Not Like America: How Australia can avoid the Trump effect
by Sandy Plunkett and Joanne Gray
“Australians don’t want the income inequality, the corporate tax avoidance, high cost of healthcare, dysfunctional education programs and social problems that have become prevalent in America,” former ACTU secretary David Oliver says.
The Twitter feeds lit up with indignation last year when a Vanity Fair writer described Australia as “America 50 years ago, sunny and slow”, a country where we “still live and die with the plot turns of soap operas”.
Australians in the United States are often told they come from a country that’s just like America in a throwback era. It’s (mostly) meant as a compliment. Long before populist angst culminated in Donald Trump’s presidential triumph, it conveyed a nostalgia for a kinder, gentler past. But it’s also a sly dig at Australia’s perceived quaintness, insularity and naivete.
Nowadays, “Not like America” refrains are popping into our discourse more often – in parliament, at conferences and Q&A panels, at dinner parties and weekend barbecues – like a drumbeat warning against a perceived capitulation to American-style culture wars and the erosion of our much-loved egalitarianism and “fair go” ethos.
Trump’s election has drastically amplified the uncertainty about Australia’s future – not just among policy makers, but also the electorate at large.
As more value across the economy gets tied up in information, or “bits”, atom-based countries like Australia are sending billions of dollars to California with online transactions, tweets, movie downloads or Google searches.
“Australians don’t want the income inequality, the corporate tax avoidance, high cost of healthcare, dysfunctional education programs and social problems that have become prevalent in America,” former ACTU secretary David Oliver said in a National Press Club pre-US election debate on the future of employment. “People want high-paying jobs, high-quality jobs, secure employment, a strong social safety net and a greater share of benefits of increased productivity.”
His opponent, James Pearson, president of business lobby group the Australian Chamber of Commerce and Industry, dismissed Oliver’s “Americanisation” label as the “new clickbait for the union movement”.
He reckoned it was way off the mark because our high minimum wage, strong social safety nets and progressive tax system are evidence of a “world of difference” between the American and Australian economies.
Who owns our future?
The ACTU represents only 15 per cent of Australia’s workers, but the “Not like America” rhetoric reverberates as real wages in Australia have stagnated for three years and the casualisation of jobs, in all sectors from retail to education, is increasing.
Arthur Sinodinos was sworn in as the fourth Innovation Industry and Science Minister in 16 months, in January.
Oliver gave digital-era villainy a name – Uberfication – where, he says, people can end up bidding in a reverse eBay-style auction for parcels of work. The danger, he says, is that anywhere, anytime opportunities become everywhere, all-the-time work, or no work.
Uber is just one of many highly capitalised 21st-century companies shaking up traditional industries and models of employment. Australian retailers are bracing themselves for Amazon’s local market entry, while other digital-era behemoths such as Google, Facebook and Apple are making greater inroads into other parts of the economy. This presents challenges for governments, regulators, employer organisations and unions alike. So far, we are struggling to keep up.
Driven by the internet, platform businesses, data algorithms and robotics, the digital revolution is making more industries and markets hyper-efficient, and human labour look increasingly expensive. Economists argue it is technology, not free trade, that has led to a hollowing out of the middle-class and high concentrations of wealth in the hands of those, mostly US, companies, that own and run these platforms and networks.
If Australians don’t want to be like America, we have to move faster to understand the underlying technologies, laws and mores driving digital-era modernity.
As president of the Business Council of Australia, Catherine Livingstone thanked the Prime Minister for putting innovation on the government’s agenda.
“The nation is coming to terms with a fork-in-the-road challenge,” says Adrian Turner, the chief executive officer of Data61, the data science arm of the CSIRO.
Turner returned to Australia in 2015 after a stint in Silicon Valley. He is a genuine believer that Australia is capable of forging success in the digital age. But he’s surprised how much education still needs to be done. “Digital-era globalisation, network effects and rapid advances in automated decision-making are based on fundamental technological laws and there are different economic outcomes for leaders and followers. Before we can possibly measure and work through all the implications – for industry, for education, for work and for the benefit of a society that is unique in its fairness – we need to understand them. There’s still a lot of education that we need to work through before we can necessarily accelerate positive outcomes as a country.”
