My Reading and Thinking This Week 30 October 2022

 

Inflation Primer
by Greg Jericho

This, along with the BIS annual report below are must read for business executive and strategists. 

Last week at a business conference for the industry I work in, I heard a stock market analyst describe the Reserve Bank of Australia policy of interest rate increases to stop inflation.  It was remarked that interest rate increases would produce higher unemployment which would address the labour shortage we have seen in our industry.  Every time Philip Lowe lectures business and workers on the perils of wage growth, I ask myself, "Why does he keep saying that?"

He does this because the BIS low inflation regime was knocked off balance.  Government power grabbing during Covid is positively correlated to business profit taking in the reopening period.  Working families have paid the price on both counts.  

I began tying the clues together while sitting up in Noosa listening to the very good analysis.    

Having just led the operations and sales of a substantial company through a pandemic event which was very likely far overblown by power and profit takers, I have been focusing my reading and thinking on RBA policy and the pain it is causing hard working families in Australia. I need to understand RBA policy as a business leader and academic.  Many articles I am reading this week are the root causes of the current economic situation in Australia (and America).  They have nothing to do with the narrative I have been seeing in the business press and trade association economic outlooks.  We need to exit the echo chamber and think afresh.   

Greg Jericho says:

There is no evidence at all that a tight labour market, rising wages, or labour costs more generally have anything to do with the surge in inflation since the COVID pandemic. To the contrary, the evidence is clear that wages have had a dampening impact on inflation in this period. Recent inflation is clearly associated with a further expansion of business profits in Australia, to their highest share ever. Attacking inflation by aiming deliberately to increase unemployment and restrain wage growth even further, is a “blame-the-victim” policy that will only make workers pay even more for a problem they clearly did not create.

The current surge of inflation reflects a “perfect storm” of unique factors (mostly global in nature) sparked by the COVID pandemic: which has been, after all, the most dramatic and painful event in the world economy since WWII. It should hardly be surprising that after-shocks from those events will be felt for some time, and the surge in global inflation is clearly one of them. Responding to this unique and unprecedented challenge by simply reciting a monetary playbook formulated in a fundamentally different era (the inflation of the 1970s) is not just inappropriate. It will, if pursued, lead to a painful and unnecessary global recession that will almost certainly engulf Australia, too.

For all these reasons, the Reserve Bank and the Commonwealth government need to take a more careful, balanced look at the nature, causes, and consequences of the upsurge in inflation since the pandemic, before leaping to conclusions that are unjustified – and imposing policy responses that do more harm than good.

Bank for International Settlements Annual Report

Read what the central bank to the world's central banks has to say about inflation.  It is not the narrative the business media is peddling.  The BIS, writing from the central bankers point of view, clearly prefers a situation that is more manageable, in other words a low-inflation regime in which labour (along with other price-setters) is disempowered. 

A low-inflation regime has significant self-stabilising properties. What is measured as inflation is, in large part, the reflection of relative or sector-specific price changes that tend to have a transitory impact on the inflation level. In such an environment, inflation has little effect on the wage and price formation as it loses significance as a factor influencing behaviour. Central bank credibility is instrumental in hardwiring the regime and increasing its robustness.

High-inflation regimes do not have such self-stabilising properties. Inflation becomes a focal point for agents’ behaviour and wage-price formation becomes more sensitive to relative price shocks. Higher inflation, in turn, induces changes in more structural features of wage formation, such as indexation and centralised wage bargaining, which help entrench the regime. It also undermines central bank credibility, further unmooring the inflation process. The experience with the oil price shocks of the 1970s illustrates the mechanisms at work.

Because of the sensitivity of agents’ behaviour to the level of inflation, transitions are self-reinforcing and hence challenging. They are challenging for the models typically used to explain and forecast inflation, which are ill-suited to capturing such behavioural changes. And they are especially challenging for policymakers, because of endemic uncertainty and the possibility of tipping points.

