Cut the corporate stranglehold

Covid has caused quite a lot of changes of heart, most recently the Federal Government’s attitude to paying sick leave to those who do not have it. Before that, it was increasing unemployment benefits and giving free child care. It gives rise to the question: why did it take a pandemic? If they could be afforded when the economy is on its knees why couldn’t they have been afforded earlier when economic times were much better?

When this pandemic ends, people will ask for, or perhaps demand, a fairer system. This is what happened after World War II. In the quarter century after the war, income and wealth distribution became more equal. There was a much greater trust in governments and institutions.

So what went wrong? It happened in several stages. In the first, governments withdrew from many areas and allowed the private sector (especially corporations) in. Governments trusted corporations to deliver efficiency and value through privatisation and out-sourcing. 

The trust was utterly misplaced. The misplaced trust came in the form of deregulation and self-regulation.

If a corporation has the choice of doing the right or the wrong thing, it will always choose whatever makes the most profit.

With labour-market deregulation corporations stripped away job security, sick pay and holiday leave, replacing them with contracts. 

The next stage came when consumers of what hitherto had been public services and public utilities or well-regulated businesses were one way or another cheated by the corporations so they blamed “the system” – government and institutions as well as corporations.

The process was completed when corporations cemented their position by infusing themselves into the political process through donations to political parties; behind-the-scenes lobbying; and self-serving misleading advertising directly to voters.

The promise in the 1990s was greater economic efficiency which would benefit all. We now know that the benefits were not shared.

Unless that is unwound, it will be back to business as usual when the pandemic ends. Corporations, whose sole purpose is profit, will in effect run the place again, at great cost to consumers and the public.

Without regulation by public officials who are not driven by profit, but by the public good, corporations will take short-cuts on the environment, safety and quality. Ultimately, that is much more inefficient for society than the “burden” of regulation. For example, when building codes are not enforced or are “enforced” by the industry itself, shoddy practices lead to collapsing buildings and costs to the end user because the corporation has disappeared.

Post-pandemic, we must also strengthen publicly owned enterprises and even buy some back.

Publicly owned enterprises set standards against which private corporations are judged. This is why business advocates cuts to, or even the abolition of, the ABC. Without the ABC, commercial broadcasters would not even have to pretend to run half-way decent news services.

The mission of media organisations should be to provide fearless news of consequence. Without the ABC showing by example, commercial broadcasters, instead of speaking truth to power will speak lies to the powerless. 

Post-pandemic, ABC funding should be increased by television licences as in Britain or a national lottery, in the way other countries fund cultural activities.

When the Commonwealth Bank was privatised, Australia lost the leadership and example of an ethically run banking business. From then on, the banks’ pursuit of profit had no ethical bounds, as the Royal Commission demonstrated.

The privatised Qantas generally behaves itself because it is competition with many overseas publicly owned airlines.

The real point is that major disruptive events, like war, economic depression and pandemics, make people hope and seek a better future for themselves and their children and grandchildren. Whether it happens depends on the political leadership at the time.

Sometimes those hopes are dashed. For example, the “World Fit for Heroes” promised after World War I ended in hyperinflation, the Great Depression and War. Political leadership and economic skills in the US, Britain and Australia and elsewhere were sorely lacking. It was the war to end all wars, but the victors were only interested in punishment and revenge.

On the other hand, the Depression itself brought forth President Franklin Roosevelt and his promised New Deal for the American people.

And World War II brought the United Nations; the criminalisation of aggressive war; the international monetary system and a rules-based international order. Alas, it degenerated into the Cold War.

As with other cataclysmic events, people will think that all the suffering, economic loss and inconvenience of Covid has got to be for something.

Governments in the developed world be doing themselves a favour by getting out of the clutches of corporate power and instead delivering for the broad mass of their people.

Covid could be a catalyst for that. In Australia it is fairly apparent what should be done. 

The fundamental corrupting influence of corporate power in our polity must be weeded out. Their donations should be banned and their lobbying curtailed. Without that, no political party will be able to do much reform in any field.

We should mine our abundant solar, wind, hydro and wave energy and use it to do more processing of our minerals and to replace dirty energy sources. We should do a top-to-bottom reworking of our tax system to make it fairer and more economically efficient. We should address the big national-identity issues of Indigenous participation and constitutional anachronism. Inequality in health and education, their poor funding, and dysfunctional federal-state division of responsibility should be fixed.

Covid has highlighted mental health and homelessness. How can you obey a stay-at-home order if you haven’t got one?

