Close on 100 APPMA members and guests, representing 35 companies, gathered at the MCG on 10 September to hear former Federal Minister Lindsay Tanner give his frank and forthright assessment of the state of play in the world of politics, economics and industrial change.
Given Lindsay Tanner's credentials as a speaker, it was no surprise that it was a crowded house at the APPMA Member's Dinner hosted at the MCG in Melbourne earlier this week.
Former Federal Minister for Finance and Deregulation (2007-2010), Lindsay Tanner is widely regarded as one of the Government's strongest economic thinkers and highly respected by industry leaders and economic analysts.
And he pulled no punches when it came to delivering his view on the "circus" that is global politics, where reality TV stars and "clowns" are in powerful positions, endangering the world's future.
Tanner says we find ourselves in this situation because there are a lot of angry people in the world, and to assuage that anger, they have elected leaders for their entertainment value rather than their political agenda.
Tanner said he had to acknowledge that he is essentially one of the people that everyone is angry at, on multiple levels, having been a lawyer, trade union official, politician and, now, a banker.
"There's only one occupation left that's lower – a journalist," he said [a comment this journalist chose not to take umbrage at].
Jokes aside, in a world gone crazy, his career path has left him eminently qualified to reflect on what's going on.
Commenting on perceived inaction in politics, he said that when people call on politicians to show leadership, it's usually because what they want does not have popular support. And thus, most politicians have come to interpret the word leadership as code for "commit political suicide".
"That's why you don't see much of it most of the time," Tanner said. "And it's closely allied with that common call, 'someone should do something'. Unfortunately, it's never quite clear who that someone is."
He went on to say that this has created a world, in our country and in many other developed countries, where politics is now run around two core principles.
"The first, look like you're doing something thing at all times; the second, don't offend anyone that matters."
So where does that take us to what's actually happening, why has politics got so mad?
To answer this question, Tanner offered the audience a big picture perspective, starting with the retreat of the industrial age.
“This has been happening for a while but has now reached a tipping point,” he said.
“What we call globalisation is often talked about in the political and media world as if it’s a fashion statement that we can switch on and off.
“Globalisation is actually technological change with another name and that is driving a whole lot of structural changes both within countries and between countries, and most importantly it is bit by bit shrinking the role that is being played by routine labour in world economies,” Tanner said.
Examples he cited include increased automation of manufacturing processes, the use of outsourced administration services to developing countries, and the adoption of AI in professional services.
“All this does is erode the market value of those in the labour force that are not specialists, who do not have a particular set of skills or expertise to bring to the table that is hard to displace.”
This gradual devaluing of a whole lot of people is the key reason why we are seeing stagnant wages on average across most Western economies, he said.
Technological change and the efficiency it brings is a good thing, but every time it happens it produces consequences and attendant challenges, he noted.
“We now have a lot of older workers, used to a stable position, relatively low paid, who increasingly are under great pressure. And as you could guess, they are pretty unhappy about it.”
This, Tanner said, is a critical driver of unhappiness, anger, fear and resentment. Closely allied with this is loss of status.
“We are status obsessed creatures, like it or not. Economic change is devaluing people’s status. Particularly in regional areas where there is less opportunity to reinvent themselves.”
Tanner noted that in the US, it’s this sector of people indirectly affected by economic change that have been instrumental in causing the Trump phenomenon.
Also allied to this is the change in gender roles.
“A very large cohort of less educated males, who have had the psychological crutch of feeling more important than many women, are now facing the reality that this (thankfully) is no longer the case, and this structural change is being driven through western societies. And guess what, they don’t like it. However just and fair it may be. And that is a driver of the kind of angst that brings about situations like Donald Trump.”
Allied to this is racism, Tanner continued, noting that the one indicator that was most correlated with voters for Trump was resentment against racial minorities. But he was quick to warn the audience that you can’t confuse correlation with cause. Racism is always there, he said. It’s something else that triggers the racism to emerge. It’s as much a symptom as a cause.
“Part of this big picture is our need as creatures to understand… to have security and stability to navigate our complex world … to have a sense of what the opportunities and risks are, where things may be heading. And when these things are unsettled and we’re surrounded by uncertainty and threat and fear, we respond in desperate and ugly ways,” he said.
