The promise of the knowledge economy isn’t being delivered as knowledge becomes a commodity worth less than data.
One of the mantras of the 1980s was the future of western nations lay in becoming ‘knowledge economies’, unfortunately things don’t look like they are turning out that way.
As the developed economies moved their manufacturing offshore – first to Japan and Korea, then Mexico and finally China – the promise to displaced Western factory workers was the replacement jobs would be in vaguely knowledge based industries like call centres and backoffice computer work.
From the 1990s on, those jobs also started to go overseas to lower cost centres in India, the Phillipines and other countries.
When the internet became ubiquitous in the developed world in the late 1990s, the creative industries – musicians, artists and writers – found income dried up as their work became commoditised by digital distribution channels.
Now the professions are being affected by combination of offshoring, artificial intelligence and automated processes. Many of the jobs that were done by highly paid accountants and lawyers can now be done by computers or in places not dissimilar to those that took away the call centre jobs twenty years ago.
So it turns out the knowledge economy isn’t the key to riches after all and the future turns out to be more complex than what we thought in the 1990s.
A visit to the Gold Coast’s oldest high rise raises some questions about sustainability.
Today high rise buildings are the norm on Queensland’s Gold Coast, but just over fifty years ago in Surfers Paradise, nine storey Kinkabool was the first of the breed to be built. Its condition today is a warning on how skyscrapers can turn into expensive liabilities for owners.
A visit to Kinkabool today reveals a building struggling in the face of poor maintenance and an undercapitalised ownership. Luckily for the owners’ corporation, the Queensland government pitched in to repair the roof but much of the rest of the complex is showing its age.
The rabbit warren lobby with its orange tiles indicate some of the building was upgraded in the 1970s but apart from a lick of paint, it hasn’t seen much love since.
The lift is are where the building’s age and owners’ lack of investment really shows. An old, slow elevator that hasn’t been upgraded since the first residents moved in clunks its way up the building. Even Hong Kong’s Chunking Mansions – the world’s best example of a dysfunctional high rise – gets its lifts upgraded sometime.
Inside the lift, it’s a depressing scene and one wonders if the antiquated equipment would meet today’s building standards. Even if it does meet the regulations, the dispiriting ride on its own would knock a big chunk off the asking prices for buyers or renters.
Stepping out of the lift, the view in the stairwell isn’t much better. The lack of maintenance or investment begins to show in old fittings, damaged glass and hints of painted over graffiti.
While standing on the ninth floor, music from unit 1B drifts through the building – it’s lucky the occupant has a taste in cheesy 1970s music as some thumping headbanger music could to serious damage to the building along with the residents’ sanity.
One wonders just how noisy the building would be with a party happening or a young, crying baby although it seems families aren’t really interested in these apartments or the central Surfers Paradise location.
Though a very undistinguished building, it does have one touching little architectural feature in the different tile patterns on each floor, although probably not enough to redeem it in the eyes of most people.
Probably the saddest thing about Kinkabool is how a building that once dwarfed everything in the region is now overshadowed by its much bigger neighbours.
Across the road, and blocking out most of Kinkabool’s sunlight, is the 1980s Paradise Centre.
Time isn’t proving any kinder towards the Paradise Centre with the lack of maintenance beginning to show on the thirty-year old complex as this vent across the street from Kinkabool illustrates.
Generally, if the landlord or owners’ corporation is too stingy to afford a coat of paint, then you can be sure there are more nasty surprises
Both the Paradise Centre’s and Kinkabool’s declines illustrate a much more fundamental problem in an economy driven by property speculation and taxation allowances — there isn’t a lot of money to go around for maintaining older buildings.
While Kinkabool’s residents can get by with a clapped out lift, inhabitants of larger and more modern complexes like the Paradise Centre will find the costs of running and maintaining their buildings an increasingly difficult burden.
It could just turn out that Kinkabool, should it escape the wrecker’s ball, may well turn out the more desirable dwelling than its bigger, more modern neighbours.
For the meantime though, Kinkabool marks the beginning of a far more sophisticated era in Australian and Gold Coast history. Whether that era became too sophisticated for itself remains to be seen.
What a greasy schnitzel tells us about Australia’s economy in the 21st Century.
One bad schnitzel on Queensland’s Gold Coast illustrates the biggest economic problem facing Australia.
As we approach the 2013 Australian election, it’s notable how the debate – if it can be described as that – hasn’t touched on the biggest issue facing the country, the hollowing out of the nation’s economy.
In the 1980s the Gold Coast was going to be the centre of a Japanese led tourism boom.
That boom petered through a combination of greed and incompetence on the part of Australian tourism and hotel operators, a process being repeated with Chinese tourists twenty years later.
Like the rest of the Australian economy, in the 1990s the Gold Coast looked inwards with a focus on property speculation and construction that kept the workforce employed pouring concrete and fitting out kitchens.
In the meantime, the Gold Coast’s tourist assets were left to rot through under investment. Jupiter’s Casino is a good example of this, a building stranded in the 1980s and in desperate need of a capital injection.
