Paul Wallbank – Brilliant Communications

Category: government

  • Enniskillen and the G8’s Potemkin Village

    Enniskillen and the G8’s Potemkin Village

    In the middle of this month the G8 group of world leaders will meet in Northern Ireland when the UK takes their turn to host the annual conference.

    With the leaders of eight of the world’s biggest economies – which includes Canada but not China – coming to visit the Northern Irish government is anxious to present a prosperous face to the world, including allocating £233,000 to give Enniskillen’s town centre a ‘facelift’.

    It seems a good chunk of the facelift money has been spent on creating fake shops in the distressed town’s centre.

    In a little over two weeks they and other leaders will gather for a G8 summit at a golf resort in Enniskillen. And as the date approaches the cleanup is moving into high gear. It includes new coats of paint on houses, tidying up lawns, and putting up fake storefronts on shuttered businesses.

    For the visiting dignitaries, their advisors and the media caravans that follow them, Enniskillen’s shops will be looking prosperous when the reality is very different.

    “The County of Fermanagh has suffered terribly as a result of the credit crisis and the resulting recession,” says Dan Keenan of the Irish Times.

    Fermanagh County’s efforts to present a brave, if false, face to the world is symptomatic of the Western world’s refusal to accept the consumer based economy that drove the Corporatist model of government over the past fifty years is over.

    Just as the fall of the Berlin Wall in 1989 signalled the end of the Soviet experiment, the global financial crisis of 2008 marked the end for the big spending, big debt era which had driven the Western economies through the last half of the Twentieth Century.

    Unlike the Soviets, we refused to accept the game is up and have kept a failing economic philosophy alive with massive borrowing and money printing. In this respect, we’re dumber the Russian communist leaders who accepted the reality of the world they found themselves confronting in 1989.

    All of which will probably amuse Russian President Vladimir Putin as his motorcade speeds past the repainted shopfronts of Enniskillen and no doubt he’ll be thinking of the face Russia will present next year when they host the G8 Summit.

    Perhaps its time for the G8 leaders to invite the People’s Republic of China to join their privileged club – at present Japan is the only non-‘white’ nation.

    If the G8 decide to let the Chinese join, there’s the South China Mall that would be a perfect counterpoint to the Potemkin Village of Enniskillen and the world’s great leaders can continue to believe that the business rules of the 1980s still hold true today.

    Yesterday’s men are still pursuing yesterday’s dreams, dressing up Enniskillen may cater to their fantasies but it won’t help today’s economy.

    Picture of a propped up facade courtesy of Ingolfson through Wikipedia Commons.

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  • Does closed government hurt business and the economy?

    Does closed government hurt business and the economy?

    Earlier this week I interviewed Vivek Kundra, the former US Chief Information Officer and now Salesforce executive, on innovation, technology and government with some of the Australian business perspectives run as a story in Business Spectator.

    Something that stood out for me from the interview were Vivek’s views on the effects of governments making both innovations and information freely available.

    “Two policy decisions that transformed the future of civilisation – GPS opening and human genome project through the Bermuda Principles.”

    While it’s probably too early to draw conclusions on how the opening of the human genome data will change business, it’s certainly true the Global Positioning System has allowed whole new industries to evolve and it’s an important lesson on making technology available to the masses.

    The Global Positioning System was, like the internet, a US military technology developed during the Cold War with the Soviet Union.

    After Korean Airlines flight 007 was shot down by Soviet fighters in 1983, President Reagan approved civilian use of the GPS – then named Navstar – to prevent similar tragedies.

    Such a decision was controversial, this was military technology being given over to the general population which could be used by enemy forces as well as airlines and truck drivers.

    No doubt if the GPS technology was developed in the UK or Australia, there would have been demands to monetize the service. It almost certainly would have been sold off to a merchant bank that would have charged for the service and stunted its adoption.

    By making GPS freely available, the US gained a competitive advantage which maintains the nation’s technological and economic lead over the rest of the world.

    This openness isn’t just an advantage for technology companies. While US governments are no means perfect, the relatively open nature of local, state and Federal administrations is an advantage for the United States economy and society. As Vivek says,

    Making data available provides three concrete functions; it allows citizens to fight corruption, it allows you to build the next billion dollar companies and it transforms government functions by breaking down silos.

    When the default position of government is to classify everything as secret or ‘commercial-in-confidence’, there’s little chance of an entrepreneurial culture growing in that society – instead you have a business culture that favours connected insiders who can trade off their privileged contacts within government.

    A culture of closed government reflects the business culture of a society and the reluctance of both the private and public sectors to openly share knowledge is why countries like Britain and Australia will struggle to emulate the United States.

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  • Ending the motor industry’s 1950s delusions

    Ending the motor industry’s 1950s delusions

    Today Ford announced the pending closure of its Australian manufacturing operations, bringing to an end ninety years of the company building automobiles down under.

    Ford’s announcement is small on a global scale – the Broadmeadows factory built 40,000 cars out of a worldwide supply of sixty-three million – it does illustrate some major structural issues facing both the global automobile industry and the Australian economy.

    An Automotive Depression

    Over capacity has been the curse of the automobile industry for decades as governments have propped out producers around the world.

    KPMG’s 2012 Global Automotive Survey forecast the global industry would be 20 to 30 percent over capacity in 2016.

