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Peering into the Murky Crystal Ball – Part 3

In the final part of this special three-part series, Part 3 – The Imponderables, Executive Coach and freelance blogger for The Slade Report, David Simpson, offers some observations on the factors at play in determining the new normal. Catch up or recap here on Part 1 – The Inevitables and Part 2 – The Inconclusives.

The Imponderables

  1. Civic Unity or Selfish Disunity

Since the 50s we have seen a radical shift in attitudes about community. The reasons are many: changes in the nuclear family, urbanisation, greater media transparency, higher levels of education, multiculturalism and globalisation. “Shared values” have fragmented and once trusted institutions – government, the law, medicine, banking and church – have all come under fire. The meaning of good citizenship has changed. With the work day expanding and dual income families becoming the norm, time available for community involvement has evaporated. An obvious example is the membership decline of service clubs such as Rotary, Kiwanis and Lions.

It could be argued that human behaviour has been modified by technology (attention span, inward focus, susceptibility to web influence). It is hard to say if less human person to person contact leads to less empathy, but the time spent with individual handheld screens has certainly promulgated a first person/me first mentality.

One would hope that the COVID-19 crisis reminds us that we are all in this “humanity thing” together. It should have a bearing on how we manage the challenges of unemployment and what is deemed fair as the digital divide widens the gap between the haves and the have nots. The answer lies somewhere between full blown Socialism and Social Darwinism. Hopefully, enlightenment prevails over self-interest.

In the short term, I believe that we need to re-emphasise the subject of civics in our education system to teach what citizenship involves and why it is important.

  1. Environmental Action or On-going Inertia

The vast majority of the world’s inhabitants support more initiative on climate change. Whether most fully appreciate the cost or the effort required of real action is another matter. Powerful interests such as oil, auto and fast consumables wield significant influence in resistance. Putin’s oligarchs, the Saudi Royal Family and the likes of the Koch brothers are not going down without a fight. However, the collective action that has been required to get a significant percent of the global population to self-isolate for self-preservation may spur on a surge of activism in the sustainability movement.

Interestingly, the pandemic’s impact of virtualisation with downward pressure on petroleum use and overall consumption could be an unexpected first step in lowering of the global carbon footprint.

  1. Decline of America/Ascendancy of China

Trump has certainly done a good job burning off the goodwill the US has built up with its allies since 1945. America’s moral authority as crusader for democracy and guardian of the free world has been eroded in three and a half short years with poor statesmanship and bullying America First protectionism. It is hard to believe that the damage is irreparable if there is a return to more sane foreign policy and respected leadership. On the other hand, an extended Trump presidency could lead to a permanent loss of credibility as well as worldwide instability.

Despite being initially cast as the COVID-19 pariah, China is filling the foreign aid void left by America and is providing economic and technical assistance to the third world. Hey, they are even donating medical essentials to the US! Even if major trading partners push to repatriate some production, China will remain the global manufacturing and export powerhouse. If stoking of domestic consumption starts in earnest, it is only a matter of time before their GNP rivals the US. At the same time, the Chinese continue to build up military capability to offset the US as the international police force.

US sponsored democratic capitalism has always espoused the philosophy that a rising tide lifts all boats. It would be naïve to think that the People’s Republic has quite the same “win-win” attitude. China has shown they will follow their own path that is decidedly Chinese in its focus. If you dislike American hegemony, you will like the Chinese version even less.

  1. Globality or Nationalism

Have we reached the peak of globalisation or just a momentary pause? Given that we will undoubtedly be working through a recession at best, recovery not expansion will be the priority. The problems of supply chain and vulnerability to offshoring will stall any further plans to outsource overseas and the call to bring back jobs to address unemployment will be strong. The larger questions about consumerism – “Is it sustainable?” and “Can there be prosperity without growth?” – are likely to get more attention than they might have otherwise.

On the political side of globalism, does the lack of a coordinated approach to tackling the pandemic signal the need for greater cross border collaboration? Alternatively, do countries now conclude that they have no choice but to shut their borders and tend to their own backyard?

I hope it is a combination of both. Building redundancy into a worldwide health response capability must surely happen. The WHO or some repurposed alternative will have to be funded and provided the requisite authority to mitigate a disaster re-occurrence. It will require worldwide agreement (or at least consensus with the UN Security Council) to achieve it. Having something vitally serious to talk about in terms of collaboration is a real opportunity.

