Category: society

Tasmania and the travelling circus

Big events are good for giving a local economy a short term boost, but how does Tasmania build its economic foundations?

“We bring in almost everything,” says V8 Supercars director Mark Perry as he guided journalists around Launceston’s Symonds Plains racing track.

Everything Mark showed us – a fleet of trucks, communications equipment, hospitality tents and the racing teams themselves would be packed up on Sunday night, shipped to Melbourne and flown to New Zealand for the next race.

The V8 Supercar management are very proud of their work, and they should be given the massive task they have, but it exposes a weakness in the Tasmanian economy in that almost all the high value employment and equipment has to be flown in.

Quiet times in downtown Launceston

Arriving into Launceston on the Friday before the races, it’s interesting how little hype there is around the event. In Sydney, San Francisco or Cannes there would be banners and flags around the city welcoming visitors, in Launceston there’s almost nothing despite the race meeting being one of the state’s biggest events.

It was also surprising how there were no downtown events to complement the main attraction.

Almost every major sporting event from the Olympic Games and FIFA World Cup to the AFL Grand Final and Australian Open has some inner city satellite venues with big screens for the locals who can’t make it to the stadium.

Having those satellite events adds to the buzz and hype in the host city. Something that downtown Launceston needs at 7pm on a Friday night.

That lack of support by the community is notable, particularly in light of the $600,000 per year the cash strapped Tasmanian government pays in subsidies for the V8 Supercars.

I’m against government support for events like these, but if that money is going to spent it may as well be spent properly to maximise the economic benefits.

Subsidies like this would be even better if they were part of some grander economic plan, but like all the payments given to the film production, motor manufacturing and other industries, they are based more on populism than any strategy – the politicians may as well be giving free beer out in Launceston’s main street.

Why the community support is so tepid for the Supercars event is so tepid is something I’m going to be exploring in the next few days as I meet various business leaders in Launceston and Hobart to hear how the state is positioning itself in the 21st Century.

In the meantime, the V8 Supercars “travelling circus” has moved on, hopefully Tassie will have some more long term jobs to show for it.

Paul travelled to Tasmania and the V8 Supercars courtesy of Microsoft Australia

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Taxing the internet

Cash strapped governments are trying to find new ways of raising revenue. Can they find sources online?

On Friday the US Senate passed a motion supporting the rights of states to collect sales taxes on internet sales.

While not a binding vote or a law, this is the latest blow in the fight to control, and tax, online commerce.

The stakes are high, companies like Amazon have built their business models on basing themselves in low tax jurisdictions while many bricks-and-mortar retailers have complained they are at a disadvantage compared to out-of-state or international suppliers.

For consumers a few dollars in avoided tax isn’t the main reason they shop online, most internet shoppers cite a better range, convenience and, in many cases, superior service as the reasons they buy over the web.

But it is clear the online retailers do get an advantage over local stores.

While provincial governments cite protecting employment in their regions as part of the motivation for trying to tax online sales, the bigger issue is the desperate search for sources of revenue to balance cash strapped state and local budgets.

Those budget requirements aren’t going to ease – the global economy is restructuring in a way that doesn’t favour 19th Century levies like sales tax or stamp duty, while aging populations and declining incomes are increasing demands on government services.

With governments caught in a pincer of rising costs and falling revenues, it’s not surprising they are trying to find ways to get more money.

It’s not clear though they’ll win this battle though, the Senate vote is a symbolic gesture and the difficulties of being able to tax all forms of internet commerce can’t be underestimated.

The struggle ahead for local governments also can’t be understated, the public demands more services while administrators have to deal with rising infrastructure costs and the pension liabilities of retired public servants, teachers, firefighters and police.

Even the bravest politician struggles to find the political capital needed to deal with that challenge.

How we tax the internet is going to be a task that will define our governments and society in the first half of this century. We’re going to have to think very carefully about the choices we have ahead.

Tax image courtesy of ctoocheck through sxc.hu

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Employment’s changing face

Is it management’s and white collar workers’ turn to deal with the change of contracting and business process outsourcing?

Last Thursday recruitment company Talent2 launched its 2013 Market Pulse Survey looking at the employment trends across the Asia Pacific.

According to the survey, things are looking good with 61% of businesses across the Asia Pacific forecasting growth and 45% expecting to hire more staff.

However there’s an interesting underlying theme to the good news, employment is changing in large organisations.

One of the give-aways is the fact that while nearly two-thirds of businesses expect to grow in 2013, less than half intend to increase staff. Businesses are doing more with less.

Part of this is because of increased automation. Despite the headlines, productivity is increasing in workplaces – particularly offices – as technology automates many business functions in fields like logistics and workforce management.

Another aspect driving the lack of employment is outsourcing, Talent2 say the proportion of Australians working as full time employees dipped below 75% in 2012 with a four percentage point drop over the year.

