Productivity isn't working, so why not try being more ethical?

Economists and business councils have been telling us for years that we must improve our productivity if we want to be more prosperous but, so far, they’ve had little success. Surely, there’s something else we could try?

As we’ll see, it’s something for Treasurer Jim Chalmers to ponder as he puts the finishing touches to next Tuesday’s budget.

Economists have many strengths, but they don’t win many prizes for thinking outside the box. Productivity is the obvious way to increase our prosperity but, despite all the admonition, for years it’s been hard to achieve, both here and in the other rich economies. It’s clear there’s a lot economists don’t know about how productivity is improved.

So, is there nothing else we could do to improve the way the economy works and the satisfaction it brings us? Of course there is – particularly when you remember this isn’t just about dollars and cents. Don’t you think life would be better if we could do all our earning and spending in an economy that generated less angst?

I’m indebted to Dr Simon Longstaff of the Ethics Centre for reminding me that behaving more ethically would be a good way to get better results from the economy.

Huh? How does that work? Let me tell you.

Ethics is a set of beliefs about the right way for people and organisations to behave, particularly in their relations with other people. Often, the right thing for us to do in particular circumstances is obvious.

It’s obvious, for example, that we should (almost) always obey the law. It’s just that obeying the law isn’t always convenient or inexpensive. And sometimes when our own interests are top of mind, it’s hard to see what’s obvious to everyone else.

In any case, because differing groups of people have differing beliefs and motives and objectives, ethical dilemmas – deciding what’s the right thing to do in all the circumstances – are common, particularly in business. That’s why we have a new profession of ethicists offering advice to organisations, of which Longstaff is the most prominent.

But what’s that got to do with the economy?

Well, let’s be clear. The only reason we should need to do the right thing is that it’s the right thing to do. And the only reward we should expect is being able to sleep well at night in the knowledge that we’re treating people justly, often at some cost to ourselves.

However, as Deloitte Access Economics has demonstrated in a report for the Ethics Centre, there is a strong “business case” for behaving ethically. A case that makes sense not just for individuals and businesses, but also for the treasurers and Treasuries responsible for improving the way the economy’s working.

The case rests on an obvious, but often forgotten truth: market economies rely on a high degree of trust. Trust between buyers and sellers. Trust that you’re not selling me a dud. Trust that your cheque won’t bounce.

Trust that you’ll let me return it if there’s a problem. Trust that you’ll honour your promise to service the thing for the next X years. Trust that you won’t pinch someone else’s bag from the airport carousel. Trust that you’ll repay the money I lent you.

Trust that if I let you check yourself out at my supermarket, you won’t slip in a few things you didn’t ring up. Trust that if I work for you, you’ll treat me fairly. Trust that the law will back me up if you do the wrong thing.

Point is, the more confident we are that we can trust each other – trust the businesses we deal with – the more smoothly and cheaply the economy runs and the more business gets done. When we have to spend a lot of money on security and making sure we’re not ripped off, the costs mount up, and we end up not doing all the transactions we could.

So, how do we get more trust into the economy? How do workers, employers and businesses get themselves a good reputation? By always behaving ethically. (I could say this also applies to politicians, but that would be pushing it.)

Research by Access Economics finds evidence that fewer unethical decisions lead to better mental and physical health for individuals. And evidence that unethical behaviour leads to poorer financial outcomes for business. And evidence that ethical behaviour results in higher wages.

But Access also reminds us of the evidence that our ethical standards could be a lot higher than they are. The World Values Survey finds that only a bit over half of Australians think most people can be trusted. The Governance Institute finds that, on a scale running from minus 100 to plus 100, Australia ranks at plus 45, or “somewhat ethical”.

Then there’s the string of royal commissions finding unethical or even illegal behaviour in institutional responses to child abuse, misconduct in the banking industry, and aged care. And that’s before we get to the epidemic of “wage theft” that so many otherwise respectable big businesses have had to admit to – all of it purely accidental, apparently.

OK, OK, we could do a lot better, with that producing tangible economic benefits. But how? Well, one approach would be for economists and econocrats to switch their sermonising from productivity to ethical behaviour.

Perhaps not. What would help is for ethical questions to get a lot more of our attention. As sociologists understand, but most economists don’t, businesses – like the rest of us – tend to want to do what others are doing. If we’re all being ethical, I don’t want to be seen as uninterested in ethical behaviour.

If we could give ethics a higher profile, we’d probably get more of it. If expert advice on ethical problems was more readily available, more would be asked for. If there were more training and meetings and conferences on the topic, more decisions would be examined for their ethical implications.

Longstaff’s Ethics Centre has a proposal to improve our “ethical infrastructure” by teaming up with the universities of Sydney and NSW to establish an Australian Institute of Applied Ethics, which would be open to receiving requests from governments and the private sector to report on major ethical questions facing the nation. It would be a bit like the Productivity Commission or the Australian Law Reform Commission, but it would not be a government body.

It would also contribute to education, training and leadership development, building the practical skills of good decision-making on ethical issues in the private and public sectors.

Copying the pattern used to establish the hugely successful Melbourne-based Grattan Institute, the proposal is for the federal government to contribute $30 million towards a $40 million one-off endowment. The new institute would be funded from the earnings on this endowment, plus earnings from providing education, training and other services.

We’ll learn on budget night whether Chalmers and his boss are acting on this sensible idea for achieving a better economy, or whether they will be content with more platitudes on the need for greater productivity.

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When funding healthcare, don't forget the caring bit

 It’s Easter, and we’ve got the day off. So let’s think about something different. As a community, we spend a fortune each year on health, mainly through governments. What has economics got to tell us about healthcare? And, since it’s Easter, what light has Christianity got to shed on how we fund healthcare?

One man who’s thought deeply on these questions is Dr Stephen Duckett, Australia’s leading health economist, whose career has included academia, running government health departments, and the Grattan Institute think tank. He’s now back in academia, at the University of Melbourne.

Duckett has long been a lay reader in the Anglican Church. He’s recently completed a doctorate in theology, awarded by the Archbishop of Canterbury. He’s turned his thesis into a book, Healthcare Funding and Christian Ethics, published by Cambridge University Press.

One way to run a hospital is to let the doctors and nurses do as they see fit until the money runs out but, for several decades, health economists’ advice has reshaped the health system, helping to ensure that the money available is spent in ways that do the most good to patients.

One definition of economics is that it’s the study of scarcity. We have infinite wants, but limited resources of land, labour and physical capital to achieve those wants. So we must carefully weigh the costs and benefits of the many things we’d like, so we end up choosing the particular combination of things that yields us the greatest “utility” (benefit) available.

Since there’s never enough money to spend on healthcare, hard decisions have to be made about what can be done and what can’t, what drugs should be subsidised and what can’t, who should be helped and who turned away.

Health economists analyse the cost-effectiveness of the various options to help governments and hospitals make their choices, working out the number of “quality-adjusted life years” each option would add.

The Scotsman called the father of modern economics, Adam Smith, saw it as a moral science but, as economists have striven to be more “rigorous” (which mainly means more mathematical) this touchy-feely stuff has fallen away.

Most economists see economics as amoral, that is, neither moral nor immoral; having nothing to say about moral issues. When it comes to means and ends, economists see themselves as sticking to means.

They’re saying: tell me what you want to do, and I’ll tell you the best way to achieve it. That’s what they say; it’s not always what they do.

Economics is based on utilitarianism: seeking the greatest good for the greatest number. But this ignores the question of “equity”: how fairly the benefits are shared. Are some getting a lot while others miss out?

Duckett says: “Economics’ assumption that humans are simply individual units, de-emphasising community, and [economics’] ubiquitous use in policymaking, comes at a cost, as Homo economicus [the self-interested, rational calculator that economists assume us to be] crowds out other manifestations of what it is to be human.”

