Reality check: Phil Ruthven
Facts can ruin a good story but they are essential for making good business and economic decisions
American corporates on the New York stock exchange have been the world’s most profitable, on a weighted-average basis, in the post-industrial age over the past half century. The average American company’s profitability has been four times the long-term bond rate, which continued through the GFC and beyond. In contrast, Australian companies’ average profitability on the ASX has only been twice the 10-year bond rate, apart from during the recent short-lived mining boom. (See chart 1.)
One of the reasons for this discrepancy, perhaps the most important, has been that American corporates spend more on information than any other nation – indeed, twice the gross domestic product (GDP) share of the world’s most developed nations. Evidenced-based decisions beat guesswork and gut feel.
Facts usually ruin good stories, at work and in our social life. But rumours, scuttlebutt, scandals and old wives’ tales can be very believable, and we tend to believe a lot of them until they are debunked. After all, they are interesting, entertaining and often comforting.
But when leading a business or governing a nation, it is safer to make evidence-based decisions, which leads to a number of myths that should be given overdue rebuttal. So what are some of these surviving or new myths, beginning with several that are social urban myths rather than business-related fallacies?
1Marriages don’t last as long as they used to Not true. The average length of a marriage has stayed around 20 years for three centuries. That there are more divorces and separations these days is due to the fact that we live over twice as long as people did in the early 1800s (when the average lifespan was 38 years) and have time for a trade-in, if you have a mind to. In the olden days, you married at 18, lived another 20 years together and then went to God before you were 40, on average. There just wasn’t enough time for a divorce. 2Crime is on the rise, especially murders No, it isn’t. Not only is the murder rate in Australia one of the world’s lowest, at under two per 100,000 each year, it has fallen to record lows over the past five years. 3Speeding is the No. 1 cause of road-based deaths No, things like distractions, falling asleep and intoxication are. Speed is usually somewhere around the second to fourth most common cause. 4We need a big population to compete in a globalising world No, we don’t. Some 18 of the world’s top 20 countries with the highest standard of living have a population lower than Australia’s 24 million, and most are less than a third of our population. Only the US and Germany are more populous countries in the top 20. 5Australia’s population is getting to the limit of our carrying capacity That’s good for a laugh right around the world, especially in high-density Asia. Our population is so thin we could only just touch hand to hand around the coastline. Indonesia’s population, on a fraction of our land, could do so 11 deep and China, with only a slightly bigger land mass than us, could be 52 deep. On our present growth rate, we will have a population of over 40 million in 2050 and over 75 million by 2100, and still have one of the world’s lowest population densities. 6Immigrants take our jobs
No, they don’t. They more often take jobs we don’t like. And if a migrant family arrives, they create demand for more jobs than they can fill for at least five years, in terms of the necessary infrastructure and annual consumption expenditure. 7Australia will run out of workers due to ageing No, we won’t. Being too young a population, as we were in the 19th century, was a worse problem; and to get enough workers to support the population, we needed children to start work at under 15 years of age, often as young as 11 to 13. As this century unfolds, working beyond 65 and up to 75 or more – often on a part-time or casual basis – is realistic for a workforce that emphasises brains, not brawn. And the only way to wear the brain out is to stop using it. 8There won’t be enough jobs due to technology, robots and artificial intelligence Yes, there will be. We are good at creating jobs. Over the past five years we have created eight times more jobs