JERRY ROBERTS. The banking culture in context.

Our banks are urged to change their culture and the federal government proposes a Commission to fight corruption but such measures scratch the surface. Our problems are not hidden behind closed doors. They are in plain sight. They are in full public view. Our society worships false gods. Old Testament scholars advise us that such stories end badly.

In 2010 a Labor Government in Canberra hired a bank manager called Ahmed Fahour to manage Australia Post and paid him the gigantic salary bankers consider to be their divine entitlement. In the fullness of time retired public servants who managed Australia Post in happier times within what were then considered to be reasonable salary levels heard about the goings-on at their old organisation and they were outraged. Indignant emails began to float through cyber space. One landed in my computer.

Eventually the story got back to the government, now in Liberal hands under Prime Minister Malcolm Turnbull, a former Goldman Sachs partner who knew all about extravagant salaries. Malcolm said straightforwardly that the Australia Post manager’s salary was too high.

When Liberal Senator James Paterson revealed that Ahmed Fahour’s income from Australia Post for 2016 was $5.6 million consisting of $4.4 million salary and $1.2 million bonus and that five more Australia Post executives were paid between $1.3 million and $1.8 million each Senator Pauline Hanson hit the roof.

“Well, the cat’s out of the bag,” said Senator Hanson, “and I am mad. I’m absolutely seething over this. Damn right it’s too damn high and It’s absolutely unjustified and ridiculous.” 

Senator Hanson suggested $250,000 was an appropriate salary for the job. As I recall, she said that figure should be a maximum salary for all chief executives. After watching the cross examination of our managerial geniuses before the Royal Commission in Melbourne I’m sure we all agree with Pauline on this point. Indeed, if Pauline could restrict her rage exclusively to the big end of town, she would be Prime Minister.

Finally, when all the damage had been done, the story made an appearance in the mainstream media. On the ABC’s Channel 2 Sunday morning “Insiders” programme regular panellist Gerard Henderson was asked a simple question – was the Australia Post salary too high?

Gerard is a member of a devout Australian Roman Catholic family and he has been commenting on Australian politics since Billy Hughes was a baby. He can be relied on to produce a well-reasoned argument at the drop of a hat and he is never short of a word. He is famous for his pungent opinions, generally of a conservative character and often politically incorrect. That is why he is in demand for talk shows like “Insiders.”

Yet on this simple question of a multi-million-dollar salary Gerard was struck dumb. “I don’t know,” was Gerard’s answer. “I don’t know.” I think Gerard was saying that he did not know enough about the market in fat-cat salaries to comment on the subject.

I am not suggesting that Gerard Henderson is any sillier than all the other talkative folks on our television and radio political programmes. On the contrary, his role of devil’s advocate is increasingly important in these trendy times and I often agree with him.

Nor am I suggesting that Ahmed Fahour is any more obnoxious than all the other tiny-tot, smarty-pants overpaid executives who have starred in the Royal Commission and who traditionally play out their childish ego games on the financial pages of our newspapers. Indeed, compared to the Commonwealth Bank’s Ian Narev, young Ahmed looks like an impoverished member of the Sans Culottes. 

I am merely using these gents to illustrate the main reason for all the problems in our banks and throughout our society. That main reason is the supine acceptance of phony economic and political theories and philosophies by the very institutions that should have subjected these so-called “reforms” to critical scrutiny – the media, the parliaments and political parties, the universities and the Church — to name a few.

By coincidence, I mentioned Australia Post in one of my first comments on Pearls and Irritations, responding to an excellent post by John Falzon (25 August 2017).

“Australia Post is indeed a good example of the black hole at the heart of neoliberalism. Whether it is corporatisation, privatisation or acquisition and merger the game is the same. The property and the jobs belonging to the people are swept upwards from the periphery in a gigantic, centralised vortex and re-distributed to the coupon-cutters mocked by Keynes and a loathsome, nouveau nomenklatura of arrogant, grotesquely-overpaid executives.”

With Australian politics as appetising as a cold porridge sandwich we look overseas and all eyes are on France. Is there a whiff of 1848 in the Parisian air or is that just the smell of tear gas? Jacques Cheminade, head of France’s Solidarity and Progress Party, makes a text-book Gramscian analysis of the Paris riots.