The under the hood perspective sheds light on how monetary policy can best secure a low-inflation regime. The perspective underscores the importance of navigating the transitions and the associated difficulties. Transitioning back from a high-inflation regime can be very costly once it becomes entrenched. All this puts a premium on a timely and firm response. Central banks fully understand that the long-term benefits far outweigh any short-term costs. And that credibility is too precious an asset to be put at risk. 

The highlighted portion explains the actions of the Reserve Bank of Australia.  I recommend that business leaders should start with the big economic picture to interpret their industry and local situation.  This means start with the BIS view above.  Next, you can work your way down to your country reserve bank monetary policy.  Then, understand geopolitical and government fiscal policy.  Commercial banking is driven by monetary and fiscal policy.  Businesses that understand their position through the lens of all these economic drivers will be best situated to devise the right strategies to chart their course.  This is how a true external SWOT analysis works, finally ending up with understanding your local competitors.  If they do not understand the larger economic forces at work, their strategies will not be as profitable as those that do. 

There are some real head fakes going on right now.  Page 77 is a do not miss chart!  

Under the Hood of the Power Dynamics of Inflation 
by Adam Tooze. 

This article ties together BIS views to reserve banking messaging. This is where to learn about the low inflation regime objectives.  Bankers have discouraged wage growth to keep inflation managed since 1993. The decrease of worker collective bargaining power is well known.  Inflation rising causes collective bargaining resurgence. 

As the money supply was astronomically increased during Covid, we saw inflation begin.  Price setters (corporate capital) started raising prices because consumers had money to spend.  Now, the RBA is concerned workers will want wage increases knowing they are paying more for gods and services, and their employers are making larger profits.  What we have right now is a first round price shock.  The central financial and social planners do not want a second-round reaction.  This will lead to companies further raising prices.  

Grow Wealthy By Investing in Assets

Click here to listen to my latest "Peak of Potential" podcast.  

I have discovered that those who have been building their income by working for others often do not stop to consider that the owners of assets, those who they work for, are actually getting wealthy while they are not.  This podcast helps people stop and think how wealth is produced, and calls for a change on mindset to start thinking about growing wealth, not being the means to another person growing wealthy. 

 Summary:  Today we discuss how to grow wealthy by investing in assets.  Kevin Baker leads the Peak of Potential Nation on the path to wealth, freedom, and living the life you desire.  It starts with changing your mindset from being a wage earnng empliyee to being an investor in assets.  This episode equips the everyday income earner with knowledge how to build assets and wealth.  

Please review us on iTunes so others can find us! Visit the website to learn more. Thank you for sharing the podcast with others.

In this episode you will learn about wisdom and wealth in 2022:

1. Grow wealthy--Why do you need money?
2. Grow wealthy by investing in assets. Three properties and classifications of assets.
3. Grow wealthy by investing in assets. The difference between income from a job and alternative income.
4. Grow wealthy by investing in assets. 

Our expert, Kevin Baker, defines an asset as something that, in the future, can generate cash flow for you. Assets make money. Anything that takes money out of your pocket is a liability.  Kevin is a former CFO who managed the investments of a 900 yearol non-profit.  He has studied the masters of value investing inlcuding Warren Buffet, Seth Klarman's "Margin of Safety" (which he owns), Bruce Greenwald, Christoper Brown, and others.

Wealth Scale

• Novice/Poor – You’re poor if you have a lot of liabilities and need to keep working to maintain your lifestyle. People can be poor even if they have great income. Unfortunately, most Americans are stuck here most of their lives.

• Amateur  – You have been investing for a while and own some good assets. If the value of your good assets is more than 50% of your net worth, then you’re firmly in this class.

• Financial Independence – This should be the goal for everyone. Once the income from good assets, aka passive income, surpasses your expense, you can retire and live life the way you want.

• Generational Wealth – This is beyond financial independence. You have plenty of income from your investment to keep reinvesting. This way your wealth will keep growing and you can pass it on to the kids. That’s generational wealth.

