The way, the truth and the life of Reilly

May 18, 2021

A few weeks after the First Fleet stopped at Port Jackson and disgorged a representative collection of thieves, cheats and vagabonds, the British House of Lords began the impeachment trial of Warren Hastings, the recent Governor-General of India for the East India Company, accused of looting the wealth of India on an epic scale — certainly more than all of the convicts and prisoners of Great Britain were capable of stealing in their lifetimes.

It might be beyond the wit of any modern man to loot, steal, extort and simply abstract as much money from Bengal and a host of dependant states, allies and petty kingdoms, as Hastings, (and before him, Robert Clive), took back to Britain as personal possessions, or  the loot sent back as profits to be distributed among shareholders. One estimate is that the system Hastings and Clive set up looted and sent back $45 trillion in today’s money. The impeachment — which ultimately failed — was to pitch two contrary theories — that the shareholders had the right to maximise their profits without regard to the rights of Indians, or that the company owed duties of justice and fair dealing to the colonised people. Profit, including profits made from land confiscations, arbitrary taxes, extortions, bribes, and state violence on a grand scale, won.

The House of Lords, in effect, vindicated the remarks of Robert Clive, answering earlier criticism of the personal plunder he had taken. “Am I not rather deserving of praise for the moderation which marked my proceedings?” he asked the House of Commons. “Consider the situation in which the victory at Plassey had placed me. A great prince was dependent on my pleasure; an opulent city lay at my mercy, its richest bankers bid against each other for my smiles; I walked through vaults which were thrown open to me alone, piled on either hand with gold and jewels! Mr Chairman, at this moment I stand astonished at my own moderation”.

 Although some rather prim people, including members of the Labor Party, have expressed disapproval of the way in which the 2021-22 Budget of Scott Morrison and Josh Frydenberg has been appropriated to the coalition for re-election purposes, frankly I stand rather astonished at the government’s moderation. It could have done a lot more to “own” purposes to which it could dedicate public money, to build for itself more monuments to our prime minister and his colleagues, and, more particularly, to lay the foundations for a society still recognisable a generation from now as having been constructed from the economic ruins of the pandemic.

There is precedent for treating public money as if it is money that the government of the day can spend for any old purpose, by any old system, including by mere discretion, without tender or operating principles, and to whomever the government likes, including friends, relations, cronies and party mates, captains of industry, and people who donate money to the coalition. Precedent has also made it plain that no merit principle applies to patronage appointments, including to tribunals and jobs where there is some onus to be, and to be seen to be, impartial. A codicil to this principle is that any old former member or senator who has been rejected by the electorate is entitled to a long-term high-paying government job, regardless of merit. It also seems to have been re-established, after a partial hiatus a decade ago, that public money can be used to advertise coalition wares, especially around election time.

We are now used to secretive and partisan spending by the discretion of ministers, and it may be something Labor will copy, not ban.

It is true that many of these precedents were established by Scott Morrison himself, although the purist would note that John Howard, particularly in his last term, threw money with gay abandon at any cause which seemed likely to bring the coalition votes. Indeed the promised largesse and unaffordable tax cuts were such that the then Labor leader of the opposition, Kevin Rudd, was able, with some initial success to pretend to be a greater financial conservative than Howard, and to make a virtue of promising less.

Fifty years ago, a famous American senator, Everett Dirksen, examining the estimates for the cost of new military equipment, commented that “A billion here. A billion there. Pretty soon you are talking about real money.”

Somewhere along the line the ease with which our economic guardians borrowed and spent money has fundamentally changed the nature of budgetary economics. It has, obviously, knocked for a six old coalition mantras about debt and deficit, and, probably, the criticism of Wayne Swan, Kevin Rudd and Ken Henry for keeping the economy liquid during the GFC in 2008. Even assuming that future governments try to reduce debt, or reduce the rate of its growth, it has become obvious to many citizens that there is no particular science, or economic advantage in setting some artificial limit on spending, particularly at the present.

The relative unimportance of the bottom line, and the fact that a billion here or there makes little difference — certainly in terms of the political dangers Morrison faces — is why I am astounded at the moderation of Morrison and Frydenberg. We could have given Murdoch and other media moguls a few billion. Built a bridge to Tasmania. Dredged the Darling River. Extended the Australian War Memorial adventure playground to the Lake. The lack of imagination is worrying.

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