Inheritance: the major life event no politician wants to mention

When I was growing up, my family didn’t have much. We lived rent-free in a succession of down-at-heel manses (the Salvos called them “quarters”), but my father’s stipend was a small one on which to support four kids.

Mum worried about where my parents would live after they retired but, with much scrimping and saving (including making my sisters hand over almost all their wages), they built and paid off a small cottage at Lake Macquarie, near Newcastle.

After my father died, Mum spent many impatient years in God’s waiting room, longing to be “promoted to Glory” and thus reunited with my Dad.

That was in 2004 but, though all she had was the cottage and a thousand or two in the bank, that was enough for the four of us to receive one or two hundred thousand each. By then, we were middle-aged and well established. It was nice to add it to the pile, but we didn’t desperately need it.

More people are receiving significant inheritances these days. They’re getting bigger and will get bigger still.

We worry that houses are becoming unaffordable, but the other side of ever-rising house prices is that inheritance has become an important event in most people’s lives. Many people look forward to it, and family disputes or unhappiness over wills is not uncommon.

But here’s a funny thing. When was the last time you heard a politician talking about inheritances? You didn’t. They never do. I’m sure they think about their own inheritance, but they never want to mention yours or anyone else’s.

In the 1970s, Australia became one of the few rich countries to abolish death duties (state and federal). People were so happy to see the end of them that death duties have become one of the bogeymen of federal politics.

Want to start a scare campaign? Spread a rumour that the other side has a secret plan to reintroduce death duties. Want to oppose limits on share franking credits? Claim it’s a form of death duties.

This is why, compared with other countries, we have little information – and even less reliable figures – on the size and dispersion of inheritances. The pollies fear that if they let the bureau of statistics ask people questions about their wealth, their opponents would jump to conclusions.

This explains why last week’s report from the Productivity Commission was “the first comprehensive research report on wealth transfers” and was initiated by the commission, not requested by the government.

The report explains that rising house prices are just the main reason inheritances are getting bigger. Another is that, with superannuation having been compulsory for about 30 years, more people are dying with unspent super balances. And, of course, family sizes are getting smaller.

The report finds that each generation has been wealthier than the previous one, though Baby Boomers have done particularly well. It found that $120 billion was transferred in 2018 – 90 per cent as inheritances and 10 per cent as earlier gifts – which was more than double that in 2002.

The average inheritance, we’re told, was $125,000. But that included a few large inheritances plus many much smaller ones. The average inheritance received by the wealthiest 20 per cent of recipients was $121,000, and by the poorest 20 per cent was about $35,000. Or so we’re told.

Not surprisingly, the children of rich parents received much bigger inheritances than the children of poor parents. Nor is it very surprising that the children of rich parents tend also to be rich, while the children of poor parents tend also to be poor.

But this may surprise: if you switch from focusing on absolute dollars to looking at relative size, you find that the smaller inheritances received by people without much wealth increase that wealth by a much higher percentage than the larger inheritances increase the wealth of already-rich recipients. The same thing can be seen in other countries’ figures for wealth transfers.

So, to a small extent, the growing prevalence of inheritance is reducing the gap between rich and poor. And, as the report’s authors stress, inheritance isn’t the main reason the children of the rich are also rich and the children of the poor also poor.

No, monetary inheritances explain only about a third. The rest is explained by “all the other things parents give their children – education, networks, values and other opportunities”. And remember, IQ is mainly genetic. Luck is another factor.

Did you notice how little of the wealth transfers gifts accounted for? The authors say they couldn’t find strong evidence of larger transfers from the Bank of Mum and Dad “despite popular belief”.

Sorry, not convinced. By their own admission, the data they’ve been using are “somewhat limited”. My guess is that more people receive inheritances than their figures show. The size of inherited amounts seems very low. As for parents having to cough up to help their kids buy a home, it’s become a big deal relatively recently.

So if the statisticians can’t find much evidence of it, that’s probably because they haven’t been asking the right questions.

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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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Now's a good time to work on your rules to live by

The week between Christmas and new year is unique among the 52, a week of no great consequence, a kind of no man’s land between the end of the old year and the start of the new. Not a gap year, but a gap week. A week where all the sensible people are on leave and having fun with the family, while the few who must work while others play hope there won’t actually be much work and no one will mind if they skive off early.

But I’ve always found it a good time for reflection and taking stock. What were my great achievements in the year just past – if any? And what are my grand plans for achievement in the coming year?

A few days ago I happened upon a list of "17 Things I Believe", written by the American management professor Robert Sutton, which I put away a decade ago because I believed so many of his 17. Some of them are useful for anyone using this week for a little reflection.

Let’s start with number 14: "Am I a success or a failure?" is not a very useful question.

That’s because all of us are both a success and a failure. Successful in some aspects of our life and less successful in others. Good at making money, for instance; less good as a spouse and parent.

If so, see number 17: Work is an overrated activity.

Many men do need to find a healthier balance between work and family. They need to stop kidding themselves that sending their kids to an expensive school and buying their loved ones expensive presents is a satisfactory substitute for their presence and attention.

More generally, however, the school of "positive" psychologists says that, rather than always focusing on fixing your weaknesses, you make more progress if you concentrate on getting the best from your strengths.

But Sutton has his own twist. "Rather than fretting or gloating over what you’ve done in the past (and seeing yourself as serving a life sentence as a winner or loser)," he says, "the most constructive way to go through life is to keep focusing on what you learn and how you can get better in the future."

This ties in with number 8: Err on the side of optimism and positive energy in all things.

Yes, a much happier way to live your life.