Something wrong with our ideas?
“Is it possible in a modern society to preserve all the prosperity and happiness of a nation so inimical to ideas?” wrote Donald Horne in his iconic and still-prescient work, The Lucky Country. It was 1964, the end of the second Menzies era, the last decade of the White Australia Policy and wool was our largest export. Meanwhile, across the Pacific, the silicon chip had just arrived on the scene and with it, a young Silicon Valley – birthed by giant US defence and aerospace companies and their renegade postwar spin-outs – was poised to usher in the modern computing era.
Fast-forward 50 years to November 2015 when a newly ensconced Prime Minister, Malcolm Turnbull, in launching the National Innovation and Science Agenda (NISA), welcomed us to “the ideas boom”. The salutation fell flat. If innovation (most simply defined as the application and commercialisation of ideas) is the essential ingredient for healthy 21st-century economies, it was rejected by Australians in the July 2016 federal election.
The shallow catchcries “jobs and growth”, “agile and innovative” and “continuity and change” made a mockery of Turnbull’s promise that advocacy, not slogans, would be a hallmark of his government. More potent was the inchoate sense that “digital”, “innovation” and “agile” were code for job losses, not job growth. The politicians mouthing these slogans did little to convince the electorate they should be excited about that.
The scale of the challenge – of devising policies that will work, and communicating them – is recognised by some of Turnbull’s inner circle. Dr Martin Parkinson, secretary of the Department of Prime Minister and Cabinet, has said he feared the Australian public service was at risk of the fatal combination of “arrogance and ignorance”.
“In the APS we think disruption is something happening to other people, and conversely we seem to regard innovation as a buzzword or something that’s nice to have,” he told the annual Institute of Public Administration dinner in December. “I want to be clear: this is a false reality, and a dangerous one at that.”
In January, the ministerial travel rorts scandal led to a reshuffle that saw Australia’s fourth Innovation Minister in 16 months, Arthur Sinodinos, sworn in. He was reluctant to comment for this article given his newness to the portfolio. But in a separate interview just months before he supported Turnbull to wrest the leadership from Tony Abbott, Sinodinos zeroed in on the need for system-wide reform. “Real reform in response to technology-driven globalisation – and the conversation to bring the populace into the reform conversation – has been delayed for 25 years,” he said.
When asked, beyond NISA, what additional reforms are priority in 2017, Sinodinos said “The NISA is about incentivising innovation activity and collaboration across industry, science, academia and government. It’s a great first plank. But these things don’t operate in a vacuum and should be linked-in with macro-economic, competition, regulatory, employment, trade, and investment policies. My focus will be to connect the dots.”
Which brings us back to Horne’s follow-up questions in a section titled, “Nation without a mind”: Is Australia really inimical to ideas? Or has there been something wrong with the ideas presented to it?
The Lucky Country disrupted
Sandy Plunkett first raised the theme of the Lucky Country Disrupted at the 2015 Australia 3.0 Roundtable
Is our leadership today, in politics and business, curious and courageous enough to navigate an era of heightened uncertainty, higher unemployment and quite possibly, a lower standard of living? Is Australia’s egalitarianism and affluence under threat or even possible to maintain in the digital age?
Australia is the world’s 12th-largest economy, thanks largely to the deep richness of our mineral resources and agricultural land. We have a peaceful, ethnically diverse and religiously tolerant society (28 per cent of our population was born overseas); our education system, despite increasing angst about private versus public funding inequities and a slide in global rankings in the maths and sciences, is said to be world-class and is our fourth-largest export; we are creative; and our scientists and researchers produce a relatively high percentage (per capita) of the world’s top research. But the world continues to make demands on Australia and our record of response to those demands is patchy at best, the gaps easily glossed over throughout a resources boom and 25 years of uninterrupted growth.
For all the talk of technological innovation and disruption, few of Australia’s biggest and most powerful companies have truly embraced it. Prominent businesses are grappling with lacklustre growth prospects and a risk-averse culture. The government is yet to set the budget on a sound footing and is easily distracted when issues such as the backpacker tax or ministerial travel rorts flare-up.
