AI generated image of an arrogant but powerful man with a huge jaw standing over another who is trying to put forward his reasonable point of view.
How would it play out, in the media, and I guess I’d better include the courts, if a bloke at a community gathering with senior politicians – cabinet ministers – did a Ron Casey on one of them?
See, I nearly did this in 2008. I REALLY nearly did it!
I was recovering from a nervous breakdown which I had after quitting my career as a world-renowned research scientist. I had returned from 2 prestigious international fellowships and couldn’t get a job, and wanting to start a family before the biological clock took that chance away from us, and with house prices having over doubled in the short period we were away and resettled after returning, and then our rent being increased by 30% in one year taking home ownership further away from us, I had quit my career to become a stay at home dad… and did I mention by this time our second child was on the way …
And, well, I was really vulnerable, to say the least.
I had really soaked up the “bringing back the fair go” message from their recent election and I thought they were fair dinkum.
Boy was I wrong to believe them!
As I approached Wayne Swan to request a direct conversation, from a metre away I was taken by how his oversized mandible was even larger in real life…
and when he looked me in the eyes and said, “you’re dreaming if you think negative gearing will ever be ended”
his huge jaw was all I could look at as my mind had already calculated that he was within easy reach of my right hook.
At that split moment my mind shifted from the controlled (but feeling much smaller) man in the above AI generated image to another (former) version of myself (below) …
AI generated image of angry men fighting
Keep in mind that I grew up in a culture where my parents’ school friend Warwick Crossland, a really nice bloke, was widely admired as the “King of Kurrumba”, the best bar brawler in the Gulf.
Somehow I stopped myself from reacting to Swan’s vile taunt.
Honestly I still don’t really know how I did.
As I walked away from the throng of people surrounding him and the others I was in a state of anxious shock – at what was said to me and at what I actually contemplated in a split moment of my life when so much could have changed depending on my reaction.
I literally shook all of the half hour drive home and the first thing I said to my wife is that I nearly punched the Treasurer of the country.
Over the past 17 years I’ve often deliberated about that moment in 2008 when I almost lost control and punched Australian Treasurer Wayne Swan in the jaw, and it still brings echoes of the strong anxiety I felt then. But the overriding question remains what might have happened because the court of public opinion would have been critical, not just the judicial court, in what happened.
Now as a lad from the country, not a faux larrikin as all those pollies become outside of the CBD, I well know the Aussie pub test goes along the line of …
“Well Swan was being a prick, and Edgo just dropped one on his jaw – he gave him what he deserved just like anyone being a goose around here on a Friday night would get”.
Don’t agree? What did Mick Dundee do to the arrogant New Yorker who took him and his ‘sheila’ to a swanky Italian restaurant to show him up? Mick gave him a quick chop across the jaw, politely out of sight of the lovely lady so as not to embarrass her.
And didn’t we all love it!
So I ask again, how does this play out?
Because, to be honest, it’s a question I’ve asked myself a lot over the years. I even wonder whether it might not have been such a pivotal moment that maybe the whole history of the Australian housing bubble might be very different if I did not manage to control myself and show the decency that Wayne Swan arrogantly failed to show me …
I do pride myself on being a thought-leading progressive man and exemplary role model to my sons.
But like all human beings I do try to calculate the pros and cons to my actions which flow from my values …
And, after all, the same narrative that excuses selfish behaviour as human nature also says we will revert to our primitive caveman state when provoked sufficiently …
So maybe, just maybe, on that one occasion the ends may have justified the (aggressive and uncontrolled) means.
Rest assured, President (of federal ALP) Swan is well aware that he has an open invitation from me to step outside and settle things the way men from the country do on occasions. I know for sure that I’ll enjoy the support of generations of young and not so young Aussies that have been deeply hurt by another 17 years in the squeeze of entirely unnecessary atmospherically high housing prices.
But I’ll settle for a public apology from Swan and a commitment from the Labor party to be authentic and ensure their actions mirror the values they spruik …
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The factor likely the most important in the US election result is also the most unlikely to be discussed – because it suits neither major party nor powerful interests to highlight it.
You see when I talked about the West led by America moving towards fascism in “Reset” I was not only talking about (far) right major parties.
The dragging to the right of politics means that most major parties are to the right of centre by the standards of 50 years ago.
It was, after all, a progressive right wing (Republican) President in Nixon that put a great deal of political effort into introducing the equivalent of a universal basic income (UBI) which just fell short!
Now there is essentially no progressive right wing Government anywhere, and most major parties of the former progressive left are not very progressive and not actually left.
How has this happened?
Very simply. The wealthy elite have bought both sides of politics. And our permissive systems of governance just allowed it to happen.
So no matter who wins Government, the same people have ultimate influence over decisions made.
Recall ‘Trump 1’ was built on the motto “draining the swamp”, his argument being that he is so wealthy (and virile) that all the vested interests and hangers on will be stripped of their influence.
That did occur to an extent, but then again he has lived his entire life among that group of people – the wealthy elite – and his narcissistic nature meant that winners and losers were based on his transactional viewpoint with the main aim to advance Trump himself, and certainly not the people who elected him.
This election he was surrounded much more closely by wealthy elites indicating they have learned how to play him like Putin and Kim Jong Un. But standing up to powerful interests is now deeply embedded in the personal brand that Trump’s fanatical supporters accept without question.
Note also that JP Morgan CEO Jamie Dimon was widely discussed as potentially being offered a high level position with ‘Trump 2 (infinity)’ even though he is a Democrat, supporting what I am saying herein and have said previously that this is how all major major parties are all influenced by wealthy elites. Bill Ackman who was instrumental in having Claudine Gay sacked as President of Harvard, and who has spoken harshly against DEI, also has been a significant Democrat donor.
Clearly there is little significant ideological differentiation, not in the eyes of wealthy elites who donate to so-called left political parties as well as to their historical allies on the right, nor in the eyes of the electorate.