Economists often say they have no expertise on equity and the community, so they leave that to others – such as the politicians. Economists often claim that economics is “objective” and “value-free”.

But Duckett says it’s not simple. By ignoring issues you’re implying that they don’t matter. And you’re making implicit assumptions that are value-laden.

For instance, if a cost-effectiveness study does not explicitly highlight the distribution of costs and benefits [how unequally they are shared between people], it is implicitly conveying the message that the distribution is not a relevant issue.

If nursing home funding allows money ostensibly allocated for care to be leached out as extra returns to the owners, then quality is assumed to be not a concern of those doing the funding.

If a system design places a higher monetary reward on cosmetic surgery intended solely to improve appearance compared to the monetary reward for caring for older patients and people with mental illness, this sends a signal about the value placed on care for the marginalised.

Duckett says that, because decisions about public policy inherently involve value choices, health economics becomes a “moral science” whether economists like it or not. What’s true, however, is that economics is not well-equipped to determine issues such as what should be society’s priorities, what value should be place on unfettered choice, and the value to place on ensuring no one is left behind.

This is where Christian ethics has a contribution to make, a contribution that, except on matters of sexual morality, doesn’t differ much from the views of the aggressively secular philosopher Professor Peter Singer and, no doubt, many other Western ethicists.

Duckett offers a “theology of healthcare funding” based on Christ’s parable of the Good Samaritan. As I hope you remember, a man was travelling to Jericho when he was set upon by robbers, who left him naked and bleeding by the road.

Two separate religious figures passed by him on the road without stopping to help. But a Samaritan saw him and “was moved with pity”. He bandaged his wounds, put him on his donkey and took him to an inn, where he paid the innkeeper in advance to look after him, promising to come back and pay for any extra expense.

From this parable Duckett derives three principles that should guide health economists in the advice they give on healthcare funding.

The three are: compassion (shown by the behaviour of the Samaritan), social justice (everyone included and treated equally; shown by the identity of the Samaritan, a race despised by the Jews) and stewardship (shown by the innkeeper, who was trusted to care for the traveller and to spend the Samaritan’s money wisely).

Compassion must involve feeling leading to doing. It must involve helping people other than yourself. So health economics must be less impersonal, remembering the flesh and blood behind the statistics and calculations. Any funding arrangement must allow time for workers to care for patients in a compassionate way.

The Christian ethic is that social justice is not simply about fairness for atomised individuals, but also the person as part of a community, something economists tend to forget. Archbishop Desmond Tutu has said “a person is a person through other people . . . I am human because I belong. I participate, I share.”

“Christian contributions to the public square need to challenge policy ‘solutions’ that rely on individuals pulling themselves up by their own bootstraps, victim-blaming approaches, and a narrow definition of [who is my] ‘neighbour’,” Duckett says.

As for stewardship, it’s the easy bit. It’s the Christian word for what economists already know about: making sure that other people’s money is spent carefully, and their property is looked after. It’s being efficient.

But the Christian contribution to what health economists do is to make sure stewardship is kept in tension with the other two principles. “Austerity does not mean that compassion and social justice can be ignored, or distributional consequences [for the rich and the poor] can be erased from consideration.

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Yes, the government does believe what companies do you to online

How often have you had trouble cancelling a subscription to a streaming video site or some other service? When you’re trying to do something online, how often have you ticked a box to say you’d read the terms and conditions, when you hadn’t?

I do it all the time. And my guess is that almost everyone else does too. Why? Because the site won’t let you get on with making a restaurant booking or buying something until you do.

You don’t have the time to read the terms and conditions, which probably run to several pages of fine print. And how would you benefit if you did? It will be written in legalese – by lawyers, for lawyers.

What little you could understand would give you a clear impression: you have few rights, but the company has loads. Ah, it was written by the company’s lawyers to cover its backside, but not yours.

Say you were mad enough to wade through all that guff. Can you imagine the reception you’d get if you rang the company’s call centre and told someone in Manila that you’d like them to explain what term 3(b) means, and could they strike out clause 9(f) because it’s unacceptable?

No, it’s a take-it-or-leave-it deal. The company knows you won’t have read or understood the terms and conditions, and it doesn’t care. All it wants is to be able to tell the judge you said you had, so you’ve got no grounds for complaint.

But can companies really get away with those kinds of stunts? Are the unfair conditions they write into their contracts legally enforceable? In most rich economies – even the US – no they’re not.

And in Australia? In a speech last week, Dr Andrew Leigh, Assistant Minister for Competition, gave the answer: maybe, maybe not.

He told a small business conference that those leasing printers from Fuji Xerox may have received notification that certain terms in their contracts were void.

That’s because, on application by the Australian Competition and Consumer Commission, last August the Federal Court found that 38 contract terms in 11 of Fuji Xerox’s small business contracts were void and unenforceable. These included ones providing for automatic renewal, excessive exit fees and unilateral price increases.

You may not know that the commission protects small businesses as well as consumers. Leigh reminded us that one of the government’s first acts last year was to prohibit the use of unfair terms in standard-form contracts.

From November this year, the commission and the Australian Securities and Investments Commission can ask the court to fine big businesses that try to push small businesses around in this way.

But unfair contract terms are one thing; unfair trading practices are another. Although the Australian Consumer Law bans several specific unfair practices, there’s no general ban on them. The government is working on this.

One form of unfair trading practice is the “dark patterns” used by companies on their websites. Leigh says these are subtle tweaks in the way sites are designed, intended to trick users into doing things they didn’t intend to do. They discourage consumers from doing things that would reduce the company’s sales.

Efforts to make it hard for you to unsubscribe from digital streaming services are so notorious the Norwegian Consumer Council wrote a whole paper about them, Leigh said.

It compared how hard it was to sign up for Amazon Prime with how hard it was to cancel a subscription. “Consumers who want to leave the service are faced with a large number of hurdles, including complicated navigation menus, skewed wording, confusing choices, and repeated nudging,” it found.

(What I found, before I switched to the ordinary taxis’ app, was how hard it was to cancel a ride with Uber, even though drivers were playing pass-the-parcel with your order. And how hard it was to query a surprisingly high fare, only to have my complaint considered and dismissed in a nanosecond.)

The commission lists other examples of dark patterns: false reminders such as low-stock warnings and false countdown timers, preselected add-ons to what you purchased, and illogical colours, such as a red button for yes and a green button for no.

Then there’s the manipulation of search engines, such as when food delivery companies impair the ability of restaurants to attract customers by ensuring the delivery company’s site appears above the restaurant’s in internet searches.

There’s nothing new about unfair trading practices. But, with the law as it stands, the commission has had mixed results getting firms prosecuted. It alleged Medibank had engaged in misleading conduct in what it told members about its benefits. The Federal Court said Medibank had acted “harshly” and “unfairly”, but still ruled against the commission.

In another case, the commission was unsuccessful in bringing an action against a vocational education and training provider that used door-to-door selling in disadvantaged communities, promising students a free laptop, and promising the courses were free if the students’ earnings stayed low. Such behaviour was found not to breach the act.

The US, European Union, Britain and Singapore simply prohibit unfair trading practices. The US, of all places, has been doing it since 1938.

The Albanese government is working on plans to do something. Leigh says the government knows that effective competition depends on strong safeguards for households and small businesses.

“When laws allow a firm to get away with ripping off consumers, it can create the wrong competition incentives. Other firms in the market see bad behaviour go unpunished and protect their own patch by employing the same dodgy tactics. Soon enough there’s a race to the bottom in dodginess,” he said.

Consumer protections are intended to improve the wellbeing of consumers – and small businesses. But consumer protections also foster effective competition.