With Covid driven high unemployment we should suspend skills immigration. We should have a population policy rather than high immigration which benefits only big business at the expense of everyone else.

Experts, scientists, and a dispassionate public service should have greater sway over policy generation and public discourse.

The US and to a lesser extent the Australian response to Covid shows what happens after decades of senior politicians saying (climate) science is “crap”. People begin to distrust, ignore and deny all science, such as virology, epidemiology and immunology with ghastly results.

In short, tumultuous events require self-examination and change. This crisis should not be wasted with a return to business as usual.

Crispin Hull

This article first appeared in The Canberra Times and other Australian media on 8 August 2020.

www.crispinhull.com.au

11 thoughts on “Cut the corporate stranglehold”

  1. Thank you for that succinct albeit frightening summation of the US today. I lived for many years in the US. Back in the UK now for my dotage years!
    Keep well, keep writing.
    Jennifer Gold

  2. I’m a retired Episcopalian (Anglican) priest, and I have just finished reading your column on the possibility of an imminent collapse of the U. S. It articulated most of my inchoate fears and feelings about the state of things in the States. Uncomfortable as it is, I want to thank you for your stark and unsparing analysis. As someone has said, “Opinion abroad is contemporaneous posterity.”

  3. I love your recognition as to who high population growth favours! I have seen that high population growth of high worth individuals does actually increase our GDP (includes costs and is not a measure of well being) but in recent years GDP per capita has been in decline – meaning a measure of well-being must also be declining. This is good for federal budgets so is popular with federal politicians. I understand, however, that high population growth also puts high demands on state budgets for all sorts of infrastructure costs (http://onlinelibrary.wiley.com/doi/10.1111/j.1468-0270.2011.02125.x/pdf and https://population.org.au/publications/discussion-papers/infrastructure).

  4. The last Newman conservative state government in Queensland tried extremely hard to privatise our electricity supply. So for that and other reasons we voted them out after 1 term.

    Queensland has the lowest generation wholesale price with most of the old coal generators, 2 hydro’s in Far North Qld and the 500MW Wivenhoe pump hydro in SEQ government owned. Qld also has the lowest residential retail electricity prices under NSW, VIc, SA, Tas. Our transmission and distribution (poles & wires) are government owned and uncontestable regional retail north of Gympie and from Toowoomba west is also government owned.

  5. I wholeheartedly agree, but will it happen?
    We are already seeing the effects on Virgin Australia being owned by an Equity investor. All they do is strip the profits, sell the assets that can be sold, and then declare bankruptcy. The Australian government was very shortsighted when they refused to assist Virgin. It won’t be long before the airline will be no more. And then Qantas will raise its domestic fares.

  6. Excellent article as usual – thanks you very much. Being here in Melbourne, uppermost in mind when corporate greed comes up are the run-for-profit Aged Care homes. I’ve visited enough of these along with the not-for-profits to see and know about the differences in numbers of qualified staff and levels of care. The pandemic has highlighted the inadequacy of the care homes run for profit.
    Like you I do hope that after we get over the COVID lockdown, a fairer Australia will be what the majority want and agitate for – and vote vote.

  7. Crispin – thank you for your article in the Canberra Times today. I too hope (though perhaps in vain) for a changed societal order. Unfortunately, vested interests are actively trying to thwart any change to the paradigm that prevailed prior to Vovid-19.

    One parallel issue which I believe we need to address is that of the politicisation of the public services in Australia, which has led effectively to the Government being able to have the advice it wants (often on ideological grounds). The rot started with Keating’s placing APS Department heads on contract, and I understand the situation now is that Ministerial Offices have exploded in size, while (at least nationally, and with the current Government) decreasing weight given to any contrary Departmental advice.

    This means that not only do members of the public have vanishingly little reason to believe Government’s announcements and directions, but also that change to the status quo becomes increasingly difficult.

    Neal Hardy
    Downer ACT

  8. Absolutely! The weaknesses of the previous model were already starting to show up; the pandemic might be the jolt which gets things changed. Pursuit of efficiency with total disregard for risk has come back to bite us very hard. That efficiency was measured in one way only – output divided by cost of labour – created the viscous cycle also showing up pre-pandemic: lower wages = lower demand = need to cut costs further = lower wages……

  9. “Governments trusted corporations to deliver efficiency and value through privatisation and out-sourcing.”
    Governments *said* that they trusted corporations to do this.

    “If a corporation has the choice of doing the right or the wrong thing, it will always choose whatever makes the most profit.”
    Particularly in the case of Coalition governments, this was the point, not an unintended consequence.

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