Optimising on the frontier

I’m writing this purely from a theoretical viewpoint, and perhaps it can feed into practice and application but I’ve no intention to address that in this post. From a supply-side perspective, there’s no single optimal point of production combinations. The production possibility frontier involves a continuous combination of possibilities that would be “optimal” from a technical efficiency and resource availability perspective.

In Economics, the optimal point of production is obtained by specifying some sort of aggregated utility function – in other words, asking the demand-side of the picture. Figuring out the demand and specifying it is just as important as thinking about how to produce because it helps determine what is to be produced.

Yet day in and out we seem to act as though the market is always calling the shots, pinning down our behaviours. A society that is caught up with trying to produce more and more, and scaling up without understanding the demand-side of the equation will only find itself in misery. We cannot always assume our demand function or aggregated utility to behave in the same way, to comply with the kind of assumptions made in the Economics discipline.

Significant member

Does a society exist for its members or do the members exist for the society? Think of “significance” as the extent or ways in which members feel that appreciation and sense of being part of the group that they make up. The demand for significance have increased.

Wait, no the way significance is manifested have changed. Maybe it was an arms race after all, but maybe, it does not have to be. Members don’t have to be pit against one another for significance, they all can have significance.

So many of our systems have been built by drawing upon the resources and members of a society in order to help govern and maintain the society. These systems reward significance to those who are helping to lead and control (or maybe those people reward significance to themselves); but either way, the people who are ‘managed’ are often mere digits. They are called to work their way up to gain significance, to learn the skills to be a top dog, to lead and manage.

What about a world where all the members of society are rewarded with more significance by the leaders and so the members can themselves attribute more significance to the leaders? Where we as constituents don’t just say people are leaders because they make the cut in competence but above all, they care for the people.

Underinvestment in capital

Singapore is a small island state. We have no natural resources besides our strategic geographical location, as well as our manpower. And therefore, most of the value that we can try to create comes from being able to drive productivity growth from our manpower. And productivity growth cannot be seen as isolated within industries or sectors, but rather, integrated as a cluster of activities.

The mistake of looking at construction sector, or cleaning sector and say that productivity growth is lagging behind that of financial sector is the fact that investment trends in these sectors are different and quality of labour may not be evenly distributed. More significantly, as a result of those conditions, the bargaining power of labour vis-a-vis capital is also much more imbalanced. This sort of productivity slowdown cannot be easily dealt with through skills training.

Think about the incentives from the capital-side of the equation. With little competition from international capital to compete in the domestic sector (due perhaps to limited size and scale of the market), the businesses will tend to use labour as a means to put off capital investment as that helps improve returns on existing capital stock at the expense of labour productivity. Once you factor the uncertainties around return on capital, that will start to appear as a sensible move.

If this is the case of underinvestment in capital, then how would skills training improve the situation? What is being encountered is a labour force that might be worn out from poor quality capital being deployed (poorly maintained machinery, version 1.0 of an equipment for which version 10 is already available, etc).

Then moving on to my point about productivity cluster. Should the cleaners of a bank earn more than the cleaners at the construction site? With outsourcing, competition being encouraged at every segment of the value chain, this probably would not happen anymore. But is this really a good outcome? Because there will always be industries that are growing faster and extracting more profits from their activities, the supporting activities should also be entitled to a share of that windfall. This helps to speed up the expansion of growing sectors in an economy. This sort of cluster helps facilitate more real trickle-down effects.

Spectrum of intelligence

I was having a conversation with a middle aged man. He was in his late forties and having been a salaryman all his life, he was happy and satisfied with his work. He thought about some of those who went farther and higher in the organisation and said ‘they were really good’. I interpreted that to mean ‘they had what it takes’. I responded to say, ‘it’s also a lifestyle choice’.

The society has its way of determing what constitutes merit. And it’s often a mad rush in those dimensions in order to prove you’re up to par. Whether it is certificates, points, grades, licenses, we are all sucked into some of these common denominators of comparison. We want to find out the rules of the game everyone is playing and then play to win it. And be ‘really good’ – and if others win, we consider them ‘really good’, implying also that they are ‘better than us’ (though only in that single, narrow dimension).

The greatest gift as a parent that you can give to a child is to show them – that despite the education syste, despite what the society and people around you keep trying to tell you about studying hard, getting good grades, gaining CCA points, being able to rattle off lists of achievements, that there is a spectrum of different intelligence. And you may be intelligent in some form, others may be intelligent in other forms. There is no single overall type of intelligence. In a PR firm, intelligent may be about EQ, language skills; whereas in academia, intelligent may be about intellectual rigour. The context matter and of course in the context of school, there is certain definition of merit but that is not the definitive kind of merit in life.