And it leads on to number 5: You get what you expect from people. This is true when it comes to selfish behaviour; unvarnished self-interest is a learnt social norm, not an unwavering feature of human behaviour.

This really chimes with my experience. I’ve found it particularly true of bosses. If they can see that you expect them to give you a square deal because they’re a decent person, they most likely will if it’s within their power.

That’s because of a person’s natural desire to meet the other person’s expectations of them. Hold them to a high standard and they’ll rise to it. But let them see you distrust them and half expect to be cheated, and they’re unlikely to dash your expectations.

Another one I really like is number 7: The best test of a person’s character is how he or she treats those with less power. Or, as I prefer to say after too much Downton Abbey, how you treat the servants. The taxi drivers, shop assistants, receptionists and executive assistants trying to stop you getting through to their boss.

It’s a test I apply in retrospect to my own behaviour, and often don’t pass.

Now here’s a better one for this time of year, number 9: It is good to ask yourself, do I have enough? Do you really need more money, power, prestige or stuff?

Like many economists always have, in this age of hyper-materialism and vaulting ambition it’s easy to assume more is always better. It often isn’t, particularly when quantity comes at the expense of quality. Nor when we use cost as a measure of quality.

I think the world would be a nicer, less frantic, more generous, less unequal and, above all, more enjoyable place to live if our politicians and business people put more emphasis on making things better rather than bigger. (And by quality I don’t mean striving for an all-Miele kitchen.)

Sometimes I think top executives strive for ever-higher remuneration because they don’t get much satisfaction from the jobs they do. They’d be better off themselves if they put more emphasis on making sure their staff had more satisfying and reasonably paid jobs, and their customers always got value for money.

Which brings us back to work. There is more to life than work, but since work takes up so much of our lives, I think the secret to a better life is to keep wriggling around until you find a job that’s satisfying. And a business full of satisfied workers – from the boss down – should still be one that makes a big profit. That is, big enough.

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Virus reminder: governments need to be better, not smaller

One good thing the coronavirus has done is slow the pace of our lives, leaving us more time to think about them. And since the main device being used to stop the spread of the virus has been to reduce physical contact between people, it hasn’t been hard to see that what matters most to us is face-to-face contact with family and friends.

People of middle age fret about not being able to visit elderly parents. The great Dr Brendan Murphy, flat out advising the Prime Minister, really misses being able to hug his granddaughters. (Grandsons and granddaughter, in my case.) Teenagers take their family for granted, but miss their friends. Younger kids realise they actually like going to school and mixing with others.

The virus has also thrown into relief our rights as individuals versus our obligations to the group. The prevailing political and economic ideology highlights the individual and plays down the group, but in emergencies like this even our squabbling federal and state politicians see that the only way of coping is to co-operate rather than compete.

Looking at the Americans and the terrible disaster they’re making of it – including people refusing to wear masks because it’s a violation of their personal freedom – it’s not hard to see that individualism can go too far, and playing your part as a loyal member of the group has its virtues.

The virus reminds us that many of the problems we face can’t be solved by individuals acting alone, but by all of us acting together. For this we need leadership; we need the government to govern. To tell us what needs to happen, to issue instructions, provide support for those who need it, and then have all of us falling into line and pulling our weight.

That’s easy to see – and accept – in a crisis, but harder when we’re muddling along as normal. Fact is, however, our world abounds with problems that can’t be solved by individuals and businesses acting on their own initiative.

For these we do need somebody – or some body – with the authority to act on our behalf, calling the shots, fixing things, spending money and requiring us to cough up that money according to our ability to pay.

And yet the rise of individualism has been accompanied by the denigration of the role of government. It was the now-canonised Ronald Reagan who famously said that the nine most terrifying words in the English language are "I’m from the government and I’m here to help".

Obviously, governments can be far from perfect. Government agencies can be unhelpful, they can push us around for no good reason, be inefficient and waste our money. And yet the prevailing ideology’s response – influencing the behaviour of both sides of politics – hasn’t been to improve the functioning of government, but to chop it back as much as possible.

Any government business that can be sold, should be. Industries should be deregulated so private enterprise is given maximum freedom to be enterprising. There are services that governments need to pay for from the public purse, but their provision should be contracted out to private firms.

The trouble is, the advocates of Smaller Government have never persuaded the public of the wisdom of this approach, nor received a mandate. When governments try to cut back government spending in big licks – as Tony Abbott, despite promises to the contrary, tried to do in his first budget – they get repudiated.

So they end up forever trying to keep the lid on government spending – quietly cutting money going to politically unpopular causes (the unemployed, public servants), and ignoring all the people warning them to start preparing for possible problems in this field or that (a bad bushfire season, for instance).

They justify all this short-sighted penny pinching by saying no one wants to pay more taxes. Which is the message we so often send them, partly because we’ve grown distrustful that our money will be spent wisely.

See where this is leading? All the denigration and distrust of government does much to explain why we haven’t responded to the pandemic as well as we should have. National planning for a pandemic was discontinued after 2008 and it’s likely that the recommended national stockpile of personal protective equipment was a victim of successive "efficiency dividend" cut backs.

The ironically named efficiency-dividend cuts to the public service may help explain the inadequacy of Victoria’s contact tracing arrangements. There’s an inquiry into the failures of Victoria’s quarantine of returning travellers, contracted out to private firms.

Deregulation of wage-fixing has encouraged the growth in casual workers, whose lack of paid sick leave tempts them to go to work while at risk of having contracted the virus. Governments are scrambling to fill this dangerous gap.