“The past is being rejected but the ideas for a future have not yet been put forward by the yellow vest movement. At the beginning it was a protest with the cry — ‘We need our cars to go to work. We are here in France and most social services have disappeared, the baker has disappeared, the post office has disappeared. We need our cars to travel long distances to our work place, if we are lucky enough to have one.’ “

In a fascinating New York Review of Books article linked to Pearls and Irritations (15 December), Mark Lilla explained how Macron sneaked into the French Presidency after the front-running Conservative Francois Fillon was caught up in financial scandals. Mark is researching a third force on the French right occupying the space between mainstream Republicans and The National Front.

The star of the show is Marion Marechal -Le Pen, granddaughter of Jean-Marie Le Pen, founder of the National Front. “If all French eyes are not on Marion, they should be,” writes Mark Lilla, who has interviewed the brains trust of this new right — predominantly young, Roman Catholic intellectuals.

“They share two convictions,” he writes,” that a robust conservatism is the only coherent alternative to what they call the neoliberal cosmopolitanism of our time and that resources for such a conservatism can be found on both sides of the traditional left-right divide…. They are all fans of Bernie Sanders.

“They predictably reject the European Union, same-sex marriage and mass immigration. But they also reject unregulated global financial markets, neoliberal austerity, genetic modification, consumerism and AGFAM (Apple-Google-Facebook-Amazon-Microsoft). Why do they consider the European Union a danger? Because it rejects the cultural-religious foundations of Europe and tries to found it instead on the economic interests of individuals….

“In putting pressure on countries to conform to onerous fiscal policies that only benefit the rich the EU has prevented them from taking care of their most vulnerable citizens and maintaining social solidarity.”

On the other hand, back in Australia, the Liberals surveying the wreckage of their Party may conclude that their problems are sexual. Liberals woke up the morning after the same-sex marriage vote and discovered they were 30 years behind the times. Now the Church is trying to fire up a ridiculous scare campaign that religious freedom is under threat in Australia.

The Christian Church, as the name suggests, was constructed to promote the teachings of Jesus
Christ as they come to us in the Gospels. Jesus had nothing to say about homosexuality because he had more important concerns. Christ’s mission on earth was justice – pure justice, true justice. We call it social justice nowadays.

There are seven passages referring to homosexuality in the Bible, none of them favourable. The four Old Testament texts are Genesis 19. 1-11, Judges 19. 16-30 and Leviticus 18.22 and 20.13. The three New Testament texts are Romans 1.26-27, 1 Corinthians 6.9-11 and Timothy 1.9-11.

The Bible has 250 verses on the proper use of wealth and over 300 on our responsibility to care for the poor. If the Christian Church wants to survive the 21st Century – which seems unlikely, looking at the age of parishioners – it needs a mission. That mission is the mission of Christ. It is social justice.

It was good to see the programme staff at SBS television scheduling to coincide with the French yellow vest riots an excellent movie about the 1987 uprising in South Korea where the Roman Catholic Church through its social justice movement played a key role in the success of the fighters for democracy.

Let’s return to the sorry picture of our banks and statements by John Hewson and others that their problem is cultural and can be solved at the board room level. The problems of our banks are not cultural, except in as much as they are part of the larger cultural sickness of our society illustrated by the above parable of Gerard Henderson and Ahmed Fahour.

The specific banking problems are structural and legal. Structural reform is not on the Royal Commission’s terms of reference but we can expect Commissioner Hayne to comment on this subject. Good work is being done in this area, much of it coordinated by the Citizens Electoral Council in Melbourne.

Denise Brailey is making heroic efforts on behalf of the banks’ victims and business heavyweight John Dahlsen is weighing in from the big end of town. John makes the practical criticism that the banks need to be broken up because they are too big and complex for anybody to manage. He knows what he is talking about, being an experienced corporate lawyer, former director of ANZ and former chairman of Woolworths. 

On YouTube financial analyst Martin North and economist John Adams conduct a probing conversation on the banks and point out that a bank deposit is nothing more than an unsecured loan to a bank. So old-fashioned conservatives who say their money is safer under their pillows may have a point.

Jerry Roberts has a personal vendetta against the dumbing-down of politics and religion and is grateful to John Menadue for publishing his views. 

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6 Responses to JERRY ROBERTS. The banking culture in context.

