Complexity – the Great Australian Aversion

loading animation
Monday, 11 June 2012 20:41 by Ad astra
Close your eyes and reflect for a moment on news items you have seen or heard on commercial TV or radio in recent times. What characterizes them? They are almost invariably short, sensational, overly dramatized, sometimes squalid, and often portray conflict between people or groups or races. In recent years we have been fed a diet of this material so regularly that for many it has become the norm. Like those who have become accustomed to eating fast food, without it they feel deprived.

Any attempt to represent the difficult and complex issues we face as a nation in a more considered way is too often thwarted by the desire of the majority of consumers for short, simple, uncomplicated bite-sized and easily assimilable messages that require little thought, little reflection, little discomfort. There is widespread agreement that this phenomenon has lessened the attention span of consumers to the extent that asked to concentrate on anything for longer than a few seconds, or at most a couple of minutes, results in wandering attention, loss of concentration and interruption by minor distractions.

The net result is an electorate where many are not attuned to complex issues, and are not just disinterested, but hostile at having to consider them. They want issues to be simple, or at least simplified, and the solutions straightforward and uncomplicated.

The complexity of climate change
To illustrate these points, let’s look at one of the most complex issues of our time – climate change and global warming. For many, the science is too complicated, too beset with caveats, and so subject to contrary views that most people decline to think about it at all. They are not prepared to read, view or listen to even a well-prepared discourse that uses relevant facts and figures, and draws reasoned conclusions. It is all too hard. Denialist statements give them the easy way out.

There are exceptions of course, and some of the media, notably the ABC and SBS, do make an attempt to address complex issues in their special programs such as Four Corners and Insight, and in their documentaries, so that the few who are interested can enjoy and benefit from them. Sadly they constitute but a tiny fraction of the population.

To convince a skeptical electorate that a serious threat to our planet and its inhabitants and ecology exists, one that responsible decision-makers must take action to combat, is a monumental task. The task itself is hard enough, but with climate deniers or skeptics deliberately disseminating misinformation, doubt and fear, it becomes almost impossible. And since there is a widely-held view that the consequences of global warming are a long way off, the motivation for change is minimal. If a lethal tsunami were visible on the horizon, action would be immediate. The global warming ‘tsunami’ is not yet clearly visible.

Contrast the task of the Government with the actions of the Coalition.

The Government has to convince the electorate that global warming is occurring and that it is a dangerous threat to our way of life and to future generations, that preventive and remedial measures are available, and that action must be taken, and taken now before it is too late.

It must convince the electorate that an Emissions Trading Scheme preceded by a price on carbon is an effective and necessary action, and that as the highest polluting nation per capita in the world we are morally obliged as good global citizens to take action now. It must convince the electorate that the price per tonne is appropriate. It must convince it that this action, along with other measures to move our economy to a low carbon one that can take advantage of the burgeoning renewable industries, is essential for the survival and prosperity of our economy.

And this task has to be undertaken in the face of self-serving opposition from those whose vested interests are threatened, and from the skeptics, together with a concerted campaign of misinformation, deception, and simplistic solutions from Tony Abbott and the Coalition.

Those simplistic solutions are to ‘stop the toxic carbon tax’, that will drive the cost of everything up, and up, and up, and destroy whole industries and towns and countless jobs, and instead adopt the ‘simple’ Coalition approach, its Direct Action Plan, proposed ever so quietly in the background as an alternative. It is simple for Abbott to visit countless commercial outlets and get on TV with a short message that ruin will attend these businesses when the carbon tax is introduced. It is easy to say that Australia will disadvantage itself economically by being ahead of the rest of the world when its scheme begins on July 1, which is untrue as scores of countries, US states and Canadian provinces already have a trading scheme, and that it will have the highest price per tonne of carbon in the world, when this too is untrue.

Which is easier? The Government’s task or the Coalition’s?

Even if the Government had a top class media unit staffed by educators who were capable of crafting understandable messages about global warming and an ETS to combat it, the messages would be bound to be more complex, more comprehensive, more detailed than the simple, albeit disingenuous contrary messages of the Coalition. Being negative, disseminating deceptive messages, is simple and easy. And this is largely because the electorate has an aversion to complexity, an aversion to teasing out the facts, an aversion to reasoning to a logical conclusion.

This is deadly serious. How can any government introduce complex measures to deal with the complex problems facing our nation when the electorate by and large are averse to, and refuse to think about complex matters, preferring instead simple solutions to problems no matter how complex?

