Why the refugee problem won’t go away

It is often useful to think about organisational and social problems in terms of the  language of stocks and flows which work rather like a bathtub with inflows ( the tap), accumulations  (the bath tub) and outflows (the plug hole).

If we apply this thinking to the refugee situation we have a very simple diagram shown below.

 Here, refugees arrive ( the inflow), they remain in detention (the accumulation) and they are processed (the outflow). The increase in refugees in detention is a result of the arrivals outstripping those that are processed. There are two ways around this: decrease the rate of arrivals or increase the  processing. Both of these will lead to a decrease in the numbers of refugees in detention.

Both solutions have inherent problems. The difficulty in stopping the boats has been outlined in the press recently. It is highly likely that the Indonesian government would not cooperate with this policy. Increasing the rate at which refugees are processed  also has inherent difficulties because of the feedback that exists between processing and arrivals. This feedback is shown by the red arrow.

News about the increased processing is fed into the  network and increases the arrival rate.

The solution does not lie in changes that can make be made to this particular  structure.

The solution lies somewhere else and is shown in the third diagram

This diagram adds the legal entry process for refugees. News about these applicants has a feedback effect to the arrivals of the so-called illegal immigrants. If the rate at which legitimate applicants are processed increases, then we can expect the rate at which the illegal immigrants seek to arrive by boat to decrease with a consequent decrease in the numbers of people held in offshore detention centres.

This solution will not decrease in the refugees coming to  by boat but it will decrease the refugees held in detention centres.


Why the transplant program will continue to run into overcrowding problems

A recent article in The Age  reported that the lung transplant  theatres at The Alfred Hospital had been closed for lack of funding. While there was some debate about whether this was necessary, the structure of the system suggests that the retrieval and transplant processes are coming under increasing pressure.

The  Federal Government has funded appointments of doctors to identify potential organ donors in hospitals. This policy has been particularly successful and donation rates have risen.This has combined with some significant improvements that  the coordinating body,DonateLife, has made to the system.

It is principle of systems theory that improving one part of the system  will place increasing stress on the unimproved  parts of the system. When this improvement, in this case increased funding  for the identification of donors, occurs at the beginning of the system,  the whole system comes under pressure.

The causal loop diagram below shows the dynamics of this process.

The improvements to the donation process and the increased funding increases the number of organ transplants and reduce the waiting list.

This creates pressure on the downstream donation and hospital processes which have not received the  increased funding of the  donor identification process.

There are some unintended consequences as well. Many organ donors require  a second  or possibly third transplant, so there is is delayed pressure on the system. In addition, improvements in medical technology  will lead to a broadening of the criteria for both  donors and and recipients. This serves to increase the waiting list. This means that the decrease in the waiting list as result of the increased funding may not be as great as was expected.

The main problem however remains the unequal distribution of funding across system. This, in addition to the  built-in dynamics of the system, means that situations such as the one that occurred at The Alfred will become more frequent.

Closing the Gap between “standards”

The archetype Drifting Goals uses a central concept of a gap between two different standards, ethical, safety, academic etc.  If the gap is large or increasing, some effort will be made to close the gap so that the normal business can continue.

The initial situation looks like this, where the Y  axis is the “standard”.

Clearly, there is a gap between the standards  and one of two things can happen

We lower our standards to meet theirs. ” this is the way you do business in ….  (insert name of country)”

The alternative is:

Where some action is taken to lift a lower standard.

In the case of the RBA subsidiaries, it would appear that the Australian standard has been lowered. However, for those who find the first alternative  repulsive, it is worth considering the difficulty of achieving the second.

How corruption creeps into the Reserve Bank of Australia.

We watched in horror as reserve bank Glen Stevens admits that senior bank officials may have known about the bribery of overseas officials and ask ourselves “How did this happen?” and “How far does it extend?”

The answer to the first question is “ Possible fairly easily and insidiously.” The way in which this kind of corruption grows is described in the systems archetype called “Drifting Goals”  which is shown in the causal loop diagram below.

As the gap between our way of doing business increases, so does the pressure to lower the ethical standards. (The S at the end of the causal arrow indicates that these two variables move in the same direction). As this pressure goes up, the ethical standards are likely go down. ( Moving in the opposite direction, indicated by an O). As the ethical standards go down, the gap closes and business can proceed. The difficulty  is that with causal diagrams, you keep going round and round. As a consequence, the ethical standards of an organisation decline over time. It starts with something small and ends up with a banking scandal.

You can find good descriptions of this at this website




Why Taxi drivers uses taxi clubs for insurance

Recent commentary in the press and on television indicates that taxi drivers and owners are seeking to reduce the costs of operations by using so-called “taxi clubs”. These taxi clubs offer heavily discounted insurance policies to taxi drivers. However, their track record in paying out policies is not good. As a result of the failure of the taxicabs to provide good insurance cover, it is suggested that many taxi drivers are now driving without insurance.

The causal loop diagram below shows the dynamics of the situation and the detrimental effect on the industry.

As the number of taxis increases the use of taxi clubs to minimise Insurance costs will increase. This is indicated by the S at the end of the arrow meaning  that as  the number of taxis increases, use of clubs also increases.  The short-term impact of this is that costs go down  (indicated by the O at the end of the arrow) and the profitability of individual taxi drivers goes up.

However, the long-term effect is  that there is an increasing number of failed claims and this increases the costs to the taxi driver often to the point where they are bankrupt by the cost of insurance claims and are forced to leave the industry. The likely consequence of this is an increasing number of marginally profitable taxis driving without insurance.

There are four immediate policy levers. The first is legislation to require comprehensive insurance as part of the conditions for holding a licence.  The second is not to increase the number of taxis to the point were impinges on profitability. The third is to increase taxi fares to a point where owners and drivers do not resort to shady insurance deals to contain costs. The fourth is regulation of the taxi clubs.


The Taxi Industry Enquiry

Most of the analysis that has been done in this report does not examine the ongoing dynamic relationships between the public (who use  the taxis), the owners ( who own licenses and in many cases extract rents from them) and the taxi drivers (many of whom are overseas students who are returning home in increasing numbers). These dynamic relationships unfold over time. For instance, the demand for the new licences from existing owner drivers will be related to the rate at which their current contracts expire. The number of new licences will interact with the decreasing pool of drivers. These  dynamic  relationships can be examined  using simulation modelling
We have built a simulation model based on the draft report which looks at a number of scenarios over a 5 year time period and in particular looks at the returns to the various stakeholders in the industry.
Scenario 1: Existing licence holders drop assignment fees

The current licence holders match the government licensee and the number of new licence holders in the industry is limited to the normal rate of growth.

Scenario 2: Existing licence holders become owner-operators

All the existing licence holders decide to become owner operators and all the holders of the signed licenses take-up government licenses as their assignment contracts expire.

Scenario 3: Government policy interventions

The government  introduces a series of policies to improve quality and customer service.

The model also includes:

  1. The dynamics of the driver shortage that the enquiry noted and assumes that the labour market for the text industry, which is primarily made up of overseas students, will decline over time.
  2. Fare increases at the historical rate of increase

The full report on this is attached to this blog.