  1. Hi Geoff, thanks for that. It was new to me — a body to promote another phony market. The economists call them “quasi” markets. Simon, I don’t disagree with you on the stifling tendencies of political parties and the need for more outspoken people in the parliaments — like you and me. I still see the universities as more important than the parliaments. Research has shown that the stuff kids are taught in their typical under-graduate years — late teens, early twenties — tends to stick in their brains. If they are taught garbage like B.F. Skinner’s behavioural psychology or fresh water economics they do a lot of damage when they go out to the bureaucracies and corporations and the political world.

    Another way of looking at the source of the problem comes from Terry Moran writing about the civil service. (Pearls and Irritations 28 and 30 November 2017) Economists have been too dominant in the formulation of public policy. More input is needed from other disciplines such as history, anthropology, sociology. There might even be room for common sense. In periods of radical change such as our neoliberal revolution the baby tends to be thrown out with the bath water, as Trotsky wrote about the Bolsheviks in his introduction to The History of The Russian Revolution.

    Thanks Rosemary. The Gerard Henderson — Ahmed Fahour parable is designed to demonstrate our society’s loss of direction. When a good Catholic boy does not even bat an eyelid let alone vomit all over the studio when the subject of Ahmed’s $5.6 million income is put on the debating table we see clearly that we have thrown the moral compass overboard. Meanwhile the clown at the Commonwealth Bank was getting twice that amount.

    It beggars belief that in modern Australia we have created a new bunyip aristocracy of useless financial managerial parasites for no other reason than to conform with a ridiculous academic theory about the government of mankind by markets. And the Church still wants to stick its nose into people’s underpants.

    Ben, you may have found the immediate solution to the problem. Tax the mongrels! When I was a boy in President Eisenhower’s USA the tax on such salary levels was 90 cents in the dollar and America has never been more powerful, before or since. Picketty recommends 80 cents in the dollar. Dick Smith came up with an ingenious idea a while ago. Channel the ego trips of these executive types into a competition to see who can pay the most tax. They could still get their pictures in the finance pages and they would be doing something useful for the first time in their lives.

  2. Garry Everett says:

    Kenneth Hayne said “Greed before customers” was the cultural expression of big banks in Australia..
    I still think the Banks central problem is culture which will infect any attempts at structural and legal changes. By all means, lets pursue these types of changes as You persuasively argue, but don’t ignore the need for cultural change. You cannot legislate for morality, nor can you build a substantial edifice on rotten foundations.

  3. Executive salaries in the multinational, corporate and Government domains are excessive due to the adoption of independent remuneration mechanisms. The opportunity for a conflict of interest is obvious. The fee paid to these entities is frequently a percentage of the executive salary negotiated. Either way it is excessive. The corporations and departments select compliant remuneration entities that provide the desired outcomes that boards and supervisory authorities desire. I submit that independent remuneration purveyors do not receive sufficient recognition for the misdeeds of the executive classes.

  4. Ben Morris says:

    Privatisation is taxation without representation.

  5. Simon Warriner says:

    A great essay, highlighting a symptom of our major problem. The problem, as I have repeatedly stated here and elsewhere, is leadership. Our political parties are congenitally incapable of producing it over the longer term. They often start with intellectual vigor but party politics takes over, the intellectual are trumped by the vigorous and what we are left with is very active idiots who have no concept of conflicted interest and the dangers allowing it to exist unrecognised creates.

    If we want serious political debate about the issues that really matter, like what role banking should play in our lives, we need to be electing people into national leadership roles who are capable of recognising and understanding the dangers of the conflicted interest that lies at the heart of letting a banker operating for private profit bring money into existence by writing a loan.

    Right there is the heart of the problem and how to fix it.

    We need a movement dedicated to getting more capable, competent independent individuals into government. If we can start there we might get something useful done. Otherwise I see a bleak future.

  6. Rosemary O'Grady says:

    Thanks again JR. Of course we all incline to praise those who publish & reflect our own opinions but one must be grateful for their being so lucidly expressed. I am copying your paragraph : ‘…That main reason… the supine acceptance of phony theories…’ into this year’s diaries as I trudge off to the courts, all too soon, to observe a trial currently subject (and continuing) to a comprehensive Suppression Order…
    In the meantime I hope NOT to see Ian Narev’s successor on the podium at the Australian Open in January – a more obscene picture I have yet to recall than the CBA’s chief officer grinning despite his public disgrace as he waited to greet Federer & Nadal (was it?) – people who really stand for something.

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