Complexity in economics
Let’s move to economics. In recent memory there has been nothing as complex as the global financial crisis, its precedents and the fallout, which continues to this day.

There is a splendid account about how the GFC came about at the denis bider website titled: The subprime mortgage collapse for dummies, which is well worth a read.

Apart from describing how subprime mortgages came into being and how they fell apart, it also describes collateralized debt obligations (CDOs), which were at the very heart of the ultimate collapse. The whole sorry tangle was so complex that very, very few understood what they were getting themselves into – their aversion to complexity meant they were not prepared, or perhaps not equipped to even try to understand them. They preferred to take the simplistic approach that this seemed a good way to make money, and they avoided thinking about the risks. That was too complex, too difficult. Even those not intimately involved declined to address the complexity of the collapse, leaving them confused about how it all happened and apprehensive about it happening again. Unwillingness to address complexity has left them uncertain and fearful of the future.

This is another example of how aversion to complexity led to a financial disaster for many, a global disaster for much of the world, and continuing trepidation.

Complexity in Europe
Look at the contemporary financial situation, notably in Europe. Nobody seems to know what ought to be done. Some put forward their opinions and theories, but because they often conflict, no one is certain. Add to that the political dimension, and the self-interest of nations caught up in the crisis, and even the best economic solution might be rejected. Here again an aversion to complexity has led to simplistic solutions from economists, platitudinous suggestions from politicians, and political unwillingness to act decisively.

What makes the ‘Eurocrisis’ so complex? Try multiple nations all with separate and fiercely independent governments, all trying to do the best for themselves, with the common good of the Eurozone a secondary consideration. Consider that almost all are tied to the Euro. Reflect on the differences in culture from the hard working Germans to the laidback Greeks who regard as their right early retirement at 55, with civil servants on a pension that equates to 80% of the final salary, and who have a cadre of wealthy people who have made tax avoidance an art form, thereby pushing the Greek economy towards bankruptcy. Think about the variety of attitudes that exist towards the proposed austerity measures, with the Germans and others insisting they must be attempted, while in France and Greece there are political parties that reject austerity as part of their party platform. Take into account multiple national banks with varying liquidity, debts and ratings, some needing a bailout, or as some like to label it, ‘a line of credit’. Remember that there is a European Central Bank as well as the World Bank and the International Monetary Fund, all interacting in a complex way. Think about the bond markets in those countries, which are used to raise funds to manage debt, and which need to offer higher and higher interest rates as the risk to lenders rises, with around 7% seen as the tipping point towards inability to repay. Reflect on the effects: economic, financial and psychological, that the economies of these nations and the whole Eurozone have on markets worldwide and in our own country. Then you will have some idea of the complexity of the Eurozone crisis. Is it beyond human understanding? Are there any who are capable of tackling it and advancing plausible solutions?

It is because so few are capable of, or willing to tackle this complexity that the crisis drags on month after month.

The lesser players who invest in stock markets, who themselves do not understand this complexity, have to rely on hunch, bits of information and what others are doing to manage their investments, and of course the age-old motivators, fear and greed. They choose the easy to understand bits rather than attempting a more comprehensive analysis.

In a telling article in the Sydney Morning Herald today titled: Economists fail the reality test – again, having set out how they once again got it so wrong about the health of Australia’s economy, Ross Gittins concludes: “The unvarnished truth - which none of us can admit, even to ourselves - is we think we know what's happening in the economy, but we don't. We're too fallible, and it's too big and complicated.” Exactly, it’s too complex, and even economists have an aversion to complexity.

The complexity of entitlements
Finally, let’s look at the complexity surrounding what are believed to be our ‘entitlements’, about which the much-admired political editor of the Australian Financial Review, Laura Tingle has written in her recent Quarterly Essay: Great Expectations: Government, Entitlement and an Angry Nation.

Before we do, let’s look at what another respected source said this week about our state of mind. Glenn Stevens, RBA Governor, in his address to the American Chamber of Commerce (SA) on 8 June, after describing Australia’s buoyant economy and last week’s ‘beautiful set of numbers’, said: “Yet the nature of public discussion is unrelentingly gloomy, and this has intensified over the past six months. Even before the recent turn of events in Europe and their effects on global markets, we were grimly determined to see our glass as half empty. Numerous foreign visitors to the Reserve Bank have remarked on the surprising extent of this pessimism. Each time I travel abroad I am struck by the difference between the perceptions held by foreigners about Australia and what I read in the newspapers at home.”