They help drive a race to the top in service quality. “But that race to the top can only occur if there’s enough competition,” Leigh said.

True. So, what we also need is stronger merger laws.

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We risk becoming a business kleptocracy, with pollies showing how

I was startled the other day to hear a mate saying he was a bit depressed by the thought that Australia was turning into a business kleptocracy. What? Surely not. But the more I thought about it, the more I realised he was on to something.

I’ve written a lot in recent times about the failure of what lefty academics call “neoliberalism” and its quest for smaller government. Going back to the reign of the Howard government, both sides of politics have accepted the fashionable idea that, though there are plenty of services governments should continue asking taxpayers to pay for, the actual delivery of those services should be “outsourced” to the private sector.

Why? Because, as everyone knows, the public sector is inefficient, whereas the private sector is highly efficient. Because it would be so much better to have more of us working for business and fewer working for the various arms of government. The greater efficiency should lead to lower taxes.

I’ve pointed to instances where this mixture of ideology and tribalism has failed, leading to lower quality services without much evident saving to the taxpayer. In a democracy, it’s always right to hold governments ultimately responsible for their stuff-ups.

But is that the whole story? My mate’s looking at it from a different angle: what do the many failed attempts to hand service delivery to for-profit operators say about the ethics and trustworthiness of Australia’s business people?

That, for a surprising number of them, if you see some money lying around with nobody watching, you grab it? That while ripping-off customers is unethical and will soon get you a bad reputation, overcharging “the government” is a harmless, victimless crime? No human was hurt in the making of this profit?

One of the first government services to be outsourced was childcare. Before long, a single company bought up more than half the childcare centres, expanded overseas and then collapsed. To avoid leaving many parents in the lurch, government had to step in and sort it – at great expense.

Much of the sector remains privately owned. Last week the United Workers Union produced a report finding that three-quarters of the 12,000 enforcement actions taken since 2015 were against for-profit providers.

The Rudd government drew much criticism over the deaths of several people caused by faulty installation of pink batts during the global financial crisis. But what does it say about all the inexperienced operators using unqualified workers who flooded into the industry because they saw an easy buck to be made?

Bipartisan decisions to open vocational education to private operators and charge fees on a similar basis to the HECS loan scheme, attracted many new operators, some of which used salespeople offering free iPads to unsuitable youngsters who signed up for “free” online courses. Cost the taxpayer millions in debt write-offs.

The present government and the four big banks swore there was no need for a royal commission into possible misconduct but, when its hand was forced, we all remember how much misconduct was uncovered.

An accountants’ report for the royal commission into aged care found that, using a common definition of profit (earnings before interest, taxes, depreciation and amortisation) for-profit aged care providers in the second-highest quartile had a profit margin of 16 per cent, compared with 13 per cent for non-profits and 4 per cent for state government providers in 2018. Return on equity was 12 per cent for non-profit providers and 72 per cent for for-profit providers.

This week Sydney’s Star casino joined Melbourne’s Crown casino in being accused of turning a blind eye to suspected money laundering, organised crime and foreign interference.

Whether or not you think Treasurer Josh Frydenberg should have included in the JobKeeper scheme a provision to claw back assistance that proved not to be needed, it’s surprising to see some big companies announcing healthy profits while hanging on to their grants.

This week the Fair Work Ombudsman filed court proceedings alleging that the Commonwealth Bank had knowingly breached its wage deals with employees as part of a $16.4 million underpayment.

The ombudsman’s annual report for 2019-20 said it had recovered more than $123 million for 25,000 employees, including $90 million in underpayments that employers self-reported.

Some of our biggest and seemingly most respectable companies, including Woolworths, Coles, Wesfarmers’ Target and Bunnings, Qantas and Crown casino – not to mention the ABC – have admitted or been accused of “wage theft”. Underpayment seems standard practice in the restaurant industry.

We’re asked to believe these are innocent mistakes made by big corporations with big human relations departments and computerised payroll systems because industrial awards and agreements are so hellishly complex. Sorry, I don’t.

Much easier to believe a culture has developed that business’ contribution to the economy is so heroic that behaving with honour and even obeying penny-fogging laws is optional.

And how could business people have reached such a self-serving conclusion? Perhaps by observing the Morrison government’s unashamed rorting of grant programs and Saint Gladys’ sanctification of political pork barrelling: it’s not illegal and everybody does it.

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Economists need updating on what makes humans tick

At the heart of the weaknesses of economics – its frequently wrong predictions and the bad advice its high priests often give governments – is its primitive understanding – its “model” - of how and why humans behave the way they do.

It’s taking economists far too long to realise that to understand how the economy works you’ve got to start by understanding how the people who make up the economy work. The model economists started with in the second half of the 19th century and haven’t really moved on from is the mere assumption that businesses, workers and consumers always behave “rationally” – with carefully considered self-interest.

In the 150 years since economists decided their stick-figure assumptions were a sufficient foundation on which to build their model of economic behaviour, the other social sciences – psychology, sociology, anthropology – have made much progress in understanding human behaviour and motivations.

So, just this once, let’s set aside “Homo economicus” and see what wisdom the more social social scientists have to impart.

In his book, Moral Tribes, the Harvard moral psychologist Joshua Greene lays out a view of human behaviour that accounts for most of the things missing from economics. He starts with the proposition that the way humans behave is heavily influenced by the way we have evolved.

As one of the founders of behavioural economics, the psychologist Daniel Kahneman, explained in Thinking, Fast and Slow, humans are good at thinking rationally, but it takes time and (literally) requires energy, so we’ve evolved to make most of our everyday decisions instantly and instinctively – without conscious thinking.

Our feelings and emotions can’t be dismissed because their role is to do most of our thinking for us. To motivate our instinctive reactions.

Humans have spent all but the past 10,000 years or so in roaming bands of hunters and gatherers. So it’s no surprise we still think like members of a tribe. We feel an affinity with those in our tribe, but not with people in other tribes.

As tribal animals, we care deeply about our relations with those around us, the other members of our tribe. It’s being in the tribe that protects us from harm and provides us with food, friends and someone to mate with. So we have to keep in with the tribe; make sure we’re not kicked out.

This is where moral attitudes come from. Morality is about how we treat others. Greene says “morality is a set of psychological adaptations that allow otherwise selfish individuals to reap the benefits of co-operation”.

You can get competition within tribes, but mainly they’re about co-operation for mutual benefit. We co-operate to organise enough food and shelter, but also for the group’s protection against its enemies, animal or human.

As tribe members, the moral issue we face is “me versus us”. We’ve evolved to remember to suppress unbridled self-interest and treat others well. Thus we’re good at co-operating in shared objectives, and our moral standards involve punishing others who fail to co-operate.

This co-operation does much to explain our success in becoming the dominant species and in radically transforming the world to make ourselves more comfortable. Greene says we’ve defeated most of our natural enemies. We’ve outsmarted most of our predators, from lions to bacteria.

But note this: our ability to co-operate as a tribe has evolved into a weapon to use in competing with other tribes. And, though our evolutionary instincts may not have changed a lot since we ceased being roaming hunters, our success has greatly changed the circumstances in which we live.

Though we live in countries with populations of many millions, we still have moral instincts that evolved to help us solve the problem of me versus us, not the problem of us versus them.

In one sense, we no longer live in small tribes that don’t have much contact with other tribes, but only sometimes do we see ourselves as living in, say, one big Australian tribe. We tend to see ourselves as members of many tribes, according to our differing characteristics: not just the party we vote for, but the part of the country we live in, our ethnic origin, our religion, our occupation, social class, education and much else.

