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Australia's Comparative Advantage report - an analysis

Australia's Comparative Advantage report title page
A prominent feature of complex dynamic systems is progression lock, a particular state of its subsystems achieved at a certain time which from then on limits further manifestations to the range of probabilities set by that state.

When it comes to human activity systems (non-linear systems par excellence) the phenomenon occurs within the material as well as the functional context. A city may change over time, but the layout continues to reflect its history; a concept may be modified, but its initial premise holds sway over further conceptualisations. It matters therefore how a project is framed, be that a building or an investigative report.

Thinkers the world over have come to realise the profound changes that are occurring in their society and hence the challenges from within their environs as well as those emanating from without, from other societies. Australia is no exception.

The report Australia's Comparative Advantage [1] (from now on referred to as the Report) seeks to identify those challenges based on a wide range of sources. What follows is an analysis of the Report under the Otoom model, a description of cognitive dynamics. The text is seen as a cognitive system in its own right, and the analysis deals with the mutual correspondence within its elements as well as its relationship with the outside. At times other articles on this website are referenced as a source of additional data.

The authors recognised the need for an interdisciplinary approach since it is "the natural, geographical, economic, social, cultural, and scientific attributes and capabilities" which are needed for the nation to thrive (Report, p. 12). In using those capabilities the intended result should "enhance productivity, innovation, fairness and equity" (p. 13).

Note the conceptual umbrella: a complex system such as an entire country is to be re-formed, and its multitude of thus affected subsystems are expected to yield a particular result applicable to the entire range. The Report appreciates the complexity of the initiative since the advantage is not meant to be merely static or sectoral but would have to be dynamic by including politics, law, markets and culture (p. 16), although different interpretations are expected to happen (p. 34), reiterated further on (p. 36). According to the Report those multi-faceted dynamics would achieve a projected increase in real annual consumption per head from $36,000 to $55,000, whereas without the recommended changes that increase would only amount to $45,000 (p. 15).

How difficult if not impossible it is to predict outcomes in a non-linear environment is described in the Manual for CauseF [2], a computer program that simulates complex dynamic systems. To ascribe a rather precise dollar value to the resultant confluence of a society's innumerous entities is precarious. Not only is the precision (and accuracy, for that matter) questionable, the aim of enhancing 'productivity, innovation, fairness and equity' as stated at the outset assumes this effect to be unilateral across the whole system. Non-linear systems do not work in a unilateral manner; their various functionalities might although even they are subject to their host's overall degree of interdependency.

The authors appreciate the relationship between an over-arching system and its members. As they write, "the capacities of the people of the nation are the true core of advantage" (p. 19), and "a nation is defined by its people" (p. 28) (this as a conjunct to "well-managed immigration" (p. 29)). The element of culture - a more general yet significant factor - contributing strongly to the country's national wellbeing has been mentioned as strongly agreed upon by a "clear majority" within industry and the public service (p. 44). Entities such as the British Council, the Goethe Institute, Institute Francais, Cervantes Institute, and the Confucius Institute (p. 110) are highlighted as examples of other nations' initiatives in this regard. There is the need to better understand culture and societies (p. 21). As a consequence risks should be seen as an opportunity to improve oneself (p. 53), which is reasonable as this is a process that starts with the members of a society.

Australia's "well-skilled and effective workforce" is seen as a strength. At the same time it lags behind advancing economies and the Report puts the blame on insufficient management skills since its various sources have indicated as much (p. 22). It warns the nation's skills profile "could easily be locked into the low value-added end of the skills spectrum" (p. 18); it is summarised in the graph Employment in Australia by industry, share of total*, 1961-62 to 2011-12 on page 21. As well Australia's love of the underdog is referred to, where achievers are not valued highly (p. 40) and respondents to surveys speak of a "poor work ethic from the labour force" (p. 41).

The qualitative tag regarding the workforce is used as an essential reference point by the authors and information from the real (ie, statistics about advanced economies) becomes subsumed to it by necessity. Such a cognitive cause-and-effect relationship conceptualises both: the workforce is seen as well-skilled but there are problems and they must be due to something else, in this case poor management.

Consider the sequence in reverse. First the figures pointing to a relatively lower ranking local workforce are taken into account; then sources among that workforce speak of problematic management. What would be the conclusion? The idea would suggest itself that those sources are possibly blaming others, and the real problem could lie with members of that selfsame workforce. Having identified culture as a major influence, the attention would move to the general ambience underpinning the processes which result in this or that type of workforce.

