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This suggests that the instances of bad behaviour uncovered in banks and financial institutions were not one-off but the natural and systemic expression of an ideology and an economic system based in greed.
Banking royal commission is popular, not populist25 May 2016
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Andrew Hamilton | 25 May 2016
http://eurekastreet.com.au/article.aspx?aeid=47273#.V6Xf06NJnoo
Demands for royal commissions usually bark for a while and die with a whimper, the potential targets yawning all along. The Labor Party demand for a Royal Commission into the banking and financial industries, however, has caused the government and banks to scurry in their anxiety to avoid it.
The most telling criticism of the proposal is that it is populist. The pejorative word characterises policies as both popular and lacking in rationality.
Populist has overtones of the ancient mob which is powerful in its brute anger but whose demands are ultimately destructive, changeable and counter-productive. Their fervour needs to be tempered by the advice of the wise elite, namely the critics of the proposal.
To call this proposal populist is really a concession that acknowledges its popularity and so its political seriousness. Recognising its popularity, its opponents have changed tack.
Initially they argued quixotically that that it would diminish people's trust in banks and would divert their attention from their proper business. They claimed, too, that such central enterprises as banks are best left free to regulate and investigate themselves.
Other opponents of the royal commission were less subtle: in the shadow of an impending election they threatened to launch a big-spending campaign against it.
But it soon became clear to financial institutions and to government that the proposed commission was massively popular, that the scandals and cover ups had left little trust to be eroded, and that self-regulation would be seen as synonymous with self-interest. So all kinds of concessions are now being offered to avoid the dangerous royal commission.
The ineffectual and only recently emasculated ASIC will be funded by the banks themselves to investigate bad behaviour; the government has put banks on notice; secrecy will be removed from shell companies used to avoid taxation, and so on. Whether politically these concessions will be enough to bury the proposal is uncertain.
"If the engine of a good society is economic competition with minimum regulation, then what ethical boundaries can be placed around competition?"
If popularity by itself equated to populism, the royal commission would certainly be populist. But populism also implies a lack of due rationality, an unwisdom. Its critics assert vehemently that it would be unwise but offer little argument in favour of their claim. The vehemence of their opposition, however, suggests that at issue are not merely conflicting arguments but also conflicting views of what counts as wisdom. They fear that a royal commission might go deeper than deal with the bad conduct that banks have fostered. It might also consider the rationale the banks offer for business as usual, and find that the abuses in fact flow from that rationale.
The ideology currently accepted by banks and government is that a healthy economy is defined by competitive individuals who are motivated by material gain. Furthermore, the good of society is defined by economic growth, which depends on individuals and individual corporations being able to compete with a minimum of regulation. Acceptable regulation is confined to to cajoling and forcing people to compete economically. In a word, the engine of prosperity and happiness is greed.
The evidence of misbehaviour by banks and other financial institutions has become public at a time when the underlying ideology has also been criticised. The inherent unlikelihood that an economy based on individual greed will benefit the whole of society is now patent. It is seen as much more likely that unregulated competition for material gain will lead to the concentration of wealth in the hands of the wealthy and powerful. And evidence now suggests that inequality in fact hinders the economic growth it was presumed to nurture.
This suggests that the instances of bad behaviour uncovered in banks and financial institutions were not one-off but the natural and systemic expression of an ideology and an economic system based in greed. If the engine of a good society is economic competition with minimum regulation, then what ethical boundaries can be placed around competition? Even legal restrictions will be subverted.
The fact that abuses in the financial industry have been made public by dedicated journalists and community organisations, not by government and industry bodies fuels the call for a royal commission. It is needed to propose regulation and structures that enshrine the responsibility of the financial industry and other corporations to serve the common good.
The demand for a Royal Commission is popular but not populist. It is eminently reasonable. If we want to denounce populism, we might begin with the highly popular but humanly incoherent and economically extravagant treatment of people who seek protection.