Our tribal instincts keep most of us believing and behaving the way our tribe thinks we should. But the moral intuition of particular tribes has evolved in differing directions. What I see as the moral – or fair – thing to do, may be quite different to how you and your tribe see it.

Most countries used to be fairly homogeneous, with most people in the country adhering to the same religious views, particularly about issues such as abortion, same-sex marriage and assisted death.

These days, many people have abandoned traditional religious views, though many haven’t. And much moving between countries means most countries have many people from differing religious traditions.

This leaves us with moral tribes that can’t agree on what’s right or wrong. This applies not just to sexual morality, but to whether I think it’s “fair” for me to pay more tax to support you when (I tell myself) you wouldn’t need my support if you’d worked as hard as I have to get what I’ve got.

Because our two-speed brains are adept at finding fancy rationalisations for “values” that are really just instinctive desires, we argue about our sacred Right to this or that treatment – which the other tribe counters with its own sacred (but conflicting) Right.

And, Greene says, even when we think we’re being fair, we unconsciously favour the version of fairness most congenial to our tribe.

He offers no magic answers to these widespread problems caused by modern tribalism. But he does say that, with a better understanding of why these tribal disputes arise, we all ought to be a lot less self-righteous about the moral correctness of our position and more willing to find compromises all of us can live with.

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Economies malfunction when we can't trust our leaders

With the federal, NSW and Victorian governments all mired in questionable conduct but refusing to accept responsibility for their actions, a reminder of the value of ethical behaviour to the good governance of the nation is timely.

A report, The Ethical Advantage, by John O’Mahony, of Deloitte Access Economics, and commissioned by Dr Simon Longstaff’s Ethics Centre, reminds us that while ethical behaviour and trust are different things, a long record of ethical behaviour builds trust, which can be quickly destroyed by unethical behaviour.

To be successful, business leaders need the trust of their customers, employees and suppliers. The less people trust them, the harder they must work – and the more they must spend on marketing and security – to remain profitable.

It’s true you can go for a fair while abusing the trust of others, but when eventually they wake up, they tend to be pretty dirty about it. For years our banks took advantage of their customers’ trusting inattention by, for instance, failing to advise loyal customers of the better deals they were offering new customers. Now they wonder why their customers hate and distrust them.

Years of declining standards of behaviour on both sides of politics, and refusal to accept responsibility when things go wrong, have led to declining levels of trust in our politicians, and lowering respect for our leaders.

The imminent threat posed by the pandemic prompted our federal and state leaders to stop bickering and pull together, with oppositions anxious to be co-operative. The result was a marked increase in public confidence in the Prime Minister and premiers – a bonus Queensland’s Annastacia Palaszczuk banked on Saturday.

But no sooner had the threat eased – but not passed – than we were back to politics as usual. Our leaders don’t lead, they try to score points off their opponents. Great way to kill their newfound popularity.

Unsurprisingly, the report finds that there remains significant scope for us to raise our levels of ethical behaviour and trust. The Governance Institute of Australia’s ethics index, based on an annual survey of Australians’ perceptions of the level of ethical behaviour in society, gave us a “somewhat ethical” score of plus 37 on a scale of minus 100 to plus 100.

This was for last year, before the pandemic, and down from plus 41 in 2017. Across industries, healthcare was seen as the most ethical, with a score of plus 67. Then came education, charities and not-for-profits, and agriculture. Banking, finance and insurance was seen as the least ethical industry, with a score of minus 18.

According to the 2020 Edelman Trust Barometer, just 47 per cent of Australians trust business, government, media and our non-government organisations to do the right thing. Worse, none was seen as strongly competent or ethical – with government being seen as the least competent and ethical out of all our institutions.

Remembering the “steady stream of state and federal political scandals”, the report says, this weak ethical performance is no surprise. Royal commissions have uncovered unconscionable behaviour in religious and other institutions, widespread misconduct in the banking, superannuation and financial services industry, and alarming lapses in aged care quality and safety.

Behaving ethically requires us think a lot about what’s right and wrong in the things we do, the way we treat people and the choices we make. For some action to be legal doesn’t make it ethical. Grant Hehir, Commonwealth Auditor General, says “we care not only about whether an entity is following the legal rules, but also whether it is acting within the intent of the law and community expectations”.

Nor is an action ethical because “it’s what everyone does”. Professor Ian Harper, of Melbourne University Business School, says “we all have values and moral convictions – ethics is about having the courage to apply these in the real world”.

The report says that, apart from the pandemic, we’re facing big challenges to our future, including from climate change, an increasingly risky geo-political environment, new technology and the future of work, and reconciliation with Indigenous Australians.

The actions needed to cope with these challenges “will require leadership of a quality that enables society to cohere in the face of external and internal pressures that would otherwise cause divisions.

“In these circumstances, trust will be at a premium – especially for key institutions. In turn, this will depend on the quality of ethical decision-making by individuals, groups and organisations,” the report concludes.

When the unethical behaviour of business and politicians causes them to lose the public’s trust, governments lose the ability to make tough “reforms”. As the pandemic demonstrates, only when politicians can clearly be seen as acting in the whole public’s best interests will they be safe at the polls.

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We won't achieve economic reform until we start co-operating

If you wonder why the push for economic reform has ground to a halt, I’ve discovered the reason. It’s because the foundational assumption of conventional economics – that individuals competing in pursuit of their self-interest make us all better off – is only half the truth.

If the mention of economic reform made you think of tax reform, then you’re making my point. Those who want a higher GST because they’d benefit if the proceeds were used to lower income or company tax are stymied by the many punters convinced they’d be worse off if this “reform” came to pass.

Many other cases for reform suffer the same fate. Your pursuit of your self-interest is neutered by my pursuit of my mine.

What the conventional economic model misses with its emphasis on individuals, competition and self-interest is that much of the success of the human animal – including its success economically – is owed to people co-operating to achieve changes of benefit to the whole community.

Often, norms of socially acceptable behaviour – entrenched views about what behaviour is ethical and what isn’t - are used to encourage people to put the interests of the group ahead of their own immediate interests. Markets work much better, for instance, if it’s realistic to assume that almost all the people you deal with can be trusted to act honestly.

All this applies in spades to our failure to make progress in the area of reform that’s more important to our economic future even than conquering the coronavirus: stopping emissions of greenhouse gases from wrecking the climate.

Here, the owners and miners of our huge remaining deposits of coal and gas are fighting tooth and nail to delay the day when those deposits become worthless, while the rest of us are encouraged to put the frightening thought of having to pay a bit more for electricity and petrol ahead of the future environmental and economic wellbeing of our children and grandchildren.

It’s okay for the oldies – who, until this year’s bushfire conflagration, fondly imagined they wouldn’t live long enough to suffer the consequences of their selfish short-sightedness. And those who will suffer the consequences have either yet to be born or are only just realising what a mess their loving parents are leaving for them.

But the deterrent to action isn’t just that the (modest) adjustment costs are upfront, whereas the (much greater) costs of inaction are off in the uncertain future. It’s also that the greenhouse effect is global, not local.

As the climate-change deniers love reminding us, no amount of effort to reduce emissions on our part will make much difference until people in other parts of the world are doing the same. In which case, why don’t you and I do nothing and leave it to all the others? (Economists call this the “free-rider” problem.)

All this may explain why a recent discussion paper from the Academy of the Social Sciences in Australia, Efficient, Effective and Fair, included a chapter on the moral case for action on climate change, written by Professor Garrett Cullity, a philosopher from the University of Adelaide.

Cullity argues there are five reasons why climate change is a moral issue, each of which is independent of the others. The first is that it involves many causes of harm including extreme weather events, tropical diseases, and malnutrition.

“These harms are primarily borne by the most vulnerable members of the global community,” he says. “We should be morally concerned to reduce the amount of harm we do to them.”