    This doesn’t seem to worry industry executives or their government supporters, as KPMG reported;

    Alarmingly, most auto executives still seem to regard the risk of overcapacity and excess production as a necessary evil to remain competitive. As the rapid growth of recent years eventually slows down, manufacturers that fail to address overcapacity could face some tough decisions.

    Ford’s Australian executives could at least be credited with facing some of those tough decisions.

    Many governments though are still in denial as they continue to subsidise motor manufacturers in an effort to copy the industry model that worked for the US Midwest during the 1950s.

    Indeed, the Australian government in 2008 committed 5.2 billion dollars to support their domestic industry through to the end of this decade. Ford’s announcement today coupled with General Motor’s cutbacks last year show that policy is in ruins.

    At the Ford and government press conferences, journalists pressed the Prime Minister and the Ford Australia’s CEO about repaying some of the millions of corporate welfare doled out to the multinational over the last decade. Naturally little was to be said about that.

    In a stark comparison to Ford Australia’s announcement, US electric car manufacturer Tesla Motors repaid a $465 million US government loan.

    While no-one can say Tesla’s future is certain, at least US investors are putting their money on 21st Century technologies instead of propping up declining industries of the last century.

    Australia’s predicament

    The car industry is just one sector that faces global overcapacity – ship building, real estate and mining are just three with similar excess production.

    For Australia, the mining industry is winding down investment as worldwide production capacity expands. At the same time, the blue sky projections of China’s resources demand are being challenged.

    While the mining boom comes to an end, Australia now has to face the consequences of the nation’s economic decision to focus on resources and property speculation in the 1990s and early 2000s.

    As the Thais and Indonesians found in 1997, and the Irish and Icelanders a decade later, economies based on unsustainable foundations seem to work fine until suddenly they don’t.

    It may well be that Australia is about find out what happens when the economic tide suddenly changes.

    One bright side is that the government has the best part of five billion dollars to invest in new industry – assuming Australia’s politicians can wean themselves off their 1950s view of the world economy.

    Image of Ford Australia celebrating 50 years of Falcon Production courtesy of Ogilvy Communications.

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  • Silicon Valley’s network effect

    Silicon Valley’s network effect

    Philip Rosedale, the founder of Second Life and various others startups has an interesting take on why San Francisco and Silicon Valley are the centres of the tech startup world.

    He puts the region’s success down to the network effect where like minded groups share knowledge and encourage each other.

    If you want to create a vibrant start-up ecosystem somewhere else that is competitive with San Francisco and Silicon Valley (and this is starting to happen right now in places such as Boulder and Austin), you want to do two things: You want to pack the people working together into as dense an area as possible, with public areas and co-working venues where they will see each other constantly, even when they aren’t working in the same company. And then you want to encourage them to let down their guard and be as open as possible about what they are doing.

    Of course the network effect doesn’t just apply to the Silicon Valley tech startup model, it’s just as true for China’s manufacturing hubs, South Korean shipbuilding or historical centres like Detroit’s motor industry and the English Midlands during the industrial revolution.

    We shouldn’t forget that fifty years ago governments sought to to emulate Detroit’s success and a century ago cities strived to be like Birmingham.

    That’s something we should keep in mind when looking at ways to emulate Silicon Valley – in trying to copy today’s successes, we may be mimicking a model that has already peaked while overlooking our own unique advantages and the opportunities in new industries.

    For cities striving to become world centres of industry, it might be best to first figure out what they do well and then find a way of attracting the smartest people in that field to move there.

    Then again, it may just be that most industrial hubs are accidents of history and the best we can do is try to attract smart people to our communities.

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  • Training for mediocrity

    Training for mediocrity

    In researching the tech angle of the 2013 Australian Federal budget for Technology Spectator last night one thing kept really bugging me – the government’s cap on tax deductible education expenses.

    The decision to cap self education deductions was made earlier in the year by Treasurer Wayne Swan.

    The Government values the investments people make in their own skills and recognises the benefits of a tax deduction for work related self-education expenses. However, under current arrangements these deductions are unlimited and provide an opportunity for people to enjoy significant private benefits at taxpayers’ expense.

    So the government is going to save $500 million dollars over the next few years by capping legitimate educational expenses on the grounds they were ‘unlimited’.

    We could ask why negative gearing continues to be unlimited where taxpayers claiming the expenses of property speculation cost the Federal government eight billion dollars last year.

    So Treasurer Wayne Swan says a salaried worker has effectively no limits on claiming losses from property speculation against their taxes but is subject to a ludicrously low limit for claiming education expenses.

    This one comparison – between negative gearing and self education expenses – shows the magic pudding fairyland that Australia’s political leaders live in and their cowardice.

    What’s bizarre about this policy is that most industries are undergoing major changes and almost every worker will have to reskill a number of times through their careers.

    Many of those workers will be able to get their courses and education expenses under the limit, many others won’t.

    As the New Australian points out, Wayne Swan – like most lifetime Australian political apparatchiks – has never to worry about reskilling as the party has nurtured and cared for him all his adult life.

    In the real world though, Australia’s economic future will depend on the workforce picking up the skills to operate in rapidly changing times.

    That Australia’s politicians and economic policies are focused on encouraging property speculation over skills only guarantees mediocrity.

    Although mediocrity might be the world that suits Wayne Swan, Tony Abbott and the rest of Australia’s political classes.

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