Showing posts with label social problems. Show all posts
Showing posts with label social problems. Show all posts

Wednesday, December 14, 2022

2022: The year our trust was abused to breaking point

As the summer break draws near, many will be glad to see the back of 2022. But there’s something important to be remembered about this year before we bid it good riddance. Much more than most years, it’s reminded us of something we know, but keep forgetting: the central importance of trust – and the consternation when we discover it’s been abused.

Every aspect of our lives depends on trust. Spouses must be able to trust each other. Children need parents they can trust and, when the children become teenagers, parents need to be able to trust them. Friendships rely on mutual trust.

Trust is just as important to the smooth functioning of the economy. Bosses need to be able to trust their workers; workers need bosses they can trust. The banking system runs on trust because the banks lend out the money we deposit with them; should all the depositors demand their money back at the same time, the bank risks collapse.

Just buying stuff in a shop involves trust that you won’t be taken down. Buying stuff on the internet requires much more trust. Tradies call on our trust when they demand payment before they start the job.

Our democracy runs on trust. We trust the leaders we elect to act in our best interests, not their own. Our country’s co-operation with other countries rests on trust. Of late, our relations with China, our major trading partner, have become mutually distrustful.

The trouble with trust, however, is that it can make us susceptible. And, as Melbourne University’s Tony Ward reminds us, it can be just too tempting to the less scrupulous to take advantage of our trusting nature.

They can get away with a lot before we wake up. But when we do, there are serious repercussions. Much worse, the loss of trust – some of it warranted; much of it not - makes our lives run a lot less smoothly.

The truth is that, as a nation, we’ve slowly become less trusting of those around us. But this year is notable for events where trust – or the lack of it – was central.

It’s widely agreed that the main reason the federal Coalition government was tossed out in May was the unpopularity of Scott Morrison. The Australian National University’s Australian Election Study has found that the two most important factors influencing political leaders’ popularity are perceived honesty and trustworthiness.

Its polling showed Morrison 29 percentage points behind Anthony Albanese on honesty, and 28 points behind on trustworthiness.

By contrast, many were expecting Daniel Andrews to be punished at the recent Victorian election for the harsh measures he insisted on during the pandemic. It didn’t happen. We don’t have fancy studies to prove it, but my guess is he retained the trust of the majority of voters.

The ANU study always asks questions about trust in government. This year it found 70 per cent of respondents agreeing that “people in government look after themselves” and only 30 per cent agreeing that “people in government can be trusted to do the right thing”.

This helps explain why the federal election was no triumph for Labor. The combined primary vote for the major parties fell to 68 per cent, the lowest since the 1930s. Labor’s own election report explains this as “part of a long-term trend driven by declining trust in government, politics and politicians”.

But don’t put all the blame on the pollies. This year opened our eyes to the risk we run of the businesses we deal with allowing our identification details and other private information to be stolen by hackers and made public.

Customers of Optus, Medibank and some other firms have learnt the hard way that the businesses who demand so much identification from us can’t be trusted to keep that information secure.

It’s been a wake-up call not only for those big businesses and others, but also for the new federal government. If businesses can’t be trusted to do the right thing, they must be required to do so by tighter regulation.

Oh no, not more red tape? Yes, and that’s my point. There’s nothing that generates extra expense and slows things down more than not being able to trust the people you must deal with.

Ward reminds us of the benefits of a high level of trust. It reduces “transaction costs” – the cost of doing business. “Profits and investments are higher if you don’t have to spend lots of time and money checking whether other parties are honest or not,” he says.

“People invest more in their own education if they believe a fair system will reward their efforts. If you think the system is rigged, why bother?”

Comparing countries, economists have found strong links between more social trust and higher levels of income. Trust is one of the top determinants of long-term economic growth.

And high-trust societies, with less distrust of science, had better outcomes in tackling COVID. That’s one respect in which we didn’t do too badly this year.

Read more >>

Wednesday, September 23, 2020

How economists got it wrong for so long

Most economists are great believers in the need for "reform" – for other people, not themselves. Over the past 30 or 40 years, no profession has had more influence over the policies governments have pursued, but the results have hardly been flash.

Even the lightning speed at which an epidemic in part of China became a pandemic reaching every corner of the globe can be blamed in large part on the globalisation that economists long championed.