The second argument holds if we believe there’s a risk of serious harm in the future but can't be sure it will come to pass. “Action that imposes serious risks on others can be morally wrong because it is negligent and reckless, independent of the harm that actually eventuates,” Cullity says.

These first two arguments give us moral duties of both “mitigation” (reducing the further damage our emissions are doing) and “adaptation” (helping vulnerable people to adapt to the damage already done).

“They apply not just to national governments, but to any agent whose actions contribute to increasing atmospheric greenhouse gas concentrations – including state and local governments, cities, corporations, non-government associations and individuals.

“And they apply to each of these agents unilaterally. The moral duty not to engage in actions that harm or endanger others is not a duty that we are exempted from when someone else is not complying with it.

“The strength of the duty is proportional to the harm or risk imposed if the duty is not followed, and it may be related also to the capacity to influence others to comply with their duty.”

The third argument concerns “contributional fairness”. When a group needs to achieve something important by acting together and is doing so by sharing the overall burden among its members, failure to contribute an equitable share of that burden amounts to free-riding. Duties of fair contribution apply to groups of any size.

In the case of a wealthy country such as Australia, the size of our contribution to the solution should reflect the size of our contribution to causing the problem, the benefit we have derived from past emissions-producing economic activity, and our relatively great “ability to pay”, as tax economists put it.

The remaining two moral arguments concern the responsibility of national governments. If you accept that they have a duty to protect future citizens, not just present ones, it follows that they must contribute to global mitigation, not just local adaptation. And, since the economic costs of responding to the problem get higher the longer you delay, they have a moral duty to begin now.

Conventional economics doesn’t take much interest in morality. But economies where everyone sticks out for Number One stop working very well. And self-interest isn’t enough to solve a “wicked” problem like climate change.

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If you’re virtuous, don’t be afraid to signal it to the world

I’m troubled by the fashion of accusing others of “virtue signalling”. This world could use more virtue and less vice. And if people want others to see their virtue, well, there are worse sins.

Usually, it’s an accusation hurled at those on the other side of the political fence as a way of impugning their motives. They’re not genuinely virtuous, they just want people to think they are when they’re not.

They want to be seen as better than we are. They want me to feel guilty for not being as good as them, but I’m not buying that. I may be motivated by self-interest in the government policies I advocate, but so are they – they’re just pretending otherwise.

You can rationalise such a response by using the assumption of the neo-classical economic model that economic agents (you and me) are always and only motivated by self-interest. Altruism doesn’t exist. When I help someone, I’m doing so only because it makes me feel good.

In truth, social psychology has found plenty of evidence for the existence of altruism. It’s associated with another truth: homo sapiens’ success as a species is owed as much to co-operation as to competition.

I remember how shocked I was years ago to hear a top Treasury official refer with contempt to the Australian Council of Social Service – the peak body representing welfare organisations, including the Salvos – as “the compassion industry”.

First time I’d heard that word used as a term of derision. It reminded me of a song we sang when I was a Salvo: “Except I am moved with compassion, how dwellest Thy Spirit in me?”.

The Treasury man’s claim was that the ACOSS people didn’t really care about the poor and needy, they’d just found a way to make their living by representing the interests of poor. They were no more than another lobby group with their hand out.

As social animals, humans form themselves into tribes – groups. We have a compulsion to divide the world into good guys and bad guys. Naturally, my group are the goodies but, unfortunately, your group are the baddies.

Each of us sees ourselves as good, but some others as bad. I’m genuinely virtuous, whereas you’re just pretending to be.

In truth, none of us is all good or all bad. All of us are good in some respects and bad in others. And psychologists tell us we’re all often guilty of hypocrisy – applying high standards in judging others’ behaviour while making excuses for our own.

Equally, much of what we do we do for mixed motives. Try this test (one I usually fail): when you’re giving money to charity, how do you answer when asked if you’d like your donation to remain anonymous?

It’s possible some of us do virtuous acts – or make statements in support of virtuous policies – without any genuine interest in the wellbeing of others. It’s possible, but I doubt it’s very common.

What’s much more likely is mixed motives: we’re genuine in our professed concern about others, but equally genuine in our desire to be seen by others as having such a concern. That’s not really hypocritical, just being human.

Because we’ve evolved as group animals, all of us care deeply about what others think of us. We want to be accepted by the other members of the group. And we fear being excluded from the group.

Like teenagers, we’re desperate to fit in. The more we look and act like the others, the more comfortable we feel.

(This points to a further weakness in the neo-classical model: its assumption that each of us is a rugged individualist who makes decisions – about what movie to see or what clothes to buy – totally without reference to what those around us are doing.)

Turns out humans are signalling animals. We’re always using what we do, what we say, the way we dress, to signal our virtues to others – including our conformity to the group’s norms of acceptable behaviour.

The economy abounds with people and businesses sending signals. The first three economists to realise this won the Nobel prize for their genius.

We resort to sending signals because neither we nor others have enough hard information about the people we deal with and who deal with us. The main message we send is: you can trust me to deal with you honestly.

In today’s economy we’re suffering from a loss of trust, caused by a lack of virtuous behaviour, which has damaged reputations. We need economic behaviour to be a lot more virtuous. As that virtue is signalled, others will join in and the group norm of acceptable behaviour will be restored.

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How the banks lost our trust - and how they can get it back

Where to now for the big four banks, AMP and some other big businesses? They’ve abused the trust of their customers and the public, and it will be a long time before any side of politics wants to be seen as going easy on them.

Of course, the banking royal commission isn’t over. We’ve yet to see what punishments it recommends be imposed and what tightening of regulation, and then what the next government decides to do in response.

But if the nation’s chief executives have any gumption, they won’t wait for all that before turning their minds to why their customers’ trust was lost, and how they can go about getting it back.

This week the Academy of the Social Sciences in Australia held a symposium in Canberra on regenerating integrity and trust in Australian institutions. Professor Leon Mann, a psychologist from the University of Melbourne, and Associate Professor Nicole Gillespie, a management expert from the business school at the University of Queensland, spoke about trust from a business perspective.

Gillespie drew on a major study she conducted with three other academics, Designing Trustworthy Organisations, published by the MIT Sloan Management Review.

Although companies that suffer a loss of trust often blame “rogue employees” or “a few bad apples,” Gillespie and her colleagues’ research shows that major violations of trust are almost never the result of rogue actors.

Rather, they are predictable in organisations that allow dysfunctional, conflicting or incongruent elements of their system to take root. It’s the barrel that’s rotten.

Often the incongruence that led to the loss of trust was the development of a company strategy that favoured the interests of one stakeholder group while betraying those of others.

“This problem has often been defined as letting shareholder profits take precedence over core responsibilities to other stakeholders (such as employees, customers, suppliers or communities),” the study says.

And it’s not just favouring one stakeholder over the others, it’s doing so at the expense of the others, and even causing harm to them.

Bang on. How did those guys know about our banks?

They note that a US Senate committee investigating the global financial crisis was very critical of Goldman Sachs, whose stated values of client focus and integrity were at times overshadowed by a less formal culture that emphasised getting deals done with less than full disclosure (to the mugs on the other end of the deal).

Good point. Trustworthiness has to be embedded into every aspect of the business’s strategy, structure, processes and systems. But there are formal ideals and rules, and then there’s always an informal culture. The two must be “congruent” – they must fit together.

When the rules say one thing, but the pressure from your supervisor says something different, most employees soon realise what the boss, and the boss’s bosses, really want.

“Our research suggests that the key differentiator between companies that violate trust and those that sustain it is integrity and consistency within and across the organisation,” the study says.

So how can a company that’s lost its customers’ trust get it back? The good news is that when years of untrustworthy behaviour reach crisis point, this can create the impetus to really turn things around.