That’s why Trump 1’s message “draining the swamp” was so very powerful and important to his election win. This time around the ‘anti-politician’ factor was very strong again, even if it went largely undiscussed.
This is not, however, only about America.
With a looming Australian federal election it would be a miscalculation to see it only or even mainly in terms of a weigh-off between the negative of incumbency in a cost of living squeeze Vs our historic reluctance to vote out a first term Government.
Albo’s re-election chances must also be seen through the lens of how differentiated Labor is from Liberal/Nationals, and he from other politicians.
The more Albanese’s Labor Government: – grants approvals to fossil fuel extractors while trying to paint themselves as climate crisis proponents; – fails to seriously address 2 decades of Government inaction on housing while the PM straddles the line of appearing empathetic because he grew up in housing commission while having just bought a multi-million dollar home, and while most politicians own investment properties; and – pesky journos like Joe Aston highlight the perks which self-interestedly selfish politicians avail themselves of from businesses …
the more they show themselves to be just like any other selfish, self-interested Government to which we have been subjected for decades now.
Obviously it’s a bit late on that front and that is really why Albo is in trouble.
While the Queensland election gave Labor some hope they can repel the Greens surge from the left, and that might be enhanced by the warning to genuine left voters concerned at our drift towards ‘Trump 2 (infinity)’, the signs are more ominous than comforting given the loss of support in the regions including coal mining regions (mirrored in the US election).
The best strategy, perhaps the only viable strategy, for an incumbent one term Government in a cost of living squeeze to differentiate itself and win re-election comes down to one word:
AUTHENTICITY
The truth is it is impossible to remain authentic when you are so conflicted by self-interest and the continual demands of vested interests. There is only one real solution …
Drain the billabong!
Fess up. Politics has been corrupted by the wealth of the elites, and that can only be addressed by severing the link between wealth and influence.
Introduce fair dinkum donations and sponsorship laws that go well beyond political donations but to advertising and the myriad ways wealth buys influence.
And set out a program of review followed by reform to incentivise politicians to act in the long term interests of the people not themselves, their parties and their donors.
From gambling/fossil fuel advertising, to Qantas lounge and fare upgrades, to a Royal Commission into misconduct in the banking and finance industry conveniently forgotten, there is so much to work with that it will grab the narrative immediately, leaving the conservatives completely flat-footed, and …
most importantly, it will actually leave the people and the nation better off in the long run!
Addendum: Since posting this on LinkedIn last week Labor’s hasty attempt to change donation laws have been introduced to parliament which will do nothing to address these concerns, in fact they will deepen the billabong by entrenching the power of the two major parties. Even the progressive left-leaning Australia Institute is opposed – that should tell you how far off course are Albanese and Labor … as I said, they long ago became not very progressive and not at all left … head to Australia Institute to sign their petition to force a parliamentary inquiry to these proposed changes …
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In “The Unity Bell” I discussed how the forced grading of employees’ work performance into a normal distribution bell curve to reward and punish the few deemed by their managers at either end of the distribution is well known to demoralise the majority thereby worsening productivity instead of improving it.
Moreover, I stated that a very obvious implementation of the bell curve within organisations to actually improve productivity is to apply it retrospectively to the tasks that each employee does to eliminate the many ‘just in case’ tasks required of them that have caused high levels of burnout through overwork and demorilisation as they know that these tasks – many of which would also fit the definition for ‘bullshit jobs’ as described by David Graeber – do not add value to the ‘bottom line’ or mission statement/vision of the organisation.
‘Just in case’ and bullshit tasks are created by self-interested managers intent on using the resources available to them to ‘win’ status by advancing in their careers and attaining other status rewards including remuneration. The implementation of a ‘Unity Bell’ and other bottom up feedback channels are resisted in many organisations, or when implemented are usually perfunctory and ineffective, because they run counter to the top down direction of power and authority in Extreme capitalism.
Through these past five decades of increasingly Extreme capitalism the drive for worker efficiency has been relentless with nowadays most organisations remaining in an almost perpetual state of restructure and head count reductions. It has been collectively assumed by executives that their top down drive for efficiency will force that prioritising of tasks so that pointless or low return ones are eliminated as employees have already been pushed to their limits on how much work they can perform. However, as I discussed in “Reset” Chapter 4: “A future of our own making“, the experience of the past few decades has been that workers have been the pressure valve that has had no choice but to absorb more and more pressure as they are squeezed between the top down drive for efficiency from executives and the upward drive of aspirational bosses. Consequently, the actual number of tasks performed are little reduced even as employee numbers are reduced.
Consequently, real productivity is little improved but worker burnout has gone through the roof.
Workers are effectively treated like machines and are noticing – especially with the pause for reflection that occurred during the COVID-19 pandemic – that the meagre rewards on offer come with significant costs to wellbeing living in this system of increasingly Extreme capitalism.
This is the basis for my thesis that we have entered a new paradigm, which I refer to as ‘The Great Reset’, whereby many are re-evaluating what it is that is truly important to them in their lives.
This push back by employees is creating tension within organisations where executives and/or their boards refute the desirability of adopting a more compassionate and balanced work culture. There is a gap opening up with more progressive organisations driving change such as fully flexible working conditions and reduced work hours including moving to a routine 4 day work week at the same remuneration after being stubbornly stuck at a 5 day work week for almost 100 years.
Implementing a’Unity Bell’ involves a systematic process to prioritise actual work tasks completed in a manner where all are accountable to eliminating ‘just in case’ and bullshit tasks so that all effort goes towards tasks benefitting bottom line organisational goals.
Whether explicitly outlined or not, prioritisation of work tasks is the essential process implemented in organisations that authentically seek to drive efficiency through reducing work hours.
I chose to name this process the ‘Unity Bell’ as a pointer that it is a process to create unity and team work to improve productivity in contrast to the division and competition created by applying a bell curve to perceived employee performance in a harmful and self-defeating manner.