Connect to Kevin Baker at https://www.kevinbakerinc.com/
Join the Peak of Potential "On Life" Facebook Group.

The Peak of Potential Podcast is a media publication of Kevin Baker Consulting, an Australian media and consulting group with offices in Sydney.

Business Speakers in Australia Last Week

I had the opportunity to spend a few days in Melbourne, Victoria--Australia last week.  Where I work by day, we are members of several buying groups.  This trip was to Plumbing Plus University.  A time each year for plumbing and bathroom supply companies to gather together for professional development and networking.  

All the speakers this year were very good.  First was Simon Kuestenmacher.  His talk was on the present and future of Australia by the numbers.  As a Gen Xer, I was interested in learning the outlook on my demographic X, my wife's Y, and my younger children as Z and α .  Simon, co-founder of The Demographic Group with partner Bernard Salt, was dynamic, well researched, and interesting.  

Next up was Steve Simpson dealing with workplace culture.  His presentation focused on UGRs--unwritten ground rules.  Simpson says:

Most of us have been to a meeting where, upon conclusion, the real meetings begin. Typically, people reconvene in smaller groups to canvass a range of issues that can include displeasure at a decision that has been made, lamenting the attitudes of one or more people who were at the meeting, or planning a strategy to work around a particular outcome.

It’s often the case that those most vocal after the meeting are least likely to have spoken up during the meeting.

So what’s causing this?

We propose that it is the UGRs – or unwritten ground rules – that drive people’s behaviour in organisations. UGRs are defined as people’s perceptions of ‘this is the way we do things around here’.

Read more about UGRs here.  

Last up was Colin James, of The Colin James Method. His talk on performance and engagement was contwent rich, well presented, and one every company needs to hear.  This is a man whose message resonates with a person like me.  I have been in business leadership for 30 years now.  I am a lifelong learner, driven by a passion to transform every business I am affiliated with into the high performing championship team.  

Sample Colin's work here.  He is great.  

Monday Reading and Thinking

What I have been reading and thinking about today...

How Many More Times Will You See Your Parents Before They Die?  #Idea  Americans place a very high value on family.  When travel the world like me, you realise other countries do not value family in the same way.  Everywhere, though, we think our parents will always be there.  Then one day, they are gone.  My father passed away from cancer at just 51 years young.  As I kissed his forehead in Buffalo General Hospital that cold February afternoon, shockwaves of grief began to pour over me. I had never kissed my Dad as an adult.  I cried for three days.  Twelve years later, on the anniversary of his death, I was telling a Catholic monk at a monastery "today is the anniversary of my father dying."  The grief and sadness hit me again.  I told him I regretted not seeing him more before he died.  I was so busy at 31 raising my own four children. 

Recently, I was playing kiss monster with my three middle age children. Yes, I had children again later in life.   I chase then around the house making monster noises, then catch them and instead of eating them, I kiss them ten times.  I turned to my wife and said I could not recall my father ever kissing me or telling me he loved me.  I am sure he did when I was a baby, but after four, I cannot recall one instance of love or affection.  As I said that, I felt that old wave of regret that I did not take more time to be with my dad when he was well, and especially when he was sick. This article is about the few days we actually spend with our parents as adults (Big Think).  < Click

Wy We Must Fight Back Against The Forces of Woke.   #society   At work, I park in the Council car park at the oval (stadium) where the Manly Sea Eagles play footy (rugby). When seven players did not want to be forced to endorse a particular ideology, the were excluded from playing. What happens when "diversity" means uniformity, and "inclusive" means exclusion.  How can a multicultural society like Australia have uniformity on the big issues of life and justice?  (John Anderson). < Click

The Chatter Toolbox. #Productivity   Chatter is a common problem that many people experience: We try to think through our problems logically but our minds run amok instead. We focus our attention inward, hoping to tap into our inner coach, but find our inner critic.  (Ethan Kross, The Chatter Toolbox). < Click

Be sure to check out Kevin's podcast, "The Peak of Potential."  Kevin Baker is an Australian-American business executive in Sydney.  His side gigs are media publishing as an author and producer of an internet TV show, and consulting as a futurist and strategist.   He specialises in family business, and advises executives on business growth and reinvention strategies. 