You need to start with a credible, rigorous and independent investigation of the weaknesses in the system that caused the problem.

“Companies are often so concerned with appearance and damage control that they are unwilling to engage in the degree of examination required to root out the entrenched causes of trust violations,” the study says.

For instance, BP allowed its Texas refinery explosion in 2005 to be followed by the oil spill in the Gulf of Mexico in 2010. News Corp had an employee jailed for phone hacking in 2007, but endured another phone-hacking scandal in 2011.

Next, since trust failures are typically systemic, the organisational reforms need to be systemic as well. Structures, systems and processes should be the first point of intervention because they’re relatively easy to design and change.

However, such interventions by themselves are unlikely to produce sustainable change. “The more difficult challenges involve making changes to the organisation’s culture, strategy and leadership and management practice.

“Indeed, adding training in ethical conduct probably won’t affect organisational behaviour in any meaningful way if supervisors, workplace norms and performance management objectives continue to encourage questionable activities,” the study says.

Finally, evaluation. Even when a trust crisis recedes, old habits have a way of returning. Reforms must be evaluated to ensure they are working as intended, and any shortfalls are addressed.

“Because it takes time to change systems and deep change is hard to realise, in some respects the most important part of trust repair is the ongoing assessment, learning and course correction required to build authentic, sustained trustworthiness.”

Wow. How easily Australia’s story fits into the academics’ generalised framework.

I think the main reason our banks ran off the rails is that they got locked into an utterly inward-looking game in which each of the four players competed to see who could raise their profits the most.

To this end, they gave their senior people incentive schemes and their junior people key performance indicators aimed solely at increasing profits. The targets set were so demanding they implicitly encouraged staff to ignore the company’s stated values and bend rules that stood in the way of achieving the target and pleasing the boss.

Bosses can’t have failed to notice the questionable practices this gave rise to, but they looked the other way for fear of falling back in the profits comp.

They attempted to justify this by claiming company law required them to put shareholders’ interests first. They failed to mention that, by exploiting and using up the trust of their customers, they were putting shareholders’ short-term interests ahead of their long-term interests – a short-sightedness company law never required of them.

The price bank shareholders are paying for the mistreatment of bank customers is now apparent.

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Why so many businesses are behaving badly

While we digest the royal commission’s evidence of shocking misconduct by the banks and insurance companies, there’s another unpalatable truth to swallow: they have no monopoly on bad behaviour.

It seems almost everywhere you look you see examples of companies behaving badly. In a major speech he gave a few months ago, the chairman of the Australian Competition and Consumer Commission, Rod Sims, offered a remarkable list of business household names the commission was taking proceedings against, as I noted at the time.


Commissioner Kenneth Hayne has given us a lawyer’s explanation of why the banks misbehave, but Sims’ speech offers an economist’s explanation.

It’s an important, though sensitive, question for economists since their simple “neo-classical” model of markets predicts firms won’t mistreat their customers because, if they did, they’d lose them to a competitor.

Sims offers seven reasons for this evident “market failure” – a term economists use to acknowledge when real world markets fail to deliver the benefits the textbook model promises.

First, he says, meeting customer needs may not be the main way companies succeed.

On the supply side, markets and economies are driven by the desire of firms to earn and grow profits. (On the demand side, markets are driven by the self-interest of consumers seeking the best deal they can get.)

Nothing wrong with that. Indeed, it often means that those businesses best at meeting the needs of consumers over the longer term do best and survive longest.

“However”, Sims concedes, “being the best at meeting the needs of consumers is not the only, or even the dominant, way firms succeed. Staying ahead of rivals through continual improvement is a difficult task for most companies; eventually, someone [else] works out how to do things better and cheaper.”

“Commercial strategy therefore is largely about building defences against the forces of competition. To make it more difficult for other firms to develop a better product. Or, if they do, to limit their access to customers.” Much of this is perfectly legal.

Michael Porter, the doyen of corporate strategists, from Harvard Business School, demonstrated that firms can best attain commercial success by reducing the number of competitors, by erecting high barriers to new firms entering the market, by keeping suppliers dispersed and weak, by using brands or the bundling of products to create strong consumer loyalty, and by reducing the likelihood of other firms being able to offer your customers products those customers see as substitutable for your product (that is, by “product differentiation”).

Sims’ second reason customers may not get treated well is that executives are under considerable sharemarket pressure to increase short-term profits, so as to increase share prices. Executives’ bonuses are often geared to achieving this.

Many companies set a sales or profit target higher than the growth in nominal gross domestic product, meaning not all of them can achieve it. This can induce some executives to push the boundaries and ignore the risk of reputational damage over the longer term.

Third, in some markets poor firm behaviour goes unpunished by customers. This can be so because customers don’t see what’s been done to them – that they’re being misled, or that firms have formed an (illegal) cartel to keep prices high.

Or it can happen because customers don’t have viable alternative products to turn to. Or switching to another provider may be too difficult or costly. Firms may deliberately make it hard to compare their product with their competitors’.

Fourth, competition can become a race to the bottom rather than the top if firms gain a competitive edge through poor behaviour that goes undetected and unpunished. Stay pure and you lose business. A firm can know it’s bad practice, but not be game to be the first to stop doing it.

Fifth, companies may give their staff financial incentives without adequate safeguards to prevent mistreatment of customers.

Companies can establish poor business models, such as arrangements that leave franchisees little room to achieve a return on their investment while paying their workers award wages.

Sixth, customers can consider themselves badly treated when firms (including banks and power companies) engage in “price dispersion” – charging new customers a lower price than existing customers – which is a common practice and perfectly legal.

Economists have often judged this to be a good thing - “welfare enhancing”. But Sims notes that such behaviour imposes extra search costs (spending leisure time checking to see that companies you deal with aren’t taking advantage of you) which are a loss to society.

(He could have added than the economists’ simple model assumes away all search costs – an example of “model blindness”, by which economists mislead themselves.)

Finally, customers can suffer if executives’ loyalty to their company leads them to sail closer to the edge of what’s legal than they would in their private lives. If some lawyer tells you it’s not illegal, does that make it honest?

Not surprisingly, the economist’s explanation of why businesses behave badly is very different to the judge’s. But when it comes to what we can do about it, Sims and Hayne aren’t far apart.

Commissioner Hayne’s answer is not to pass new laws outlawing conduct that’s already illegal, but to increase penalties so as to make them a realistic deterrent to big businesses whose size means their misconduct in just one area can earn them huge sums, and then police the law with far more vigour and diligence that so far shown by the financial regulators, including Treasury.

Sims has several suggestions. Increase the "private cost" of bad behaviour by identifying and shining a light on bad behaviour, increasing penalties and continually looking for new ways to increase regulators’ ability to identify and pursue bad behaviour.

Markets will never be as competitive as the textbook model assumes, but Sims says governments should ensure they’re as competitive as possible.

And they should bolster competition on the consumer side by taking measures to lower customers’ search costs – the time and effort needed to find the best deal.

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How a better business culture is within reach

Last week must have been a terrifying wake-up call for Australia’s ruling class – not just our politicians, but also the chief executives and directors of our big corporations, both publicly and privately owned.

If they’re half as smart as they’re supposed to be – after all, we’re told they got their jobs on merit – their performance of their duties will be much improved “going forward”.

The problems at the ABC – managing director sacked and chairman resigned in the same week – and the problem behaviour of our banks are very different, but they have one thing in common.

Members of the ABC board were made aware, if they hadn’t already known, of the chairman’s alleged interference in the day-to-day running of the corporation in a way that endangered its independence from the elected government, but chose to do nothing. Until that knowledge became public and the public’s horrified reaction obliged them to act.

