#statusquo

Japan lets in 42 refugees in 2018

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Japan is often criticised for its ‘heartless’ stance on refugees. Last year, the country let in only 42 refugees or 0.4% of those that applied for asylum. In 2009, 1,389 applications were made with 30 refugees granted status. In 2017, 20 positions were granted despite applications peaking at 19,629. Last year 10,493 applications had been made. Japan is not a signatory to the UN Global Compact on Migration.

Japan is probably one of the most successful monocultures around. 98% of the population is Japanese. It has low crime, next to no religious-based terrorism and takes a stance that all foreigners should assimilate with the culture or they will be sent home for non-compliance that breaks local laws. Japan is not interested in virtue signaling. Social justice warriors who hurl insults ignore the importance Japan places on protecting its societal values.

CM wrote last week how Germany is suffering from growing civil disruption for not protecting the culture. Japan has similar demographical challenges as Germany but the former is looking for solutions that point to more robotics and highly selective screening.

Japan still has issues with crime but the government understands that the citizens do not want a disruption to the status quo. Having lived there for 20 years it is patently obvious why they have no interest in an open doors policy.

To learn more about crime in Japan refer to:

Pensioner Crime

Breakdown in the nuclear family

Yakuza

Terrorism in Japan

If the status quo is so good why would we vote out the incumbents?

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Almost everywhere we look, we’re told by the political class how good our lot is. Our blessed Aussie PM told us, “It has never been a better time to be an Australian.” Boosted asset prices, low unemployment and tepid inflation gives the illusion of real wealth for everyone. As an electorate, if all of that were true, why wouldn’t we be going out of our way to make sure the status quo gets voted back in with similar if not greater majorities? As it stands, more and more incumbent parties are hanging on by their finger nails, being forced to create alliances to stay in power rather than stick to the principles their parties were founded on. The irony is that these grand coalitions are formed on the tenets of ignorant ‘un-populism.’

The latest election cycle shows us that a growing number of people aren’t buying mediocrity. They’re sick of incumbent politicians ignoring them. The current crop of leaders seem to think that being less worse than the opposition is a virtue to be proud of. Yet poverty levels continue to rise and wealth is not trickling down to the masses. Even rising state entitlements have a finite life and the electorate knows it. Being married to the government is not seen as a desirable strategy long term. Deficits keep rising and look increasingly hard to pay down.

Searching through the St Louis Fed database, civilian employment under Obama managed to grow 2.5% on pre-crash levels. So the US loaded up on $9 trillion in short term debt to create 4 million net new jobs. That works out at $2.25 million per worker. Hardly an achievement. Yet despite that economic growth has dithered at the lowest post recession rates ever. As much as we might want to celebrate record low unemployment these are not proud statistics. The quality of jobs keeps going down. $8.4 trillion of this federal debt load needs to be refinanced inside 4 years. $12.3 trillion inside 10 years. While politicians can call the average voter stupid, the daily struggles of the average punter shows how out of touch the law makers are. This was the grand mistake made by Clinton. While she hung out with her elite mates at $1,000 plate dinners in Democrat strongholds in LA, NY and Chicago expecting a coronation, Trump hit the little people and had crowds flocking to see him.

While Trump’s trade tariffs seem daft on the face of it, it was done for the forgotten people who voted for him. He is not concerned about the consequences. That’s the point. So much of his platform appears abhorrent but he is the only politician in danger of being raked over coals for keeping his promises. That’s why he was elected. The status quo had failed to deliver over decades. 80% of the population didn’t benefit from the asset bubble post GFC. The 1% took 42% of those gains. The average Joe and Joanne see this. While they might not fully comprehend it they know enough to see their situation is not much better.

Take a look at Trudeau’s India debacle. Apart from the embarrassing wardrobe saga, the bigger problems came when he blamed the Indians for letting a known terrorist attend a state dinner. The Indians, unsurprisingly, were most unhappy at the accusation. Many look to Trudeau as the posterchild of the left, pushing peoplekind. Telling Canadians that he will convert returning ISIS fighters with haiku poetry, podcasts and comparing them to Italian migrants at the end of WW2 is utterly preposterous to his constituents. Telling his veterans they’re asking for too much flies in the face of love of one’s country. No wonder his popularity continues to dive. His speech to the UN – where he rattled off how Canada was ticking all the UN diversity boxes – was only a quarter full. Not even his own liberal mates rallied to show unity in numbers. It was telling that virtue signalling is all about appearing to do good rather than doing it.  Yet the day before Trudeau presented, Trump spoke of America First and the audience was packed. They might have hated every word that dripped from his tongue but they didn’t miss it for the world. It is hard talk. Not carefully prepared politically correct nonsense.