How To Know Who We Really Are

By Kevin L. Baker

Have you ever felt like you didn't know who you really are? I have felt this way when I was young and figuring out who I was. "Finding yourself" and having an identity crisis were common back then. I really do not hear much talk like that these days. Then, at midlife, everything I thought was stable crumbled, even though I had done everything possible to have a stable marriage, family, and career. Lesson: Some things you just cannot control.

Then I discovered what it means to reinvent yourself. After living my whole life in America, mostly in Western New York near Buffalo, I ended up reinventing my life in Sydney, Australia. Now I live out on a peninsula near the sea.

I got married again, and had three more children. A new beginning, a new country, a new family, and continued growth as a business leader. That last one took some adjustment to learn the nuances of international business.

I believe one of the most important questions—perhaps the most important—is “Who am I? This is the core question we all eventually ask.

I imagine this particular question has been with human beings since conscious awareness first appeared in the minds of our most ancient ancestors. A long time ago, a wise person told me you see who a person really is when they are under stress. Another wise person, Jim Selman, came up with an idea that we can know ourselves in five basic relationships.

I am my relationship with myself (my inner conversation). 

I am my relationship with other people. 

I am my relationship with circumstances.

I am my relationship with time. 

I am my relationship with whatever is beyond my understanding (a.k.a. the mystery of existence). 

 When We Don't Know Ourselves Fully

At one point in my life, I didn’t know who I was/am. I was lost and wandering through time searching for purpose, identity, meaning, and what I should do with my life. I was married at a young age and had my first child at 21. I was a family man.  Husband.  Dad.  At that time, when I thought of who I was, I mostly found my identity in being a family man. My confidence, my behaviours, values and priorities changed when I got married and had children. 

I was also working in business by day because being a clergyman doesn’t always pay the bills.  I had grown up the son of an entrepreneur who started his own business. I was highly entrepreneurial and started two non-profits, then two businesses.  So while I was raising four children, I worked in business by day moving up the ladder through middle management to senior management, and working in my non-profit labour of love work. 

In our twenties, many of us try a lot of things, and then narrow it down to something that we think is what we are meant to be and do in life.  When we get there, we can think, I am that. Man of us at one time will think, “I am my career.” When we do, everything from my confidence and my behaviors to my values and priorities revolve around that belief. How many times do you meet people, and they ask, “What do you do?”  In that question, people might think of who you are as what you do.  Who we are is much more than what we do, isn’t it?  

At twenty two, I had started a college education at Houghton College. However, balancing the class load with work and family caused me to pause. I have often repeated that scenario doing many things all at once. 

Two years later, I moved from New York to Missouri and restarted my quest for education at what is now Evangel University in Springfield. I decided to go to university to learn how to think.  If you read my writing for awhile, you will learn I read, I think, and I write about it. I attended a seminary to study theology and philosophy. Looking back, that degree did not have had the highest probability of a sunstantial return on investment. One day, I will tell you about the Diamond-Water Paradox and show you why people who want to help people never get paid well. I did not think like about ROI on education back then. I did not look at the value of a university education as an outlay of an initial outlay of a cash investment that would generate future cash flows. I developed that outlook when I got an MBA and moved from an idealist to a realist financially. 

My liberal arts and divinity education, though, prepared me well for what was ahead. Philosophy taught me how to think and live a good life. Divinity taught me the about the nature of reality, objective moral truth, how to live a holy life, hermeneutics (the science of interpreting literature), ancient Greek language, public speaking, writing, and much more. 