The embarrassment of high-profile debacles in digitally delivered government services – the Australian Tax Office, Centrelink and the Census – serve to highlight our lack of tech savvy. We are struggling to make sense of how fast the world is shifting. We now understand we are giving our data away to the biggest global corporations who are using technology and business models that didn’t exist when our leaders were at school or university.
Tax revenue leaks away every time we use Netflix, Uber, Amazon and Google, even as they employ very few of us; rapid advances in 3D printing promise to upend manufacturing and global supply chains. Meanwhile, the threat of automation, or jobs being lost to artificial intelligence and robotics, is omnipresent. Professionals, skilled and unskilled workers alike, are already competing in a global market for work.
As George Megalogenis wrote in his Quarterly Essay, Balancing Act (February 2016): “The supposed strengths of the Australian character – our openness, our love of technology, our pluck – have been notably absent in our attitude to the future. Put bluntly, we don’t have a plan. We know we need one, written jointly across government, business, trade unions and civil society. But we keep finding excuses to return to the trenches of our prejudice.”
The barbarism of now
The innovative ethos we’re being urged to embrace in the digital age assumes that relentless technological progress is inevitable and good. But its key advocates have rarely conceded the corrosive impact their inventions can also have on the rest of us.
In his bestselling book, The Next 100 Years, George Friedman, American geopolitical forecaster and CEO of Stratfor, sets out a compelling argument for why the computer’s binary logic has become the governing ethos of society. “Nothing exemplifies American culture more than the computer, and nothing has transformed the world faster and more thoroughly than its advent,” he writes.
“Computing culture is also, by definition, barbaric. The essence of barbarism is the reduction of culture to a simple, driving force that will tolerate no diversion or competition … Pragmatism, computers and Microsoft (or any other American corporation) are ruthlessly focused, utterly instrumental and highly effective. The fragmentation of American culture is real, but it is slowly resolving itself into the barbarism of the computer and the instrument that ultimately uses and shapes the computer, the corporation.”
Ruthlessness (and a mastery of “spin”) are much celebrated and highly rewarded attributes in the internet age. According to leading US tech analyst Mary Meeker, 11 of the 20 most valuable tech companies are in Silicon Valley, with seven in China and one in Japan. Tech insiders know there is little difference these days – in skills preferences and sales culture – between Wall Street and Silicon Valley. It’s all about the data and the speed with which it gets gathered, analysed and resold. As more value across the economy gets tied up in information, or “bits”, atom-based countries like Australia are sending billions of dollars to California with online transactions, tweets, movie downloads or Google searches.
In the era of Trump and Brexit, however, tech-sector insiders are being forced to acknowledge they have had a tin ear to the concerns of those working outside of it. Paypal co-founder, Facebook board member and libertarian Peter Thiel, put it this way: “Silicon Valley has been extremely successful over the last decade or so. But it’s been a success for specific companies.
“The story people in Silicon Valley always want to tell is one in which their specific success – as individuals, as companies – gets conflated with the story of general success and general progress in the US,” Thiel told the National Press Club in Washington last October. “The truth is one of specific success, but more general failure. You know, Silicon Valley promised us flying cars. But all we got was 140 characters.”
The only Silicon Valley tech titan to openly support Trump’s presidential run, Thiel was vilified by his billionaire tech-sector peers. (Amazon’s Jeff Bezos offered Thiel a ticket on his first rocket ride off the planet.) Thiel now has a front-row seat in the Trump transition team as science and tech adviser.
Other Silicon Valley insiders are highlighting the dark underside of the digital, data-driven era. In the book Who Owns the Future?, highly respected computer scientist Jaron Lanier delves into the destruction of the middle-class in the networked digital economy and the poisonous concentration of money and power that comes with it. Noting services like Google and Facebook only exist because of the social acceptance of a mass amount of distributed volunteer labour, Lanier writes: “Digital technologists are setting down the new grooves of how people live, how we do business, how we do everything – and they’re doing it according to the expectations of foolish utopian scenarios. We want free online experiences so badly we are happy to not be paid for information that comes from us now – or ever. That sensibility also implies that the more dominant information becomes in our economy, the less most of us will be worth.”
