JERRY ROBERTS. Cause and effect.

May 2, 2018

Royal Commissions are often diverted into by-ways that are interesting and entertaining but have little relevance to the terms of reference and do nothing to solve the problem that required the inquiry to be established in the first place. 

Thanks to the tireless efforts of civil rights campaigner Doreen Trainor, a Royal Commission was established in the 1970s to investigate treatment of Aboriginal prisoners at Fremantle Gaol. During hearings the Commission heard that resourceful prisoners were doing some home cooking in their cells to spice up the prison diet and had rigged up a telephone system which they were using to call their mothers for advice on recipes.

This had nothing to do with the subject of the inquiry but it was a page one story that delighted the good folks of our Western Third.  Twenty years later the Wood Royal Commission into police corruption in New South Wales was seriously considering a radical solution to the problem.  On the table was a plan to sack the entire police force and train a new force.  A back-up proposal was to put the plain clothes detectives into uniform and put the required number of uniformed officers into plain clothes.

The closer people were to the facts the more they favoured the radical plan.  In the event the good folks of New South Wales were treated to a series of stories about a police officer with the classic Australian name of Chook Fowler.  Did anything change?  You have to be joking.  Does anything ever change in New South Wales?  Walk around old Sydney and you can still hear the screams of the convicts as the whip carves the flesh off their backs.  The Rum Corps is alive and well.

There are various ways of looking at the finance sector, most of them mysterious to my little brain, but one way that might be worthy of consideration is to regard bankers and their customers as human beings, not just numbers on a computer screen.  My Anne’s father, Archer Eckersley, was employed by the ANZ Bank throughout his working life, apart from war service in the Middle East and Pacific islands.

In his youth, Archer played football and cricket.  He and Beryl, as they matured, followed the common sporting progression from tennis to golf and bowls.  They were active members of the communities in the regional centres where Archer managed the bank.  He had a grassroots knowledge of each district’s industries, companies and families which he took with him to his final posting managing the St George’s Terrace West branch of the ANZ.

At Archer’s funeral his younger brother, a knight of the realm, recalled a fishing trip to his favourite spot at Shark Bay when he stopped at a roadhouse. “You’re Archer Eckersley’s brother, aren’t you?” said one of the locals.  Indeed, he was. “Your brother saved my farm.  He saved me.  He saved everything.”  Sir Donald Eckersley was a leading figure in West Australian agribusiness.  He told us he often heard similar stories about his brother on his travels around the State.

My grandfather, Stan Wreford, was manager of the National Bank in Perth during the 1930s Depression. Through that period, he was able to keep the bank’s country customers on their farms in all but two cases.  Despite Stan’s powerful position in the bank and his deep knowledge of finance, these two families lost their farms.  My mother never forgot it.  The families came to dinner at Stan and Mina’s home.  Around the dining table everybody was crying – my mother and her mother, her young brothers, the farmer and his family.  My loud, bad-tempered grandfather cried his eyes out.

In a more recent rural downturn when families were losing farms by the dozen, I sat on a government committee where our financial expert wore so many gold bangles on his wrists that he jingled and jangled when he walked down the Terrace.  He talked about “restructuring” without an ounce of emotion.

Farmers are important.  So are small business people in country towns, suburbs and cities.  We need bankers who are committed to our country and its people. The most important assets on our land are not fences or sheds, or even flocks of sheep and herds of cattle. These can be rebuilt.  It is the people who are important.  Many have known their country for generations. Where they remain committed to that life, we should do our level best to keep them there lest their farms be swallowed up by corporate owners or foreign money launderers.

In the movie “Margin Call” the young bank mathematician who discovers that the firm is broke is a rocket scientist by trade.  In the bank’s late-night emergency meeting on the eve of the Global Financial Crisis he explains to the chairman, played by Jeremy Irons, that the equations he wrote about friction’s effects on rocket take-off could be adapted to the behaviour of financial markets.  Readers may excuse my lack of mathematical precision. Jeremy Irons took his word for it. Unfortunately for the bank and its clients the equation calculating risk no longer worked and the bank was galloping into the red.

It does seem reasonable to suggest that centralisation is a significant factor causing the problems now being investigated by Australia’s Royal Commission.