On the national level, I hope that this will finally get us discussing more seriously how oppositional politics have gone too far. Representing one’s supporters is a commitment, but not the exclusive one. In the most basic terms, elected officials are responsible to all citizens, not just the ones who voted for them. Building back the muscle memory of bipartisan cooperation
– at least in areas of general public interest (disaster relief, infrastructure)
– can only translate to better preparedness when crisis hits again. Here’s to the positive side of nationalism: We stand as nation together, but also as a willing member of the world family when necessary.

The fact that WFH has given me occasion to reflect on these matters encourages me to believe that better minds than mine are also thinking them through. It is said that you should never waste a good crisis.

 
I certainly hope that is true.

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Peering into the Murky Crystal Ball – Part 2

In Part 2 – The Inconclusives, the second in this special three-part series, Executive Coach and freelance blogger for The Slade Report, David Simpson, offers some observations on the factors at play in determining the new normal. In case you missed it, click here for Part 1 – The Inevitables.

The Inconclusives

  1. Objective Truth or Limbaugh’s Four Pillars of Deceit

The explosion of on-line information sources and the Balkanization of media reporting in the 24/7 news cycle has ushered in an era of “believe what you want to believe” versus a focus on objective truth (that is self-evident). Nowhere is this more apparent than in post Trump America, but greater reliance on partisan narratives is a worldwide phenomenon.

A significant portion of the US population believe academia, science, government and the fake news media are the enemy of the people, perpetrating hoaxes (like global warming) to limit personal freedom. Playing fast and loose with the “facts” has somehow been accepted as a part of modern life. Digestible sound bites have become the currency of political debate.

The notion of using technology as a filter to factor out bias in order to provide a truly objective reporting of the facts is an interesting one… but raises the following questions: “How many are actually seeking that objectivity?” and  “How many would remain perfectly comfortable having their own preconceptions reinforced?”

  1. Urbanisation or the Escape to the Country

Up until March it was a foregone conclusion that cities would continue to grow. Being under home lockdown, particularly in urban centres most vulnerable to the virus, has many of those in self-quarantine questioning the expense and inconvenience of big city living. As well, those who have decamped to more rural situations for distancing reasons have been reacquainted with the advantages of a slower pace.

If the move to a more virtual mobile lifestyle does in fact become a reality and workers are actively discouraged from commuting to their desks, the choice of domicile opens up. If you can work from anywhere and have anything delivered to your door, do you need to live in Detroit, Dusseldorf or Doha?

In this scenario the less salubrious urban centres will see an exodus of mobile workers. Those of cultural or historic significance like New York, Paris and Shanghai would likely maintain their appeal, but less as commercial hubs and more as experiential destinations (or idylls for the rich and famous).

  1. Domestication of Manufacturing

The world’s over reliance on China’s production capacity and the supply chain vulnerabilities that exist when a Wuhan occurs have been brought to light. This has led nations to start to challenge their assumptions about “just in time” inventory control, access to essential goods and services as well as the prudence of strategic stockpiling.

Ironically, the Trump MAGA cry of “I’m bringing back manufacturing jobs to America” may gain some broader currency courtesy of COVID-19. It seems unlikely that car making will return to Australia, steel plants to the US or cheap garment making to Italy. Nevertheless, the local production of small run, vital commodities like pharmaceuticals, food products and precision engineered components might become viable again if access to them is seen as critical. Resistance due to higher cost may be somewhat mitigated if high unemployment levels put downward pressure on labour rates. Having said that, with the advent of micro manufacturing, turnkey robotics and 3D printing, it is unlikely that such installations would require much physical manpower.

Continue reading: Part 3 – The Imponderables

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Peering into the Murky Crystal Ball – Part 1

In Part 1 – The Inevitables, the first in this special three-part series, Executive Coach and freelance blogger for The Slade Report, David Simpson, offers some observations on the factors at play in determining the new normal. David has been a past CEO of global organisations, working in cities across North America, South Africa, China, Japan and Australia. A little bit of distance is often a good thing, and now he also has time to recast lessons from the past and paint us some future scenarios.

What the world is going through currently is a once in a generation, if not a lifetime, occurrence. Historically tsunami-like impact events bring about significant change because they are a shock to the system. Odds are that the future won’t look like the old normal.

