First an admission. As an alleged election expert with nearly 50 of the things notched on my bedpost I should be pretty good at picking a result. While this was the case for many years, I was wrong about our federal election, wrong about Brexit, wrong about the Queensland election and wrong about the rise and rise of Donald Trump.
Senility is a possible explanation, but I suspect it’s something rather more ominous, because every election expert I can think of got these wrong too. As Buffalo Springfield warbled so plaintively, ‘There’s something happening here, what it is ain’t exactly clear …’ For yes, things seem to be changing, orthodoxy and the notion of collective consensus are being slowly dismissed—and it’s much bigger than politics.
The political context is straightforward: major parties are failing to connect. The dreary routine of collecting and reflecting the views of the disengaged in order to capture their votes is manifestly failing. The focus groups, the textured policies, the stage-managed photo-ops and slogan-studded soundbites aren’t working as they once did.
Australia watched Malcolm Turnbull and Bill Shorten mouth lines they’d been given and policies they didn’t believe in, judged it fraudulent and turned away. It was lack of authenticity that brought both parties such low primary votes, and these would have been eroded yet further were there credible alternatives or were so many followers not so unthinkingly, unblinkingly loyal.
The election belonged to the group of people—motley and otherwise—who told it as they saw it: Derryn Hinch, Jackie Lambie, Bob Katter, Pauline Hanson, Cathie McGowan, the urbane Nick Xenophon and his team and even the fading Greens.
Who really said what they thought in the major parties? My list stops at Barnaby Joyce. Turnbull looked like a thunderbird puppet in his positive ads, while Shorten was so evidently insincere that the contrast of his buoyant post-electoral candour was refreshingly shocking until he got soporifically back on message.
The major parties delivered such largely mistake-free campaigns (one notable exception being Liberal deputy leader Julie Bishop being unable to explain proposed superannuation tax changes) that their very structure became a larger error for which they were punished. There are technical reasons for this failure that I’ll come to, but I suspect there’s something rather bigger afoot. I think the rejection is a symptom of larger societal changes that we see reshaping media, products and services and now politics. It’s the evaporation of average.
Consider our world for a moment; it’s a tragedy for so many of its inhabitants. More than a billion people live on less than $1 a day. Six million children die annually from malnutrition before they celebrate their fifth birthday. More than 800 million people go to bed hungry every day, and 300 million are kids. There are 246 million child labourers; 1.2 billion people can’t access safe drinking water; while every minute, a woman somewhere dies in pregnancy or childbirth. But never mind all that, we are a selfish species—when we have wealth we are extremely reluctant to share it. The richest 20 per cent of the world has three-quarters of the planet’s resources, whereas the poorest 20 per cent has only 1.5 per cent of them. Fewer than 100 rich people control the same wealth as the 3.6 billion poorest.
The theoretical cost of eradicating poverty is 1 per cent of global income. Debt relief to the 20 poorest countries would cost the same as building Euro Disney. Providing water and sanitation to all would cost less than three-quarters of Western expenditure on perfume. Providing basic health and nutrition would cost one-third of what the Japanese spend on business entertainment.
While that is all rather terrible, the great news is that poverty is in absolute and rapid decline. It has fallen 80 per cent in 40 years. Unquestionably the world is getting better for most people, and it’s doing so rapidly, because globalised trade is increasing and efficiencies are being discovered. We might be selfish as individuals, but that leads to us looking for the cheapest labour in a global market, and that work lifts people out of poverty.
That in turn is a problem, because as markets globalise, labour can be employed in the cheapest market. What this means is that first-world workers are losing their jobs and being replaced by workers in other countries. Manufacturing, which 30 years ago was around 25 per cent of Australian GDP, is down to about 7 per cent. That’s rotten news if you’re a worker, because demand for your services is slipping away, and ghastly news for the owners of factories who have failed to plan for global markets.
Thinking and acting globally and leveraging global opportunity and connectedness have been the key to making money—big money—for the last couple of decades. In 2000, 200 companies represented 28.3 per cent of global GDP but by 2012, 40 per cent of global wealth creation was controlled by just 147 corporations and many are bigger than countries. Exxon and Walmart are both bigger than Austria. BP is larger than South Africa, Sinopec out-scales the UAE, Chevron is more substantial than Israel, Toyota turns over more than Pakistan and VW dwarfs Portugal.
It’s very clear that in future businesses will either be niche local players or dominant global operations. Companies need to decide to get global or be prepared to get smaller and more specialised as competitors from other countries steal their customers. High-growth companies increasingly need to plan and finance offerings to 7 billion people, not 24 million Australians.
