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The Brexit Paradigm
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For many years it seemed that elections or votes on other substantive issues were somewhat mere formalities to endorse the conclusions of opinion polls, which seemed to have accurately predicted the outcomes before the vote was taken. Even if opinion polls were not quite totally accurate, you could follow the money because bookmakers always got the right result.

The "shock" outcome of the Brexit vote in the United Kingdom seemed so inconsistent with the expected outcome that statistical theory was being challenged and large fortunes were literally lost (and probably made) as investors made calls on the expected outcome.

However on review of other recent elections it seems that the paradigm has been suspect for some time. The UK national elections last year had an outcome that was significantly contrary to poll expectations, so at least in the UK there is a precedent.

In Australia we have just had an election for our federal parliament which saw both the House of Representatives and the Senate dissolved and all seats were up for contest. In this case the polls got it absolutely right - or did they? The polls concluded the election was too close to call and so it was. In the end the government was returned with a wafer-thin majority, but it took 10 days to find out who had been successful. We still have no real idea what will happen in the Senate, except that we will probably have a lot of independent senators.

What the polls did not pick was the huge disparity in voting trends in different parts of the country. They also did not identify how outcomes could be dramatically influenced by a mix of social media and concerted action group campaigns.

More than 20 years ago a ground-breaking book, "Paradigm Shift", posited that through information technology "a fundamental change was taking place in the nature and application of technology in business". Of course back in 1993 business, and society, could not have predicted that the paradigm shift identified in the book was comparatively just a hint of what was to come. Nevertheless the book was remarkably prescient in identifying not only shifts in technology, but also in business, enterprise and geopolitical order. Email was in its infancy and although the World Wide Web had in fact been publically available since 1991 and became free in 1993, the explosion in data exchange was yet to come and smart platforms still a decade away, as was "social media." That has been a paradigm tsunami!

What has this got to do with the paper industry? Possibly not much, but in fact perhaps a lot.

Much has been written about the probable impacts of Brexit, but for the paper industry the impacts are ostensibly minimal. However the resulting uncertainty has affected global business confidence with implications for a slowdown in global paper demand. The UK was once Australia's largest trading partner but is now relatively minor. Paper imports are insignificant, but currency depreciation may mean cheaper imports from that source, to the extent that there are any products of interest.

Fundamental to Brexit and the Australian election (and dare I be so bold as to suggest, the forthcoming US presidential elections) is the trend for emotional issues to play a far more decisive part than rational economic arguments. There is more than an element of "what's in it for me," but what seems to be the focus of individuals has to do with the heart rather than the mind. The problem is that matters of the heart are often irrational and susceptible to manipulation.

A salutary example from the Australian election was the effectiveness of the GetUp organisation to change outcomes through a tidal wave of social media campaigns and putting agitators on the ground, funded by online donations. GetUp says it has more than one million members and claims at its website to be an independent grass-roots movement "campaigning on issues that our members care about in the fields of Environmental Justice, Human Rights, Economic Fairness and Democracy. GetUp is about making change, not just making noise. Everything is guided by carefully crafted strategies designed to win. Sometimes that means raucous protest, partnering with policy experts to develop new solutions, or exercise our consumer power, and everything in between." GetUp is an Australian organization, but when it was founded in 2005 it drew heavily on the US action group, MoveOn.org. It now has strong links with Leadnow, Canada's action group and also with Germany's Campact, 38 Degrees in Britain and Action Station in New Zealand.

GetUp mounted a campaign worth about $3 million that paid for TV and billboard advertising, phone calls, door-knocking and how-to-vote cards. The lobby group had 10 paid staff and 80 volunteers at polling booths in one electorate on election day, building on 18,000 phone calls made to swing voters using cheap but effective in-house software to enable members to call from their own homes. The campaign was backed by "tens of thousands of people" who donated on average $18 each.

Through its history, GetUp has targeted a range of environmental issues and boasts that it played a major role in causing the collapse of the Gunns Pulp Mill project.

When Gunns proposed the development of its world-scale pulp mill in Tasmania's Tamar Valley, GetUp urged its members to oppose this project. They escalated the opposition to one of GetUp's most comprehensive campaigns. A key strategy was to target the financial sector to make sure that major financial institutions would refuse funding to the project. Nearly $500,000 was raised towards a national and international advertising campaign, with ads placed in key Australian newspapers and even the London Financial Times. As well, more than 30,000 members sent messages to the company's bankers, pressing them not to finance the project by threatening to close their bank accounts. As much as anything this sealed the fate of the project. Of course the public was inundated with "lies, damned lies and statistics" and many ordinary Australians were deluded by misinformation from people who had never been to Tasmania, let alone the Gunns pulp mill site.

Prior to this action GetUp took credit for convincing Gunns to cease logging of native forests, although they acknowledged the support of the Wilderness Society and other environmental groups. It has fought (less successfully) against the delisting of part of previously national heritage listed forests in Tasmania.

At the heart of much of GetUp's activities is their view on climate change, which engenders many supporters who then become bolted onto other campaigns without necessarily being well informed and accepting as givens the arguments promoted by GetUp.

Other matters on their hit list include action against coal-seam gas projects, coal mining and the Trans-Pacific Partnership (which I wrote about in March 2016).

It rather seems that this new paradigm has the capacity to overwhelm the established order of business and politics with outcomes and impacts that may be unpredictable and have unintended consequences. Data reports show that in the twelve hours after the Brexit poll closed, Google was overwhelmed with voters trying to resolve exactly what the consequences of their vote were. This is at least qualitative evidence that modern campaigns do tug at more elemental than rational levels. This may not signal the end to the business world as we know it but it would be a brave company that does not have a strategy to address populist campaigns against developments that have the potential to be controversial. Even if economics are irresistible, it is hard to envisage a new greenfield pulp mill in Australia, such is the emotion surrounding such developments.


 

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