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Skin in the Game

The title for this blog has been borrowed from a book of the same name by Nassim Nicholas Taleb, who poses values similar to those espoused in my own book Becoming: accepting one’s own risks and responsibilities.

Having skin in the game, claims Taleb, works better than thousands of laws and regulations to even out the risk/responsibility profile in community, business and government. It is a simple rule that’s necessary for fairness and justice, and the ultimate BS-buster.

Insights offered by Taleb are pertinent to our current COVID situation, when decisions made by “expert” elites are controlling so much of our freedom of movement and operation. At the same time businesses under pressure of failing, with no choice in whether the borders are opened or operations can restart, are expected to fund decision-makers who still have their jobs and income.

Taleb offers pertinent insights such as:

  • Minorities, not majorities, run the world. The world is not run by consensus but by stubborn minorities imposing their tastes and ethics on others.
  • You can be an intellectual yet still be an idiot. “Educated philistines” have been wrong on everything from Stalinism to Iraq to low-carb diets. (We could add COVID-19, Global Warming modelling and University of Queensland’s faceless judiciary committee for its treatment of student activist Drew Pavlou).
  • Beware of complicated solutions (that someone was paid to find). A simple barbell can build muscle better than expensive new machines.
  • True religion is commitment, not just faith. How much you believe in something is manifested only by what you’re willing to risk for it. (Think Climate Change, where costs are borne by taxpayers and the poor rather than decision-makers who often benefit financially)

That Premier Anastacia Palaszczuk has no skin in the game is evident as she keeps Queensland borders closed despite the very low number of people who have the virus in this state and the trend towards suppression in other states.

Palaszczuk has lived all her life on the public teat: her father was a politician; she has worked for the Labor Party; and now heads the Queensland Labor government. The Premier has no experience in business, like Pauline Hanson in a fish and chip shop, risking all financially starting a business and employing staff. She has never had to put her hand in her own pocket to pay a worker. As Premier, Palaszczuk has found it all too easy to add another 30,000 public servants to the payroll, racking up more government debt.

 It is clear that the Premier doesn’t understand the desperation resulting from quarantine measures and border closure, especially for tourism businesses which will miss out on 40% of their usual earnings when southerners are prevented from travelling north for the winter sun and grey nomads are unable to move to warmer climes. No skin in the game! And contemptuous of those who have risked all to create business to provide goods and services, employ staff, make profits and pay tax to keep the Premier in the style to which she has become accustomed. Constitutional challenges may be necessary to change the Premier’s mind.

Strategic decision models

Strategic decision making models that respect all parties are available to the Premier and her elite advisers should they be open to other than political or ideological positions:

  • Maturity Model: Those familiar with my writing would recognise the Maturity Model which can be applied to all situations, policies and circumstances across life. Context is an important basis on which choice, responsibility and expectation are balanced. By increasing expectation and loading responsibility, as the Premier is doing by keeping the border closed, unreasonable expectation and responsibility are loaded onto people and businesses who have no choice. Financial and social fragmentation will inevitably result.
  • Cynefin Framework: (Snowden DJ and Boone ME, Harvard Business Review, November 2007) is a multi-context model that recognises approach to issues differs and different management responses are required depending on whether the situation (context) is simple, complicated, complex or chaotic. Authoritative management is necessary when a situation is chaotic, as with the onset of the pandemic. However the authors recognise the risk in authoritarian management continuing when the crisis (pandemic) is past, leading to greater problems.
  • Multiple Objective Decision Support Systems (MODSS): Values and weighs up various objectives (e.g. health, economy, health system capacity, reliability of supplies, population tolerance of restriction on freedom) to reach decision compromise that will not satisfy every criterion while allowing sensible advancement.

Any or all of the models could inform leadership decision making to achieve far better outcomes than we have received from the daily “expert” briefings.

Inners and Outers

Nowhere are Taleb’s “educated philistines” better expressed than by Matthew Lesh (Democracy in a Divided Australia), whose new elite “Inners” of the technical managerial class dominate public policy decision making in the Left, Right,  academia, bureaucracy and business. Decisions made without input from the practical “Outers” who will be most affected so often fail, yet rarely does anyone accept responsibility, even when it is their job. COVID-19 has brought focus to the disparity.

  • Pandemic modelling which began from an uncertain base predicted worst case scenario to be managed. Generally people complied with sanitation, isolation constraints and closures to enable hospital supplies to be secured. However, as the situation changed and fewer than predicted cases emerged, there’s been a distinct reluctance to revisit the ‘expert’ modelling. Scope creep meant that expert ‘Inner’ authoritarian decisions made by people in secure jobs remained, while ‘outer’ people’s jobs and businesses went to the wall.
  • Ruby Princess debacle is a classic case of having no skin in the game. Allowing 2700 passengers disembark from the cruise liner in the early hours of the morning without abiding by proper health protocols, merely shifted responsibility to the hundreds of people, their families and health workers that had to pick up the pieces in illness, death, care and cost for those who became infected by the virus. No one lost their job. A few tears from a low level operative taking the hit for NSW Health at the enquiry hardly compensates.
  • Closing the borders may have had merit for a short time. Driving local tourist businesses to the wall by extending the closure beyond necessary, while seriously inconveniencing the movement of locals demonstrates a lack of skin in the game. Shutting down normal congress is easy. Doing something constructive is more challenging.

With the intensity of recent bushfires we had already experienced how badly damaging flawed bureaucratic decisions can be when local and state governments failed to undertake recommended clearing of undergrowth causing loss of property, livelihoods, people and biodiversity running to $billions. No responsibility! No skin in the game!

Similarly with the elite policy decision to trade water in the Murray Darling Basin has meant that flows are not available to productive farmers, having already been traded to international interests who do not own land. Again $billions in actual and opportunity cost.

I am sure you all know of instances where the public have been failed by people paid to secure their safety and interest. Tell me some.

Skin in the Game

Estonia recovered from the global financial crisis by every politician and public servant taking a 10% pay cut. Front line health care responders aside, Australia’s recovery from recent crises would be helped if public servants in secure jobs could take a similar cut, to show they have some skin in the game while so many in private enterprises have lost their jobs and businesses. It would more truly show “we are all in this together”. Instead, we have a pay increase of 10% over four years for the 228,000 Queensland public servants in well-paid, secure positions, merely deferred until later in the year – closer to the October election.

While the COVID crisis presents opportunities to reset many parts of the economy, as PM Scott Morrison is attempting, let’s hope that due attention is paid to redress the “koala” protected species status of public sector employees at every level of government. Reduce the numbers, improve the efficiency and effectiveness and expect them to show initiative and responsibility as if they had some skin in the game.

4 thoughts on “Skin in the Game

  1. Lyn Ambrose

    I love it Paula! Especially as I have worked both with lots of skin in the game and absolutely no skin in the game. My thoughts are with all the struggling small businesses whose owners risk so much personally to even open their businesses in the first instance. Well written!!

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