Super industry must adjust to gig economy, monetocracy

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17/07/2017

The financial services sector needs to reconsider how and where it invests, in light of the failure of carbon-driven capitalism and the global monetocracy, urges Centre for the Future founding executive chairman Dr Richard Hames.

Unbeknown to the superannuation industry and investment community at large, the traditional way in which monetary value is extracted from what people do for a living – their day job – is crumbling right under humanity’s feet, Hames warns.

Nowhere is the shift in monetary value more prevalent globally, he argues, than in the move to portfolio employment – the ‘gig economy’ – which contrasts with yesteryear, when many people stayed in the same job for their entire career.

“Artificial super intelligence (ASI) will erode many unskilled jobs; even white-collar jobs in medicine, law and beyond are no exception,” Hames says. “This phenomenon has led Finland to experiment with a universal basic income (UBI) to avoid the pressures of maintaining a welfare system.”

Given that virtually all of the money paid as a UBI goes directly back into the economy, Hames expects other countries to follow Finland’s lead. But he says paying people not to work has even greater consequences for how society values human capital into the future.

“It’s conceivable that Australia will have to start addressing these kinds of issues within five to 10 years, and given the likely impact on superannuation, the sector needs to start thinking about it now,” Hames advises.

The futurist, philosopher, corporate strategist and author has been lauded by Forbes Asia as “one of the smartest people on the planet”. Since July 2015, Hames has headed the Centre for the Future, a think tank that aims to foster collaboration to improve the world for all of humanity without ecological damage.

Status quo under threat

When it comes to dealing with ASI and other mega-trends confronting the global economy – including inadequate policy to reduce the impact of climate change – Hames recommends the super industry reframe these risks using better strategic intelligence.

“To move from patching up the present to focusing on the future, super executives need to get out from their own echo chamber and re-examine, A) where their sources of intelligence and influences are coming from, and B) undertake more sophisticated analysis that allows them to reach better strategic outcomes,” Hames argues.

Super executives and their trustee boards have acquired analytical tools from business schools that are now seriously out of date, he says, and urges them to draw on smarter algorithms, visualisation technologies, new dialogical methods, and metadata to improve the quality of their investment decision-making. Given that these tools already exist, he also reminds the sector that it doesn’t need to increase its spending to improve its performance, management and overall governance.

“Making more intelligent decisions is less about disruption, per se, and more about the interruption (through a reallocation of resources) that allows you to see the bigger picture,” Hames explains. “Greater emphasis should be on analysing patterns within trends, anticipatory foresight and the use of visualisation tools, as opposed to ploughing through numbers on a spread sheet.”

Hames cites the banking industry’s moves to reframe its risk appetite for investing in fossil fuels, specifically coal, as evidence the sector is being dragged into the 21st century when it comes to investing ethically. He says Australian politicians are actively pursuing policies voters don’t agree with, making it critical that the superannuation industry clearly understands what it is the community wants; after all, it’s their money.

“Within a global monetocracy, where wealth flows from the poor to the rich, it’s time to finally admit that carbon-driven capitalism doesn’t work for most of humanity,” Hames says. “With some life-critical systems currently in decline, like healthcare and infrastructure, we clearly need to re-energise the system of capitalism, and the superannuation and investment community can no longer afford to sit on its hands.”

Dr Richard Hames will deliver a keynote address titled “What does the future look like?” at the FEAL National Conference in Melbourne on August 3, 2017. For more information or to register, visit the event website.