After the unmitigated disaster of the global financial crisis of 2008 – which the economists not only failed to foresee, but did much to help bring about by their advocacy of deregulated financial markets – many people assumed this would force the economists, shamefaced, back to the drawing board.

It didn't happen. But the poor performance of economies in the decade following the Great Recession hasn't allowed the more intellectually honest among the world's economists to delude themselves that all's well with their theories and policy prescriptions.

At present, politicians and policymakers are preoccupied with suppressing the virus and countering the coronacession this effort has led to. Economists are worried about the depth of this recession, and are warning politicians that they'll need to spend (and borrow) unprecedented sums to bring about a sustainable recovery.

A big part of the economists' concern arises from their knowledge that deep, structural problems had caused the rich economies to be in a weak state before the arrival of the virus. This suggests that, without an extraordinary effort by governments, the recovery is likely to be slow, with unemployment staying high.

Worse, the "normal" to which we return after the virus has been fully vanquished isn't likely to be nearly as good as the normal we remember. Not only will material living standards be improving at a glacial pace, but there'll be continuing, maybe worsening, social conflict (not to mention a worsening climate).

The good news, however, is that leading thinkers among the world's economists are still grappling with the embarrassing question of why their profession's advice over many decades seems to have made our lives worse rather than better.

I'm just back from a couple of weeks catching up on my reading. I noticed several books by well-known economists coming to similar conclusions about how the ideas of "neoliberalism", which dominated economic advice to governments for so long, led us astray.

In their book Greed is Dead, two leading British economics professors, Paul Collier and John Kay, both from Oxford, argue that the problem with what they (and I) prefer to call "market fundamentalism" – which oversimplifies and takes too literally the basic model of how markets work – is its overemphasis on the role of competition between self-interested individuals in generating economic progress.

By sanctifying selfishness, it has undermined community-mindedness and the role of co-operation in advancing our mutual interests. Voting has become a simple matter of "what's in it for me and mine", while businesses and industries have been licensed to lobby for preferment at the expense of everyone else.

"In recent decades the balance between these instincts [of competition and co-operation] has become dangerously skewed: mutuality has been undermined by an extreme individualism which has weakened co-operation and polarised our politics," they say.

In his book, The Third Pillar, Raghuram Rajan – a US-based Indian economist who did foresee the global financial crisis, but was told by his elders and betters not to be so stupid – argues that society is supported by two obvious pillars, the state and markets, but also by a neglected third pillar: the community. That is, the social aspects of society.

"Many of the economic and political concerns today across the world, including the rise of populist nationalism and radical movements of the Left, can be traced to the diminution of the community," he says.

"The state and markets have expanded their powers and reach in tandem, and left the community relatively powerless to face the full and uneven brunt of technological change. Importantly, the solutions to many of our problems are to be found in bringing dysfunctional communities back to health."

In his book, The Common Good, Robert Reich defines his subject as "our shared values about what we owe one another as citizens who are bound together in the same society – the norms we voluntarily abide by, and the ideals we seek to achieve".

Since the late 1970s, however, Americans have talked less about the common good and more about self-aggrandisement; less "we're all in it together" and more "you're on your own". There's been "growing cynicism and distrust toward all the basic institutions of American society – governments, the media, corporations" and more.

But the last, more hopeful words go to Collier and Kay: "We see no inherent tension between community and market: markets can function effectively only when embedded in a network of social relations.

"Humans are not selfish, maximising individuals, pursuing their conception of happiness; they seek fulfilment which arises largely from their interaction with others – in families, in streets and villages, at work."

Read more >>

Saturday, July 20, 2019

Change is inevitable. If we embrace it we win; resist it we lose

Will Australia’s future over the next 40 years be bright or pretty ordinary? It could go either way, depending on how we respond to the challenges facing us. So what do we have to do to rise to the occasion?

The challenges, choices and likely consequence we face are spelt out in the report, Australian National Outlook 2019, produced by the CSIRO in consultation with 50 leaders from companies, universities and non-profits. The group was chaired by Dr Ken Henry, former Treasury secretary, and David Thodey, former boss of Telstra.

The report identifies six main challenges we face between now and 2060. First is the rise of Asia and the way it is shifting the geopolitical and economic landscape.

