Kenneth Haynes' enquiry into the finance industry has exposed troubling ethical behaviour among those we expected should know better.
But the problems are not confined to senior executives in large corporations. As my recent talks to Rotary clubs explained, this unethical behaviour is wide spread.
Here, in the text from those talks, I sheet home the blame to bad parenting and an adolescent unwillingness to take responsibility for our own actions.
The Decline of Civil Virtue: Abuse of Trust
When a group of young Essendon footballers were asked to sign confidentiality agreements
and not to disclose the details of their performance supplement regime,
their hero, James Hird, was in the room.
When Catholic priests were accused of fondling young boys, their superiors moved them to different parishes.
Commonwealth Bank staff have altered loan applications, to the detriment of the applicants.
AMP has invoiced the dead for financial advice.
Bill Shorten was the sole signatory when he diverted $25,000 of union funds to his own campaign and $100,000 to Get Up! where he was a director.
Coles and Woolworths have done deals with the Shoppies union to pay their staff below the award. In return, the union gets 100% membership and union fees direct debited.
At Sydney University, the students’ union denies access to facilities to those who do not conform to their political views.
James Cook University has fired Peter Ridd for finding errors in his colleagues’ published work.
ANU has refused a bequest to promote a course in Western Civilization but accepts funds from foreign governments for its Centre for Arab and Islamic Studies.
Our cricketers tamper with the cricket ball.
That is when we notice. That is when we feel national shame.
Here is a question for you.
If Steve Smith is banned from work for a year,
and loses about $5million in salary and sponsorships,
because one of his team tampers with the cricket ball,
what is a suitable penalty for the Catherine Brenner and Craig Meller, Chair and CEO of AMP, whose staff have billed the dead for financial advice?
Today, I am going to talk to you about being responsible for ourselves, our families and our society.
Inculcating Good Values
Before I begin, let me tell you a little about myself.
I come from Geelong. I grew up in retail.
My parents ran a mixed business and from the age of seven I used to help in the shop.
My Dad taught me his values while we worked.
He encouraged me to work hard and always do my best,
to respect the customers and to do the right thing by them.
I look back on this as a positive education in life, not an exploitation of child labour!
My uncle was a butcher. Dad’s best mate, Cliff Cooke, was a florist.
My parents and their friends were civic minded.
Service clubs like Rotary, Apex and Lions flourished.
Dad and Cliff held senior positions in Legacy.
My values derive from family life and family business in a small town.
My father encouraged me to have an enquiring mind.
But he cautioned, that if my views differed from the norm,
to at least have the humility
to realise that I was probably wrong.
Raised in the Depression, my mother knew the virtue of thrift,
and the importance of saving and investment.
She used to say, “Money doesn’t grow on trees.”
(She was evidently unfamiliar with the Reserve Bank.)
Scott Morrison has added $7 billion to the GST distribution
loudly proclaiming that no-one will be worse off.
So where do the billions come from?
Today, politicians throughout the world run deficit budgets,
spending on projects to win votes
but unwilling to raise sufficient tax to fund them.
The difference is met by printing money, euphemistically termed quantitative easing.
My mother would have said “Sounds like counterfeiting to me.”
And it is. Just like the kings of yore used to clip the coins to fund their wars.
Applying Home Truths to Business
For thirty-five years, I managed the professional services consultancy,
Fenwick Software, which I founded in 1976.
Its culture is built on the principles of classical liberalism.
Its employees are granted an appropriate degree of autonomy,
and responsibility for their own actions,
are provided with opportunities to grow and assume more responsibility,
and are encouraged to apply their skills to help each other
and to deliver value for their clients.
Most of our clients are small-to-medium-sized enterprises, often family businesses.
Businesses like Ward McKenzie who make the baking powder that sits on your pantry shelves; Hazeldene’s who process the chickens you buy from Woolworths;
and Confoil who make the aluminium foil that holds your Four and Twenty pies.
It is an area of the economy where the free market thrives.
Our clients cannot afford lobbyists to win them special favours from the government.
They are independent and proud, and do not expect government help;
in fact, they would be embarrassed to receive it.
Running a business in a free market economy gave me a unique opportunity.
It enabled me to develop my ideas and to test them in practice.
When I retired, I wrote a book, The Fragility of Freedom, to pass on what I had learned.
“For the future, for the unborn.”
Our Free and Prosperous Society
We live in one of the freest and most prosperous societies
in the history of mankind.
This has not happened by chance.
It is due to the institutions we inherited from Britain:
the rule of law;
the principle of private property,
a free enterprise economy, and
a culture that accepts a wide range of human rights –
to free speech,
to our political and religious beliefs,
to choose our friends and associates, and where we may meet with them;
to choose whom we may marry, and how many children we may have;
to choose our occupation;
to choose where we may live;
to choose what we may eat or drink or wear;
to choose our entertainments;
to equal protection under the law;
not to be detained unlawfully;
to be able to form voluntary associations - clubs, societies and businesses;
to be able to enter into legally enforceable contracts;
to retain the rewards from our work and to dispose of them as we see fit;
and so on
This is classical liberalism, the philosophy of the Enlightenment.
Wherever this ideology has been tried, mankind has flourished.
Per capita incomes have risen multiple times,
longevity has increased by many years,
education has become universally available,
women have been treated equally,
there has been more time devoted to culture and the arts,
and there have been noticeable increases in civility.