All of those skills have served me well in my life of founding non-profits, businesses, and executive life in businesses. Later, as I mentioned, I added a Masters of Business Administration (MBA) degree to my Bachelor of Arts. These two degrees provided me a great starter toolbox of capabilities to build a life and vocation with. 

Once We Know Purpose, We Start To Have Peace 

I often translate to people outside of faith that clergy are life coaches, spiritual advisors, community organisers and builders, and they connect people to one another and the mystery of life. 

My inner and spiritual life development told me at that point in time that I was supremely loved. I didn’t have to strive for approval like I did as a teen and twenty something.  I didn’t have to please people,or feel the hurt of rejection.  My search for significance ended.  I was significant because one version of me was created. 

Personally, I was accepted just as I am, and I experienced peace. Little did I know this was laying the groundwork for something larger that would come down the road. As I had a sense of purpose, in my thirties I was accomplishing and achieving, and still finding meaning in what I do, more than who I am.  

The whole concept of human doing and human being began emerging. We are much more than our achievements. I made many good choices, and also some bad choices through the years.  That is how you gain knowledge, experience, and good judgment.  Trial and error plays a part in life, as does learning from others–trusted elders, mentors, coaches, professors, and friends.  

With each new declaration or understanding of myself came new interpretations of what I had learned or experienced in my life up to then, as well as new insights and possibilities. Today, I have another answer about who I am. It is the understanding that comes from a lived life. 

I think many of you are searching for an answer to the question, “Who am I?” Now, in later midlife, my answer to who I am is one which I believe, while not definitive, can be universally empowering. It is obviously not the only interpretation or “truth” about who we are.  

The Five Relationships That Define Who We Are

I believe we are at the core defined by our relationships. I learned this concept from Jim Selman, an executive coach and writer who has impacted my life. With his principles as a foundation, I have developed my own thought on how to flourish in life by truly knowing who we are.

Let’s look at these in more depth today, and in future articles.

I am my relationship with myself (my inner conversation). 

There is a continuous conversation going on in everyone’s head. Have you noticed you spend alot of time, energy, and attention having a talk about meaningless, unimportant matters inside your own head? This conversation goes on from the moment of waking until falling asleep. What is the inner conversation?

It is the process of asking yourself questions and answering them. It is the process of repeating words and thoughts in the mind. It is the little voice in your head that comments on your life, circumstances and situations, and on other people. Our self-talk can be cheerful and supportive or negative and self-defeating.

Self-talk can be beneficial when it’s positive, calming fears and bolstering confidence.  Human nature, unfortunately, is prone to negative self-talk, including sweeping assertions like “I can’t do anything right” or “I’m a complete failure." For others, their self talk is full of grandiose ideas about themselves!

Our inner dialogue continues while working, studying, reading, watching TV, talking, walking and eating. There is a constant activity of judging of people, commenting on what is going on, planning, desires, gossiping, and conducting mental conversations with people you know or don’t know. These inner talks create a snowball effect. The more you conduct them, the more you become chained to them, unable to stop them. That is why healthy inner dialogue forms our relationship with ourself.  

Our relationship to our inner thoughts and talk is part of who we think we are.

So, is inner speech just thinking? Thinking means everything the mind does. A certain category of thinking that we call verbal thinking, inner speech, the stuff that we do in words.   When emotions are experienced in our self talk, more power, energy and attachment are added.  This has an adverse effect on the behavior, judgment and general performance of our outer self.

On many occasions, the inner dialogue is negative, and strengthens any negative attitude or behavior. Sometimes, it is a dialogue with ourselves, and sometimes, it is just a monologue. Most people do not have enough faith in themselves and in their abilities, and therefore, they allow their mind to engage in negative inner dialogues.

How To Silence The Inner Critical Voice

The process and effects of these inner conversations are similar to repeating affirmations. Constant thinking about the same subject, affects the subconscious mind, which consequently, accepts these thoughts and words and acts on them. This is our relationship with ourselves in our self talk.  