The Gold Coast was not alone in this, a review of Perth’s Rendezvous Grand Hotel — built by Alan Bond in the 1980s — illustrates exactly the same problem at the other end of the country.
A lack of investment plagues all of Australia’s hospitality industry, a dinner at the Bavarian Bier Cafe on the Gold Coast’s Broadbeach* was a disaster as poorly trained staff were overwhelmed by a half full establishment and let down by poor business systems.
That shocking meal — which saw the staff struggle to get out a salad and two beers in over two hours with the greasy, overcooked mains arriving nearly three hours after the diners arrived — is not untypical in Australia.
Soviet style service is fine when beer and a poorly cooked, mostly breadcrumbs, schnitzel costs fifty kopecks, however at modern Australian prices the service, food and cooking should be world’s best.
That high prices rarely translate to superior standards in Australian establishments shows how poorly the nation has adapted to being a high cost nation.
While it’s fashionable to blame the mining industry for the down under manifestation of the Dutch disease, the answer to what has driven Australia’s under investment in tourism, agriculture and manufacturing lies in the cities and suburbs.
While much of the rest of Australia’s property markets have been spared similar declines to date, the emphasis on real estate speculation over investment in industry has been similar across the nation.
That lack of investment in productive industries, whether in tourism or manufacturing is already hurting Australia, more critically it’s preventing Australian businesses’ from dealing with the transition to being a high cost economy more akin to Switzerland, Japan or Germany than the United States.
One bad schnitzel on the Gold Coast might not tell us much in itself, but the under investment in systems, training and staff is a bad omen for Australia’s economy.
Regardless of who wins Australia’s federal election on Saturday, it’s unlikely the group of pampered apparatchiks occupying the Treasury benches will have any idea of helping business or society transition to the realities of the Twenty-first Century.
*Paul travelled to the Gold Coast and ‘dined’ at the Broadbeach Bavarian Bier Cafe as a guest of Microsoft Australia
What does modern architecture tell us about our suburbs and society in today’s Australia?
If an era’s architecture tells us about the times, what do today’s houses tell us about modern society and values?
On Sydney’s North Shore lies a collection of old army bases, from the 1980s onwards the military started moving out and some of the land was handed over as national parks, other parts were converted into office parks or cafes while the disused married quarters were sold off to private home builders.
The old stores and administrative buildings have been adapted into artists’ studios and elegant, if expensive, offices. Overall, that’s been a success which has created quite a thriving businesses and creative community.
old army store converted into an art gallery
Many of the colonial officers’ and NCO’s quarters, impressive sandstone and wood structures, have become offices, restaurants or function centres. Although some are still looking for a purpose.
Old Colonial Military residence
What happened to the functional three bedroom 1960s and 70s brick veneer homes that housed a generation of army brats is less encouraging and tells us much about the times in which we live.
A few of the old post World War II homes remain for Navy families in the still operating, and expanding, HMAS Penguin and these show us the houses that once lined Middle Head Road in Mosman.
1960s Mosman military homeAnother old Mosman military family home
These are perfect examples of the functional family homes that covered Australian suburbia during the 1960s and 70s. While nothing exciting or particularly pretty, they were adequate for their task as baby boomers built their families in the post war prosperity.
When they were sold by the Federal government most those modest family homes on Middle Head were bulldozed to make way for the grey behemoths of the 21st Century.
New grey mosman mansion
Like the Mc Mansions that crowd today’s suburbia, these feature four, five or even six bedrooms with on-suites, multicar garages and games rooms. Just as every child today has to win a prize, every room has to have a plasma TV.
These monuments to the modern consumerist economy triumphantly march along a road that once featured modest homes with gardens, trees and lawns.
Line of grey mosman mansions
In many ways these modern buildings represent the ethos of our time – grey, non-descript, poorly built, overcapitalised and dependent on cheap, never ending debt.
A striking aspect about them is their hostility to the pleasant surroundings and the 1930s mansions that make up most of the street. With their battleship grey, security features and blocky air raid shelter lines they look much more like some sinister military installations than the red brick army homes they replaced.
What’s also notable about these new buildings is many are empty. Some of them are being refurbished, only a few years after being built, and many are undergoing substantial repairs – a testament to how Australian building standards have declined in the past two decades.
Strolling along Mosman’s Middle Head Road its hard not to imagine that if Dorothea Mackellar were writing her iconic My Country poem today, she would have included the lines;
I love a sunburnt country
a land of capital gains
The tragedy for Australia is those old three bedroom houses could have been used by a visionary government to help low income families in Sydney’s increasingly unaffordable suburbs.
There was little chance those modest housing blocks would become anything more than expensive, over capitalised gin palaces for bankers and the city’s well connected business elite who are never slow to see a coal mine or old military property going cheap.
Architecture tells us a lot about our times and the abandoned Middle Harbour army base is a good commentary on the phases of Australian development through the twentieth Century and the beginning of this century.
The houses also tell how Australians see speculating on overcapitalised property as a safer investment than building the technologies and businesses necessary to prosper in this century. How that will turn out remains to be seen.