Herein I give a high level outline on how the ‘Unity Bell’ can be implemented in all organisations.
In Extreme capitalism the link between worker tasks and bottom line outcomes of the organisation are corrupted by self-interest of those who have immediate control of those labour and other resources. Of course the degree of this (mostly) legalised but highly inefficient corruption is dependent on the nature of the workplace – likely far more common in white collar settings – and in the overall culture of the organisation.
This corruption produces a positive skew to the tasks performed by the average worker in an organisation where the typical few tasks performed which adds very significant value for the organisations bottom line or mission statement/goals are dwarfed by the very many tasks that are unlikely to add very much real value if any (Figure 1).
Figure 1: Positive skewed distribution of tasks performed by a typical contemporary white collar worker – the X access is likely impact on organisational goals of tasks performed (decreasing to the right) and Y axis is time spent performing tasks.
In especially inefficient or toxic workplaces this large right tail to the distribution comprising of tasks unlikely to add real value to the organisation requires workers to consistently work beyond their normal and legislated reasonable work hours (Figure 2).
Figure 2: Same positive skewed distribution of tasks with the typical fulltime 5 day mandated work week of 37-40 hours and also a 4 day work week indicated.
Being required to consistently work unreasonably long hours is damaging to wellbeing even when fully engaged within the role and the vision of the organisation, but knowing that that extra work is essentially pointless is especially damaging to wellbeing.
It is in this long thick tail where employees’ wellbeing is seriously harmed. They first lose their ability to clearly see how they can improve efficiency in their role – in all of their tasks including the critical ones that do actually add real value – and have no bandwidth left to bring about change even if through the cognitive fog they manage to recognise potential improvements. They then develop a sense of helplessness and go into survival mode feeling utterly and continually fatigued.
They have been burnt out.
Implementing the ‘Unity Bell’ process requires ordering on a retrospective basis those tasks that were performed in order of those that created most value to the organisation through to those that created the least thereby allowing workers and managers to work together to cull and minimise the low reward tasks.
Tasks are recorded in real time by an employee in a diary with the amount of time spent on each task and who initiated the task, along with the employee’s immediate assessment on the likely impact of the work (an assessment on likelihood that the work will find it’s way to the bottom line of the organisation and how much potential impact it will have). There is another column for outcome assessment if the outcome is soon apparent. Work that was dropped through change of mind or drafting out, etc, would most often have a near zero impact.
Note that this can be a personal diary as employees can feel insecure about being specific about exactly how much time they spend on particular tasks which is natural especially with the threat of AI hanging over (almost) everyone these days. The data should be collated in relative terms, i.e. in percentages, such as “this week I worked 43 hours in total and 10% of my time was devoted to X which I assessed had a likely impact of very high” – with 100% of their time accounted for and presented in tabulated form. The detail required should be, in their confidential diaries, down to the 6 minute segment as for professional billings to provide sufficient granularity. This would force, for example, an assessment of how much value was added in tasks that consist of many small repeated subtasks, such as reading and addressing emails, where the entry might be “reading emails – low impact (all largely irrelevant)” which if a common entry would point to a need to improve communication standards.
The manager would have a chance to record their own assessment of the likely impact of the work, which in some cases may carry higher credence if it relates to higher order strategy that the subordinate may not be privy to, but this should be rare as in well functioning teams the import of strategy and consequent work should be understood by all.
Over a month or more of ordering these tasks from highest (likely) impact to lowest these data will allow the filling out of a distribution curve which will reveal how much time was actually spent on high, medium and low impact work and where, how and why low impact work is being generated so that it can be eliminated.
What will be found is that once low impact work is peeled back and employees feel engaged and empowered to contribute to improved efficiency and productivity, that space will provide them with extra bandwidth in a virtuous cycle of improving efficiency.
Instead of the distribution curve of tasks having the fat right tail simply cut off, what will happen is that this virtuous cycle of improving efficiency will push the distribution of tasks into a true normal distribution bell-shaped curve where the great majority of tasks are flowing significantly through to the bottom line outcomes for the organisation. It will enable significant reduction in work hours – allowing a reduction in work days to a 4 day work week – with at least equivalent work output at likely a higher quality level ensuring that remuneration is maintained on the same trajectory. And, critically, that thin right tail will not consist of low likelihood of low impact work – it will consist of ‘moonshots’ – ideas that are unlikely to work out but will have a hugely positive impact if they do (Figure 3).
Figure 3: By implement the ‘Unity Bell’ process the distribution of tasks becomes a true normal distribution with the thick right tail of low likelihood of low impact tasks replaced by a thin tail of tasks that have the potential to pay huge dividends to the organisation.
It is these creative moonshot ideas, that are unlikely to ever be replicated by AI, that bring real value to organisations and turn them from ordinary into extraordinary.
The cohesive and collegial work culture will improve employee wellbeing and produce significant additional benefits flowing through to the bottom line organisational goals through greater employee retention and engagement producing a win-win-win situation for all stakeholders.
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Administrators see Rugby League not as a game but as a ‘product’ to be commercialised and monetised. To appeal to the marginal viewer rule changes have made Rugby League manically fast with homogenised over-coached touch-footballised style of play with homogenised powerful ‘athlete’ players.
Rugby league is being commoditised in an international market for sports viewing and gambling and has moved away from its traditional style of play.
Rugby league is losing its DNA developed over a century of play.
The Consequences:
Opponents of this campaign will say that evolution in a sport is natural and that many advances, for example in sports science, are good for the players and spectators alike.
Not all evolution is good, however, for players or fans, especially when it occurs in conjunction with and/or as a consequence of rule modifications which change the style of play away from the traditions of the game.
In modern day Rugby League the style of play now strongly favours attack over defence and it favours power over endurance of players.
While faster play may seem superficially more appealing, it actually makes the games boring as a spectacle.