Negative inner dialogues create negative results, and positive inner dialogues create positive results. That’s why you should switch to positive self talk. It’s simple. If you fill your mind with negative dialogues, you start expecting negative results, lose motivation and avoid taking action. On the other hand, if you keep conducting positive dialogues, you become a more positive person, seek opportunities and take action.

Many of us have had to deal with the voice inside that drags us down. Every human being possesses one of those inner voices to question, doubt, and challenge their dreams, aspirations, and sense of self. It’s a survival mechanism our ancestors needed to keep them safe from wild animals or big natural disasters, but in modern-day society this voice has evolved into this untamed inner beast that can often encourage us to shy away from greatness. 

But how can we step away from those negative patterns and turn our inner dialogue around? If we’d never speak to a friend in such derogatory ways, we should certainly not be speaking to ourselves like that either, so how do we take back control and learn to quiet the inner critic down? 

Drawing upon my divinity edcuation, the ancients wisdom of Job says, "If only you could be silent! That’s the wisest thing you could do." Some of you know I ran the business affairs of a Catholic monastery for ten years. The Rule of St. Benedict requires living by the work of one’s hands, not by donations. In the monastery, I learned to practice silence, and think deeply with a clear mind. The teachings of John Cassian, Thomas Merton, and others taught me to be still and listen.

We typically have anywhere between 60,000 to 80,000 thoughts each day and quieting our turbulent mental environment creates the blank canvas upon which to paint a positive internal conversation. When the mind is still it becomes a fertile field that is receptive to the seeds we plant there. In addition, meditation cultivates our witnessing awareness and helps us pay attention to our mental commentary and its contents.

Here are a few ways I learned to quiet down the inner turbulence and anxiety that can dominate our inner conversation.

LEARN TO TO GRATEFUL

Fix your thoughts on what is true, and honorable, and right, and pure, and lovely, and admirable. Think about things that are excellent and worthy of praise. Being thankful and grateful re-orients us and combats anxiety. Try repeating the statement, I am so grateful for _____,  By doing this we create positive momentum in our internal dialogue.  Focusing on what’s good or uplifting in your life also conditions you to stay vigilant in looking for more of the same gratitude-worthy experiences to come into your life—or as the saying goes, where attention goes, energy flows.

LEARN TO FOCUS ON THE POSITIVE 

Negativity is easy, and it is everywhere. Our brain has a negativity bias—an actual tendency to notice negative situations and events more easily than positive ones.  We inherited this neurological artifact from our ancient ancestors who, due to their constant survival mentality, had to always be on the lookout for danger or anything that would put their lives at risk.

Negative energy can be contagious and pollute the internal dialogue with fear, anger, and other dense mental states. While we can’t avoid all negativity, being consciously aware of refocusing our attention away from the negative and toward the good can have a powerful effect on our internal dialogue.

Moving to a new country caused me to discover that my controlled life back in the USA was more predictable which caused me to not worry about survival.   When I went through what I call my period of great sadness and loss, my inner dialogue became distressed leaving everything familiar into the unknown.  Immigration. No one knowing me. No work network.  I still have to take one day at a time and fighting negativity helps me to enter peace.

 

FIRM UP THROUGH THE POWER OF MENTAL EXERCISE

Positive self-talk statements that can help to reprogram your subconscious mind and internal dialogue toward a more constructive mental environment.  To “affirm” means to make firm that which you wish to be true or experience.  Affirmations help us replace our old, stale, or obsolete mental commentary with new and more inspiring ideas.  With regular practice and exercise, we learn to keep your attention on what you we want rather than what you don’t.
 

LEARN TO LIVE A LIFE OF PURE SPEECH AND BEHAVIOUR

“It's not what goes into your mouth that defiles you; you are defiled by the words that come out of your mouth.”

