Nicholas Gruen

Ryan Faulkner-Hogg asked me to join him on his long-form podcast show where, over nearly three hours, we spoke about many things.Here are his show notes:

I joined the Australian economist Nicholas Gruen recently in his Melbourne home to host his first 'long-form' podcast (although I'm not sure at what hour it goes from short to long)

At the core of Gruen's worldview is the “un-seriousness” he levels at Australian politics, the media landscape, institutions and in a word... bureaucracies.

From his creation of the HALE Index to his decades inside Australia’s public institutions, Nicholas continuously challenges orthodox thinking.

The podcast covers the (in my opinion) radical yet (Nicholas's opinion) ancient idea of citizens’ juries as a second pillar of representation, the reasons bold policy rarely survives bureaucratic reality, and how lessons from the Toyota production system could help governments actually listen to people at the bottom of the hierarchy.

Along the way, Gruen takes us from Australia’s superannuation system to pokies, from the mental health crisis to the subtle erosion of public-spiritedness inside organisations. 

To be specific, these are all the topics covered in this chat.

• The HALE Index of Well-being – Why GDP misses the mark, how HALE works, and what it reveals about Australia’s progress.
• Measuring What Matters – The limits of subjective well-being metrics, correlations between indicators, and why faux indexes mislead policymakers.
• Indigenous Policy Contradictions – The tension between material “gap closing” and self-determination, and why policy rarely confronts it.
• Citizens’ Juries & Political Reform – Introducing random selection into governance and how it could act as a check on elected officials.
• Goodhart’s Law in Action – How turning measures into targets corrupts them, and the problem of gaming metrics in education and beyond.
• Internal vs External Goods – Alasdair MacIntyre’s framework and its relevance to public service, corporate culture, and motivation.
• Institutional Stagnation – Why promising initiatives stall, and how bottom-up programs could scale without being crushed by bureaucracy.
• Toyota Production System Lessons – Building respect for frontline workers into systems and how it transforms performance.
• Australia’s Superannuation System – Strengths, inefficiencies, unfair taxation, and misaligned regulation of self-managed super funds.
• Compulsory Voting & Preferential Systems – How they shape Australia’s political centre and guard against extreme populism.
• Universities Today – The shift from idea-driven discourse to metric-chasing careerism, especially in economics.
• Trade-offs vs Synergies – Why economics often overemphasises trade-offs, and examples of where quality and cost improve together.

In the second of three talks at John Allsopp’s Web Directions Dec 2024 NEXT conference, I dig into a question modern life has taught us to overlook: how do we decide what's truly good?

We’ve built a civilisation where merit is often confused with ambition, where leadership is predicated on self-promotion, and where institutions reward ambition and playing the game (instead of service) and ‘smartness’ (instead of good judgement).

Enter what I call “bottom-up meritocracy”, as practised in medieval Venice and on modern Wikipedia, I explore how “bottom-up meritocracy” once thrived—and could again.

We’ll look at how the American Founders tried (and failed) to build a system of bottom-up meritocracy inspired by Venice's constitution (among others), how our institutions have become increasingly hollowed out, and why Charlie Munger summed it all up when he described what we should be aiming for: a “seamless web of deserved trust”.

In this freewheeling conversation with John Humphreys and Gene Tunny, we delve into what’s gone wrong with modern policymaking—and what can be done about it. We begin with the dysfunctional state of our tax system. I argue we should scrap dividend imputation and cut the company tax rate to attract foreign capital and grow the national pie.

We then explore the systemic malaise of democracy: how spin, performativity, and institutional incentives have crowded out real deliberation and made difficult choices all but impossible. Politicians aren’t uniquely bad—they’re trapped in a system that punishes truth-telling and rewards evasion.

All politicians are against tax and for spending and you can see that in the sea of red ink we're sailing into in Tasmania, Victoria, Australia and the US. That leads to my proposal for a deeper reform: embedding citizens’ juries into democratic life.

We discuss how standing citizens’ assemblies could reorient policy debates on issues like housing, infrastructure, climate and budget repair. This is not about trusting “ordinary people” over politicians—it’s about designing a system that enables public reason to flourish again. (OK, well the AI wrote that sentence, which gives you some idea of why we can't hand over to AIs just yet.)