Finally, the decades of wilful neglect and misregulation of aged care facilities, “left out of sight and out of mind” and “fragmented, unsupported and underfunded” – to quote the latest of many inquiries. All to keep taxes low.

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Getting and spending - what's it meant to prove?

In the Aussie calendar, tomorrow – the day after the Australia Day holiday – is the unofficial start to the working year. So today’s the last day we have a moment to pause and wonder what all our getting and spending – my usual subject matter – is meant to prove.

From a narrow biological and evolutionary perspective, our only purpose is to survive and replicate our genes, playing our part in the survival of our species. Apart from that, what we do on the way to our inevitable death is of little consequence.

Don’t like that idea? No one does. Enjoyable though we find the mechanics of reproduction, the human animal craves more than just sex, good meals and a bit of fun while we kill time until our funeral. We want somehow to find purpose and meaning in our lives.

Contrary to the message of much advertising and other marketing, this meaning can’t be supplied satisfactorily by the efforts of our business people, politicians and economists. Beneath the glitter, their message is simple: get back to your getting and spending. Just do more of it.

Is there anything scientists – as opposed to philosophers – can tell us about the meaning of life? Steve Taylor, a senior lecturer in psychology at Leeds Beckett University, can, even though he’s not religious.

In a recent article on The Conversation website, he tells of his work over the past 10 years talking to people who’ve had what he calls “suffering-induced transformational experiences”. These include being diagnosed with terminal cancer, suffering a bereavement, becoming seriously disabled, losing everything through addiction, or having a close encounter with death during combat.

“What all these people had in common is that after undergoing intense suffering they felt they had ‘woken up’. They stopped taking life, the world and other people for granted and gained a massive sense of appreciation for everything,” he says.

They spoke of a sense of the preciousness of life, their own bodies, the other people in their lives and the beauty and wonder of nature. They felt a new sense of connection with other people, the natural world and the universe, he says.

“They became less materialistic and more altruistic. Possessions and career advancement became trivial, while love, creativity and altruism became much more important. They felt intensely alive.”

A man who experienced a transformation due to bereavement spoke explicitly about meaning, describing how his “goals changed from wanting to have as much money as possible to wishing to be the best person possible”.

He added: “before, I would say I didn’t really have any sense of a meaning of life. However, [now] I feel the meaning of life is to learn, grow and experience.”

Taylor stresses that none of these people were, or became, religious. The changes weren’t merely temporary and, in most cases, remained stable over many years.

He says we don’t have to go through intense suffering to experience these effects. “There are also certain temporary states of being when we can sense meaning. I call these ‘awakening experiences’.”

Usually they occur when our minds are fairly quiet and we feel at ease with ourselves. When we’re walking in the countryside, swimming in the ocean, or after we’ve meditated, or had sex.

“We find the meaning of life when we ‘wake up’ and experience life and the world more fully. In these terms, the sense that life is meaningless is a distorted and limited view that comes when we are slightly ‘asleep’.”

So what’s the meaning of life, according to Taylor? “Put simply, the meaning of life is life itself.”

Wow. From my own reading of what psychologists tell us about life satisfaction, let me add two more-prosaic points. First, humans are social animals and we get much of our satisfaction from our relationships with our family, in particular, and also with our friends.

When economists and politicians try to make us more prosperous materially without ever considering what strain they may be putting on our relationships, they’re not doing us any favours. They – like us, so often – are mistaking the means for the end. Cannibalising our ends to improve our means doesn’t leave us better off.

Second, the simple economic model assumes work is an unpleasant means to the wonderful end of having money to buy things. But, as they say, if you can find a job you like – or get more joy from the job you have – you’ll never have to work.

If politicians, economists and the business people we work for put more emphasis on helping us find satisfaction from our work, they’d be adding more meaning to our lives (and theirs).

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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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Here’s what you’ll have most regrets about

They say no one on their deathbed ever regrets not spending more time at the office. Which is not to say we don't have other regrets, nor that we have to wait until we're drawing our last breath to have them.

This column will tell you nothing about the state of the economy, or business or the financial markets, but that's its attraction.

Maybe there are other things you should be paying attention to, so as the cut the number of unticked items left on your lifetime To Do list.

I can't tell you what you most regret – or will come to regret – but I can give you some big hints, using a study by two professors of psychology, Mike Morrison, of the University of Illinois at Urbana-Champaign, and Neal Roese, of the Kellogg School of Management at Northwestern University in Illinois, which I learnt of through the PsyBlog website.

The profs commissioned a nationally representative survey of 370 American men and women. The most common regrets they found were romance, lost love, 18 per cent; family, 16 per cent; education, 13 per cent; career, 12 per cent; finance, 10 per cent; parenting, 9 per cent and health, 6 per cent.


That regrets about our relationships – 43 per cent by the time you combine romance, family and parenting – well-exceed working-life concerns – 35 per cent, when you combine education, career and finance – shouldn't surprise you.

If it does, keep reading. It's well established by psychologists that the quality of our relationships is hugely important to our wellbeing. Far more important than how many bucks you make.

"We found that the typical American regrets romance the most. Lost loves and unfulfilling relationships turned out to be the most common regrets," the authors say.

"People crave strong, stable social relationships and are unhappy when they lack them; regret embodies this principle."

The trouble isn't that most of us don't realise this in principle, I reckon, but that so many of us find it hard to remember day by day in the struggle to get ahead in life, or even just derive satisfaction from our work – which psychologists know is another key source of "subjective wellbeing" (AKA happiness).

It's telling that women were more likely than men to have romance regrets, whereas men were more likely to have work regrets.