What our heart is full of comes out of our mouth and our actions.  Speech and behavior are natural outcroppings of your internal dialogue.  In a similar way, your actions and speech reinforce your internal dialogue.  

When you consciously choose to practice impeccable speech and behavior, your internal dialogue will automatically become more positive and refined.  Being impeccable means behaving in accordance with the highest standards of propriety. In essence, it means being unimpeachable and without fault.  This can be a tall order and while none of us are perfect, we can continually aspire to carry the spirit of impeccability within us, refraining from anything that could be potentially considered hurtful to others.

 

LIVE OUT OF OUR TRUE NATURE

One of the challenges of being an executive in business is the politics and cut throat egotistical environment many business people cultivate.  It makes me take on what I think of as my lower nature to be in the jungle.  It becomes very easy to lose ourselves and forget our true nature as those who a born to thrive and have an unbounded spirit.  We feel localized in the world of positions and possessions, roles and titles. However, this is not who we really are. 

This is where we started.  How do we answer the question, who are we? 

When we identify with our true selves we have the instant recognition that we are free from limitations, that we have spontaneous knowing, and that we exist in a state of complete fulfilment.   Mastering our inner dialogue is an every day, lifelong development.   

In future posts,I will share about the other relationships that define who we are.

The New Roaring Twenties

The Time Is Now To Start Your Own Roaring Twenties  

The Once in 100 Year Opportunity--The New Roaring Twenties
Rapid industrial and economic growth, accelerated consumer demand,
and significant new trends in lifestyle and culture.

by Kevin Baker

It is not just the changing of how we work for companies that has changed during Covid.  It is not just about Zoom creating the work from home movement.  It's not about the Great Resignation.  The current massive quit taking place globally is an incredible event which will likely go down in history as a major turning point as big as the beginning of the industrial age, the 1970s freedom movements, or the information age.   

The unintended consequence of government policy worldwide is a reversal of the economic relationship between those who own assets and balance sheets, and those who are a labor expense line on their profit and loss statements.  

The current problem some businesses are having getting workers to replace those quitting their jobs did not happen overnight.  After many years of a low growth rate of wages compared to the growth rate of productivity and corporate profits, millions of lower paid workers are simply not returning to low paying businesses.   

During Covid, low wage workers reconsidered their careers.  As people making low wages were put out of work by government policy, or decided the risk of facing the virus was not worth their low pay, people began quitting work.  While forced to not work by government Covid lockdowns and stay at home, people re-discovered their love of family, hearth, and home.  They realised work-life balance is a myth.  Being locked up in homes against their will caused them to invest in their homes, home-based business, and mothers who want to homeschool.  

In the post war period, government social engineering fuelled the idea that women were not being treated equally and should go to work.  Double incomes produce double taxes for government coffers.  Women left their children with daycares and government run schools to pursue careers.  Covid lockdowns caused a great awakening.  Mothers love their children, they love mothering, and they have had enough with fuelling government tax coffers at the expense of family. 

Holy Family with an Angry Baby
Brian Kershisnik Art

The Data 

Barry Ritholtz shared these St. Louis Fed charts in his blog (which is one of my favourites):

The first chart shows those at the lower end of the income scale will no longer work for low wages.  The second chart shows that white collar, professional and business service jobs, are not quitting.  Companies with a business model requiring low wage workers are having a very hard time finding workers.  This is permanent, not temporary.  When governments around the world decided to pick winners and losers, the unintended consequences of putting health over the economy created an 18-month mega shift they cannot control.  

As an American living and working overseas in Sydney, I have watched the Covid situation unfold in both America and Australia.  Living through some of the most restrictive lockdowns in the world here, I watched government decide that some businesses and workers were essential, and others were not.  I watched businesses built on savings, hard work, and investing all an entrepreneur had destroyed by short sighted government class elites.  I watched people put out of work supported by small government support payments reinvent themselves.  Teachers, pilots, managers, business owners, workers of all kinds, were put out of work losing everything while government agencies cut no one.  These people decided they would not go back to the way work was before Covid.  