Of all the podcasts we’ve done so far, this is my favourite.

There's a spectre haunting ESG, the new trend towards investment funds seeking to consider things other than their financial bottom line. ESG stands for Environmental, Social and Governance. But there's a problem. Often firms are not well placed to improve outcomes beyond their own immediate purview. Thus divestment from high-emissions firms might seem like a good idea, but it turns out to have minimal impact on emissions. This is as one might expect because it simply passes the invest onto investors who don't care about the issue.

In fact there's a more powerful reason which is that starving emissions-intensive firms of funds is likely to depress their investment which they need to reduce emissions. And since the 20% of firms with the highest emissions emit 280 times what the least emitting 20% firms emit, reducing the emissions of the high-emissions firms is very likely to be where the biggest climate change action is going to be. These are genuine dilemmas but investment firms who seek to target ESG tend not to level with their retail investors that this is what is going on. They're much more likely to do their best and then 'sell' their members some calming PR on how their investments are making a difference. We talk about a left field way round this dilemma.

A couple of months ago I read and admired this article on Palladium, a new(ish) website that “explores the future of governance and society through international journalism, long-form analysis, and social philosophy”. It seemed that there was sufficient overlap between its concerns and mine that I asked if the author, Tanner Greer, would join me on the podcast.

The essay begins with this assertion: The first instinct of the nineteenth-century American was to ask, “How can we make this happen?” Those raised inside the bureaucratic maze have been trained to ask a different question: “How do I get management to take my side?” 

It then elaborates and explores with examples, speculates on the causes of the change and discusses the means by which we might get back to a healthier situation. Greer argues that the 19th-century institutions combined three characteristics: the aspirational ideal of public brotherhood, a commitment to formality and discipline in self-government, and organizational structures that combined decentralization with hierarchy.

I hope you enjoy the discussion.

In this thought-provoking episode of Uncomfortable Collisions with Reality, Nicholas Gruen and guest Jarrod Wheatley, founder and CEO of PIC Professional Individualized Care, delve into the complex issue of risk in out-of-home care for children. As they explore the challenges faced by those involved in child protection, they discuss the delicate balance between prioritizing the child's well-being and managing organizational risk. Drawing parallels to the institutional imperative and transparent decision-making, this episode sheds light on the need for thoughtful consideration and empathy when navigating the intricacies of the out-of-home care system.

0:55 Introduction 1:23 How the system humiliates 4:07 Prioritizing the best interests of the child 7:42 How the system prioritizes its own preservation, more than the children 9:56 Risks surrounding out-of-home care 13:30 It's the interests of the kids we're after 16:45 How would you act if they were your niece or nephew? 20:10 Bernie's advice 22:35 Practical examples 25:54 The role of communication

This is the second part of a great discussion I had with friend and colleague Gene Tunny on wellbeing agendas, how they go wrong and how transformative they could be. We begin by exploring what I call ‘top-down thinking’ — a style of strategising that was largely (and mercifully) absent from life fifty years ago. 

That’s the style of thinking which begins with fine sounding apex statements — Mission, vision and values statements — and then builds plans and priorities by ‘drilling down’ from such statements. 

Wellbeing agendas too are tied up in pleasant-sounding objectives. However they pass over many of the important questions. They relate firstly to how trade-offs are made and secondly to how we'll acquire the knowhow to get what we're after. Planning from the top rarely addresses such questions.

Another great conversation with my friend, colleague and partner in podcasting crime Gene Tunny. Gene suggested we discuss various ways in which we've placed nationally independent analysis at the centre of government, only to find that it hasn't performed as well as it might. A classic example is regulatory impact statements, which were a good idea back when Australia was among the world's leaders in introducing them in 1986.

However, they've not had much impact because although notionally independent, government rewards 'can do' types both at the political and bureaucratic level. So the process degrades into a box-ticking process. Something similar happens with freedom of information as bureaucrats delay and resist release in various ways and the important stuff migrates into whispered conversations in corridors and secure and self-erasing platforms like Signal. And then there's independent assessment of infrastructure.

Every society evolves unique ways for people to live together happily and productively. But they change over time. Modernity has eclipsed these four ideas.