Clearly globalisation is reshaping the world, but it has only just started—less than 30 per cent of trade is global. In the context of a globalising economy Australia is a changing country. Our recent prosperity is largely due to the growth of China. China is remarkable; if incomes and population continue to grow at their current rate, by 2031 it will consume 66 per cent of the world’s current grain crop, 118 per cent of world oil and 200 per cent of world paper. They’ll drive 1.1 billion cars—and there are only 800 million on world roads today. That will produce huge problems in future, but for now the economic centre of gravity is rushing
Australian taxpayers and most national economies are increasingly dependent on the fortunes of the Chinese peasants who are becoming middle class. They are moving at the rate of 20 million a year from China’s countryside to its burgeoning cities, fuelling their country’s booming economy. Between 200 and 250 million peasants will move to the cities in the next decade, and that’s what’s powered the commodities boom that was pouring money into the Australian economy—and into Australians’ own pockets.
An evaporation of average is evident in the world of marketing. Super-expensive luxury brands are prospering, and brands at the shallow end of the economy that are based on being cheap are also doing well. Those brands in the middle, like people trapped in the middle of a polarising globalising world, are suffering.
In housing, the evaporation of average has meant that the median price in the most expensive Sydney suburb is now almost ten times that of the poorest one. Demo-graphically the baby boom has brought the evaporation of average. Over 30 years our average age has increased from 30 to over 36. For the last ten years the over-60 demographic has grown by 80,000 annually, while 30-year-olds have grown by only 6000.
The family unit of mum, dad and the kids was once the backbone of the country; now it’s a minority, albeit a large one. Our ethnic mix is changing. In 20 years the percentage of immigrants coming from England has more than halved, and they are now outnumbered by the combination of Chinese, Indians and South Africans.
We’re breeding later and less. In 30 years the average age of brides has increased from 21 to 28. Fertility has dropped from 2.1, which is enough to see population growth down to 1.78, which will see population shrinkage.
The evaporation of average is giving us different body shapes. We’re increasingly either fat or fit. Weight problems are 2.5 times the rate they were in 1980, and obesity is three times more likely. Being overweight or obese, incidentally, is largely an issue for lower socioeconomic groups—fat and rich doesn’t hold true, today we’re fat and poor.
In marketing terms, the evaporation of average is evident with a gradual polarisation of products and services to either the luxury or economy ends of the scale—the middle is collapsing. The waiting list for $20,000 Hermes handbags is at a record and at the other end Primark are selling endless volumes of super-cheap bags, but the mid-range bags of Myer and DJ’s—indeed their entire businesses—are in terrible trouble.
Sales of Grange Hermitage rocket up, and $200-plus champagne brands such as Krug and Dom Perignon have tripled in the last three years. Low-end super-cheap wine brands are gaining large market shares, but sales of traditional beers have plummeted over the last decade, and now their owners are trying to resuscitate them. They are projected to fall from $9.3 billion in annual sales to $8.7 billion over the next four years.
Heston Blumenthal’s Fat Duck restaurant, with its $1000 wine-matched degustation menu, is filled by a lottery for eager eaters, and uber-cheap eateries are booming while the middle collapses. The waiting list for Lamborghinis on the Gold Coast doubled in 2015, Porsche Australia tripled profits and lifted revenues by 37 per cent to $428 million and at the low end, sales of bikes have trebled.
In contrast in the dangerous middle market, Mitsubishi, Holden and Toyota are all history motors reporting heavy losses year after year. It’s the evaporation of average. The trend is evident in media too. Thirty years ago the family would gather around the television to watch the Sunday night movie together. Now that’s all changed. This Sunday dad might be watching TV while mum is preparing for a meeting next day. The 14-year-old daughter is listening to MP4s, the 12-year-old is locked in his room doing homework (actually he’s downloading porn) and the 17-year-old is on Instagram. We’ve seen a shift from mass to micro media, and it’s gathering pace.
Compounding this, social media is increasingly influential, but its algorithms cause an unfortunate situation whereby interests and biases are identified mathematically and reflected through like-minded media feeds to the exclusion of other opinions, reinforcing the perception that a prejudice is universally held. Thus social media becomes an outrage amplifier and an echo chamber with insidious arithmetic that mirrors attitudes and denies debate.
The digital world is far faster, and we are adjusting to its speed. It took radio 38 years to reach an audience of 50 million, television got there in 13 years, while the internet reached that figure in four years and the iPod in three. Facebook reached 50 million in two years, but Google+ took only three weeks. Then comes an election campaign in which voters have shrugged off the middle ground and run to voices of authenticity, for these ructions are playing out in politics too. The Coalition and Labor are not keeping pace with our changing society, so they are losing market share. As we have done with department stores, we seem to be ready to move away from the major parties, looking for specialists, for authentic voices, and that move away appears to be accelerating. It’s the evaporation of average.