Speeding up the game has meant that, to the experienced viewer, attack has become monotonously predictable. The risk-reward in attack has been shifted in favour of conservative low-risk – i.e. very simple mistake-free – football because attacking teams do not have to earn the right (gain field position through tough and/or creative play) to be within striking distance of the try line by the end of the set. The new rule-set almost hands the attacking team that opportunity from early in the contest. As such, creative play makers are afraid to chance their arm even mid-field because a turnover will lead to the opposition pressing their line within a tackle or two. In other words, the reward from creative play is reduced but the punishment (when the play does not work) has increased. Creative coaching is also greatly reduced with play from all teams homogeneous, e.g. the unique set play pieces which so entertained us in the 80s have been lost from the game.
Favouring attack over defense leads to many tries being scored which decreases their significance (value) in the game and results in a very stop-start game (which provides stoppages for advertising and suits gambling).
Then greater scoring leads to a higher likelihood of one-sided contests which rapidly lose their appeal through the second half of the game.
In short, while a brief clip of play may seem exciting, more often than not the game itself is boring and rapidly loses interest through scoring blowouts even though we also live in the era of the salary cap which should result in closer games through talent being shared more evenly than in past eras.
The following point should be made early before the sceptic turns off – those who want to point to the quality of game 3 of State of Origin this year in support of the strengths of the modern game should realise that the game was played at a significantly slower ruck speed than even the typical NRL game. This is in direct contrast to virtually every high profile game which came before it where the high profile games were always faster than the weekly club games, and this most likely is an indication that there was an experiment to see whether there was anything to this campaign that I have been mounting.
I would suggest that that outcome – a low-scoring, engrossing and dramatic game – proved my point in spades.
There are other consequence to the way the style of the game has changed since around the commencement of the ‘Super League War’ for the (commercial) control of Rugby League which specifically affect the players.
The increased speed and power through the whole game increases the chances of more frequent and more severe head injuries (concussion) which has the potential of shortening careers and causing long-term health issues for players and their loved ones to confront.
Furthermore, the changed style of play suits a different type of player and thus changes the market value of those players and affects the lifetime earnings potential of those people and their families; e.g. older props (30+ years) are struggling to prove their value in the modern game, and the skill of genuine ‘footballers’ and playmakers is lesser valued in comparison to powerful athletes, in fact Rugby League immortal Wally Lewis probably would not have had the impact that he did on the game if he played under current conditions.
Note also that this year we saw the ridiculous situation of the NSW State of Origin male captain spending on average 52 minutes of games 1, 2 and 3 rotated off the field onto the bench having played only the first 28 minutes of each game (averaged).
The Detail:
Now I know that the commercial interests in modern Rugby League are going to roll out all sorts of people in support of the modern game, and they have the power to give them voice. From what I have been seeing I would say it is already happening.
That’s good. I’m glad that I’ve concerned the commercial interests and that this is stimulating conversation even if it is one-sided.
I am also certain that very many old players agree with what I am saying, and I’m not talking about the ones who (are paid to) go on TV and talk about how good ‘the product’ is (hand me the vomit bucket!)
Two factors control the speed of play at any moment in the game, those being how far the defense must retreat each tackle and how quickly the attacking player is allowed to play the ball to start the next play. (The level of genuine fatigue will affect speed through the game). It was not so much the move to the 10m rule that sped up the game to manic levels but it was the determination to speed up the play the ball by ensuring defenders roll off the attacker extremely quickly (especially when the attacking player has ascendancy). This is the greatest factor in turning the style of play touch-football-like and it is the reason why defensive players are now taught to condense when attackers are coming off their own line, and tackle high first and then wrestle to tangle the attacking player up while the defensive line resets. This wrestling and other defensive tactics to slow the attack down under these rules has necessitated additional rules to try to stop the wrestling and the strange techniques, such as ‘chicken wings’, ‘crusher tackles, ‘canonballs’, ‘hip-drops’, etc, that have stemmed from it, to reduce the risk of injury.
The manic speed that the defensive line must maintain, its condensed nature, and the high tackling technique also increases the likelihood of head injury to both attackers and defenders.
Prior to the introduction of the 10m rule and the speeding up of the game (i.e. ruck speed) causing the condensing of defense lines in an attempt to prevent the attacking side getting a roll on, it was not uncommon for there to be 3 lines of defense – instead of the 2 of front line and the fullback – where a smaller half would roam a few metres behind the front line and close down any half-breaks. Teams could afford to do this because attack was not favoured so greatly over defence.
It might even be reasonable to say that at times in the past defence was over-favoured. But, to the enthusiast, there was always interest and value in a low scoring, tough, chess-match/arm-wrestle game of field position.
Clearly things have gone much too far in favouring attack over defence now.
Zero tackle/rapid restart from quarter line
With the manic speed in the game, the opportunity to have a rapid restart from the quarter line (after the ball goes out in the in-goal area or is caught on the full in there) gets the attacking set off to a flyer, and might even result in a (boring) solo length of the field try if the defensive line is slow to reset. Moreover, together with the minimum (see ‘tackle count resets’ below) 7 tackle set, the roll on this provides means that very often the offense will be attacking the try line by the end of that set.
Again, gaining field position so easily is the antithesis of Rugby League DNA.
Interchanges instead of replacements
Through the early history of club Rugby League in Australia the team consisted of 13 fresh players with replacements permitted if they played already in the lower grades. In 1981 the number of replacements permitted in a game was increased from 2 to 4, and then in 1988 up to 2 fresh players of the total of 4 replacements were allowed. Note that replacement means just that in that the player replaced did not participate further in the game and the replacement remained on until the end of the game unless they were also replaced.
Remember, however, that this was the era of the AIDS pandemic so there was initial confusion on how to deal with bleeding of players. In 1991 unlimited interchange (bench of 2 fresh players and 2 who had already played earlier that day) was permitted to address this but a fan outcry led to the number of interchanges being capped at 6 excluding players sent to the ‘bloodbin’.