Take the recent European elections. Germany gave Merkel the worst ever performance of the CDU post WW2. The SPD was even worse. The anti-immigrant AfD stormed to 16%. Is it any wonder that when Merkel’s misguided altruism  showed up on Election Day even she finally conceded we have a problem with “no go zones”. Some may wish to look at the Merkel miracle of growth and low unemployment but the public service in Germany has exploded from 9% pre 2008 crash to 16% today. Not private sector growth but public sector.

The Italian election showed over 60% of the vote went to eurosceptic parties. While volatility has always been a feature of Italian politics, this results showed the discontent underbelly of Italy which has seen poverty jump 50% to one third of the population since Lehman collapsed. While M5S said it wouldn’t form a coalition, all bets are off if it tied up with League. There are plenty of overlaps on the party platforms but the M5S would have to insist on the PM role. The EU would go into a tailspin on such news.

Austria voted in a wunderkind who put the right wing anti immigrant FPO in charge of immigration. Holland saw Wilders claw more seats. Nationalist Marine LePen in France doubled the number of seats ever attained by the Front National. Even Macron is changing his spots looking to introduce national service and take a harder line against migrant crime.

Whether the real statistics of migrant crime are wholly accurate or not is beside the point. It is increasingly seen as an election issue and more EU countries have had enough. They feel their lot is getting worse and view forking out billions in aid for people to settle here is pennies out of their pocket. If the stats are as the government sugar coats them to be in terms of the prevailing prosperity surely the citizens would overwhelmingly back them. Sadly the opposite is true meaning politicians aren’t selling their “compassion” effectively. Too many examples of gagging the police and muzzling the press have surfaced.

That is the thing. If the economy was rosy and bullish and more people felt secure there is a likelihood they would look at the immigration debate in a more positive light. All they see now is millions flocking to Europe as poverty is on the rise and the economy is on the back foot at ground zero. European EU-28 GDP hasn’t grown since Q4 2015. Despite a quadrupling of ECB assets net jobs created post GFC numbers 4 million, labour force participation remains below the peak. However we should not forget that Romania and Bulgaria joined in Jan 2007 and Croatia in 2013 which would add (at a 50% employment ratio) c.20mn meaning that employment in the EU on a like for like basis as a whole is down 16mn jobs ceteris paribus. Even if only Croatia was included then net jobs creation in EU-28 would be a paltry 2mn, or a smidgen above 1%. Anemic.

Yet the political class still doesn’t seem to be learning, especially the EU. Poland and Hungary have formed a pact to reject proposed quotas on migrants. The EU has failed to address the most important question. The wishes of the migrants themselves. It is one thing for the EU to appeal to voters as saving asylum seekers from war torn lands (when 80% are economic migrants by the EU’s own numbers), it is another to forcibly send them to countries that flat out don’t want them. Ask for a show of hands of asylum seekers looking to stay in Germany or head off to Hungary to settle and the likelihood is 100:0. Trying to make Hungarians or Poles feel guilty for being incompassionate is a price they’re clearly willing to pay with losing EU membership. Would we take kindly to a neighbor telling us how to arrange our furniture in the living room or sign a petition to prevent us building extensions even though it is not even in their way? Of course not. Still wagging fingers in disapproval is only likely to steel their resolve.

Flip to the Southern Hemisphere and Australian politics is also exposing the sordid state of the swamp. 5 PMs in 10 years. Now the Deputy PM has had to resign to the back bench and in a last ditched effort to claim some sort of moral high ground with the staffer he was having an affair with. He claimed he would still look after her even though a paternity test might show the kid wasn’t his. What a grub and a slap in the face for his partner to imply she may have been promiscuous. Once again the popularity of the incumbent parties in Australia continues to sink to all time lows. The Labor Party looks to have the next election in the bag but even then the popularity of the opposition leader is woefully tiny.

While the world seems to be in this state of blissful tranquility on the outside, we needn’t probe too deep before seeing how bad things continue to be on the inside. The little people may not have any financial fire power but at the ballot box they have an equal opportunity to stuff those that aren’t listening. Once again Italy shows us it wants change. Call it populism if you must but it is truly a reflection of just how bad things really are and how little ammunition to deal with any future crises remains. The little people are raising their voices. Best heed their words. It is the same reason why as zero chance as Trump looks in 2020, don’t bet against another 4 years in the White House. If the Dems hope that celebrities that talk of #METOO and gun control (all the while they attend Oscars semi-naked and collect their millions doing action films full of explosions and automatic weapons fire) will sway them to a return to the swamp they’re sorely mistaken.

If everything is so great then why is our political scene so broken?