The next great gift to your child is to encourage them to get out of basing solely on the paper chase, and find a domain of intelligence that allows them to flex their potential more than any others. Cultivate and develop that, and keep at it even as they try to meet the basic standards on other areas. Then they will come to appreciate others’ as ‘really good in such-and-such’, ‘better than me in so-and-so’.

Regulating influence

Man are social animals and so it is natural that with the pandemic out there, social media is going to have a greater hold of us than before. The unique feature about social media is that fringe group can find more strength in numbers because distance is no longer a barrier. And with some kind of perceived veil over our identities (as an online digital avatar rather than our real physical self), our voice may be a bit more expressive.

That can be used positively or negatively; we can decide to amplify positive or negative voices each time we share, and every time when we post. We may try to punch above our weight in terms of voice by exaggeration or taking a more extreme stance than we actually do just as a tactical way of counterbalancing the voices. But it is our choice whether to do so.

Now that we have that awareness of how we come across, we are better positioned to think about how we are being influence. Thinking through more clearly about our stance on different things helps us give pause to what we are reading and consuming and consider whether we are relying too much on similar viewpoints and others who are in agreement with us. Social media algorithms have their patterns of keeping us hooked to them because they show us things that agrees with us. But what about those opposing views that are available out there which social media is not showing you? Does the algorithm make them less valid?

We have to start regulating our influences and also our influence, especially online. And make your contribution a positive one.

Disruptions and pain

What is a transition? It is shifting from one state to another and it entails change. So configurations and structures will have to change in order for that shift of state to occur – or those reconfigurations and structural-shifts are simply the transition itself. Over the past decades, there are some transitions that we kind of take for granted are necessary and we just allow them to happen even though they wreck a lot of havoc but most people may think nothing much of them. Then there are the transitions we haven’t fully agreed with in part because we think there are ways to stay in the same state, or that we are simply so vested in the current state that the new state feels ‘inhabitable’ to us.

Now I invite all of us to rethink those instances where we are resisting change because of that. Because of the thought that the new state is ‘inhabitable’ or is it?

Now the Energy Transition is going to be a major such shift in the world over the next decade or so. And the pace will accelerate – well, it must – in order to achieve the carbon-reduction targets that we have committed to at the Paris Climate Agreement. The world will have to radically change the way we produce food, consume products, move people and goods around. That will entail pain because activities which are geographically-bound previously may open up to more competition, communities and local economies created by the old ways of doing things may be destroyed.

We are going to find ourselves aligning with the resistance on some fronts at least; because we might think the new world on the other side of the energy transition is inhospitable for our habits, our lifestyles, at least for quite some time. But we have to think, whether our prevailing system, habits and practises themselves can eventually make earth, our one and only home planet, more inhabitable instead of the alternative on the ill-fated trajectory we are on.

Having Guts

Suffice to say most “talented” Singaporeans who did well in school would play it safe and choose the traditionally popular jobs that pays decently at the start and have clear trajectory in career development. They would switch from being grade-maximisers to be career-maximisers. They would continue to hunger for recognition from a system, to have the right boxes checked off, to get the right set of papers.

Do we have the guts to send a message that contradicts the idea that school prepares you for life? The mainstream education is great for preparing you to be in civil service, to make friends and solve intellectual problems together, but it is not building the skills you need for actual success in the marketplace. So it becomes terribly important that you do not optimise for grades; but rather, you optimise for life skills. Actually, to segregate “life skills” from school is already a big warning sign. The desire to measure and find common denominators to compare students against each other is natural. As a student, it is important to run from these.

For example, what does school teach you and train you about taking risks? Do you have the guts to decline a scholarship so you could pursue what you want rather than what they ask you to? Do you have the guts to take on unconventional subject knowing full well you don’t have the support of your teachers in mainstream education?

And that is not foolhardy recklessness; it is about trying to create something new. To take the risk for the country because we need all the people to pursue the different paths needed to show their fellow countrymen alternative ways of succeeding, to release new ideas and challenge what we take for granted. Only then we can be assured of continued success and breakthroughs as a country.

On Suffering

Regular readers would have discovered the rescued stray dog my wife and I adopted passed on last week. I’ve had friends who suffered greater loss of loved ones over the past month. And of course, there’s been quite a lot of bloodshed in the US stock markets as well and there are others mourning different kind of loss.

Before I came to faith in Christ, I actually had more problems with love than suffering. Life seemed to contain lots of suffering – and it can seem arbitrary when we just survey them randomly. So what was strange was that one could love – because it seemed even more meaningless than suffering if there wasn’t a God, or if we just spontaneously emerged in the world without purpose or intent. Love was more a mystery to me.