Asia’s middle class is growing rapidly, but unless we improve our ability to compete and also diversify our exports, we risk missing out on this opportunity and will be vulnerable to external shocks.

Next is the challenge of technological change, such as artificial intelligence, automation and biotechnology, which is transforming existing industries and changing the skills required for high-quality jobs.

Third challenge is climate change, the environment and loss of biodiversity. These pose a significant economic, environmental and social threat to the world and to us. We could be on a path to 4 degrees global warming by the end of the century unless significant action is taken.

Then there’s the demographic challenge: at current growth rates Australia’s population may approach 41 million by 2060, with Sydney and Melbourne housing 8 to 9 million people each. At the same time, ageing means the population’s rate of participation in the workforce could drop from 66 per cent to 60 per cent. (I don’t accept that such a rate of population growth is either inevitable or desirable.)

The fifth challenge is that trust in governments, businesses, other organisations and the media has declined. Without a lot of trust, it will be much harder to agree on the often-tough measures needed to respond to all these challenges.

Finally, measures of social cohesion have fallen in the past decade, with many Australians feeling left behind. Inequality, financial stress, slow wage growth and poor housing affordability may be contributing to this.

The report develops two plausible but opposite scenarios of how things may develop over the next 40 years. The “slow decline” scenario is the muddle-through future, in which we resist change for as long as we can. In the “outlook vision” scenario we agree to bite the bullet, resist the lobbying of declining industries, make the needed policy changes and exploit the benefits of new technology and trading opportunities.

Under the low-road scenario, real gross domestic product grows at an average rate of 2.1 per cent a year, whereas under the high-road scenario it grows by 2.8 per cent. This would cause average real growth per person to be 39 per cent higher than under the low-road.

Real wages would be 90 per cent higher in 2060 than today, compared with 40 per cent higher under the low-road.

The low-road approach would allow cities to continue to sprawl, whereas the high-road would involve increasing the density of cities by about 75 per cent compared with today. This would keep our cities highly liveable.

Urban congestion could be reduced by higher density. Vehicle kilometres per person would fall by less than 25 per cent under the low-road, compared with up to 45 per cent under the high-road.

Net carbon emissions would fall by only 11 per cent under the low-road, with total energy use increasing by 61 per cent on 2016 levels, and only a modest improvement in energy productivity (efficiency).

By contrast, net zero emissions would be reached by 2050 under the high-road, with a doubling of energy productivity per unit of GDP and total energy use increasing by less than 45 per cent.

Whereas returns to landowners would increase by about $18 billion a year under the low-road, they’d increase by up to $84 billion a year under the high-road.

There’d be minimal environmental planting in 2060 under the low-road, but between 11 to 20 million hectares under the high-road, accounting for up to a quarter of intensive agricultural land. This “carbon forestry” explains why net zero emissions could be achieved without significant effect on economic growth.

More biodiverse plantings and better land management could help restore our ecosystems. And low-emission, low-cost sources of energy could even become a source of comparative advantage for us, with exports of hydrogen and high-voltage direct-current power.

The report says we need to achieve five key shifts to get us on to the high road. First, Industry. We need to allow a change in the structure of our industry, by increasing the adoption of new technology and so increasing productivity. We need to invest in the skills of our workers to keep their labour globally competitive and ready for the technology-enabled jobs of the future.

Second, urban sprawl. We need to plan for higher-density, multicentred and well-connected capital cities to reduce sprawl and congestion. We need to reform land-use zoning, so diverse high-quality housing options bring people closer to jobs, services and amenities. We must invest in transport infrastructure, including mass-transit, autonomous vehicles and "active transit", such as walking and cycling.

Third, energy. We must manage the shift to renewable energy, which will be driven by declining technology costs for generation, storage and grid support. We need to improve energy productivity using new technology to reduce the waste of power by households and industry.

Fourth, land. We need to use digital and genomic technology to improve food technology and to participate in new agricultural environmental markets to capitalise on our unique opportunities in global carbon markets. This will help to maintain, restore and invest in biodiversity and ecosystem health.

Finally, culture. We need to rebuild trust, encourage a healthy culture of risk-taking and deal with the social and environmental costs of reform policies.