Elsewhere, throughout history, only small ruling elites led the good life;
the majority led a precarious and unpleasant existence.
That is still the case in totalitarian states today.
Compare life in Australia with life in Zimbabwe, Iran, Venezuela, or North Korea.
The Free Market
In the late eighteenth century Adam Smith observed
that work could be done more efficiently
if each task was done by a specialist rather than one person undertaking the whole job.
This concept is now known as the division of labour.
Specialisation produces benefits from:
the improved dexterity that comes from practice and repetition;
time saved when a person does not have to swap between activities;
and the opportunity to invent machinery to undertake repetitive tasks.
We benefit from our unique human trait of being willing to trade with strangers.
It enables us to specialise,
to become better and better at what we do
and to exchange our products and services and ideas.
The process is exponential.
The more we trade, the more prosperous we all become.
Free market economies flourished in the hundred years prior to the First World War.
Both population and prosperity grew at amazing rates.
In the UK, population increased four times and GDP per capita doubled.
In the USA, population increased twelve times and GDP per capita three and a half times.
In the past hundred years, many nations have thrived
by adopting free market economies and democratic forms of government.
The average South Korean lives 26 more years, and earns 15 times what he did in 1955;
for the average North Korean longevity and earnings have not changed.
In the 60 years from 1950 to 2010, Australia’s GDP per capita,
measured in today’s currency, increased from $13,000 to $43,000.
We are more than three times better off than our grandparents.
My cousin recently noticed that her late grandmother’s weatherboard cottage in West Geelong was for sale again. She went in for a look. She could not believe how small the rooms were.
Most products become cheaper over time, and better quality.
A modern car is a fifth the cost of a T Model Ford, and vastly superior.
A colour TV is 5% of its cost in 1970 and has sharper colours and better sound.
Even the refrigerator is a quarter of the cost it was 50 years ago.
The only areas of our economy where costs have not fallen are health, education and energy.
Wherever the economy is in the hands of government,
or the free market is constrained by regulations, everyone is worse off.
We become poorer because those who have the power
make choices that create poverty.
The Political Failings of the Twentieth Century
On 9 November 1989, the Berlin Wall fell,
and the communist experiment was over.
Established with so much hope and intellectual support,
it had delivered poverty,
destroyed trust among its citizens,
and terrorized, censored and imprisoned
those who disagreed with the party line.
The contrasts between East and West Germany were palpable,
like those seen today between North and South Korea.
Less than twenty years later, in 2008,
the GFC reportedly exposed the weaknesses of unregulated capitalism.
Governments in the USA and Europe protected their economies
by bailing out financial and industrial companies that were too big to fail.
The conventional opinion was that the free market had failed.
More considered views suggest that the collapses in London and New York,
and the subsequent problems in Greece and other European countries,
exposed the errors of the welfare state and crony capitalism.
The progressive political systems of the twentieth century have failed us.
Benefits have not flowed to the poor and disadvantaged as expected;
they have been captured by powerful sectional interests, by people with influence.
The widely held belief that the liberty and prosperity,
that comes from free enterprise, can be maintained
at the same time as it is shackled with interventions and regulations,
and wealth transfers to favoured groups
is no longer credible.
The state has become pervasive in our lives.
We have lost the belief that we can do things ourselves.
We live with the peculiar notion
that if we cannot afford some desired service,
it should be provided by the government.
The state is perceived as having an inexhaustible supply of funds.
The result is rising debt, unsound money, poor investment decisions,
and unfair burdens on the productive, the thrifty and the young.
The solution will require us to take more responsibility for ourselves and not force others to provide for our every need. The solution is subsidiarity.
Subsidiarity is the principle of devolving decisions to the lowest practical level,
that what individuals can do, society should not take over, and
what smaller societies can do, larger societies should not take over.
It involves people doing whatever we can ourselves,
with our families, friends and neighbours.
It means forming voluntary organisations – businesses, clubs and societies –
so that like-minded citizens can achieve their common objectives.
Government activity is kept to a minimum and as local as possible.
Being Responsible Parents
In conclusion, I would like to read a passage from my book Liberty at Risk.
I wonder why the focus of our solutions for social problems
seems to be to ask strangers to deal with them
and government to fund them.
The incidence of family violence in Broken Hill
is met by calls to restore funding of a legal aid facility.
The incidence of vandalism by 12-year-olds in Kununurra
is met by calls for improved juvenile detention facilities.
In both cases,
attention to the root causes of the problems might be more effective –
minimizing or preventing the problems
rather than treating the consequences.
In both cases,
one wonders what family, friends, neighbours and workmates were doing
to allow such anti-social behaviour to persist.
Is there no one prepared to take responsibility?
Is there no one prepared to tell the wife-basher,
‘Mate, this is not acceptable behaviour’?
Is there no family, friend or neighbour
prepared to offer the bashed wife a helping hand?
Is there no one prepared to take 12-year old boys aside,
inculcate social values,
and give them more productive activities, tasks and responsibilities
so that they can mature into good citizens?
What are the parents doing?
What are the grandparents doing?
What are the friends and neighbours doing?
Is there no one who cares for these young people and their future life?
Has the welfare state sapped our moral strength?
Do we believe that all problems can be addressed by strangers
and paid for by others?