The following long form blog looks at the impact of automation on employment, the cost/benefit of urban living and the fragmentation/partisanship in representative government. These and other topics have been for conjecture for some time, but these and other questions have been brought into sharp relief by COVID-19.

To echo our mate, Peter Thomas, the COVID-19 pandemic has pushed several emergent social trends into hyper-drive. Given the world’s inability to cope comfortably with the pace of change, even before lockdown, predicting the outcomes of the “new normal” is exceedingly difficult. In order to make some sense of it for my own peace of mind, I am attempting to articulate some of the apparent dynamics at play and the perplexing questions they raise.

The Inevitables

  1. Institutionalisation of Unemployment

No matter the rate of recovery post COVID-19, the percent of jobless will remain high for some time. Sections of commerce (e.g. travel, retail) will be decimated and unable to hire. Other businesses contending with the public’s reduced appetite for consumption (see new depression mentality below) will need to manage cost and be hesitant to staff except where necessary. Additionally, the work from home experience has likely identified unnecessary areas of operation that can be shed, so many furloughed employees may not be asked back.

This is occurring at a time when the impact of AI and machine learning is starting to appear on the radar. The significant displacement of manpower in areas like transport due to self-driving vehicles and routine customer service delivery using intelligent bots is already anticipated. However, the professional ranks are not immune either. If a medical database with appropriate sensing tech can deliver a superior diagnosis or a virtual judiciary can deliver fairer and more reasoned verdicts, is there not going to be redundancy in the high paid ranks as well?

These may be considered distant development that will be resisted with scepticism because of a belief in the superiority of human intellect and the importance of face to face contact in important decision making. But after two months of isolation and the normalisation of Zoom interaction, the progression from telemedicine to avatar advice and counsel may have been given a kick along by the virus.

Whatever happens, we will need to refresh our thinking about people without jobs. It is hard to imagine new areas of endeavour that will come on stream to soak up those displaced by automation. If there are not enough paying jobs to go around, we will have to find ways to share the wealth or deal with massive civil unrest.

The number of people who would never have considered being on the dole, but have subsequently applied due to the lockdown, has exploded. A renewed appreciation for a social safety net is certain. The JobKeeper/JobSeeker programs portend to greater consideration of the basic minimum income concept, how it might be managed and how it could be funded.

  1. The New Depression Mentality

If the lessons of the late 1920s offer any insight, it is that a prolonged severe downturn leads the population to greater frugality. Boomers who have seen their super funds plunge will be more cautious. Gen X, Y and Millennials who have been encouraged to spend everything they earn will now have a real appreciation for the notion of “saving for a rainy day”.

In the short term, as many climb out from under credit card bills/overdrafts, they will, out of necessity, postpone or forego many normal routine purchases. This forced belt tightening may in turn habituate a predisposition to thrift.

On top of all this, the massive government debt incurred in coping with quarantine will necessitate a heavying up of the tax burden across the board so there will be less free cash flow along with a growing “save first” mentality. This in turn takes the consumption driver out of the economy limiting a V shape bounce back. On the upside, the availability of greater personal saving (no doubt sitting in “easy to access” savings accounts at zero interest) could make investment capital plentiful (and cheap) for growth industries.

  1. Accelerated Virtualisation

Experience with video conference as a way of communicating and working is now ubiquitous. Concerns about WFH productivity loss have been largely neutralised and caused many to question the cost/benefit of “being in the office”. The effect on office rentals, commuting and even residential location is potentially enormous.

Likewise, any resistance to e-commerce has been ploughed over with late adopters sampling Amazon, Uber Eats, Netflix and video yoga. The slow demise of bricks and mortar retail has been put into high gear with “on the margin” department stores like Myer and Nieman Marcus heading to the retail boneyard. There will many storefront causalities when the dust settles.

With the hammering that tourism has taken, it is conceivable that VR travel will come into its own. (i.e. “Walk along the Boulevards of Paris without the worry of infection from the French.”) Regulating intellectual property rights will become even more complex when digital service expands to virtual experience.

It goes without saying that the power of GAFA (Google, Amazon Facebook and Apple) along with other tech giants like Microsoft, Netflix and Alibaba has increased as a result of the shutdown. It is in their self-interest to be pushing virtuality even further. Anti-trust pressure will almost certainly be brought to bear, but if the busting up of Standard Oil is anything to go by, the component parts of these firms will become individually more powerful if demerged, basically defeating the purpose.