Other research confirms that women tend to value social relationships more than men, which suggests Harry Chapin knew what he was doing when he directed Cat's In The Cradle at the less-fair sex:

"When you coming home, dad?/ I don't know when/ But we'll get together then/ You know we'll have a good time then."

Except that, for family-focused regrets, there were no significant differences according to sex, age, education or relationship status.

As we've seen, men were more likely to have work-related regrets about career and education.

People who lacked a romantic relationship had the most regrets about romance, just as those who lacked a higher education had the most regrets under the heading of education.

But here's a twist: those with high levels of education had the most career-related regrets.

Huh? The authors suggest that the higher your education, the more sensitive you are about how well you've been able fulfil your aspirations.

Of course, our regrets come in two kinds: things we did but now wish we hadn't (known in more godly days as acts of commission) and things we didn't do but now which we had (acts of omission).

Turns out regrets about our actions are about as common as regrets about inaction, but regrets about inaction last longer – true for people of all ages.

Roese reminds us that, although regret is painful, it's an essential component of the human experience.

It may be that part of its evolutionary purpose is to motivate us to fix whatever of our errors and omissions we can fix.

Previous research on regret has mainly used samples of college students. This study, however, used a random sample representative of all Americans.

This more representative sample allowed to authors to conclude that "one's life circumstances – such as accomplishments or shortcomings – inject considerable fuel into the fires of regret".

Students worry most about education and career, and little about family but, as we've seen, older people acquire very different priorities.

Here endeth the lesson. Now, back to work. It may not be more important, but it is more pressing.

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Have a touchy-feely holiday break from the economic grind

I hope your "face time" with family and friends over the holiday break wasn't done using a mobile phone.

A phone call may be better than nothing, but it turns out that regular, in-the-flesh, face-to-face communication reduces the risk of depression in older adults.

That's according to research by Alan Teo, a psychiatrist at the Oregon Health and Sciences University, and others.

"Meeting friends and family face-to-face is strong preventive medicine for depression. Think of it like taking your vitamins, and make sure you get a regular dose of it," Teo advised.

Thanks to my own painstaking research (I googled it), I can tell you we know from previous studies that having social support and staying connected with people is good for your physical and mental health. It even helps you live longer.

Teo and his mates examined the results of a survey of about 11,000 people aged 50 or more between 2004 and 2010.

They found a correlation between the types of interactions people had with others and their likelihood of showing symptoms of depression two years later.

"We found that all forms of socialisation aren't equal. Phone calls and digital communication with friends or family members do not have the same power as face-to-face social interactions in helping to stave off depression," Teo said.

But what, pray tell, has this to do with the economics I'm paid to write about?

Well, in the silly season it doesn't have to. But as it happens, it does. One of the most important discoveries of economists in the past decade or so is the almost magical economic properties of face-to-face contact.

For this new knowledge we're indebted mainly to the guru of urban economics, professor Edward Glaeser, of Harvard, as set out in his important 2011 book, Triumph of the City.

Economic geographers have long understood the significance of "economies of agglomeration". We crowd into ever-bigger cities because close proximity between a business, its workers, its customers, its suppliers and even its competitors does wonders to improve productivity.

Unfortunately, what's good for our material standard of living isn't necessarily good for the soul.

Glaeser's contribution was to realise that, in the era of the knowledge economy, firms want to crowd together in the very centre of the biggest cities – regardless of sky-high rents – because knowledge spreads most effectively though face-to-face contact between the smartest people.

Here in Oz, pioneering empirical work by Jane-Frances Kelly of the Grattan Institute, has shown how more and more of our gross domestic product is being generated in the CBDs of our four biggest cities.

While she was at it, she publicised Reserve Bank research showing convincingly that, in every capital city, house prices are rising fastest in those suburbs closest to centre and slowest in those suburbs furthest out.

So if you think the golden rule of real estate is position, position, position, you're behind the curve. In big cities these days its proximity, proximity proximity. And that gets back to the economic value of face-to-face contact.

Unfortunately, however, what's good for our material standard of living isn't necessarily good for the soul.

When we're crammed in together in trains, lifts or waiting rooms, we know almost instinctively to avoid invading people's "personal space", avoid conversation and even eye contact.

But research by Nicholas Epley, of the University of Chicago's Booth School of Business, and Juliana Schroeder, of the University of California, Berkeley's Haas School of Business, shows our instincts are wrong.

In a series of experiments, those commuters who were instructed to strike up conversation with a stranger reported having the most positive experience, compared with those instructed to sit in silence or behave as they usually would.

When it comes to the advent of the knowledge economy, the information revolution and digital disruption, there are two errors we can make: underestimating the extent to which it's already changing the way the economy works (see above), and overestimating the extent to which it's changing the way humans work – and are happiest working.

You can be sure the world's model-bound economists will make – are making – the first error. And since their model copes with human nature only by assumption, they won't even be conscious of the second.

For the rest of us, however, the thing is to remember new technology raises three distinct questions: first, what new tricks is it actually capable of doing for us, second, do we really want it to do that trick for us and, finally, assuming we do, what will we eventually feel about the wisdom of that choice? See intro.

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GITTINS the Book: Sneak preview I

I was an "OK" - an officers' kid. Both my father and my mother were officers (ministers) in the Salvation Army and, until I left home at 21, the Army and its strange way of life dominated mine.

For 45 years my father was in charge of a succession of small corps, or churches, around Queensland and NSW. This meant our family moved every two years, sometimes every year.