“What we are not good at is to understand that we ourselves may be the problem. We look for external factors to blame, hence the natural tendency to default to racism,” he added. “The mistake that many people like me often make is to treat the symptoms in a literal way, rather than reading between the lines.”
Tanner said we can’t take opinion polls at face value, imposing a level of sociological analysis on what is a simple message that is being sent through the response.
“Essentially, most polls default to a simple question: How are things going with you – are you grumpy, is life pissing you off?”
So what does all of this mean in terms of what is going on in the political world?
The nation state as we know it is only about 300 years old. And our sense that this is some kind of impervious construct that dominates everything within it and resists everything outside of it is a relatively short-lived phenomenon.
Today, nation states are losing economic power in all kinds of different ways, he said. In Tanner’s youth as an economics student he was taught that the Federal Government had four key economic levers to pull – fiscal policy, monetary policy, trade/customs policy, and wages policy.
“You don’t have to be a political scientist to know there’s not much left of those levers. By and large they’re not attached to anything anymore. Australian interest rates are primarily set in New York, not in Sydney, and our currency being floated effectively tends to counteract any substantial government intervention or make it ripe for unintended consequences.
“We no longer have the traditional mechanisms to intervene for those well off, and to correct the imbalances that markets tend to create. That said, there are still vestiges of those things going on. We have bizarre circuses like Donald Trump’s trade war with China.”
So why do we have the dysfunction and chaotic madness of our own political system where we change PMs every 18 months, a situation that is growing increasingly common around the world?
Tanner explained that our two main political parties are products of the industrial society, but while that world doesn’t exist anymore, the mythology of the two major parties is still reflecting that world.
“Most major issues of the day tend to divide the major parties internally more than they divide them against each other. Whether it's climate change, asylum seekers, even some economic issues. You can no longer have a nice simple world where you can choose between the socialist and the capitalist. Because underneath them the voters, the people driving the political discourse, are no longer the voters they are built by," he said.
“All political parties are ultimately a reflection of the people who voted for them. And need a commonality and coherence of interest and identity to make them meaningful. This is why we end up with dysfunctional political systems – because the major political parties now spread across such a diversity of interests and identities that it is almost impossible to have any kind of coherent agenda.”
Turning to what this all means for the APPMA members, Tanner said that the nature of the activity that APPMA members are connected to (manufacturing) is threatened by some change.
Ultimately Australia’s distance, and the nature of the product being made, particularly food, means that it’s probably not about to all be offshored to China, making the sector probably a little bit more insulated than other sectors.
Nevertheless, he said, the industry needs to be relentlessly focused on where technology is taking the world, what the opportunities and threats are. He warned that it’s easy to get carried away with fads or to overestimate the potential opportunities inherent in a particular technology.
“You will not be able to avoid the tyranny of social responsibility. Excess packaging, food waste… the world where you could keep an arm’s length with such issues is gone. They will influence your world and those companies you supply."
A major issue that he believes industry should be focusing on is vocational education and training, which he says has “become a shambles in this country”, and is “ripe for re-energising and refocusing”.
He said he hoped the APPMA members are investing in this sector, and collaborating with education providers. This in his view is the number one issue that is facing the nation and that is within the realm of government to seriously influence.
“Anything that you can do to contribute to better community outcomes on that front I urge you to do, noting that you can’t be expected to do it by yourselves and the absence of serious political leadership on these issues is a problem.”
In closing he said that the challenge of understanding what things mean and why they are happening bamboozles most of us.
“The key thing is to keep asking what is theatre and what is real. The so-called trade war with China and the US is mostly theatre. It’s having a very marginal impact on the world. But the risk is that it could be come real.
“I have likened Donald Trump to a five-year-old playing Cowboys and Indians with a loaded gun, that he doesn’t know is loaded…” he said.
Acknowledging that he’d presented a rather gloomy picture, Tanner’s final point struck an upbeat note.
He said collectively we have never had things better in terms of living standards and quality of life.
“Across human history, who has been better off than contemporary Australians? We should be optimistic and positive to be who we are, where we are in the time that we are in.”