The directors of our big banks presided for many years over a system of remuneration incentives – from the chief executive down – that rewarded staff for putting profit before people.

If the directors didn’t know this was leading to bank customers being mistreated, regulators misled and laws broken, it can only be because they didn’t want to know.

Well now, thanks to the royal commission’s shocking revelations, all of us know the extent of the banks’ misconduct. And the directors have nowhere to hide.

See the link between the two cases? When you’re on a board, it’s easy to see how things look from the viewpoint of the insiders – the people in the room, and on the floors below. What’s harder to see, and give adequate weight to, is the viewpoint of outsiders.

But that’s the board members’ duty, statutory and moral: to represent the interests of outsiders, including the shareholders, but also other “stakeholders”. To view things more objectively than management does. To avoid falling into groupthink. To rock the boat if it needs rocking.

A good question is: how would it look if what’s now private became public? Because that’s what happened last week. And now a lot of executives and directors are viewing the consequences of their acquiescence with fresh eyes and are not proud of what they see.

The ABC’s governance problems, we must hope, will be fixed relatively quickly. The misconduct of the banks is a much tougher problem.

The interim report of the banking royal commission carried a wake-up call also for the financial regulators – particularly the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority, but also the Reserve Bank and Treasury.

Allow yourself to be captured by the people you’re supposed to be regulating, and one day your failure to do your duty according to law will be exposed for all to see. How good will you feel?

Get too cosy and obliging, and the banks take advantage of you behind your back. Conclude from things they say - and the way they keep cutting your funding – that your political masters want you to go easy on their generous-donor mates in banking and, when the balloon goes up, the pollies will step aside and point at you.

Since you did neglect your duty to protect the public’s interests, you won’t have a leg to stand on.

Some people were disappointed the interim report contained no recommendations – no tougher legislation, no referrals to the legal authorities – but I was heartened by Commissioner Kenneth Hayne’s grasp of the root cause of the problem and the smart way to tackle it.

Too often, he found, the misconduct was motivated by “greed - the pursuit of short-term profit at the expense of basic standards of honesty . . . From the executive suite to the front line, staff were measured and rewarded by reference to profit and sales”.

Just so. But what induces seemingly decent people to put (personal) profit before people? That’s a question for psychologists, not lawyers. We’re social animals with an unconscious, almost irresistible urge to fit in with the group. A tribal urge.

Most of us get our sense of what’s ethical behaviour from the people around us in our group. If what I’m doing is no worse than what they’re doing, that’s ethical. Few of us have an inner moral compass (set by our membership of other tribes – religious or familial) strong enough to override the pressure we feel under from what our bosses and workmates are saying and doing.

Sociologists call this “norms of acceptable behaviour” within the group. When regulators first said that banks had an unhealthy corporate “culture”, business leaders dismissed this as soft-headed nonsense. Now, no one’s arguing.

But, we’re told, how can you legislate to change culture? Passing laws won’t eliminate dishonesty.

Fortunately, that’s only half true. Rationality tells us people’s behaviour flows from their beliefs, but psychologists tell us it’s the other way round: if you can change people’s behaviour, they’ll change their beliefs to fit (so as to reduce their “cognitive dissonance”).

Hayne says “much more often than not, the conduct now condemned was contrary to law”, which leads him to doubt that passing new laws is the answer.

So what is? His hints make it pretty clear, and I think he’s right. Make sure everyone in banking knows what’s illegal, then police the law vigorously with meaningful penalties. Fear of getting caught will override greed, and a change in behaviour will be reinforced by an improvement in the banking culture.

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What would Jesus do about tax and government spending?

It’s Easter, so let me ask you an odd question: have you noticed how arguments about governments’ intervention in the economy – should they, or shouldn’t they – often rely on an appeal to Christ’s parable of the Good Samaritan?

No, me neither. Until I read a little book called, The Political Samaritan: How Power Hijacked a Parable, by Nick Spencer, of the British religion-and-society think tank, Theos.

This is my take on what I read.

Polling in 2015 by the British Bible Society found that 70 per cent of respondents claimed to have read or heard the parable, but in case you missed that day at Sunday school, I’ll summarise.

One day a lawyer trying to trap Jesus quoted the Old Testament law to “love your neighbour as yourself”, but asked, who is my neighbour?

Jesus replied with a story. A man was travelling down a road when he was attacked by robbers and left half-dead. A priest came down the road and saw the man, but passed by on the other side. So did a religious functionary.

But next came a Samaritan who took pity on the man, bound his wounds and took him to an inn, where he looked after him. Next day the Samaritan paid the innkeeper to look after the man until he was well.

Then Jesus asked the lawyer which of the three was a neighbour to the man who’d been robbed. “The one who had mercy on him,” the lawyer replied. Jesus told him, “Go and do likewise”.

Politicians have been using this parable to support their arguments at least since British evangelicals were campaigning for the abolition of slavery in the early 1800s. Martin Luther King spoke about the parable at length in his last sermon before he was assassinated in 1968.

George W Bush spoke about it, as did Hillary Clinton. But it’s been a particular favourite of the British Labour Party.

Early in his establishment of New Labour, Tony Blair said: “I am worth no more than anyone else, I am my brother’s keeper [an allusion to Cain and Abel in the Book of Genesis], I will not walk by on the other side. We are not simply people set in isolation from one another . . . but members of the same family, same community, same human race. This is my socialism.”

Blair’s successor as British prime minister, Gordon Brown, son of a Presbyterian minister, said “we are prepared to spend money to help the unemployed; we are not going to walk by on the other side, we are going to help them.’’

In the aftermath of the global financial crisis, Brown said: “In a crisis what the British people want to know is that their government will not pass by on the other side, but will be on their side.”

So, to politicians on the left, the Good Samaritan is the all-purpose justification for state intervention to help anyone anywhere with a problem. It’s about collective responsibility and collective action.

To a politician like Margaret Thatcher, however, it’s about precisely the opposite. The Good Samaritan was an individual; he saw someone with a problem and he acted to help them. He didn’t tell the government to do something about it.

People shouldn’t hand over to the state all their personal responsibility. Point one.

Point two: the Samaritan needed money to be able to help the half-dead man, and he had it. But the more we’re taxed, the less we have to discharge our personal responsibility to others.

So what was Jesus really saying? First, according to Spencer, he was reacting against the lawyer’s legalism.

Jesus was concerned with following the spirit of the law, not exploiting its letter. And he was saying the law of neighbourly love is the key commandment which, in cases of conflict, overrides other commandments.

The Samaritan was from an ethnic group the other people in the story despised. So neighbours aren’t just the people in our street, our friends, our fellow Australians, they’re everyone, including those we don’t know or don’t like. The parable is relevant to our treatment of other races and asylum seekers.

The world has changed a lot in the 2000 years since the parable was spoken, so I think we should be wary of assuming it speaks definitively about every modern practice. It doesn’t explicitly authorise compulsory state redistribution of income from rich to poor, nor is it condemned. It doesn’t even give the tick to organised charities.

Conservatives are right to emphasise that our personal responsibility for others is fundamental. But I think supporters of collective action may claim that it’s consistent with the spirit of the parable.

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Cheating cricketers symptomatic of our declining standards

I can’t see why people are so shocked to discover our cricketers have been cheating. Surely that’s only to be expected in a nation that’s drifted so far from our earlier commitment to decency, mateship and the fair go.

Such behaviour is unAustralian? We do, or condone, many things that used to be thought of as unAustralian.

There was a time when it would have been unthinkable for Australians to stand by while an elected government physically and psychologically mistreated people whose only crime was to arrive by boat without an invite.

Many of them are fleeing persecution in their own country, but that makes no difference. We even mistreat their children, causing them to have mental illnesses and then refusing them medical treatment.

