industries, I am aware that there is far more scrutiny around formal compliance, self-regulation, voluntary codes of conduct and business ethics. Of course, individuals need to feel comfortable about the organization they work for and the role they are expected to perform, to ensure there is alignment with their personal values. In addition, I’m often reminded of three questions you should ask yourself in corporate life whenever you have any doubts about the integrity of your actions:

  • Would you still do it if the CEO or Chairman was watching?
  • What might your clients or your shareholders think?
  • How would it look if it made front page news in the morning?

I think the problem for many modern politicians is that they hardly ever say exactly what they are thinking, for fear of letting slip a personal opinion that may differ from their public persona or their party’s stated policy position. (How often nowadays do Ministers resign on a point of personal principle?) Worse, it has been suggested that “loyalty to party” has been displaced by “loyalty to faction”. As a consequence, they are compromised because they forget about individual accountability; and they collude because they either prefer to toe the party line or hide behind the collective shield of cabinet, ministry or faction. In doing so they demonstrate a lack of personal integrity. Unfortunately, when even “benign” or “innocent” collusion emerges, corruption is never very far away.

 

POSTSCRIPT:

Since drafting this blog, I have heard several “wise after the event” comments from the chattering classes, which can be summarised as follows:

  • If the original enquiry was not interested in a bottle of wine, was the Premier “mere” collateral damage of the anti-corruption investigation?
  • How could he possibly have forgotten about such a significant gift, and his written note of thanks? What was going on? What was he thinking? What were his staff doing?
  • The 1959 Grange vintage is somewhat overrated (and well past its best drinking) – which might suggest it was worth less than $3,000 (NB: gifts under $500 do not need to be declared on the Parliamentary register of MPs’ pecuniary interests…)
  • On the other hand, bottles of 1959 Grange are being advertised at over $4,000 because the notoriety has boosted its value
  • It again raises questions about whether the electorate can trust any of our politicians – the backdrop being “lies” and “broken promises” over pre-election commitments