Recovering them can make us happier and more productive.

If I had four words to sum up where I've got to over the last couple of decades thinking how to improve the world, they'd be these. In discussing them with friend, philosopher and school teacher Martin Turkis, I gave myself the challenge of writing them out in a summary form for him to present to his high school students. This has got to be a better test of their value than whether they can be published in a learned journal.

I enjoyed this discussion with philosophy PhD and high school teacher from San Francisco's Bay area. I tried to articulate my own view that our understanding of science as the paradigm of all knowledge gets in the way of understanding important aspects of reality that science can't help us with.

This is the second part of a great discussion I had with friend and colleague Gene Tunny on wellbeing agendas, how they go wrong and how transformative they could be. We begin by exploring what I call ‘top-down thinking’ — a style of strategising that was largely (and mercifully) absent from life fifty years ago.

That’s the style of thinking which begins with fine sounding apex statements — Mission, vision and values statements — and then builds plans and priorities by ‘drilling down’ from such statements.

Wellbeing agendas too are tied up in pleasant-sounding objectives. However they pass over many of the important questions. They relate firstly to how trade-offs are made and secondly to how we'll acquire the knowhow to get what we're after. Planning from the top rarely addresses such questions.

I really enjoyed this week’s uncomfortable collision with reality with colleague Gene Tunny.

We covered a lot of ground talking about the use and abuse of the wellbeing agenda.

Where does it come from? Why is it taking off as an approach to policy making? How do we make the most of this as authorisation to improve our world?

By avoiding the pitfalls!

I argue that the main pitfall is imagining ourselves to be part of some grand new way of thinking. Bureaucrats and think tanks reach for frameworks and schematic diagrams.

But if they’re the wrong kinds — if they’re schematic rather than built to aid action — those frameworks simply give us new labels with which to dress up the same old same old and the iron law of business-as-usual takes hold again. Until the next new fad, the next new vocabulary. 

Colleague Gene Tunny and I discuss a means by which we could improve the impact of innovation programs as well as fight recessions and booms.

And the cost? Nothing!

This is a podcast of a discussion between me and my friend Peyton Bowman about my essay "Democracy: forking the project". Here is the abstract of the essay. 

Citizens’ juries — where a representative sample of citizens deliberate and decide on political issues — are increasingly popular. Representing constituents by sampling and deliberation rather than election and competition, they could deepen existing democracies as a check and balance to existing institutions. But the public understands their potential poorly because most juries have been one-off, single-issue exercises held by (and so, for) existing institutions.

With governance arrangements keeping funders at arm's length, progress could begin with a philanthropically and crowd-funded standing citizens' jury. Without any formal power, such a “People’s Council” could ​​nevertheless shadow other houses of parliament/congress’s decisions and pass resolutions of its own. Had such a body existed, it would have been:

• Harder to abolish carbon pricing in Australia,
• Harder to negotiate such a ‘hard’ and damaging Brexit in the UK,
• Harder to demonise nuclear energy in fighting climate change,
• Easier for the US Senate to convict President Trump for inciting insurrection.

Greater attention would have been given ‘bread and butter’ issues like health, aged care and education and less to ‘hot button’ issues like immigration and crime. And those latter issues would have been addressed in ways that were more consensual and informed by the evidence. So policy would have been more effective.

Even without formal, constitutional power, where it disagreed with public votes taken on the floor of a house, it could call for an additional secret ballot, thus bidding for more influence and modelling the role it would have as a check and balance — in an officially constituted ‘people’s branch’ of government.

To develop its own capabilities and autonomy, the people’s branch must establish its own internal governance and leadership structures. To ensure their consistency with the egalitarian spirit of sortition and to minimise its capture by the self-assertive, charismatic and power-hungry, I suggest eschewing direct competition for office. The brevia is one such mechanism. It minimised factionalism and set the stage for 500 years of stability in Venice. It involves randomly selecting some ‘electors’ from the council and getting them to identify those most worthy of internal leadership roles. A ‘council of elders’ of past participants of citizens’ juries could be chosen by such means to act as a source of advice and support to current juries and as a repository of corporate memory and evolving traditions.