But as I came to understood love through what was demonstrated by God in Christ, I begin to see perhaps suffering was more a challenge. Faithful Christians suffered, perhaps more than others. And through the bible, whether it was the old or new testament, people who believed in God suffered – often greatly. Yet if one pays close attention, it is often through suffering that we ourselves experience the greatest growth, and we develop more depth in suffering. I’m not saying we should encourage or create suffering but I think we have to learn to see how God’s goodness and His perfect will allows for suffering. And there is meaning in it – yes, even with the misery, the angst, the grief, the pain.

Having gone through all that, the question is, how do you respond? Do you turn bitter against or do you turn to God?

Octopus Manager

I’ve previously wrote about my thoughts in HR (here too) as well as some stories about my brushes with them. I had never thought about eradicating them entirely though – but Greg Jackson from Octopus Energy actually did that, for his 1,200-strong company. I thought that’s beyond remarkable, and once I read the story, it made perfect sense to me.

Greg’s point about how HR and IT departments can infantilise the employees and end up drowning creativity in bureaucracy and process is almost definitely true. It doesn’t mean it is easy to manage a company without these functions though. He has placed that onus on the manager, which can be quite challenging. Though in today’s highly automated world, there are a lot of the traditional HR functions that is actually already automated or outsourced.

Unfortunately, in a bureaucracy, even when things are not automated, it can seem as though the human touch has been long lost. An anecdote to this is a true story I’d like to retell: an employee who was usually allowed to make transport claims when going from his home to client meetings outside the office had to first drop off his ailing dog at a friend’s place so that the dog would not be left alone at home. However, because the friend’s place was a detour from the meeting location, he paid out of his own pocket for transport from his own home to the friend’s place, then got a cab to the client’s place. When he tried to make a transport claim from the friend’s place, his claim was rejected because the origin location of the trip wasn’t his home address. Even when he appealed to HR on the nature of the situation, the staff (read: humans) were not able to make an exception even when his line manager was supportive.

I think the value here is really in empowerment of the employees and getting the management to do the emotional labour of managing remuneration, incentives, training needed for employees rather than leave it to some specialised department. The way I think about the future of HR is that it is no longer an administrative function but that of empowerment and improving productivity through watching out for mental health. And if that is all incorporated into management, it might actually give management the needed boost and reason to continue existing.

Shutting down debates

When I was 15, I wanted to go on an exchange to China – I think it was in Ningbo or somewhere East China. It was an experience of a lifetime, or so I thought during that time. I had 3 other schoolmates selected for the programme and they were going ahead. I needed my parents’ approval to go ahead. It’d be only 3 weeks, and I’ll learn so much, make new friends and differentiate myself from my classmates who were all really elite students.

I brought up various benefits of going on the programme, but my parents countered citing safety issues. I talked about assurances from the school, and staying within the campus where the Chinese students stayed too. I mentioned how another of my schoolmate (who was my classmates when we were 12) would be going. They somehow found out and then told me he was okay because he had an uncle who lived in China. At that point I didn’t know but my parents already made the decision to exercise their power not to allow me to go for the exchange. To them, there was no point discussing further because they just wanted to close the case and move on.

Honestly, it wasn’t a nice feeling and I did feel rather bitter about it. I think it was because I felt I wasn’t engaged as an adult. They weren’t honest with me in sharing all that they had concerns with, which they were unable to mitigate and hence needed me to give up the opportunity. It was a lost opportunity for them to reinforce certain values they wanted to see in me before they were willing to let me have more autonomy or support my choices.

When I was reading up the recent coverage on the budget debates, especially the ones on the budget responsibility office (or whatever it is called, because I don’t get confused just because of different names) suggestion from the WP, it reminded me of the time my parents were shutting down the debate. There was no genuine response but just condescension and sarcasm from the cabinet. Perhaps the cabinet ministers felt like parents who knew what’s best and it was so obvious there was no need to waste time explaining further. But I think the opposition MPs this time did come across as the genuine schoolboy I was. He sincerely had a point that he believes in which he wants to make, and is giving the parent an opportunity to engage maturely.

It was a lost opportunity for the government of the day to demonstrate they continue to care and value fiscal prudence rather than just paying lip service to the fact our forefathers sacrificed to build the reserves we have. I think the cabinet ought to remember that the opposition MPs also represents the people (and in the case of the last election, I would say the Leader of the Opposition in Parliament is leading MPs representing a non-trivial 38.8% of the voters or whoever did not vote for the government of the day). And when answering to concerns of the people, the government can be more respectful and engage in more meaningful discussions.