Putting ‘progress’ in perspective

IF Western Australia’s unprecedented business boom is to continue without generating a public backlash, more needs to be done to engage the community.

Economic growth is creating enormous wealth but it is also causing significant problems. This is going to be an important issue not just for policy makers, but for the broader business community if it wants government to continue making decisions that facilitate economic growth.

In the last federal election, public anxiety with the consequences of the resources boom was seen in the outcry against a bigger Australia. The public backlash against immigration will only get worse if no-one sells the benefits.

Anyone connected to the mining sector, and many other parts of the economy, are experiencing growth like never before. This success is the cause of suffering in other sectors as wage prices rise and the strong Australian dollar hurts their export competitiveness. The rebalancing of the economy is very painful for many businesses.

The community is experiencing something similar. While many people have benefited from higher wages and their wealth has increased because of the value of their house, others have found their cost of living rising quickly while housing affordability means that their children may never own a house.

The pressures that resulted in human intelligence equipped our ancestors to survive in a very hostile environment. These forces did not equip them to easily recognise many of the benefits of the economic boom. Our brain has developed to be very aware of changes in our environment as they would forewarn of approaching predators, but not to monitor how small changes in our stock portfolio are affecting our wellbeing.

More than 200 years ago, psychologist Ernst Webber recognised that people noticed changes in physical stimuli when they significantly altered the status quo rather than based on an absolute change. This observation was codified into Webber’s Law, which states our senses do not register absolute differences but relative ones. What this means is that when we are in a very dark room our sight will notice the introduction of the smallest candle but when it is bright it will take a halogen lamp for us to notice it getting brighter. In the second situation, our eyes simply will not register the candle because our brain has developed to monitor changes in our environment, not to measure physical phenomena.

In economic terms, Webber’s Law means a beggar appreciates $100 more than a millionaire. The community in WA is very well off so many of the economic benefits of the boom do not register with people.

People don’t notice when their wages go up a little bit every week, it doesn’t make enough of a difference to their quality of life to register with their senses. So, while most economic indicators have improved dramatically over the past decade, people rarely compare their present situation to that of 10 years ago.

In contrast, it is easy to identify the cause of many of life’s challenges. House prices are high because of the migrants being drawn to WA’s labour scarcity, and they are contributing to growing traffic problems. As regional infrastructure groans under the weight of economic growth, there may be a community swing against future projects.

The situation in WA is a little bit like that of Polish railway worker, Jan Grzebski, who was hit by a train in 1988 and fell into a coma. He woke 19 years later to find his world completely changed. The communist party was no longer in power and food was not rationed. He said, “Now I see people on the streets with mobile phones and there are so many goods in the shops it makes my head spin.”

Mr Grzebski observed that his biggest surprise was how much his countrymen complained. They had everything he’d dreamed of before his coma, but they didn’t even notice it.

At the turn of the century, things were gloomy in WA. Economic activity was declining and the state was experiencing negative net migration with many people, particularly younger people, flocking out of the state.

To ensure a receptive community attitude to future economic growth, business leaders must start to communicate how much better off WA is now compared to where it was a few years ago. The alternative will be growing community antagonism against the very source of its wealth.