For many years The Citizens Electoral Council (CEC), a political party based in Melbourne, has campaigned for an Australian version of the Glass Steagall Act to make our banking safer for honest people.  The CEC has now drafted legislation to go to the Parliament in Canberra.  The Glass Steagall Act was passed in 1933 to protect mums’ and dads’ banking, often known as “boring banking”, from Wall Street’s high-risk, high-flying speculative banking.  Boring banking is not rocket science.  I have heard it described as “345 banking.”  Borrow at 3 per cent, lend at 5 per cent and knock off to play golf at 4 o’clock.

President Bill Clinton put Glass Steagall to death in 1999. Leading economists hold different views on whether the end of Glass Steagall contributed to the Global Financial Crisis.  Joseph Stiglitz said it did by encouraging the growth of banks to the point of being “too big to fail”.  The Stiglitz view appears to have common sense on its side.  Generally, I’m not strong on Freudian interpretations of political decision-making but the psychological theory about Bill Clinton’s attachment to Wall Street makes sense. (For the benefit of Freudians, it is about a boy’s need for a father figure.) I have read the left-wing Leo Panitch’s explanation of why the onward march of capitalism made Glass Steagall’s end inevitable but I am not convinced.

The Banking Royal Commission is now at the stage of the Fremantle prisoners ringing up mum for advice on how to cook scrambled eggs and the darker humour of Chook Fowler and his mates.  It is to be hoped that once the Commissioner has finished listening to the naughty boys and girls of the finance industries and has taken a sauna to sweat the stink out of his skin, he might consider the Glass Steagall view of the world.  In other words, let us hope he looks for the structure behind the behaviour, that he considers the cause rather than the effect.

One of the distressing features of the current political debate is the tendency of honourable Labor members to take the moral high ground on banking.  It was a Labor government that sold the Commonwealth Bank, Telecom Australia and anything else not nailed to the floor. Labor gave Australia the full Thatcher-Hayek monty of deregulation and privatisation.  Today’s parliamentary Labor Party is an awkward position while the neoliberal revolutionary vanguard of Hawke, Keating and my old school chum John Dawkins is still alive.  Labor may employ more robust rhetoric but in policy is unlikely to do more than fiddle at the edges.

We all know where we are now at home and abroad.  We are in a gigantic vacuum.  Politicians tell blatant lies and are reported with a straight face by news media who have uncharacteristically lost the faculty of curiosity.  The Syrian war is a classic example.  The financial sector which has overpowered Western democracy in Europe, the Americas and Australia has been exposed as a poisonous parasite on our economy and our society.  The economics profession has suffered a massive loss of face identified with pin-point accuracy by Queen Elizabeth herself in her widely publicised visit to the London School of Economics.

Who is moving to fill the vacuum?  Why, none other than the very same lady. We are witnessing the best, sustained marketing campaign I can remember and it is coming from the public relations department of Buckingham Palace.   Every day the Palace is pumping out multiple stories about the royal family in all its ages, shapes and sizes.  This is way beyond the normal holding pattern we Australians associate with our wonderful Women’s Weekly magazine.  This is the real deal.  This is as good as it gets in the propaganda business.  At a personal level it makes me sick but from the professional viewpoint I lift my hat to the Palace public relations staff and I lift it even higher to the strategic thinkers behind the campaign.

These thinkers have identified the vacuum described above and seized the moment to promote the monarchy as a benign force in an evil environment – an oasis of stability surrounded by a desert of venomous political snakes hissing lies through their teeth, robber hordes of sick, greedy financiers and truck-loads of crazy generals.  They have a point.  How does Friedrich Hayek always have the last laugh?  He created the neoliberal mess when he wrote “The Road to Serfdom” and he admired the British constitutional monarchy.

With the Palace on the front foot, its opponents, including Australia’s republicans, are up against it. A passionate Australian by the name of Greg Hamilton has emerged on Pearls and Irritations and has been accused of Anglophobia.  To a degree, it is necessary to be Anglophobic in order to be Australian.  This does not mean we dislike individual Yorkshiremen or Cornishmen any more than we dislike individual Chinese or Iranians but at the very least we should be sceptical of the British establishment which we associate with the City of London and – let’s face it – Buckingham Palace.

We should be equally sceptical of America’s Wall Street establishment, Australia’s Collins Street establishment and every other establishment.  It is both a matter of theoretical logic and practical experience that in order to be egalitarian we must be anti-establishment.  Australia’s continent, its geography, climate and history require its people to be egalitarian.  We are not suited to Dukes and Duchesses, Lords and Ladies, Master and Servant.  We are mates.  Our bankers need to come down to earth.

Jerry Roberts is a journalist by trade and a member of the Australian Labor Party.

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