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'The Big Short' or the Love of Money

9/10/2016

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​Margaret and I were in the UK in 2008 when the markets collapsed, worldwide, ordinary people lost trillions of dollars, including their homes and jobs, and the big banks were rescued (or in the case of Australia guaranteed) by the tax payer. 
 
The “Big Short” a film based around the fraudulent activity that led to this disaster makes clear that money is not the root of all evil, but that “the love of money is the root all evil (1 Tim. 6:10)”.
 
This last week the banks have appeared before a Senate Committee, which they are now bound to do annually.   It was fairly obvious that this requirement is superficially ineffective, more like a play with string puppets. Following the fraudulent activities that led to 2008 one could reasonably expect that bogus and fraudulent activity would be punished.  With barely an exception it was not.   Further, one could expect that following this disastrous outcome the banks and other financial institutions would be subject to greater regulation, ensuring that common good might prevail over self interest. But is has not.
 
There are many matters which should give cause to considerable public anxiety.
 
·         The salaries and bonuses paid to CEO’s and senior executives are obscene. No human being can be worth a pay cheque of multiple millions annually.  Is the CEO of a hedge fund or bank providing a value to the community 100, times, 200 times, perhaps 300 times that of a night shift nurse or a long haul truck driver? Of course not. Worse, in order to qualify for the bonuses the criteria is clearly not customer satisfaction, but an expectation that the profit accrued by the bank, or financial institution, increases exponentially. Inevitably this encourages the authorisation of activity which may not be in the best interest of customers and in the full glare of public opinion may not be considered moral.
·         The financial market’s success is not judged on normal criteria of production or added value.  It is based upon a capacity to make money out of money.  There is an ocean wide difference between the two.  For thousands of years money has been humanity’s commodity of exchanging value in one product for another. Value does not, or should not, reside in money per se, but in what it has the capacity to exchange. Making money on money increases nothing except the bank balance of the one engaged in the activity.  Investing money long term on the stock market is a very honourable activity.  Betting against the value of a share (or currency) going up or down is not an honourable activity.  The means of exchange has become the end game.
·         The quantum of a county’s GDP involved in ‘funny money’, that is money made by not producing anything of value is considerable.  There are estimates that in some OECD countries it could amount to as much as 25%.  This money is taken from the real world of jobs and livelihoods.
·         Many bright young men and women are drawn into the world of money and appear to become deluded into believing it is the real world. It is not.  The real world is where men and women produce an item of value or render a service of value for the rest of the community to enjoy.  Worse, as we saw with the Malaysian ‘budgie 9’, young men of privilege might consider their world to be superior to those whose lives are lived in the real world simply on the basis that they have access to more money.
 
The unregulated capitalist system is in danger of becoming a pariah to human society and, unless addressed,  will serve 21st century humanity very poorly.  Capitalism should serve and feed values that build society, that encourage moral behaviour and that work in the best interest of humanity as a whole.
 
Can we have confidence that what happened in 2008 will not happen again. No, I do not think we can, as long as the banks, their lobbyists and the political elite who support them resist regulation.
 
·         Regulation should drastically reduce the capacity of financial institutions to make money by gambling on variations to the market or the currency.
·         Money made on such transactions should be taxed at the highest possible levels.
·         CE0 salaries should be capped at no more than 10 times the salary of the average employee in the company.
·         Bonuses, if they are paid, should be agreed at the annual general meeting of the company.
·         Bank investments in dodgy schemes such as hedge funds should be publicly disclosed, as should funds invested in enterprises that are troublesome to the general public such as tobacco companies or fossil fuel companies.
·         Banks and financial institutions should be banned from making political donations, and donations from individuals to political parties should be capped.
 
Money is not evil.  Having a lot of money is not evil.  What is evil is the love of money for its own sake. What is evil is the siloing of money in such a way that it corrupts the few at the expense of the many.
 
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    ​Author

    ​Bishop George Browning. 
    ​Retired Anglican Bishop of Canberra and Goulburn.

    ​Inaugural chair Anglican Communion Environment Network

    ​PhD Thesis: Sabbath and the Common Good: An Anglican response to the Environmental Crisis.

    ​President: Australia Palestine Advocacy Network

    ​Chair: Christians for an Ethical Society..

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