I ended up attending five primary schools and three high schools. All that moving meant I have few friends from school days, but it was the only life I knew and I've yet to meet an OK who felt it did them any harm.

Especially for a corps officers' kid, the Army was an all-consuming religion. The whole of every Sunday was taken up attending prayer meetings ("knee drill"), open-air meetings on street corners, holiness meetings in the morning and salvation meetings in the evening, plus, for "junior soldiers", directory meetings in the morning and company meetings (Sunday school) in the afternoon.

At all of these meetings I'd wear the appropriate uniform, of course. On week nights there'd be "legion", a bit like Boys' Brigade, and as I grew older, band practice and choir practice.

The Gittinses are an Army family. Of my father's 13 siblings, three of his brothers and three of his sisters also became officers. An aunt and an uncle of my father's were officers, and six of my cousins are officers, plus a couple of their kids, making four generations in all.

My parents were strict, but never stern or preachy. They did their duty to God faithfully (my father's favourite word and highest ambition) and cheerfully, never questioning their superiors' arbitrary decisions to shift them hither and yon.

But they lived for their children and though, as products of their age, they were undemonstrative, I was never in any doubt that I was loved. I was, in any case, the baby of the family.

Even among other Salvationists, my parents were rather old-fashioned in their disapproval of "worldliness". Like all Sallies, they disapproved of drinking, smoking and any form of gambling (we were allowed to play Happy Families or snap, but never with ordinary playing cards for fear people might think we were betting), but they also disapproved of make-up, jewellery, dancing and doing anything much on Sundays bar attending meetings. Even going to the pictures was frowned upon.

This last one pinched a little with me. I remember wandering the streets alone on Saturday afternoons while my mates were at the matinee, rolling Jaffas down the aisle and watching serials and such exciting flicks as Smiley.

But no one in my family was rebellious, and nor was I. It wasn't until I was a full-time student at Newcastle University in 1967 that I began sneaking off on Wednesday afternoons to see a movie in Hunter Street.

I suspect the experience has left me with an addiction to cinema-going. People will tell you little has changed except the day: I now sneak off to the movies on Tuesday afternoons, and I usually see three films in a row.

My parents' objection to worldliness had as much to do with conservatism as spirituality. Their views had been formed long before the advent of television, so it escaped their strictures.

When TV arrived in 1956, their problem with it was purely the prohibitive cost of buying a set. I was never discouraged from joining the throng on the footpath watching telly in the windows of department stores and often went down to see the latest episode of Robin Hood outside the electrical store near our house in the inner-west Sydney suburb of Leichhardt.

When my parents retired, my sisters bought them their first telly, on which they happily watched reruns of all the movies they had disapproved of for so long.

All this may help explain why my own kids were deprived of television throughout their school years. My wife, Claudia, rang me at work one day when our first child was still very young to say our house in Redfern had been broken into and our TV stolen. Don't worry, I said, I'll pick up another set on my way home. Don't bother, she said, let's try life without it.

I explained to my son, Sandy, that we no longer had a television because someone had stolen it, and he accepted that.

We let our kids watch TV at their friends' houses, I took care to buy them the books or toys associated with TV crazes, gave them an unlimited book-buying budget and occasionally rented a telly so Sandy could watch the Rugby World Cup, but we didn't buy another set until the day our second child, Katie, finished her last Higher School Certificate exam.

Our lack of TV was something I kept dark during the two years I was on a huge, part-time retainer to the Ten Network, but I never felt my inability to watch current affairs TV left me at any disadvantage professionally. I got on with my work most nights. As for Claudia, it was her idea. And I doubt it did the kids any harm and may have meant they read and studied more.

At this late stage I'm proud of my Army heritage, proud of my father's contribution, proud of the mark the Army and my parents have left on my values and happy to talk about it - though when I do I quickly become emotional, a trait I inherited from my dad.

But growing up as an officers' kid in such a small, strangely behaved and attired sect does make you feel a bit of an oddity and an outsider - not one of the gang. Whenever my kids were embarrassed by the doings of their parents, I'd say, "Until your father turns up at your school wearing a uniform from the Crimean War, you don't have anything to complain about."

Leaving aside the "social work" of the Army that so many people know and admire, as a church it's just another Protestant denomination, formed when William Booth broke away from the Methodists in London in 1865.

The Army is very musical. I was taught to play a brass instrument at the late age of 13 and I played in successive small Army bands until not long before I became a journalist.

Although I've long been what the Army would call a backslider, all those tunes, songs and choruses have stayed part of me. I often listen to Army music as I sit writing at night and the words can move me almost to tears. On the census I still put myself down as Army.

Like my father, my mother left school at 12. She worked for a tailoress and for the rest of her life was an accomplished dressmaker, making all our uniforms, with their intricate braid and piping.

Her aunt was a Salvationist and it was at an Army meeting that my mother met young Lieutenant Gittins. She, too, travelled to the Army's training college at Petersham and in due course was commissioned as an officer.

My mother was highly intelligent but painfully shy, with no sense of direction. She left all the grocery shopping to my father (which suited him because he wanted to patronise the shopkeepers who made weekly contributions to the Army's "shop league"), and when she needed to shop for clothes, or more likely clothing material, he'd take her.

My father was a simple, trusting, hard-working, gentle man. He was the most saintly man I ever expect to meet simply because, unlike the rest of us, he never harboured an uncharitable thought about anyone.

And despite his limited schooling, my father never used bad grammar. My mother had long ago beaten it out of him.