Trouble is, a public that’s willing to re-elect the reactionary Morrison government seems more likely to settle for the low-road than strive for the best we could be.
Read more >>

Wednesday, July 25, 2018

Decades of economic success have come at high social cost

I’m thinking of starting a new social movement. Still working on the details, but I’ve already decided we’ll have lapel buttons, bumper stickers and, of course, a hashtag, all that say #letscalmdown.

I know I’m supposed to be banging on about the urgent need for economic reform but, although as a nation we’re better off materially than ever before, I doubt we’re the happiest, most contented or most fulfilled we’ve ever been.

Even if it’s true we all want to be richer (which I doubt), why do we have to be in such a tearing hurry about it?

While I was calming down on holidays a few weeks back, I read social researcher Hugh Mackay’s latest book, Australia Reimagined, and it occurred to me that we seem to be paying quite a price for our economic success.

Mackay says that two seminal facts about Australia suggest we are in urgent need of some course correction.

First, thanks to our rate of relationship breakdown, our shrinking households, our busy lives, our increasing income inequality and our ever-increasing reliance on information technology (and, he could have added, our greater division between public and private schooling), we are a more fragmented society than we have ever been.

Social fragmentation is the opposite of social cohesion. Our fragmentation has been exacerbated by rampant individualism and competitive materialism, whereas social cohesion is grounded in compassion and mutual respect and is the key to true greatness for any society.

“In countries like Australia, we are at more risk of antisocial behaviour from people who are socially isolated and mentally ill than we are from ideologically based acts of terrorism," he says.

Second, we are in the grip of what he insists is “an epidemic of anxiety”. “Two million of us suffer an anxiety disorder in any one year and the closely related epidemics of depression and obesity swell that number even more."

Up to a third of us will experience mental health problems in our lifetime, 20 per cent of young Australians will have had at least one episode of clinical depression before the age of 25 and two-thirds of us are overweight or obese.

These two facts are so closely linked, Mackay says, we should think of them as two sides of the same coin. “Heads we’re more fragmented; tails we’re more anxious.”

The link is that, because we’re herd animals by nature, we become anxious when we’re cut off from the herd and our anxiety, in turn, induces the kind of self-absorption that further inhibits social interaction, creating a vicious circle.

Many of us have retreated into self-absorption – a heightened sense of personal entitlement and an exaggerated concern with personal comfort and personal appearance – as part of our disengagement from political and social issues and desire to escape into our own comfort zone, both physical and digital. The echo chamber effect of social media is part of this escape.

Mackay admits there’s nothing new about people feeling anxious, but argues there’s a lot more of it today because we’ve been neglecting the four strategies we've long used to minimise it: the magical power of faith, the secret power of community, the restorative power of nature and the therapeutic power of creative self-expression.

Let’s look at faith and community. Research by the leading American psychologist Martin Seligman led him to conclude that faith in something larger than the self is the one absolutely essential prerequisite for a sense of meaning in life. And the larger the entity, the more meaning people derive from it.

For most of human history – and for most people living on the planet today – the God of religion has supplied that something greater. But in our ungodly era, “the vacuum created by the absence of religion must be filled by something else”, Mackay says. He’s right. Our psychological makeup demands it.

Most of the research showing the health benefits of religious faith and practice is actually identifying two influential factors: not just the faith, but also the “fellowship”. Church or mosque goers are members of a community of like-minded people who, at their best, are characterised by mutual support, kindness and respect.

The less obvious benefit of social engagement is that “belonging to a community keeps us in touch with people who might need us, and nothing relieves anxiety like a focus on someone else’s needs”. It is “the exercise of compassion – not merely the experience of belonging – that is the great antidote to anxiety”.

Don’t have enough time to do all that, you say? Don’t want to turn your life upside down? Mackay says we’re not going to turn the clock back, not going to junk the technology, not going to stop enjoying the fleeting pleasures of consumerism and not going to give up pursuit of material prosperity for a life of poverty in a monastic cell.

“But is easing back a possibility? Rethinking our priorities, slowing down, disconnecting from technology sometimes (such as when we’re eating a meal in the company of family or friends, or heading for bed), noticing what is happening to our children as a result of the toxic blend of their excessive screen time and our excessive busyness ... in other words, being a little more observant, a little more moderate, a little more restrained, a little better prepared for the future”, Mackay suggests.

Sounds good to me.
Read more >>