  1. Recognition of Systemic Faults

Clearly the pandemic has highlighted the world’s lack of readiness for a global health disaster. The response has been slow, mixed and uncoordinated. The WHO seems at the mercy of its major funders, under-empowered and overly focussed on third world Ebola type problems. There is some debate about whether the health experts had response plans in place. If so, they were ignored, or stripped of support and put on the back burner. In the wake of the crisis the scientific community has done a good job, sharing information and collaborating on solutions while treading the thin line of fact versus politic interest. The hope is that we learn from best practice and are better prepared for next time.

Perhaps the bigger vulnerability in crisis is the intensification of partisanship in Western democracy and the resistance to intra and inter-governmental cooperation. The US is the most obvious example of adversarialism, but Brexit and the bushfire relief response show that entrenched political divisions are not unique to America. China’s initial withholding of epidemiological information is classic “look after your own interests first” in a global context.

The willingness for ScoMo to engage with State Premiers effectively and the cooperating Democratic and Republican US Governors are certainly encouraging. But the mainstreaming of the populist radical right around the world and politically correct intransigence on the left are creating roadblocks to effective non-partisan action even when emergencies occur. Will the pandemic convince voters of the need for their politicians to cooperate more willingly for the overall public good? That is the billion-dollar question.

Continue reading: Part 2 – The Inconclusives

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A lot to think about beyond 2020

February already and we’re fully back into the swing of work, with the Australia Day long weekend gone and kids back to school.

Companies and employees everywhere are returning to significant challenges to the Australian economy and their industries within it, especially retail, agriculture, and tourism amongst others. My industry focus, superannuation and wealth management, has been experiencing the pain of change for some time now, and there is a high level of executive movement as the ‘war for talent’ heats up further.

This is great if you’re an executive or specialist in demand, but there’s some awful, somewhat hidden or understated, numbers for many Australians.

According to a recent article by Jack Derwin in Business Insider, there are now three unemployed Australians for every job vacancy. Based on this fact we know that the 250,000 or so job ads listed every month just don’t match up with the 725,000 Australians without jobs who want them, and the 1.15 million under-employed Australians who are working less hours than they’d like.

Reading this, I wondered whether the majority of us currently in professional employment are even aware of these numbers… three unemployed people for every single listed vacancy!

Yes, many vacancies aren’t listed, but typically they will be filled by ‘people who know people’ as they are already employed and referred through trusted conduits.

The other big associated issue is underemployment, and when combined with the unemployed, means nearly 2 million Australians cannot find as much work as they want or need.

Let’s keep this in mind before we start labelling people as ‘lifters or leaners’ or with other simplistic clichés.

Further, in an ABC Business Report published recently, Oxfam concludes, “Australia’s concentration of wealth in the hands of the super-rich is occurring, while the share of wealth of the bottom half of our community has decreased over the last decade and workers’ wages continue to stagnate.”

“The top 1 per cent of Australians have more than doubled the wealth of the entire bottom 50 per cent – or 12.5 million people.”

Read that again. It warrants an expletive or two when you think that 240,000 of our ‘mates’ hold 100x the individual wealth held by half of all Australians.

How have we, as a society, let it come to this (and seemingly, it’s getting worse)? 

Economic liberalisation has raised millions of people around the world out of abject poverty, and certainly Australia benefitted from deregulation and the encouragement of the private sector, from what was a troubled economy in the 1970s and 80s. But have we gone too far, and is the idea of a ‘fair go’ in Australia and looking after your ‘mates’ just a slogan?

This country has shown with the recent bushfires and current drought that we still believe in pitching in to help others. It seems however, with death by a thousand cuts over 30 years, that we have become numb to the unemployed, immune to the increasing homeless on the street, and resigned to the gargantuan wealth and therefore political influence of ‘the few’.

Ok, easy for me to criticise, but what do we do? 

I don’t have the answers but I don’t believe Australia (and the world) can continue down this path of the few haves and many have-nots, with a large middle ground too busy to care because they’re just getting by. The workforce is changing and unless we come up with new ideas and products, the wealth disparity will continue to grow. Add in climate change, whether exacerbated by humans or not, the year, decade and century ahead will deliver some tremendous challenges for many Australians.

There’s a lot to think about in 2020 and beyond.

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