When we were appointed back to the Newcastle area, my father's name would occasionally appear on a roster of ministers whose sermon the previous day would be reported in the Newcastle Herald's Monday morning "From the Pulpit" column. The minister was required to submit his sermon notes, which (presumably) the most junior cadet reporter would cut down for the column.

The first time my father submitted his sermon, what appeared in the Herald bore no resemblance to anything he had said, nor to anything any minister would have thought made sense. So my mother stepped in and, on future occasions, she would write out a sermon, giving one copy to the paper and another to my father.

He would preach an approximate version of it, but what appeared in the Herald would be virtually unchanged. That's how I know any skill of mine as a journalist comes from my mother.

Edited extract from Gittins by Ross Gittins (Allen & Unwin), out next week.

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Easter message to business is think relationships

At this time of year it's worth pondering: many business people and economists think of themselves as Christians, but what implications does this carry for the way they view the world and conduct their affairs?

According to Michael Schluter, founder of Relationships Global and, these days, a business consultant, Christianity is a "relational" religion. If so, it doesn't sit easily with market capitalism as it is conceptualised by economists and practised by business people.

The primary emphasis of economics and business is on satisfying the wants of the individual. In this they give little priority to individuals' human relationships.

Is Christianity much different? Certainly, in the Evangelical version I grew up with, it too focuses on the individual. And you could be forgiven for wondering whether it pays much attention to relationships.

But here Schluter begs to differ. He says all of Christianity is a relational story. It starts with humankind created in God's image, but then the relationship is ruptured in the Garden of Eden. Finally, God comes to earth as a baby and ends up dying on a cross with the expressed purpose of restoring the broken relationship with humankind.

What does God require of us? Jesus summarised it: all the law and the prophets depend on two commandments - love God with all your heart, and love your neighbour as you love yourself. What could be more relational than that?

Schluter says life can be viewed from many perspectives: financial, environmental, individual, material. But "as Christians, we need to see all of reality through a relational lens if we are to look at the world as God sees it".

All of life is ultimately about relationships. For example, he says, "every financial transaction is an expression of an underlying relationship between nations, organisations or individuals".

The development of a society can be measured not in terms of economic growth but by the quality of relationships between individuals and between ethnic and other social groupings.

Education's goal can be defined as acquisition of wisdom for children to be able to serve their family and community, rather than acquisition of technical skills merely for personal career advantage.

"At a personal level, our happiness and wellbeing are determined primarily by the quality of our relationships. Arguably, financial issues - for example, debt and savings - matter to us primarily due to their relational implications," he says.

Above a certain income, wellbeing indices point to the central importance of relationships. Even for those below this income threshold it's not clear if the priority of income is for personal benefit or for group benefit, such as the care of children.

Debt is closely associated with depression and also with divorce, child abuse and social isolation, he says. Survival rates after serious illness are more closely associated with levels of relational support than with levels of income.

"It is easier to find someone financially rich and miserable than someone relationally rich and miserable," he says. "It is hard to find someone on their death bed who says, 'I wish I had spent more time in the office'."

The individualism of our culture leads us to miscalculate the significance of events because it takes little or no account of "externalities" - that is, the effects on third parties.

For example, companies and public service agencies move staff to new locations to maximise economic productivity, and economic analysis applauds their decision to do so. But no attempt is made to measure the social or relational costs of such dislocation, especially to spouses or partners, children, friends and parents and grandparents whose relationships have been disrupted.

Schluter says business, finance and public sector organisations are increasingly coming to recognise that financial evaluation of performance is insufficient.

"The purpose of companies is increasingly defined inclusively to recognise the significance of company decisions for many stakeholders, rather than instrumentally, where customers, suppliers and so on are regarded simply as means to increase shareholder profits."

Low levels of national debt - a measure of inter-generational loyalty - decrease economic instability and aid economic growth. Political stability is a foundation for economic prosperity, but depends on peaceful relations between ethnic and religious groups and between rich and poor.

"To see the world in relational terms requires a re-education process as the media, corporate advertising and our own inclinations constantly point us towards seeing things from an individualistic or materialistic point of view," Schluter concludes.

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'Wealth creators' push materialism over social side

There is a contradiction at the heart of the way we organise our lives, the way governments regulate society and even the way the Bureau of Statistics decides what it needs to measure and what it doesn't. Ask people what's the most important thing in their lives and very few will answer making money and getting rich. Almost everyone will tell you it's their human relationships that matter most.

And yet much of the time that's not the way we behave. Too many of us spend too much time working and making money, and too little time enjoying the company of family and friends.

We live in an era of heightened materialism, where getting and spending crowds out the social and the spiritual. That's the way most of us order our lives and it's the way governments order our society. They worry about the economy above all else.

Indeed, the parties' chief area of competition is over their ability to manage the economy. The opposition's latest criticism is that under Labor we're losing our "enterprise culture". What's an enterprise culture? One where all the focus is on "creating wealth" - making money, to you and me - and none is on how that wealth should be distributed between households or what it should be spent on.

It's one where the demands of the "wealth creators" (read business people) should receive priority over the selfish concerns of the wealth recipients and dissipaters (read you and me). But above all, it's one where the chief responsibility of governments is to hasten the growth of gross domestic product.

On the face of it, Julia Gillard seems to fit the opposition's criticism. This week she's hoping to make progress in putting her long-cherished national disability insurance scheme into law. Last week she was in the western suburbs of Sydney celebrating international women's day and offering "a pledge to all women and girls" that "Australia is promoting a world where women and girls can thrive and where their safety is guaranteed".

And Gillard used the occasion of her visit to the west to demonstrate her practical concern about growing traffic congestion and to announce a "national plan to tackle gangs, organised crime and the illegal firearms market".