Then in the Super League war the Australian Rugby League moved to unlimited interchange in 1996, which in the NRL era was wound back to 12 interchanges in 2001, 10 in 2008, and the current 8 in 2016.
It is clear that prior to the extreme commercialism of Rugby League kicked off by the Super League War, the game was more about endurance than power. Afterall, even the replacements permitted through the majority of the history of the game had to be somewhat fatigued already from having played earlier that day.
With full time professional athletes, interchanges still being abundant since some forwards will only play just over half the game with a huge rest between, if coming on for a second stint at all, and with frequent breaks in play for the many tries scored, power has predominated over endurance to a point so much so that fans often express frustration at how fresh their team players appear at the completion of the game as if they have not given their all.
They express this frustration because, again, this is not what Rugby League is.
6-again, tackle count resets
Tackle resets were implemented to prevent defensive teams from slowing down play by intentionally infringing so that prior to implementation the referee would stop play for the penalty. Players knew that, especially in high profile games, referees were loath to stop the play too much for penalties and could push the limits of the rules in order to slow the game one way or another.
The sin bin for repeated infringements addressed this successfully. The implementation of repeated tackle count resets, marked with the chiming of a bell on broadcasts to alert viewers, in addition to the shaking of the arm by the referee, has probably been the step too far for many fans leading to the realisation that administrators have taken the speeding up of the game to ridiculous levels.
While incessant 6-agains exemplifies the speeding up of the game and favouring of attack over defense in defiance of the DNA of Rugby League, the reality is that it is just the straw that broke the back for many and it is the full suite of rule changes that got us to this point that needs to be examined.
Taken together this continual speeding up of play through rule changes and refereeing/adjudication of play has turned a deeply tactical game into a try-a-thon.
This speeding up of play promotes simplistic one-out running off dummy half to create a roll on, much like touch-football, with a potential wide movement late in the set with players running block plays and fast players running in an arc around the defensive line, so it diminishes the value of playmakers able to play what is in front of them in an off-the-cuff, split-moment decision (i.e. ‘x-factor’).
If a referee from the 70s or early 80s were transported to ‘the bunker’ today to watch tries from ‘block plays’, nearly every one of them would be ruled a ‘shephard’ (or obstruction). And even though many are still denied through video referee analysis, causing much confusion and complaining, block plays are still used so extensively because it is worth risking the try being disallowed because opportunities to attack the try line are nowhere near as precious as they were in the past.
Tries are simply not as valuable as they used to be when they were rarer!
Following is what I consider the best form of Rugby League play.
The ideal Rugby League game, which respects traditions, favours fit but not overly muscled footballers over power athletes so that all of the great players of the game, including forwards, can and do play over one half of the game continuously if not the whole game.
Bill Harrigan is commonly said to be the best referee ever, and as such was recently inducted into the Rugby League hall of fame. While this recognition was very well deserved, it should also be noted that he was fortunate to referee in a period where the game – as it was played – was at its peak (and so soon after its peak that the decline was not yet widely apparent).
Bill Harrigan’s interview on Channel 9’s “Sunday Footy Show” ahead of his induction was especially interesting and he supported many of the points of this campaign. He spoke of how he opened up the game by taking the defense back 8 to 10m, even when the 5m rule was still in effect, and he made the point that it is the defenders trying to slow down the ruck speed in the modern game that is leading to wrestling and twisting of players causing injuries. Bill also highlighted the importance of players being made to play the football like Rugby League players not just rolling it through their legs like touch football players.
Almost all of the change required to achieve greater balance in the game can be achieved by refereeing which allows defenders more time to get off tackled players so that ruck speed is reduced, and by restricting interchanges to a set number of replacements/substitutions (though potentially needing additional players on the bench for head injury assessment).
The 10m rule can be kept, even in standard – i.e. lower intensity – club matches as long as the ruck speed is controlled according to the standard of the game. Ruck speed should be much slower than the current speed for typical club matches, and it is natural that it would be faster in higher profile games, to around the speed of game 3 of State of Origin 2024 (again, it was significantly slower than is usual in the NRL now).
In preliminary rounds of the NRL season the same can be achieved by setting the 10m at around 8m, in a similar way to how Bill Harrigan set the 5m at 8-10m when ruck speed was kept that much slower.
Either way the balance of ruck speed and where the defensive line is set must be altered to slow down play and eliminate the touch-football style of play from Rugby League.
This will give the bigger bodies playing in the middle of the field time to defend properly with good technique (reducing high impact head injuries) and make advancing down the field more challenging and rewarding to tough and skillful play. The forwards will relive the lost era of a softening up period where they vie for dominance which was one of the most eagerly anticipated aspects of games in the golden era of Rugby League. As players fatigue opportunities for attacking players increase giving excitement to the ends of each half of the game. And as exhausted players late in the halves have lost much of their power, tired off-target tackling technique will cause less severe impacts.
The ultimate goal should be to return Rugby League to a game where: – defense is more in balance with attack so that we have fewer tries and closer games, more entertaining creative rugby league rather than one-out touch-footballified style play; – there is none of this ridiculous wrestling (spawning phenomena such as the ‘chicken wing’, ‘crusher tackle’, ‘hip drop’, ‘Canon ball’); – there are ‘softening up’ periods at the start of the half where the forward packs struggle for domination; – there are few over-coached, highly choreographed block plays which continually stretch the interpretation of what is a shephard or obstruction; – where players run straight into and through defensive lines not in an arc (like in under 9s) around highly compressed defensive lines; – where endurance in our players is as highly valued as power, and where the stars of our game play 80 minutes or near to it; – where coaching of tackling styles is not done with the aim of keeping the attacking player off the ground and wrestling with defenders as long as possible, requiring defenders to be more upright in defense which increases the chances of more frequent and more severe head injuries (concussion), so that instead players are taught and coached to tackle low first; and, for the good of our players – high tackles are punished very severely.
Following are a few other suggestions which mainly surround guarding against head injuries.