But as American tech hegemony increases, its leaders will move hard and fast to protect it. One indication? The tech sector swung its financial support away from the Democrats and behind the Republican Party in the November US presidential and congressional elections. “As these technology firms have become corporate behemoths, their concerns over government regulatory policy have intensified – on issues including privacy, taxation, automation and antitrust,” Thomas B. Edsall wrote recently in The New York Times. “These are questions on which they appear to view Republicans as stronger allies than Democrats.”
Permission to seek … tax cuts?
How does a country like Australia – with a relatively shallow digital-era talent pool and few technology giants – thrive and compete against such “ruthless pragmatism”? And what does digital-era change mean for the prosperity and the sense of fairness on which our social contract is supposedly based?
At the annual dinner of the Business Council of Australia in November 2015, just weeks after Turnbull became Prime Minister, then president of the BCA Catherine Livingstone – now the first chairwoman of the Commonwealth Bank – beamed with optimism. “[Prime Minister] … you have given us the permission to have conversations about things that matter to people and helped, through your own example, to make those conversations positive,” Livingstone said. “For some time now, the Business Council has been trying to start a conversation around fostering an innovation-capable economy to drive the next decade of growth and job creation.”
Permission? Livingstone’s use of the word exposes just how much we are accustomed to waiting for government to take the lead. By election time, the BCA’s ambition had narrowed to demands for corporate tax cuts. But tax cuts alone (some $48 billion over 10 years) won’t get us to where we need to go. Nor will a narrow battle over penalty rates. We seem stuck, ever-ready to preserve our physical property investments and the perks of leadership, but far less inclined to take risk and build 21st-century global businesses at scale.
Philip Lowe, now governor of the Reserve Bank of Australia, pinpointed the damaging impact of an ageing population on the nation’s productivity and innovation in a speech to the Sydney Institute in 2014.
“If we are to improve efficiency and advance technology, then innovation is required and innovation requires someone to take a risk … If ageing societies become inherently more risk-averse and less supportive of innovation – as I suspect they might – then we are likely to face a greater challenge to date in generating productivity growth.”
Communicating innovation and digital-era complexity was never going to be easy for a nation like Australia, which has earned great wealth by digging stuff out of the ground and growing and rearing stuff on the land. In the digital era we also need to mine and develop the stuff in our heads.
Beyond tech utopias and dystopias
More than 50 years ago, Donald Horne was far more acutely aware of technology’s coming ascendancy and its broad implications for Australia’s future than decades of analysis of his work has deliberated upon. The Lucky Country was then, and is now, a sharp critique of a nation lacking in originality and innovation, in a world he viewed as increasingly driven by both. Despite Horne’s warning, the phrase “the lucky country” became a catchcry of national self-congratulation.
In 2017, we have to resist such perceptions and dig deep into the pros and cons of how the digital economy works. Leaders can’t lead unless they study and understand digital-era laws. Until they gain that understanding, they can’t sensibly reform tax, labour market rules or competition policy, which are vital to ensure that the advances sought in the NISA agenda are diffused throughout the economy.
The only thing that the ACTU’s Oliver and the ACCI’s Pearson agreed on in the pre-election debate was a wistful recollection of the 1980s collaboration between business, government and unions during the Hawke-Keating era, which modernised Australia and set up the economy for decades of growth.
That growth era is expiring and the 21st-century version of that challenge is upon us. We must reject polarising views of tech dystopias or utopias. And the temptation that we can retreat to a more comfortable past is a lazy indulgence. Positioning Australia for the future will be hard, but it starts with the political, business and societal will to act. And we must act to avoid the social and political fractures that are multiplying around the world.
Sandy Plunkett is a founder of independent consultancy Innovation Clearinghouse. Sandy also is a member of the Pearcey Foundation National Committee and Pearcey Institute.
Joanne Gray is editor of BOSS.
This article was originally published in the Australian Financial Review/BOSS Magazine on 10 February 2017.