What will be interesting is how our great-grandchildren see us and our legacy when they look upon the grey, hostile buildings we built to celebrate our good fortune in the early 21st Century.
As younger people turn away from old business models, those comfortable with the status quo cling desperately to their established but shrinking markets
Probably the driving factor of the consumerist society’s development was the baby boomers’ growing up.
Through the last fifty years everything from Coca-Cola to baby products and hair loss treatments has been aimed at the cohort born between 1945 and 65.
For many businesses and marketers this group has been so profitable it’s been hard to let them go.
A similar thing is happening in Australia as TV executives decide that competing with the internet for millennials is too difficult so sticking with the over 50s market is safer.
“We’d go out of business if we stayed with our traditional demographic of 16-39.” Channel Ten CEO Hamish McLennan told the Mumbrella360 conference in Sydney earlier this year.
The problem for both the US motor manufacturers and Australian TV stations is the trends are against them.
For TV stations trying to compete against the internet, the older age groups are following their kids across to the web at the same time that they are beginning to save for retirement.
That need to save is also working against the car dealers, while many boomers fawn over new cars a large number simply aren’t going to be able to afford these indulgences. It’s not a good prospect for the motor industry.
In the meantime, younger people are turning away from the motor car, Bloomberg quotes University of Michigan Transportation Research Institute s researcher Michael Sivak who penned a report on generational shifts in the US motor industry.
“I have a son who lives in San Francisco; when I get a new car and I tell him what I got, he couldn’t care less,” Sivak said. “To him, it’s a means of getting from A to B. He goes into great lengths about taking a BART or bus, even though it takes him an hour longer. He does have a car, but uses it very rarely.”
The movement away from the motor car indicates something much more profound about western society — if the baby boomer represented the age of consumerism, the entire Twentieth Century was defined by the automobile.
For politicians and town planners wedded to a 1950s view of economic development, it may be they are making terrible and expensive mistakes in pushing freeway and other road projects.
While aging baby boomers purr over their expensive cars, the forces of history may be passing them by. Those businesses pandering to those older groups might just want to consider whether they want to be left behind as the economy, and the kids, move on.
It’s comfortable to cling onto what has worked for the last fifty years, but sometimes the lowest risk lies in letting go.
The age of ever expanding consumer spending is over, we have to start thinking of different ways
One of the features of the late Twentieth Century economy was how consumer spending came to dominate the economy – as manufacturing moved offshore, mines closed down and agriculture became largely automated, many developed nations’ growth came from retail spending.
Today’s release of retail spending figures by the Australian Bureau of statistics shows how that economic model too has come to an end. A post on the Macrobusiness blog illustrates the steady, structural decline of retail spending in Australia.
Since 2000, the rate of growth has been declining, only low interest rate policies over the last two years has kept retail sales at a steady level.
Those businesses whose business models are built on the assumption of high growth rates have a big problem – its no coincidence it’s the department and clothing stores are among the loudest complainers about taxes, labour costs and rents as they see their sales and profits shrinking.
Basically the Twentieth Century era of consumption has come to an end as households have maxed out their credit cards. Now that many of those households are now older, they simply don’t need to spend as much anyway.
With the demographic, economic and cultural changes now happening in society it’s a bad time to be planning on massive expansions in household spending and debt as we say in most western countries from the 1960s onward.
It’s time to think different, and be a lot smarter about getting consumers to buy your products. The era of the 72-month interest free deal is over.
As baby boomers struggle to maintain their living standards, the burden will fall on younger generations to build future businesses.
The retirement of the baby boomers has been an demographic inevitability, but it’s interesting how policy makers and the population in general have ignored the ramifications of this despite the first boomers now aged beyond 65.
One of the consequences of this is we may see an entire generation being forced to become self employed entrepreneurs.
The 35 facts really boil down to one thing, that an affluent, middle class retirement at 65 when average life expectancy is 78 is an illusion for most people – neither their bank accounts or the state treasury can support that sort of spending.
Which is the point of John Mauldin’s column, that over 50s are taking most of the available US jobs as they can’t afford to retire.
For those over 50 who’ve fallen out of the workforce due to unemployment or illness, getting back into the workforce is proving to be tough and for many of those folk their later years are going to be a struggle.
Equally, as Mauldin points out, the younger generation is being locked out of the jobs being hogged by the over 50s.
Another aspect to that is those employed Gen-X’s and Y’s hoping to get a crack at a seniors manager’s job or their name on the partner’s list are going to find a longer wait as the boomers hold on for as long as they can.
Those young ‘uns need those high salary jobs too, a Westpac report on US student debt posits that crippling education costs are making it harder for graduates to participate in the workforce and affects their spending power when they do find a job.
What’s clear is existing government, corporate and social structures are beginning to struggle with the realities of the changing workforce and its demographic composition.
On a personal level, those Gen Xs, Ys and boomers who are locked out of the workforce have to find a new way to participate in the economy. It’s probably those locked out of today’s workplaces who will build the businesses of the future.