Very many head injuries occur during powerful collisions into compressed defensive lines. Often they are described as gang tackles involving one attacking player running full-pace into 3 or even more (mostly) upright defenders. It is usually a ricocheting/pinball effect off several defenders that causes the head injury to occur and it might just as likely be a defender as the offensive player who is injured. This is commonly from kick offs but gang tackles also happen in general play.
There are a number of issues with gang tackles most notably that it will almost certainly involve an outlawed shoulder charge by at least one of the defenders since it is virtually impossible that three or more defenders all impacting high simultaneously could all be seeking to wrap their arms around the ball runner.
So gang tackles should be removed from the game where possible by rules such as enforcing the shoulder charge law whenever one occurs and potentially with new rules.
In general play, condensed defensive lines are most common when attempting to slow the progress of attackers coming out of their own half. To prevent compressing of defensive lines there could be a rule that said that when the attacking team plays the ball in their own half there must be at least one defender within 10m of both sidelines at the play the ball. This should force the whole defensive line to spread out across the width of the field, as it is when defending their own half, rather than compress up to allow gang tackling.
The most discussed time for gang tackles has been the run back from the kick-off. Just as backs taking the first 3 hit ups off their own line is a relatively new style of play to counter the fast moving, compressed defensive lines nowadays, the front rowers taking that long run off the kick-off came into the game in the 90s. Before that it was the back rowers or the backs who typically received and ran the ball back from kick-offs (front rowers lined up on the 10 yards line from placed and drop kick restarts).
So while everyone wants to say this can’t be changed, and that this is a long standing tradition in the game, that is simply untrue. Moreover, it certainly can and will change if coaches see an incentive to do so or if they see a disincentive if they are not to do so.
Finally, when we think about the iconic collisions of the big, powerful players off the kick-off, more often than not they are for the injury done to the players, e.g. the knocking out of Paul Harrigan from contact with Mark Carroll, or the breaking of Sam Burgess’s jaw in the 2014 Grandfinal. These are the incidents we are actually trying to protect the players from.
And as this whole discussion shows, contrary to the rubbish some current and recent ex-players go on with, it is not the managed reduction of head knocks that has turned rugby league into touch football, it is the manic speed and the favouring of attack over defense in the rules and adjudication of those rules that has done it.
I would also scrap the top 8 which frankly is a joke that a team that has squeaked into the 8 by winning barely more than they lose has a chance of winning the Premiership and going down in history as the top team for that year. This is clearly all about commercialism – bums on seats, eyeballs on TV screens, and betting on more games – and it adds nothing to the game.
Opponents will say no team outside the top 4 has ever won the Premiership. That just proves the point! This year I don’t think anyone seriously gives any team outside the top 2 a chance. Personally I dislike my team scraping into the 8 because I know it is wasted emotion.
We should go back to a top 5 final series. If acceptable to the fans, instead of a single Grandfinal there could be a best of three series to determine the Premier. This would give at least one if not two extra games and it would be a more fitting way to determine the best team for the year.
The undeniable conclusion:
The strategy for playing Rugby League has always been simple: Send strong players up the middle to wear down the middle defenders and punch a hole through, as defenders tire, for the fast players to go through and score, or at least drawing in edge defenders so that the ball can then be sent wide where the spaces have become wider for attacking players to go through and score.
That has not changed.
What has changed is that the speed of the game has been continually increased over an almost 30 year period of intense commercialism to intentionally tilt the game in favour of attack over defense so that with the game now manically fast this strategy achieves success very early in most games leading to many tries being scored and frequent score blowouts even though a salary cap to even talent between clubs has also been in place.
As just one of very, very many examples, at the 5 minute mark of an NRL game the week before the 2024 finals, 4th v 7th, the attacking team progressed the length of the field in 7 tackles to score (zero tackle from 20m line, tackle reset on 3rd tackle). Then the opposition scored a few minutes later.
That is not the Rugby League I knew as a young person. That is not the game I loved.
For many of us who have observed as our game was changed to this style of play – essentially touch football with collisions and wrestling – this is not attractive or entertaining because the style of play is predictable, simple and boring, and contests are rarely genuine arm-wrestles as they once were when the forwards battled through a ‘softening up’ period for supremacy to lay a platform for a win.
Even fans who do not fully understand how this style of play has changed the game express their discontent with it in other ways, for example the way in which they complain that players don’t seem to care enough about the result and are all smiles talking with the entertainers (i.e. players) from the other team after the game.
Rugby league has always been a game where mates become enemies during the game. If the fans saw the players go through a ‘softening up’ period in an arm-wrestle style of game where attack is not greatly favoured over defense this feeling of the contest missing heart and meaning would not exist.
It’s not the ‘biff’ nor the ‘head-highs’ the fan wants back. It’s the genuine grind of a hard and tough-fought contest where their heroes are exhausted to the point of being totally spent at its end.
As the style of play has become homogenous, the style of player has become homogenous with most player positions interchangeable with just a few specialist positions in the ‘spine’.
Scoring even more tries than the opposition is often the name of the game as defense takes a back seat to attack. The top teams do understand that defense can still win matches so that the style of defense has changed radically in an attempt to counter the manic speed of attack spawning all sorts of strange and dangerous tackling techniques which increase the likelihood of soft tissue and skeletal injury as well as high impact head injuries.
Short-sighted administrators and ex-players profiting from the commercialism of the game seem unable to see past the revenue streams and their own high salaries to understand our once great game is being ruined.
Vulnerable players who have the potential to earn regular income massively beyond what they otherwise would, and that their non-Rugby League peers do, but for only a short period of their lives (getting shorter for many ‘types’ of players), have little choice but to go along with what the administrators want.
I say enough is enough.
It’s time to make Rugby League Great Again for the sake of genuine fans and the players before it is damaged beyond repair!