After providing a glowing economic analysis, complete with facts, figures and mature reasoning, his concluding words were: “For Australians, the glass is well and truly half full.” His erudite speech, The Glass Half Full, is well worth a read.

He doesn’t mention specifically, nor do other commentators, that a significant amount of the pessimism that exists today is due to the unremitting negativity of Tony Abbott and Joe Hockey, who talk down the economy day after day, but I suspect he has them in mind as he talks about 'the glass half empty’.

Laura Tingle begins by giving an explanation of the origins of the electorate’s anger by referring to our colonial history. From the arrival of the First Fleet, citizens felt the colony’s administration had control over its destiny. Paul Kelly amplified this in what he described in his book, The End of Certainty, as the ‘Australian Settlement’, an agreement made at the time of federation. According to him, this ‘settled’ political construct guided Australian political ethos for the next 80 years. It was based on five action pillars: White Australia, Industry Protection, Wage Arbitration, State Paternalism, and an Imperial Benevolence supporting nation building in this distant outpost of the British Empire. Because the government controlled these ‘action pillars’, it could be relied upon to look after its people in a predictable way.

Then came the reforms of the Hawke/Keating era when deregulation saw the floating of the dollar, interest rates set by an independent Reserve Bank, reduced industry protection, and the Prices and Income Accord that led to enterprise bargaining, all removing government control over these levers of economic activity. These radical reforms were accomplished with collaboration of the unions and other players, but were also aided via a bipartisan approach from the Howard Opposition, which was then devoid of aggressive tactics of opposition.

Tingle points out that when our long history of a paternalistic relationship with government was unwound during the Hawke and Keating period, “…an argument was put to us that in the national interest we had to wind back what we expected from government. For example, we couldn't expect that government would fund us through retirement. We would have to make our own way in retirement and fund it through superannuation.” During the era that followed, Howard set out to make people ‘relaxed and comfortable’ after the intense Hawke/Keating period of change, and gifted with a huge increase of revenue at the time, he increased payments to individuals and families in a series of handouts and benefits, so many, that by the time he left office over forty percent of the budget was being spent on social security and welfare. He had engendered a sense of entitlement in the electorate.

So we had a combination of governments having less control over the levers of the economy that left the electorate feeling that the government was less powerful than before, less able to control economic events, yet giving handouts that instead of evoking gratitude, created a sense of entitlement, a sense that this is what governments ought to do. As Tingle said: “[Howard] created this whole new edifice of government support and assistance, an expectation from people that they deserved to get something from government, not because they needed it but because they deserved to get it. That has created a really big rod for the backs of everybody who follows because it is very hard to unwind that sense of entitlement just based on the idea that government is there to give you something, not because you really need it.”

She explains: “It is wrong to see the anger of the last few years as a ‘one-off,’ which might go away at the next election. The things we are angry about betray the changes that have been taking place over recent decades. Politicians no longer control interest rates, the exchange rate, or wages, prices or industries that were once protected or even owned by government. Voters are confused about what politicians can do for them in such a world.” She adds that making promises that governments cannot keep exacerbates this confusion.

More detailed discussion of the Tingle essay is for another time. My purpose in including it here is simply to add to the catalogue of complex matters that beset us in the global economy in which we now live. My proposition is that it is the complexity of the series of events I’ve described – lesser control by governments and an established sense of entitlement – that has combined to produce anger and pessimism and disillusionment in the electorate, to an extent that almost defies comprehension by the voters. It is all too complex, and with the aversion we have to complexity it is too hard to think about, and therefore too hard to understand. The task for the Government is to explain this complexity in simple terms, to explain to the electorate that no matter who is in government, control over the economy and people’s lives is less than it has ever been, that the age of entitlement is behind us, and that the economic forces that propel governments cannot return us to the halcyon days for which so many seem to yearn. If that could be explained in understandable language, the anger might dissipate.

Aversion to complexity
To return to the theme of this piece, it is argued that because we live in an increasingly complex world, to understand what is happening, what might transpire, and what it is possible to do about it, we need to come to grips with complexity. There is no other way. Our aversion to complexity is leaving us in no-man’s land.

What we need from governments, economists and commentators is a way of addressing and understanding complexity, so that even if we cannot comprehend all the intricate details we can at least understand that there are reasons why things are the way they are. If we can comprehend even a glimpse of a plausible representation of the present, and a reasonable way ahead, we can all be collaborators in an even brighter, and more coherent future for us all.

What do you think?