During the last few months I have followed ongoing commentary regarding the state of the Australian economy.
The clever people, economists, academics, think tanks ( oxymoron ), celebrities, the mainstream media, financial gurus, reporters and television "talking heads" all have opinions, but somehow most of them appear to miss some of the fundamental issues that should be discussed or at the very least questioned.
Maybe because I am not an economist or any of those mentioned above, I observe the state of the nation in a slightly simpler way, as most of us regular people tend to do.
As a business process and project trouble-shooter, my approach is that of a detective. Gather the information, establish facts, keep it simple, understand the issues and the people. Analize all the information and start drawing conclusions.
Test the evidence against the conclusions and the conclusions against the evidence. Once one has reached a coherent, working and verifiable set of answers, one can debate the issues and available options, based on verifiable facts, in an effort to resolve whatever the problem was or is.
This is not difficult, but somehow when it comes to economics and the basic building blocks of the nation, any form of objective reality or facts go out the window. Politics takes over one part of the debate and vested interests owns the other part. You will note that we, regular folks, are not invited to participate.
Currently there is a concern that our economy is not performing as well as it should or as the economists and politicians say "a temporary state of suboptimal performance".
Retailers announce the problems of a "soft" economy, on-line competition, tax cuts not showing in their trading results and on it goes.
The politicians talk about the importance of generating a surplus in our current account, but somehow appear to have no context of how to reach this surplus other than to collect more money from us, expand the ever increasing Public Service, ( Job creation ) or spend less on anything that will not bite them during the next electoral cycle.
A big bonus to them is an increase in export commodity prices, for which they instantly claim credit, unlike a decline in prices, instantly blamed on factors outside of their control.
The economic problem is simple to understand US vs the Bureaucrats ( all types, Public and Private )
1. Most of us are broke or close to it, because..... ( simplified answer )
2. All levels of government continue to take more out of our pockets directly using rules and regulations, permits, licenses and more - or indirectly, energy being a good example of inaction in perpetual progress, as are our ongoing water shortage problems. Whatever you do please do not mention the word "dam" near any politician, unless you have some medics on standby to resuscitate the poor polly.
Their delusions of competence provides the stimulus for them to collectively create evermore new rules and regulations, resulting in massive distortions of all markets, but that is a much longer story.
The ever expanding public service continues to subtract from the economic equation, yet the government count these as "jobs created".
Be honest, when last did you interact with any government service that actually worked properly? That is despite the astronomical amounts of money spent in the process of supposedly delivering services to the population at large.
By way of example, in Queensland we have Gammons law in full force.
Gammon's Law is what Milton Friedman has named the "Theory of Bureaucratic Displacement" - In his words, in "a bureaucratic system increase in expenditure will be matched by fall in production ." Such systems will act rather like 'black holes' in the economic universe, simultaneously sucking in resources, and shrinking in terms of 'emitted' production.
Despite creating an additional 33,000 new public service jobs, including 3,375 senior positions since 2015, they still spent some $ 67 million on consultants last year.
Anybody spot a problem with this?
3. For as long as they can take money from us, borrow from the banks, for us and our grandchildren to repay at a future date, with no accountability for the massive cockups they preside over, they have no motivation to change anything, including the miles of "Red Tape".
It appears that neither the Economist nor the Politicians / Bureaucrats, have the faintest idea about what the economy is all about. ( warning long article )
4. Solution
Spend less, take less from us, stop ongoing waste and inefficiencies, become accountable, then you might give the magic of the real economy a sporting chance. Start removing the useless rules and regulations that strangle innovation and creativity. This is not rocket science, other than to the bureaucrats.
We are not faced with one 800 pound gorilla in the room, but rather with an entire gang, a large one at that, and somehow this may not be mentioned, and definitely never discussed. Maybe once one becomes a gorilla, you have to behave like one, in fear of being expelled from the gang.
With so many free bananas available to them, one can understand their reluctance to rock any boat, while they gorge on the free bananas they take from us.
Disclaimer
I know it is a bit of an insult to gorillas, so before the Gorilla Equality Team and Fight Unfair Claims Tribunal, or gender bias groups jump on my bones, I am not disparaging the gorillas and have no argument with them.
Spending less and reducing waste would never occur to them, as that might require a reduction of their banana consumption and that can simply never be allowed on any agenda.
Back to basic bananas -
Dare mention the word principle anywhere near a politician and you will have to call the medics to revive them. This one word is poison, heresy and banished from all "civilised" discussions around political activities.
I promise there is a point to this "rant", so please read on.
There are a range of other words that fall into the same category, words such as common sense, reason, logic, truth and more, but politically these are terms with no meaning or with the flexibility of a wet noodle.
These are the four terms I would like us to consider, common sense - logic - reason - truth, in an effort to gain a better understanding of why our economy is "performing sub optimally".
My eight year old grandson, yes him again, will tell you that an open mind lets the light in and warms up the imagination, while a closed mind hides in the dark with its hands over its ears.
If we concede that he is thinking in the right direction, then let us consider a recent decision made by our political masters ( makes no difference what political party it is ), and see how they would classify under the standards of an eight year old.
The French recently launched the first submarine built to their new design, the same ones we ordered. However theirs is a nuclear powered submarine and for some reason Australia decided that we are not allowed to partake of anything nuclear. At this point the economist would probably recommend shares in the "Renewable, Sustainable, Light Emitting" industry, ( Candle Factories ).
Now here is their solution to assuage their delirium tremens regarding anything "nuclear". Please apply the four terms mentioned above to this solution and determine what decision you or your grandmother would make, faced with the same information.