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Preface: I wrote this article while overseas when I left the country two days after the failed Referendum. In saying that I am well aware of my privilege in being able to escape the issues that lie behind the failed Referendum, not only in being fortunate enough to afford to travel, but also in not carrying intergenerational trauma from Australia’s racist history extending into modern reality which left the great majority of First Nations Australians in despair.
This article has been sitting in ‘drafts’ since that time while I wondered whether I should even release it.
The events stemming from the NRL opening round, including Jonathan Thurston’s emotional allyship of Ezra Mam who was deeply impacted through retraumatisation from a typical racist slur, has convinced me that I should publish it.
I did not change a word from how I left the article over 4 months ago.
Instead I say here in this brief preface that I believe that Ezra’s and JT’s strong reaction is in part a response to the still raw feelings of rejection that almost all First Nations Australians felt as the results of the Referendum rolled in, and it just underlies the points I make in this article.
We need to recognise this. We failed First Nations people in the Referendum, and that leaves question marks over our nation and us that will never be right until we have the courage to face them honestly.
(I intended to release this 13 March. Even though this is not at all critical of Billy, I opted to hold it back a few days. My thoughts are with he, Nicole and their families.)
This is a post that starts out about rugby league, but blossoms out to a much broader conversation which is so necessary post-referendum. Please consider.
In my YouTube video “Alter Edgo’s TED talk with Billy the Woke Kid and JT’ abone“, my racist alter ego – Alter Edgo – not as much a character I developed as a version of myself I would have much more closely resembled had I dropped out of university at the age of 17, gets to the heart of issues that the Queensland State of Origin teams will need to address if their success is to continue.
The key question is this: will a team that prides itself on fighting for everything until the death for the pride of Queenslanders continue to feel the same way when many in that team will feel that the Queensland people, whose non-First Nations people voted in the greatest proportions against constitutional recognition and voice to First Nations people, did not reciprocate in kind and ‘show up’ and fight for them?
In that TED Talk special, where JT’s character is a teddy bear dressed in a Cowboys jersey, obviously modelled on Johnathan Thurston, and Billy (the woke kid) Slater is a stuffed toy elephant with maroon shirt and beanie, both voiced over by me, Alter tells JT that he has his back because when First Nations players have a maroons jersey on, they’re HIS abbos.
This was intentionally written to be jarring and confronting because that is the reality of racism which I was exposed to and learned in my formative years growing up in the township of Innisfail which claims the Queensland men’s SOO coach Billy Slater as their own, and even gave him a ticket tape parade after scoring a try in a 90’s SOO game, and where the Tabone family is also well known for developing a crocodile farm which after many years, and many photos of Mick Tabone sitting atop his mate Gregory, a giant reptile, was sold to Louis Vuitton.
My learning racism started early, even before I learned to say the “N word” in rhymes in the playgrounds, or when I was teased from 6 years of age for sitting next to a First Nations child in my Year 2 school photograph.
That special episode from the first series of “Alter Edgo and His Bloody Woke Kid” was inspired by insights given by a First Nations elder on the local radio station 4KZ many years ago when he talked about his confusion and trauma as a young man at being the hero of the town on Sunday after playing a pivotal role in a great rugby league victory, either for his club or for the whole town in the Foley Shield, even being shouted drinks by the white men of Innisfail and surrounds in their own intoxication from alcohol and high on the win, but then on Monday once again being a “no-hoper abbo” up town and ignored by the very same people.
I suspected that attitudes had not changed much in Queensland from my early years. And I felt it would be intellectually dishonest if the discourse around the referendum did not reflect these truths. Equally I knew that if the targets of that racism were forthright about it in the lead up to the referendum, then there would be a backlash – involving all the usual tropes around angry black people especially men – that would lessen the message and potentially impact the outcome.
So I took the job on myself – a white, middle-aged man raised in the privilege of a colonial family deeply ensconced in the sugar industry of North Queensland, raised on the property my Great Grandfather owned from around 30 years after the rainforest MaMu-speaking people were driven from their lands.
I did so willingly and in full knowledge that it would probably be the final straw that estranged me fully from my family, a process that began over 30 years earlier when I fell in love with a woman of colour who migrated from Asia as a small girl. Though undoubtedly loved, now along with our sons, my family’s connection with her and ultimately with me was never strong enough to overcome the deep-seated racism that runs through our familial and societal culture so that their need to connect with others in the community I left was more important than their connection with me and my family.
When I was 17 and in my first year away at uni I developed a crush on an older college friend. I asked if it would be okay if I (fell in love with and) brought home this First Nation’s girl, and the response was devastating but unsurprising: “Obviously, we would prefer it if you didn’t”.
I never allowed it into my foreconscious, but I always feared – and deep down knew – that the girl I did fall in love with and bring home was only more ‘preferable’ in their eyes.
But I digress because while it was a little about me and us, it was always about the big picture. I know that people learn best when they can relate so I hoped that my experiences and those of my family might open just a few eyes. In the early days of the Yes campaign – when I wrote to First Nations friends explaining my intentions and hoping for their support, which I was gratified to receive – I dared to hope Alter Edgo might help secure a victory for the Yes. However, I knew mostly this is a process with a very long lead time.
And so it must go on now, irrespective of the referendum which revealed our greatest anxieties.
We must look forward and to do that I feel I am about to go out on a limb and say something potentially controversial, but that’s what I do and it’s why I will always be an ‘outsider’.
It will jar with key Yes allies who argue so strongly for stories of trauma from racism being centred on black or otherwise minoritised peoples because their stories are under-represented as another consequence of the racism that has caused that trauma.
I understand that entirely, but there is a really big BUT and it should be obvious to everyone.
The answer is above and in my video series and some other specifics of my background and life circumstances. However, firstly I must explain that I understand it is absolutely imperative that I differentiate my argument from an instance of “all stories matter”.
About the only criticism of the Yes campaign that holds any credibility for me is the “preaching to the choir” mantra. And now in the post referendum washup we have First Nations leaders talking about the real issue – racism – in a manner they could not during the campaign after we saw a taste of that ridiculousness in the discussion over Prof. Marcia Langton’s comments.