This particular sequencing of cognitive events - positing a feel-good assumption first and pressing any divergent indicators into its service - has been employed in other contexts as well.

One of them is immigration. The country's "inclusive and cohesive society" is lauded but "violent and regressive" ideologies are spreading (p. 17) - another a priori reference point. The Report also mentions an "increasingly diverse Australian population" (p. 18). Other nations have advanced considerably, the authors note, referring to the "Asian Century" (p. 17), a continent marked by demographically diverse yet culturally more homogenous populations.

In Figure 2.5 using data from a CEDA survey (p. 50) the risk factor #15, "Increasing societal diversity based on ethnic and/or religious identities" is seen as a positive by 67% out of a total of 280 respondents and as a negative by 33%. The respondents' attitude is reflected in Figure 2.7 (p. 51) where the same risk factor is deemed 'large' by only 34% and 'small' by a majority of 66%; note the close similarity in the obverse figures. Clearly, the notion of this particular type of societal diversity resonates regardless of perspective. Nevertheless, adding new immigrants to the population changes the latter's composition as a consequence of the former's quality, and so the authors recommend a refinement of the immigration program to properly complement domestic skill formation (p. 89).

The generally held perception by the above sources that 'immigration', an all-encompassing label standing for new arrivals per se, is an advantage sits at odds with the detail contributing to such a basic view. The dichotomy can be expressed in terms of functional sets. There is the reality that Australia is a highly diverse society due to 'immigration' (set #1). There is the view that 'immigration' has been an advantage (set #2). There is also the reality that many Asian nations have surpassed Australia (and not just Australia), which in the current context would have to be seen as an advantage for them (set #3). In addition there is the reality that Asian nations are less diverse in themselves (set #4). If those four sets were mutually congruent their intersection, an immigration-derived diversity sourced from Asia leading to a comparative advancement which is being appreciated, would be true. Clearly it is not; members from the reality-based sets do not contain members of the view-based set. Therefore the view that immigration as such stands for an advantage is not based on reality. It tallies with the above categorisation of the post-immigration "inclusive and cohesive society" as an a priori reference point and nothing more.

The formulation by the authors, that a refinement of the immigration program is needed to "properly" complement local skills hints at the same problem as well as at the caution with which the topic is handled. Without such caution the recommendation would simply read, "Immigration is good, provided new arrivals come from advancing nations such as those of Asia", or words to that effect.

An additional issue similar to the cognitive disparity mentioned above arises from the remarks referring to attitudes towards foreigners. "Fewer than half [senior executives or owners of a company] though viewed Australian workers as tolerant of different cultures although foreigners were more likely to agree with the proposition than Australians", it says on page 54. Since there is a higher-level contingent which is asked about their opinion on another, lower-level one, does this mean the former see themselves as not tolerant and therefore view the others equally, or does it mean the former are tolerant but prefer to see the others as less so? Yet when it comes to the foreigners amongst the first contingent, the views are reversed although the focus of their judgment is the same. The question is particularly poignant because under the general assumption the cultural diversity would equally apply to the foreign senior executives who are then asked about their opinions about the workforce they administer. So either foreign executives observe a similar scenario but deem it less of a problem, or that subgroup of executives are more likely to employ foreigners to start with and hence the attitudes of Anglo-Saxon workers matter less. Or perhaps there is less cultural diversity among foreign executives and again, as a group they do not see the attitudes among their workforce in the same light as their Anglo-Saxon counterparts. In either case the "inclusive and cohesive society" appears to be a misnomer.

Interestingly, on the subject of the commercialisation of innovation "77% of foreigners believe Australia does the same or better than other countries while only 34% of Australians do" (p. 55). Would this be an indication that foreigners are largely from less performing countries, and if so what are the chances that the perception of identified risks and therefore the response to them is carried out equally and cohesively across the various demographics making up the nation's body politic? Merely being better than world average does not make it good enough.

A priori assumptions prompt their owners to colour any subsequent data under their auspices, a form of progression lock.

Another example is the topic of education as treated in the Report. The authors note the higher than OECD average increase in spending between 2008 and 2010 (p. 43) while the results are not commensurate. "Fewer than half of the respondents in each group agree the education system is imparting the skills needed for a competitive knowledge economy or that basic research is strong", they write on page 47.