With more businesses contracting work out, one could expect the number of sole proprietors to be increasing. However this seems not to be the case.

The number of non-employing Australian businesses

According to the Australian Bureau of Statistics, the number of sole traders is barely moving – between 2006 and 2011 the number of “non-employing Australian businesses” only increased 5% while the population grew over 8%.

This implies the proportion of contractors in the workforce is actually shrinking.

Much of this is probably due to the work going offshore, particularly to Business Process Outsourcers (BPOs) in countries like the Philippines, Malaysia and Sri Lanka.

Saturday’s Australian Financial Review looked at what the BPOs are doing in the Philippines and they aren’t carrying out the call centre and basic clerical work that’s made up most of the outsourcing over the last twenty years. Now it’s management roles that are going offshore.

The bigger issue confronting Australians, however, is not call centre workers being relocated to the Philippines. It’s low- to mid-level professional jobs, being moved out of companies, accounting firms and law offices.

Legal outsourcing has been growing for a decade as large law firms have moved many of their para-legal and routine tasks offshore to countries where legal graduates are plentiful but work at lower rates than their western colleagues.

An interesting aspect in legal offshoring is that much of the work that was done by young lawyers has now gone to overseas contractors, which probably means there’s going to be a shortage of experienced legal practioners in the medium term. This is going to have profound consequences for law firms and their partners.

It’s also going to mean law and associated degrees are going to be less popular with school leavers as career prospects dwindle.

The biggest impact though is for managers – we’ve grown used to the assumption that management jobs stay at head office while the lower level jobs go to the lowest cost provider.

Now is those lowest cost providers are offering good quality management staff along with support desk and call centre staff.

During the restructurings of the 1980s and 90s, it was blue collar workers who were the most affected by change. Now it’s the turn of the office workers and managers.

It will be interesting to see how many of the people who thought they were secure in their roles deal with the uncertainty they now have. For some it’s going to be a tough decade.

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Graphs, damn lies and the middle class

Graphs can give us a misleading picture of our society, particularly when we’re looking at the middle classes

Graphs are great for illustrating a story, and also excellent at misleading people.

A good example of where a graph can give an incorrect impression is the Sydney Morning Herald’s story Whatever Happened to the Middle Class.

The story is a very good explanation of the predicament Australia’s political classes have put themselves into – exacerbated by their 1950s view of dividing the workforce into poorly paid ‘blue collar’ workers and affluent ‘white collar’ office staff – but it suffers from the selective use of headline graphs.

Viewing the big picture

The first graph shows how Australians are identifying themselves as middle class and the trend looks staggering,

Graph of How Australians see themselves as middle class

Now if we add those who identify themselves as working class, the picture looks even more dramatic with some pretty volatile swings,

A graph showing How Australians see themselves as middle or working class

However if we now add in those who identify themselves as rich, or upper class, we get a better perspective as the entire range is now shown,

Graph showing How Australians see themselves as upper middle or working class

Selective choosing the Y, or vertical, axis will always give an exaggerated view of a trend or proportion. Once we take the full range in we see the real extent of things. It also has the benefit of showing the trends aren’t as volatile as first appear.

Middle class perceptions

When we look at the graph showing the full picture there’s a number of interesting trends and characteristics about Australian society that come out of it which are worthy of some future blog posts.

Most notably is the identification of Australians being middle class as their property values increased.

On this point, it’s worthwhile contrasting the Australian experience with the US, here’s a Gallup poll from last year on how Americans see themselves,

A graph showing how Americans see themselves as upper middle or working class

While the definitions are different – that Americans differentiate ‘working class’ and ‘lower class’ is interesting in itself – it’s clear that the same trend happened in the US with more people identifying themselves as being members of middle class when their property values were increasing.

In 2008 and 9 there’s suddenly a sharp increase in Americans identifying themselves as working class as the property downturn bites. The steady increase in those claiming to be ‘lower class’ from 2006 onwards is worth closer examination.

What this means for Australia

The implications of the US trends is that any Australian politician intending to dismantle John Howard’s middle class welfare state will have to wait until the property market falls before trying to win any popular support.

For this year’s Australian election though, what’s clear is that any attempt to stoke the fires of class warfare is going to fail dismally in the outer suburban marginal seats so coveted by both parties.

We’re going to see a lot more selective graphs during the course of this year, it’s worthwhile taking time to look at them closely. The stories may be different, and a lot more nuanced, than the headlines tell us.

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Twenty trends for 2020

What trends will define the rest of this decade?

I’m speaking at the Ovations Speaker Showcase next week on the Twenty Trends for 2020. A big ask for twenty minutes.

Despite the time limits, it’s doable. Here’s the list of trends I think are going to define the rest of this decade, along with some  related links.