Last week a government led by Mr Harbourside Mansion dished out another round of punishment to fellow Australians whose crime was to be unemployed or to have split with their partner while having dependent children, making it hard for them to do paid work.

The money to be saved will go just the tiniest way towards paying for tax cuts for big business. Did the rest of us care? Not really.

But let’s not kid ourselves. If governments thought mistreating asylum seekers and being unreasonable to welfare recipients would lose them votes, they wouldn’t do it.

They do it because they believe most voters want them to punish boat people and supposed dole bludgers. Which also explains why both sides of politics are guilty of it.

Lovely people, Australians. (And don’t imagine the rest of the world isn’t realising how unlovely we are.)

But stoop to tampering with a cricket ball? We’d never do something so utterly despicable. A player could have been injured.

Don’t forget that cricketers have money at stake when they decide whether to ease the path to victory with the help of a little sticky tape.

Nor should we imagine they’re the only Aussies yielding to the temptation to bend the rules in pursuit of a bigger bonus. What do you think the royal commission into banking misconduct is about?

I fear we hear about only a fraction of the national franchises that screw their franchisees, who then screw the kids working for them; the many employers paying less than award wages, including those ripping off people on temporary work visas who’re afraid to complain.

They do so because they’ve lost any sense of fairness towards their workers – and because they’re (rightly) confident their chances of being caught are low.

Governments – Coalition and Labor - have been cutting the number of inspectors and auditors in the name of greater public service efficiency.

We’ve become less Godfearing, more individualistic, more materialistic and more self-centred. We’ve become less community-minded, less committed to “solidarity” – where the strong go easy so as to help the weak do better – and less sympathetic to the battling of the battlers (except when we kid ourselves that we are battlers).

We’ve changed the meaning of “professional” to being highly competent in your occupation, whereas it used to mean putting your clients’ interests ahead of your own.

Politics has degenerated into an unending battle between interest groups, in which each seeks advantage at the expense of the rest. Much of the fighting is conducted by a thriving industry of lobbyists.

Even the churches fight like Kilkenny cats for a bigger share of the government handouts to private schools – just so they can afford to teach their children Christian values, of course.

But don’t imagine the greed is limited to businesses and institutions. Almost all of us have a mercenary attitude towards the government, paying as little tax as possible while demanding free public hospitals, subsidised pharmaceuticals, bulk-billed GP visits and much else.

How does all that add up? Not my problem. My problem is paying an investment adviser to tell me the somersaults I have to turn to get the pension and avoid paying tax on my investments.

What I’ve found most surprising in recent days is not money-hungry cricketers but the views of a leading businessman, Harold Mitchell, expressed in this very organ: “I’m an Australian and I pay tax for the good of the country.”

Mitchell tells of being visited by representatives of the Singapore government, who invited him to move his head office there. Their advertised company tax rate was 15 per cent, but he’d get a special offer of 7 per cent.

He declined. “I believe in the Australian system that creates the sort of society that enabled me to build a successful business. Avoiding tax, even if it seems legal, is a very shortsighted ambition,” he wrote.

What’s wrong with the man? What a corporate dinosaur. He claims to have found at least one other rich person who thinks similarly – the Scottish children’s author, JK Rowling.

“I pay a lot of tax, and I feel one of the reasons I stay and pay and why I’m not based in Monaco ... is I think my country helped me,” she's said.

Mitchell even quoted the American jurist Oliver Wendell Holmes’ dictum that “taxes are what we pay for a civilised society”.

Perhaps the problem is it also works the other way: more money-grubbing, rule-bending and tax avoiding are part of a society that’s becoming less civilised.

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Australians of the Year utterly out of step with the rest of us

How moving it was to watch Malcolm Turnbull presenting the Australian of the Year awards last week. What impressive people they were. Made me proud to be an Aussie.

I can't help liking Turnbull. At a show like that he's all we could hope for in a Prime Minister. He looked the part and spoke it well. He was completely at ease, someone we can be proud to have represent us to the world.

In his introduction he said all the right things. The "extraordinary finalists" for the various awards – Young Australian, Senior Australian, Local Hero and Australian of the Year – "light the way for us – shining examples of our best selves".

"Generous and compassionate, selfless, never daunted by seemingly impossible odds, brilliant, curious, entrepreneurial, innovative, building bridges to reinforce the mutual respect which secures our harmony and diversity.

"They include First Australians and those who have dedicated their lives to working with them" – such as the wonderful Sister Anne Gardiner, who's spent her life serving the Tiwi people on Bathurst Island.

"They include migrants and refugees who have fled horrors barely imaginable ...

"Yet, however much we celebrate the remarkable, peaceful and diverse nation that we have built together, we always strive to be better. Our Australians of the Year have always shown us how ...

"Respect for women, respect for each other, in all our magnificent diversity, is the foundation on which our harmonious society depends, is the platform which enables every Australian to realise their full potential."

And yet I confess that in the days since that proud night I've suffered a bad hangover. It seems our One Day of the Year has moved from April 25 to January 26.

We celebrate these "shining examples of our best selves" for one night and day before we revert to being far from our best selves for the rest of the year. We hunt up a handful of people who remain "selfless" so we don't feel so bad about the self-seeking lives the rest of us lead?

Far from retaining a strong sense of community, of helping each other and working for the greater good, we live in an era of every person for themselves, where the material almost always gets priority over the social, where our ambitions centre on personal advancement rather than making the world a better place.

If our politicians – of both stripes – are so keen for us to be "generous and compassionate" as well as "respectful" and part of a "harmonious society" why aren't they setting a better example?

What's generous and compassionate about sending social security recipients bills for "debts" owed to Centrelink that you haven't checked properly, then making them prove they don't owe that much with payslips and other documents from past years that you hadn't warned them to retain?

What's "respectful" about treating invalids, the aged, and young workers down on their luck in such a way? What's Australian about denying point blank there's any problem with what you're doing?

Why when you've gone out of your way to honour the place of First Australians do you, the very next day, curtly brush aside their request that the white majority run to the huge inconvenience and expense of changing the date of Australia Day? Respect, eh?

Do we honour the work of the Sister Annes because they salve our consciences? Thank God they're willing to put themselves out, because the rest of us ain't.

Some of us – including many in Turnbull's own electorate – are the children or grandchildren of "refugees who have fled horrors barely imaginable".

Much worse, apparently, than the way we've been treating refugees on Nauru and Manus Island.

Turnbull is right to say we've built a highly successful multicultural society.

Lately it's been fraying at the edges, however, with intolerance of people with unfamiliar religious practices – women's head coverings; halal – fears that all Muslims are terrorists, fears we're being overrun by Asians, and downward envy of government help for disadvantaged Indigenous people.

But it's not just that our political leaders fail to set an example, it's that too often they seek partisan advantage from our moral weaknesses. Rather than seeking to calm our fears of foreigners they compete to pander to them. Let's protect ourselves from the resurgent One Nation by aping its rhetoric, even its policies.

As for respect being "the platform which enables every Australian to realise their full potential" it's sentimental claptrap – especially coming from a government that seems to have set its face against funding the nation's schools on the basis of student need rather than established privilege.

It's schools and pre-schools that should be "the platform which enables every Australian to realise their full potential".

The most worrying message we got from the latest bad news on NAPLAN and PISA testing of students is the wide gap between our best and worst students and the large minority of kids the system is failing.

As Peter Goss, of the Grattan Institute, has demonstrated, we can go most of the way to needs-based funding quickly and without extra spending, provided we're prepared to shift funding from the less-needy to the more-needy.

But that would require Turnbull to exhibit the undaunted, entrepreneurial and bridge-building character traits he so admires in others.

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