Tuesday, 5 June 2012

Why can't we see that life is still very good?

We don't know how good we have it.
We Australians have a very good life.

The fundamentals of the Australian economy are very good.  Most people have a job.  Businesses are still profitable. Health care is the best it has ever been.  The quality of our food is high.  So why is there a pall of gloom hanging over us?

We compare ourselves to what we had 

Rightly or wrongly, humans evaluate our state in terms of gains and losses. Rather than looking at how wealthy we are or how much food we have, we instinctively assess whether we have gained or lost.  During the mid 2000s boom, most people had more money (even if a lot was on credit), jobs were very easy to get, asset prices were booming and confidence was high. 

Now, everyone feels like they have lost (unless you are one of the small number who work in mining).  We are all a little behind what we were at the peak.  Oddly, although our logical brain knows that Australia is in a strong position, and much better than the rest of the world, our emotions win the day. We feel the losses. It is those feelings that dominate. 

Unfortunately, our emotions then have a big say in our decisions. Our logical brain says "everything is fine - we have plenty of money, just not as much as 2008".  Our emotions say "look at how much money we have LOST. Let's batten down the hatches."

Sentiment then feeds off itself 

Once the emotions win the battle, the negative feedback turns into reality. People stop spending. Businesses start failing. People lose jobs.

Job hunters queuing for 50 jobs at London Zoo
We can override these emotions. We need a different frame of reference. Rather than comparing to the past, we can compare to other benchmarks. We can compare ourselves to the British or the Americans. These are western nations that we can relate to. 

We need stories comparing the average Briton, or American to the average Australian. We need to see our current state as a WIN not as a LOSS. 

If we don't do something quickly to defeat our emotions, they will make our very fears a reality. 

Let me know what you think

Mark S

1 comment:

  1. Hi Mark,

    Interesting view, not sure people will start to think we are better off, just because we have "lost less" than other countries".

    Probably need to look at why the gloom exists. You nailed it "unless you are one of the small number who work in mining". The latest GDP results were great if you live in WA, what about those in NSW, TAS & QLD who all experienced negative GDP this quarter.
    The feeling of gloom is not just a feeling it's real for most Australians.
    The stats prove it!