The Re-Opening: A New Era Begins

People have decided enough is enough.  While some protest in the streets, others have decided to no longer be in the lower class.  While governments played with their lives, those suffering decided to upskill, get certified, pursue degrees, find new fields to work in, launch new apps, and decide to build their own businesses.  They shrugged at government, and kissed work as it was goodbye.    

I did quite a bit of reading about the 1918 flu pandemic.  As the world cautiously emerged from The Spanish flu, a worse pandemic than Covid, The Roaring Twenties followed.  New technologies such as radio and indoor lighting emerged.  A new post WWI pandemic world emerged.    

During the four-month lockdown in Sydney, I began sharing with people here that I saw an increasing likelihood that the government decisions were creating the conditions for a massive economic realignment.  Before Covid, talk of universal basic income and AI putting many people out of jobs was the futurist outlook.  What they missed was how converging forces present in the economy for decades would become an emergent black swan.  

In her comments on career plateauing, the late Judith Bardwick put it this way back in this 2013 interview with The Worcester Polytechnic Institute's Robert A. Foisie School of Business: 

After World War II, Bardwick said, career advancement seemed limitless, as American industry grew, the birthrate was still fairly low and “those who were committed to success, walked into the most expansionary period of corporate growth in history.  "Few people at the time had college degrees, until the federal GI Bill created an opportunity for many, especially men, to graduate from college. At the same time, “companies developed the desire to prevent unionization by employees,” Bardwick said, “and the idea developed that if you treated your employees marvelously well, they would make a commitment; productivity would increase and employee retention would be high.”

So companies gave employees a lifetime commitment and “employees formed the fundamental expectation that there is no limit to what you can become,” she said. “The American dream Bardwick was realized to an extent that could not now be duplicated.” Companies became multi-layered and bureaucratic, creating many more management positions than were needed, but also creating opportunities for promotion. Government programs also multiplied. As the baby boomer generation grew up and the economy hit several recessions, many more employees were competing for fewer high-level jobs. Baby boomers plateaued before they expected, too, since there are only a small number of jobs at the top of corporations.

As economic conditions changed, companies downsized and outsourced. As a result, she said, “everyone has become a business of one. That’s why we must ask ourselves, ’What do I have to offer that someone would want to buy? What can I do that will get someone who pays me closer to their goal?’ ”

“It’s very different for the millennials, because the situation is the reverse of what it was after World War II,” she said. “In reality, this group is facing a lack of opportunity.” In spite of talk about the improving economy, employment conditions remain recession-like, she said, adding that economic societal changes, government policy and personal attitudes share the blame for poor employment conditions. Around the world in developed economies, significant growth is very scarce and the opportunity for greater success has declined. Many young people feel cheated of the opportunity they expected to have.

Where government and business failed to correct imbalance for decades, the unintended consequences of government health policy during the Covid era has opened the door to a new Roaring Twenties.  The GDPs of economies are growing at rates not seen in decades.  Consumer demand is outstripping the capability of supply chains disrupted by labor shortages and Covid regulations.  Lifestyle and culture around the globe is rapidly moving away from what existed pre-Covid to a new, better society where families, children, and meaningful work has voted with their feet and quit work and society as it was.  

Government planners, economists, academics, and business did not see this coming.  Black swans, native to where I live in Australia, are beautiful to see.  Of course, looking back, we can see how what I call the Great Reversal happened.   After WWII, the social contract called The American Dream exchanged a job for life that could buy a house and college for the children, for a commitment to a company. Over time, the contract was broken.  Lack of opportunity, low paying Walmart-style jobs, the gig economy, and children with high college debt ruining their lives has finally been disrupted.  

We are about to see a new future of leadership in the world.  Like Atlas Shrugged in Ayn Rand's world, workers in the Covid world shrugged at government and business, and simply quit.