In addition to paying $ 50 Billion for the new submarines, it is reported that we will have to pay an additional $ 6 Billion for them to redesign this submarine to use diesel engines and lead acid batteries. This has never been done anywhere in the world and when one starts messing around with marine design issues, be prepared to face massive problems .
We could also take a few lessons from the German WW2 sub U-1206. -
U-1206 was one of the late-war boats fitted with new deepwater high-pressure toilets which allowed them to be used while running at depth. Flushing these facilities was extremely complicated and special technicians were trained to operate them.
On 14 April 1945, 24 days before the end of World War II in Europe, while U-1206 was cruising at a depth of 200 feet (61 m), 8 nautical miles (15 km; 9.2 mi) off Peterhead, Scotland, misuse of the new toilet caused large amounts of water to flood the boat.
( I would imagine that the design of a new toilet should be less problematic than replacing a nuclear power plant with a diesel and battery power plant, who knows what might happen when somebody decides to flush the toilet? ).
These French submarines are only due for delivery somewhere in 2030 or 2035 and no doubt the world will stand still and nothing will change, technology will simply go on hold, or so those in power responsible for this decision, appears to think.
Let's skip forward to 2035, we have just taken delivery of a few of these "Neanderthal" submarines and they can "steam" majestically into Sydney harbour to display the new naval era, we have just entered.
We would probably be the only remaining country in the world, using diesel subs that has a maximum underwater speed of some 4 plus knots ( not confirmed, top secret and all that ) and requires frequent replenishment of fuel and food, while at sea. Maybe we can paint them Yellow to make them easier to find.
Clearly this does not make them vulnerable at all, as any "enemy" would understand that we need space and time to achieve these glorious "replenishment" objectives. Gentleman's rules will have to prevail, or so they must believe.
While the "enemy" wait for our "turkeys" to be refueled, they will zip along at underwater speeds of some 30 knots or more, in their nuclear powered submarines.
We will be going into battle against sophisticated weapons, but we will bring our rowboats, bows and arrows and maybe even a slingshot or a spear.
We will no doubt fashion these advanced weapons by candle light, as by then we will probably have no more electricity to use at night and during the day we will all have to participate in finding the next submarine in need of resupply.
Here are a few obvious basic questions
Considering the very expensive consultants they would have used during this process, I would love to see the report that recommended this stupidity. Zero chance of us "proles" getting our hands on that fairytale.
In case you did not know this, the big consulting firms are also working with countries such as Saudi Arabia to assist them in making decisions on what weapons to purchase and from whom. Let's hope they do at least as good a job for them, as they did with this one.
Your chances of getting an answer to any of the above questions from government is probably zero but more importantly, what would your granny say about this, would she place an order for $ 50 plus billion, for these dinosaurs with bows and arrows?
The cockups described above, are as a result of rules, regulations, laws and the processes by which they are created. It all comes down to SOP's Standard Operating Procedures. In truth it comes down to CRAPP Creating Risk And Protecting Privilege.
Most of us can grasp the stupidity of the entire bureaucratic gridlock and distortions of reality they cause to the Australian economy.
It is easy to poke a stick at the bureaucratic stupidity, prevalent in most countries to some extent, but do we ever stop to consider that organisations and businesses are not much better than the political groups we poke the stick at. Consider that the consultants involved in this stupid decision would have been from the Private Sector !!
A report published by Deloitte in October 2014, provides an interesting insight into this issue of rules and regulations, plus the associated cost imposed on our economy.
This number is clearly not good for anybody, but the report has a sharp sting in the tail and I quote from the report..
Strikingly, the cost of complying with self-imposed rules created by the private sector is double that associated with government regulations, according to Deloitte Access Economics.
The self-imposed rules of the private sector cost $155 billion a year: $21 billion to develop and administer, and a stunning $134 billion a year in compliance costs.
It appears that the Private Sector might be twice as inept as the Public sector, now there is a very scary thought!
While it is easy to see the stupidity of governments, and we do this all the time, it becomes much harder to see the staggering stupidity in the private sector.
Our economic future might depend on our ability to learn from this perceived "stupidity" in our own organisations wherever we find it. For a general view any daily paper is a rich source of such lessons.
To quote Tom Phillips ( A brief history of how we F^&ked it all up ) "we're hugely biased towards basing our world view on stuff that's happened most recently, or things that are particularly dramatic and memorable, while all the old, mundane stuff that's probably a more accurate representation of everyday reality just sort of.... fades away"
Looking back is twice as hard as looking forward, as there will rarely be any budget allocation for looking back. There will always be meetings, forums, conferences, strategies and more to explore our "digital" future but very little to no effort at fixing what we have and do, today.
In my experience, I would wish anybody embarking on a quest to improve internal organisational issues the best of luck. They are likely to encounter massive resistance from those in power. This has always been the Achilles heel of all large organisations, where the belief in the omnipotence of senior managers or "leadership groups" ( new lexicon ) prevail.
We can all gain massively by examining our own organisations and expending real effort in reducing our self-imposed "red tape" and SOP's. The number of organisations prepared to embark on such a journey might be small, but any organisation honest enough to do so, will reap massive benefits for all.
Maybe we should remember the Government Submarine order when next we are involved in a similar "Submarine order project" contemplated by the organisation we work with or for.
Alternatively we can consult with my grandson or your grandmother, they will ask the simple questions and get to the truth in record time. The other alternative would be to invest in your equivalent of the "Renewable, Sustainable, Light Emitting" industry.
Then join our new Network
Find Underlying Creative Kinetic Umbrellas Providing Savings
Happy sub hunting
 "Philip Smith")
Author:Philip Smith| Tags:Leadership |