At one level, all this is true, none of it's made up. At another level, however, it's carefully crafted image building, intended to highlight the difference between Gillard and her opponent and emphasise those differences considered most likely to appeal to traditional Labor voters who show every intention of changing sides.

The deeper truth is that, like most politicians, Gillard is working both sides of the street. Ask her and she'll assure you her government is just as good at managing the economy - and "creating wealth" - as her opponents, if not better.

Unsurprisingly, this other, harsher side of Labor was revealed at the weekend by the Treasurer. Wayne Swan opened his weekly economic note thus: "Putting a budget together is always about priorities. For the Gillard government, our No. 1 priority will always be putting in place the right strategies to support jobs and growth to keep our economy one of the best performing in the developed world."

Ah, yes. Labor professes to be just as devoted to the great god GDP as its evil, uncaring opponents. As part of this, it's been struggling - unsuccessfully so far - to get its budget back to surplus. And as part of this struggle it has required all government agencies to economise in their use of resources.

The Bureau of Statistics has been required to find savings of between $1.1 million and $1.4 million a year - hardly a huge sum in a government budget of $387 billion. But the bureau has found a way to solve its problem for the coming financial year pretty much in one go. It's decided to cancel the "work, life and family survey" long scheduled for this year.

This is mainly a survey of how people use their time, requiring a random sample of households to keep diaries of the way their time was spent for a short period. GDP measures only the value of work that's been paid for in the marketplace. It ignores all the unpaid work performed in the home, including caring for kids, and the work of volunteers.

Time-use surveys fill that gap. How much time are women spending in paid and unpaid work? How is women's participation in the paid workforce changing over time as they become better educated? How much paid work is being done by people of retirement age? To what extent is paid work encroaching on our weekends? How is the burden of housework being shared between husbands and wives in two-income families?

It had been hoped that this year's survey would shed more light on changes in the time devoted to caring for invalids and the frail aged as governments try to save money by keeping people out of institutional care. And while we're at it, what has growing traffic congestion done to the time we spend commuting?

One of the most popular maxims of the wealth creators is: you can't manage what you don't measure. Directly or indirectly, most of the Bureau of Statistics' efforts are directed at measuring GDP. It's so important it's measured four times a year. Our time use hasn't been measured since 2006. The cancellation of this year's survey means it won't be measured again until 2019.

How do we keep on our present, hyper-materialist path? One of the ways is by failing to measure its consequences.

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How business is white-anting the weekend

Whether or not they realise what they're doing, Australia's business people, economists and politicians are in the process of dismantling the weekend and phasing out public holidays. And they're doing it in the name of making us better off.

Historically, the two arrangements that have protected the weekend and public holidays from encroachment by employers are state government restrictions on trading hours and the requirement in industrial awards that employees required to work at "unsociable hours" be paid an additional penalty rate.

Charging employers a penalty was intended to discourage them from making unreasonable demands on their employees unless absolutely necessary.

The first assault on community-wide days off came in the second half of the 1980s with the deregulation of trading hours as part of micro-economic reform.

Not much later, the move to bargaining over pay rises, and then bargaining at the enterprise level, allowed employers to push for penalty rates to be abandoned in return for higher "annualised" wages.

Employers inculcated the view penalty rates were an anachronism standing in the way of progress and modernity. Many still think that way. One of the goals of John Howard's Work Choices was to make it easier - and less expensive - for employers to get rid of penalty payments.

(Another of its provisions was to make it easier for workers to "cash out" part of their annual leave - to exchange days off for money. How this squared with the original rationale for forcing employers to give their workers paid holidays was never explained.)

Julia Gillard's Fair Work changes to Work Choices represented the first setback in the push towards the 24-hour, seven-day-a-week economy. They made it harder for employers to buy out penalty payments. And the "modern award" process - which replaced the various state awards with single national awards - inevitably involved increasing some penalty rates in some states.

But now the push has resumed. Last week, the NSW government moved to join Victoria in allowing all shops - not just those in the CBD - to open on Boxing Day. Now, say the retailers, all we need is for restrictions to be lifted on Easter Sunday.

And this week, the major banks revealed their intention to push for the definition of ordinary hours in the national banking award to be extended to include Saturday afternoons and all of Sundays. The banks say they'd still pay penalty rates, but the union doubts this promise would last. It says the banks' goal is to be able to roster employees to work any five days of the week without recognising traditional work patterns.

What's the banks' justification for seeking such a change? To promote "flexible and efficient modern work practices in a way that has proper regard to the considerations of productivity and employment costs".

Ah yes. It would make the economy more flexible and efficient, and thus raise productivity. Well, in that case, say no more. Silly me.

It's not hard to see why there's been so little public questioning of this push towards a 24/7 economy. It's highly convenient to be able to shop whenever we have the time. The more two-income families we have, the more we value the ability to shop throughout the weekend.

It also fits with the trend towards leisure being commercialised - becoming something we buy (a meal out, a show) rather than something we do (kick a football in the park with our kids).

But this belief that life would be better if shops, restaurants and places of entertainment were open all hours rests on the assumption you and I won't be among those required to work unsociable hours to make it happen. An even less obvious assumption is that the push for a 24/7 economy will stop when it has captured shopping and entertainment; it won't continue and reach those of us who work in factories and offices.

As usual, the "flexibility" being sought is one-sided. Employers gain the ability to require people to work - or not work - at times that suit their firm's efforts to maximise its profits.

If those times don't fit with your family responsibilities - or just with your desire to enjoy your life (you selfish person, you) - or if the boss's requirements keep changing in unpredictable ways, that's just too bad.