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Queensland’s state election said it all. Both the incumbent parties lost massively even though the incumbent Labor Party looks like holding on to power. While Pauline Hanson’s One Nation party looks like it fared poorly in terms of seats it still got 13.8% of the vote from 1% in 2015. Forget the headline results but think of what the political turmoil In local, state and federal levels is telling us more broadly.

Think logically about it all. If the economy is booming, jobs are abundant and prosperity is on the march then there is little need for governments to be running deep deficits let alone facing hung parliaments and acts of desperation. Surely the incumbent governments of the day can laud their own achievements and their constituents would happily keep returning the status quo. The majority should continue to be happy. More by rights should be winners in such a world of record housing prices, steady wage growth, low unemployment and 25 years of economic growth as experienced in Australia.

Yet PM Turnbull turned on many of the traditional supporters of the conservative wing of his Liberal National Party (LNP) coalition who turned their back on him to hand Labor the victory in Queensland. Not so fast Prime Minister. They didn’t leave the party. The party under your incompetent stewardship left them. At all levels the LNP is divided. There are some quarters suggesting that the Nats may split from the Coalition in the next election in Queensland to leave the stench of the Liberal Party to themselves. This is when personal ambition trumps wish to serve a nation.

While the LNP was handed the most valuable and recent lesson of the disaster that was the Rudd-Gillard-Rudd internal factional knifing during their time in power, it completely buried its judgement and started following a left leaning press, weak poll numbers and copied Labor’s folly. Now we have a hung parliament (not withstanding the dual citizenship fiasco) with chronically weak and misguided leadership. One that tells voters that they have no clue rather than introspection that the party may indeed be the problem.

It used to be said that Australia enjoyed the most stable politics in the Asia Pacific region. That encouraged foreign investment and gave Australia low interest rates, a superior credit rating and a regulatory platform that ensured trust (important for corporations), the envy of many nations. Yet inside a decade we have had 5 (soon to be 6) prime ministers which has thrown that ‘reputation’ in the toilet. In a world where international capital is more mobile than ever and asset prices are peaking, instability in government eventually carries severe financial market penalties.

For Aussie banks, levered up to the gills with inflated mortgage books on their balance sheets, such things have negative implications for the 40% reliance on global wholesale credit markets to fund themselves in the face of a tightening US interest rate cycle. Do not underestimate the negative connotations of a federal government that has lost its way, no matter which major party is in power. Where the average Aussie can’t bear anymore on the mortgage, a third admitting they can’t pay the home loan if they lose their job for 3 months or more. Almost 1,000,000 Aussie households would be in severe mortgage stress if rates moved 150bps(1.5%). Think of the spill-over effects on consumption which would only lead to a recession and lay offs, exacerbating a cycle, all the while bashing the currency making international funding even more biting. If only we had a stable government that had a decent fiscal position to weather that storm. Oh, that is right we squandered that in 2008.

One Nation in Australia, AfD in Germany, Party for Freedom in The Netherlands, Front National in France, 5 -Star Movement in Italy, Fidesz in Hungary, FPO in Austria, the Sweden Democrats, Vlaams Belang in Belgium,  Progress Party in Norway, Trump, Brexit…these patterns aren’t random. It isn’t just populism but protest votes to establishment parties that aren’t delivering. While we are constantly told how great our lot is, sadly the gap between haves and have nots is widening globally. Politicians who are ditching political correctness and making waves on publicly uncomfortable issues are thriving. Why could that be?

Donkey (informal) votes in Australia have seen numbers soar from 2.2% in the 1950s to over 5.0% in the 2016 election. Some electorates in NSW saw as high as 14% informal votes. These are powerful messages in a country that has compulsory voting, which has slid to 90.9%.

The sad reality is that the electorate is making louder noises every election that things are not pointing in the right direction yet the muppets are still being returned to their box seats on a dwindling majority. Why? Because not enough voters are heeding the warning signs that are sounding in front of them. Of course politicians still continue to sell comforting lies backed by ever more unaffordable promises to keep themselves in power for as long as possible when we all need to be facing the unpleasant truths that will happen whether we like it or not.

Indeed those deplorables who voted One Nation might have spurned the LNP but not without good reason. In time, they will be viewed as the wiser ones. Not because they necessarily believe in Pauline Hanson’s platform but because they believe in Turnbull and Shorten’s even less. It all rings like a Premier League football coach making a litany of excuses for his team’s woeful performance that ignores the fact that the collection of individuals have absolutely no cohesion as a team. All the fans can do is bury their heads in their hands until the point they can’t bear to watch another game until the coach is sacked.

Why don’t firms hire staff like they’d choose a heart surgeon?

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How many times have I heard over my career senior management talk incessantly about the need for new blood yet when it comes to doing anything about it with regards to new hires 99% of the time  the safe cookie cutter is favoured over the left field choice. It is ever more so the truth in the post GFC world. Managers seem afraid to take calculated risks because the left-field candidate may jeopardize their own positions if he/she fails.