Shifting the distribution of percentages of high-, medium- and low-skilled workers through improvement in education is seen as necessary, requiring funding support that does not fall behind global standards (p. 18). In line with the Report's comprehensive scope not only are problems in STEM (science, technology, engineering and mathematics) skills highlighted, but the need for those being complemented by the humanities and social sciences in order to better understand the role of culture is also mentioned (p. 21). Culture, a synonym for the aggregate result of a society's interplay among its subsystems, is significant.

The detailed reasons for shortcomings in this sector may not have been on the agenda for the authors since only a broad overview of its state of affairs is offered although being drawn from a considerable number of sources (p. 42). Still, the detail matters when it comes to the possible remedies, since these require a sufficient affinity with the prevailing conditions. What they are in terms of cognitive dynamics is described in Something to learn about Education: its situatedness within complex dynamic systems [3]. In contrast to the Report the word 'education' there is not treated as a homogenous a priori entity which responds to a particular initiative in a linear fashion. Rather, it represents a multi-faceted phenomenon that is the result of numerous factors having become affinitive with each other.

In a similar vein the currently "precarious existence" of indigenous knowledge (p. 108) hides the fact that the present result is not a single, disadvantaged body but demonstrates the lack of cohesion between a culture in stasis for tens of thousands of years and the ever ongoing demands of a modern society. The term used, "Indigenous knowledge (sic)", leads to the former conceptualisation as an example of how language can be a form of progression lock in itself. Had the term been less compact, the ambiguity in the expression could have been realised: does indigenous knowledge refer to the general knowledge held by members of that demographic, or does it refer to the knowledge base given to those members by their culture. Since the absence of a written language has always been an obstacle to the accumulation of insights across the generations (in human evolution civilisations only began to flower once information could be preserved in documents), and since in Australia many hundreds of millions of dollars have been spent over the past decades with the aim of improving indigenous standards yet still without any substantial results in the target (details are provided in the article The clock is ticking ... towards 2050 [4]), any argument about improvements would have to address the above ambiguity as a starting point.

In conclusion, the broad spectrum of sources as an information base for the Report should be appreciated. The authors' recognition of society and its culture being significant players in that grand game of destiny points to their awareness of how complex and interdependent such human activity systems are. Even certain derivatives have not been omitted such as "The things Australia does well are not looked at in detail and the nation may miss opportunities from a more profound study of why Australia's culture is rated so highly and what it is that makes its cities good places to live" (p. 59), when referring to the country's strengths. After all, most people would reconsider when something went badly, but only a few would think about why something went well as conditions may change and the previous approach no longer holds.

On the other hand, the innate nature of non-linear systems presents certain traps for the unwary, the relationship between content (data, particular members) and functionality (the types of behaviour by members) being a major one. Data represent overt structures, whereas functionalities need to be identified through emerging patterns. Both are necessary for a comprehensive evaluation but require their respective treatment.

"We cannot be certain what the future will bring for Australia. We cannot even predict it with any guarantees of accuracy. But we can have a look at what the future may bring and we do know the future we face will be one of uncertainty and complexity", the authors write (p. 59). However, focusing on functionality the view is less obscure, as shown in 2050: Age of the Silverback [5]. Written in 2007, as of 23 June 2016 there have been 30 developments since which are in line with predictions made in that post (referenced under Parallels [6]). The global scenario as presented in General drivers of future change on page 61 of the Report, as realistic as it is per se, suffers from the need to work around the lack of precise data; naturally, they are impossible to obtain.

The ultimate intellectual usefulness of the Report could be tested by revisiting its representations in five or ten years' time and comparing them with the reality then. Whether its recommendations find their way into government policies is up to our leaders.


1. Withers, G, Gupta, N, Curtis, L & Larkins, N 2015, Australia's Comparative Advantage, Report for the Australian Council of Learned Academies, www.acola.org.au, http://www.acola.org.au/PDF/SAF01/SAF01 full lo res.pdf, accessed on internet 19 June 2016.

2. Wurzinger, M, CauseF version 2.5 manual, General, http://www.otoom.net/CFManual.htm#gener, 2015.

3. Wurzinger, M, Something to learn about Education: its situatedness within complex dynamic systems, http://www.otoom.net/somethingtolearn.htm, 2015.

4. Wurzinger, M, The clock is ticking ... towards 2050, http://www.otoom.net/theclockisticking.htm, 2014.

5. Wurzinger, M, 2050: Age of the Silverback, http://otoomblog.blogspot.com/2007/12/2050-age-of-silverback.html, 2007.

6. Wurzinger, M, Parallels, http://www.otoom.net/parallels.htm, ongoing.

23 June 2016

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