It's the price to be paid for getting more prosperous (with the boss's standard of living rising quite a bit faster than yours).

But this is the part of modern life that makes no sense to me.

Accepting the economists' argument that keeping the economy running for more hours in the week is more efficient and so will raise our material standard of living, how exactly will this leave us better off?

Why does being able to buy more stuff make up for husbands and wives being able to see less of each other, having less time with the kids, having a lot more trouble getting together with your friends, and having your day off when everyone else is at school or working?

Why is this an attractive future? Why should our elected representatives reorganise our economy in ways that suit business and promote consumption, but do so at the expense of employees' private lives?

This is a classic case of business people, economists and politicians urging on us a mentality that prioritises the economic - the material - over the other dimensions of our lives. Yet again, no one pauses to ask what these "reforms" will do to our relationships.

Why is it the politicians who bang on most about the sanctity of The Family are also those most inclined to make family life more difficult?

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Breakdown in relations is everyone's business

I get to meet a lot of famous and interesting people in my job, but few have had more influence on me than Dr Michael Schluter, the social thinker, social entrepreneur and founder of Britain's Relationships Foundation.

They say genius is being the first to say the obvious. If so, Schluter is one. I'm sure Socrates or Aristotle beat him to it but, in our time, Schluter is the first to forcefully remind us of something we all know: the importance of our human relationships.

We are, above all, social animals. After we've secured our physical survival, the most important thing in our lives is our relationships: with friends, neighbours, workmates and, above all, with our families - our parents, siblings, spouse and children.

Even if we've avoided speaking to them for years, even if they're dead and gone, we can't stop thinking about them. If we've cut ourselves off from our families, be sure we've sought to fill the vacuum with other relationships. Take away all our relationships and who'd have much reason to live?

So much for stating the obvious. But here's Schluter's simple, unarguably telling, point: if our relationships are so fundamental to our well-being, why do we keep forgetting to take account of them in our strivings? Wouldn't we be better off if we got into the habit of viewing all our endeavours through a lens that focused on their implications for our relationships?

How often do divorce lawyers advise people to avoid all attempts at reconciliation with their estranged spouse for fear of weakening their legal position? How often do doctors treat physical symptoms that aren't what's really troubling their patient?

How often do politicians who loudly proclaim their support for the family then consider 101 policy proposals without a thought as to their implications for people's relationships? As for economists, their model is so narrowly focused on the individual that they become oblivious to the potential effects of the policies they advocate on the relationships that sustain all individuals.

The truth is much of our ever-increasing material affluence over the past 200 years has been achieved at the expense of our relationships; by making the workings of the economy ever bigger, more complex and impersonal; by encouraging economic transactions between people who've never met, let alone had a relationship with each other.

Back to Schluter's insistent reminder: aren't we paying a price for ignoring the relational implications of all this? Wouldn't we be better off if we put the protection and promotion of our relationships back into the formula?

So far have we strayed from recognising the primacy of our relationships that the proposals of the mild-mannered, respectable, god-fearing Schluter sound positively radical.

About 150 years ago, the invention of the limited-liability company allowed people with money to invest to become owners of companies without taking any part in their management. The development of stock exchanges allowed people to buy and sell their shares in a company as easily and often as they liked. From these innovations came the huge corporations that dominate the economy today.

Economists see them as milestones on our path to prosperity. Schluter sees the downside. So, last month, in troubled Britain, he and a colleague, Jonathan Rushworth, launched a plan, Transforming Capitalism from Within: a Relational Approach to the Purpose, Performance and Assessment of Companies.

He proposes that enlightened firms submit themselves to the discipline of a 10-step ''relational business charter''. Step one is for the company to include in its articles of association a goal to become a profitable and sustainable business for the benefit of all its stakeholders - owners, directors, managers, employees, suppliers and customers - and the wider society.

Step two is to promote dialogue among company stakeholders, preferably through regular, face-to-face meetings.

Step three seeks to reduce ''relational distance'' between shareholders and the employees and other stakeholders by promoting share ownership by named individuals and family trusts rather than institutional investors such as pension funds.

The goal could be 25 per cent direct ownership pursued, partly, by encouraging employees to own shares. Ideally, a growing proportion of shareholders will live close to the company's main base.

Next, to achieve commitment, involvement and responsibility by shareholders, relational firms should encourage long-term ownership, perhaps by issuing additional shares to those who hold their shares for long periods.

Step five is for companies to help their employees achieve work-life balance by minimising long working hours and work at unsociable hours (including weekends) wherever possible. These things have a direct effect on the families of employees, particularly if the employee will not be present to share the bringing up of children.

Then firms will seek to respect the dignity of all employees by minimising remuneration differentials within the business. A ratio of 20:1 between top and bottom would be a good benchmark.

Relational companies will treat suppliers fairly and with respect, paying them promptly and giving them support to develop their businesses.

Relational companies will treat their customers and the local community fairly, respecting their concerns about reasonable payment terms and adequate service.

Step nine involves companies protecting their business and stakeholders by minimising the risk of financial instability, limiting their ''gearing'' - ratio of borrowing to shareholders' funds.

Finally, relational companies will fulfil their obligations to the wider society by paying a reasonable proportion of profits in tax in the country where those profits were earned. They will also spend a reasonable proportion of profits on corporate social responsibility.

The musings of a hopeless dreamer? I think our companies' present ruthless pursuit of profit at any cost is an excess that can't last. Schluter is a prophet pointing the way back to more sensible capitalism.

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