As an example managers in finance often fall foul of hiring exclusively within the industry. The level of inferiority complex can be so overwhelming that they fawn at the idea a Goldman Sachs employee will work for them for some ridiculous sum. Invariably they forget that Goldman hires duds too and usually those that get cast off are in that bucket. If you are properly good, there is no incentive to leave Goldman as the salaries, opportunities and product capabilities are too wonderful vs peers.

Yet many financial firms set upon trying to change the firm into a wannabe Goldman Sachs. They forget that their clients can already deal with Goldman directly should they feel the urge. Why on earth would they choose to deal with a wannabe copy? Surely each firm has a unique selling property that is of value to clients. Why not invest and promote that rather than overlook the talent within. Who honestly values flattery? Besides, there are so many cautionary tales with hiring ex-bulge bracket employees who are so used to being spoon fed every possible product line that they struggle immensely when they are required to actually put elbow grease into the job. It is uncanny.

Some firms occasionally hire from outside the industry with huge success. Instead of financial analysts pontificating about a stock, someone who has worked within the industry has a far better feel for cycles, internal decision processes and strategy that formulates under different points in the cycle. Clients glean that value. They couldn’t care less about the stock target or valuation metrics because that ultimately is the investor’s job. Besides the history of brokers behind the curve is etched in stone. Unique context and perspective trumps commoditization every time.

Some financial (and other) professionals have such checkered histories that one wonders how on earth they get rehired. If companies viewed their hiring decisions as akin to selecting a heart surgeon for a life threatening operation, many of these people would never make the cut (no pun intended) given the body count from previous poor execution. Yet many firms continue to put quacks in their ‘surgeries’ with expected disastrous results. Generally hiring managers run interference on these bad choices to cover their own mistakes.

Many HR surveys (including Harvard) show that bad hires end up costing way more than the salary when the cost of onboarding is included. Not only do companies potentially have to foot the cost of a headhunter (25-30% of salary is a standard fee) , what follows is poorer output, the potential for incumbent employees to become disgruntled at the new hire’s lack of ability and most worryingly an increase in dissatisfied customers. If they land a toxic employee that can damage team productivity to such an extent the best performers will seek challenges elsewhere.

So in a world that is getting harder and harder to succeed in, on what basis does conventional thinking bring anything to the table but more of the same? What does hiring a competitor do other than bring similar tactics? In fact, the more telling question is if they were knocking the lights out their success would permeate within their current employer. Unseating happy employees requires dynamite way over and above what they can probably afford.  What hirers often forget is the extent to which internal human capital plays a part. How awful does one’s human capital creation have to be to consider jumping ship?

That is where the left field choice comes into its own when hiring. A person genuinely looking for career change may well be doing it because they’ve tired of several decades of the same industry. They’ll likely come full of fresh ideas, out of the box solutions and lessons from a completely different background with the passion of a new graduate.

Many companies fail to adapt because the stupid questions don’t get asked by the incumbent staff for fear of ridicule. Yet someone eager to learn may ask the most basic of questions and ask “does it work?” One company I consult had a new boss join from HQ and he questioned why staff had meetings on such trivial matters? One staff member said “we’ve been doing it for 15 years!” When the boss said “does it work?” all replied ‘not really”. Yet they offered little in the way of proposals to change what was broken.

In a sense I see many businesses that operate in status quo mode where change if ever happens on a trivial or traumatic basis not through consistent due diligence and proactive leadership.

Think of it like asking an elderly person “if you had one more day to live what would you do?” “Well I’d play golf, take my wife to an expensive dinner and drive a Ferrari” If you asked Athenia”why don’t you do it now” the response would be “well I’m not dead yet!”

Look at the successful businesses around the world today and invariably the corporate culture is likely to be open and flexible. Bosses are prepared to hire people more qualified than them because they want to learn. Show me a company where inferior staff are hired to protect a manager and I’ll show you a dud business.

Which then goes back to the most important ingredient in a tech savvy smartphone world. Analog relationships. Look at the latest recruitment sites which ask candidates to fill in fields where a computer will sift through algorithms to screen. These systems remove the most important skill in selecting good candidates – gut feel. A good recruiter can understand a client’s needs far better than a computer. Besides if a computer is searching for terms fixated on what you’ve done and not what you want to do it will screen you out every time. What a wasted opportunity!

Human nature is uncanny. Risk taking is inevitable but instead of most people becoming  victims of change only a mere few will end up being agents of it and there will be no second guessing who dares wins! So instead of screening for the textbook definition of identity based diversity how about focus on diversity of thought!