  1. Accelerated rate of business
  2. China moving up the value chain
  3. Dealing with a society at retirement age
  4. Rising incomes in South Asia and Africa
  5. Robotics and Automation
  6. The internet of machines
  7. Reinventing entertainment
  8. The fall and rise of social media
  9. The continued rise of the DIY economy
  10. Newspapers cease to exist
  11. 3D printing
  12. nano-technology
  13. The new education revolution
  14. Reskilling the workforce
  15. Older workers re-entering the workforce
  16. The fight for control of the mobile payments system
  17. Mobile apps redefining service industries
  18. Taming the Big Data tsunami
  19. The fight for data rights
  20. Flatter organisations
  21. The great deleveraging

Apart from the fact there’s 21, the twenty minutes I have allocated isn’t going to be enough to cover these. So which topics do I skate over?

Of course there might be more topics that I’ve missed. I’m open to suggestions.

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Are there any plans to help us?

A blizzard in New York illustrates how we struggle with evaluating risk in a connected society.

Another winter storm descends upon the North Eastern United States and dozens of people get caught in the blizzard.

The New York Times describes the plight of those stuck on the Long Island Expressway and quotes Lorna Jones who was stuck in her car overnight with nothing but a bottle of Listerene for supplies.

“It’s terrible. It’s cold. I don’t know how long I’m going to be here,” said Ms. Jones, 62, a nurse who stalled near the town of Brookhaven, less than a mile from her destination. “Are there any plans to help us?”

One of the conceits of modern society is that we have help at our fingertips, that we only have to dial 911, 112 or whatever emergency code is in use and a helicopter will come to pluck us from whatever predicament we find ourselves in.

As those stuck on the Long Island Expressway found, when a real emergency hits you will join the queue in the wait for overwhelmed emergency services.

To the west, Franklin Simson’s, 18-wheeler got stuck on an exit ramp as he tried to deliver corn flour to a tortilla bakery at 3 a.m.

He said he had called the police every two hours but had received no assistance. He tried several towing companies, but they all said they were overwhelmed, he recalled. He had heat in the truck and had slept for two hours, but had no food or water.

No doubt Franklin eventually got a feed and was able to deliver his flour, which illustrates a different type of risk in an economy built around just in time logistics, but he and Lorna got off lightly – plenty of people die in these situations.

It all comes down to our modern inability to identify and evaluate risks.

Another article in the New York Times from Jared Diamond discusses the little risks in life – the one in a thousand chance events such as slipping in the shower.

These apparently small risks are actually almost certainties – if you shower once a day, you have a risk of slipping once every three years.

While it’s understandable we discount those small risks, modern communications and the perceived safety net of government regulations lull us into a false sense of security with bigger risks.

As a consequence, we invest in financial instruments we don’t understand, we rely on technologies we barely comprehend and, most importantly, we put ourselves into physical danger by venturing out into blizzards, floods or fires when anybody sensible stays at home or bunks down at the office.

Ultimately the plans to help us don’t work when dozens, hundreds or thousands of people are affected. The best we can do is to evaluate and manage risks as best as we can.

We have the tools to do this, the tragedy is we are far better informed about the risks around us than our forebears, which makes our modern inability to judge the risks we take so much more of a paradox.

Image courtesy of ColinBroug through sxc.hu

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Who will build the next Barnes and Noble?

The rise and fall of US bookseller Barnes & Noble shows describes the changes in our society and the urge to join online and real world communities.

As US bookseller Barnes and Noble shrinks its store network, Mark Athitakis has a tribute to the once ubiquitous chain in The New Republic.

Barnes and Noble was never popular among US independent booksellers because of the perception, probably true, that the chain drove locally owned stores out of business.

What it offered though was a safe, comfortable place for booklovers to gather in suburban shopping malls. As Mark points out, it created a community.

Its stores were designed to keep people parked for a while, for children’s story time, for coffee klatches, for sitting around and browsing. That was a business decision—more time spent in the store, more money spent when you left it—but it had a cultural effect. It brought literary culture to pockets of the country that lacked them.

In recent years that community moved to coffee shops, in the United States B&N’s role was taken by Starbucks, at the same time our reading habits changed and the business of selling books and magazines became tougher.

Now that community is changing again, as the online societies like blogs, Facebook and Twitter become important, the coffee shops have responded with free wi-fi which is a perfect example of how the online and offline world come together.

That need to create communities, either physically or online, is a driving human urge.

Online that role is being catered to with social media platforms and sites like food, mommy or tech blogs where like minded people can gather.

Down at the mall, Barnes and Noble catered for that need in the 1980s and Starbucks in the 1990s. What will follow them may be the next big success in the retail or hospitality industry.

Image courtesy of Brenda76 on SXC

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