My videos were unapologetically directed straight into the racist den that I knew so well in my upbringing and I put whatever privilege I had in my home community on the line to authentically show the truth of the racism I was taught growing up there and what have been the consequences of that racism on my families – the one I was born into and the one I created with my beautiful wife – and thus on communities and me, personally.
I knew that for very many non-First Nations people who were raised in the culture in which I was raised, with hushed conversations in the main street of town about Aboriginal “advantage” when their disadvantage was patently around us, and listening always to the racist anthem “Livin’ Next Door To Alan”, and when in recent years I had a story repeated multiple times with righteous indignation about how they with others had objected so forcefully to the commencement of a meeting with acknowledgement to country that the speaker was made to cry, it would be too big a leap to show empathy and compassion to First Nations people and Vote Yes without having their eyes opened some way to truth and to acknowledging past wrongs.
I felt that the only chance of reaching some, in full knowledge that many never will be capable of that personal growth and decency, was to make the consequences of racism relatable to them, and that is why I spoke up so strongly willing to expend whatever remaining ‘social capital’ I still retained from being born into one of the best known pioneering and colonialist families in the town.
Now I can’t even offer any anecdotes, and I certainly have no capacity to search for evidence of a measurable impact from my campaign through polling booth analyses, which will struggle to disentangle proportions of First Nations people’s votes in any case, and ultimately I have to admit that I did not have a lot of social capital left in any case since I went to university in my late teens and had little contact with the township from my mid 20’s when I finished studying for my PhD in nearby Townsville and then especially as connection with my family broke in large part because of racism.
Sadly in the electorate of Kennedy along with the other north Queensland electorates south of Cairns the Yes vote was a measly 19%, which, allowing for above average representation of First Nations people who have been shown to have voted overwhelmingly Yes, means that certainly less than 1 in 6 and perhaps less than 1 in 7 non-First Nations people voted Yes.
Surely you see the issue for the Queensland SOO teams?
But I digress again, or do I? Because there’s another middle-aged, white man whose contact with Innisfail reduced through life circumstances similarly to mine but whose social capital is out the wazzoo, in technical terms – I have a feeling you might know his name. And most towns have similar heroes.
I totally get the immense pride and desire of having wonderful First Nations sporting heroes such as Johnathan Thurston and Cathy Freeman headlining the promotion of this important reform for First Nations people. That was absolutely the way it should be.
But I do consider it a mistake to centre the official campaign only on these First Nations heroes if the aim of the Yes campaign was to win by maximising their chances of speaking intimately and honestly with the majority of Australians.
Moreover, we all knew racism was a huge factor, and if there was to be success – especially in the absence of the bipartisan support which would have acted to quell somewhat the conservative racist element – then a more realistic strategy to counter the formidable racist undertow was vital.
Given that white people turn off to discussions of racism when it is black and otherwise minoritised people speaking their truth, even though it is not the ideal we all want for the future, it was always necessary that strongly allied white Australians carried the torch on that one, as I did.
A group of very high profile white Australians – heroes to the nation and in their communities – should have been formed and have been central to the campaign to reflect that truth of underlying racism back on white Australians, which would have had the added benefit of informing newer migrants of that patent truth.
Now I have zero idea whether Innisfail’s Billy Slater would have agreed to be a part of such a group. I have no idea, really, whether he would say the words I wrote in the script for Billy the woke kid for Alter Edgo’s TED Talk special, but I do know this: If Billy authentically followed the Ubuntu philosophy which formed the basis of the cohesive Queensland men’s SOO winning culture, then he absolutely would have and what’s more he would have stood strongly on the side of right – Yes – in the referendum. He would have even used his enormous political capital in our shared home community and spoken truth to community that in massive proportions remains resistant to hearing it.
Would it have been enough to sway the referendum. I don’t know. Nobody does because these strategies are as much about timing and momentum as anything else. It would have been more difficult for the No campaign to tear them down, however, especially if they were in large numbers.
These questions around authenticity of allies and loyalty to a disloyal public are the questions that the Queensland SOO teams – especially the First Nations players – will be asking themselves until the next series when we will all will get our first indications of what was the result of those deliberations.
The implications of this question are far-wider reaching than rugby league, however.
I believe that this is a moment where all Australians working to create anti-racist and inclusive culture must think very deeply on what are the messages in the referendum for them.
It would be a great pity if they failed to see they need to centre more real allies in this work so that relatability to those we need to convince is enhanced, and I feel I must say, if their trauma leads to trust difficulties, then it is my solemn wish that watching “Alter Edgo Finale: Exclusion” might help to bridge those feelings.
And the recently released video by Arnold Schwarzenegger, where he strongly speaks out against his own father who was a Nazi, should also be taken as a support of this contention on the direction we must take if we really want to have a world free from hate and prejudice.
Racism, prejudice and hate lessens and hurts all of us, that is the simple truth.
We on the right side of history, who understand that humanity’s true nature is always desirous of true progress even when change can at first appear daunting, need to stop imitating the other side who stir up those anxieties only to protect their privilege in perpetuity.
We cannot fall into the trap of creating our own echo chambers for ours is the voice of reason and love, and we must sing loudly, clearly and widely so we echo through the gorges and canyons, welcoming it’s bouncing off walls, and carrying on through the ages. We will continually weaken the barriers of those gathered together in the long but very narrow echo chambers where the wily but weak try to shepherd the fearful into that backsliding on progress.
We must not choir to a few, but encourage all to sing freely so that our choir grows broader, surer and evermore welcoming.
Next June, being a lifelong rugby league fan and ardent Queensland supporter, I will be observing closely to see just how woke is Billy the kid, and for indications on whether he was able to look the young Queensland men – and especially the First Nations men like baby-faced and freakishly talented Selwyn Cobbo – in their eyes in a way that is possible only if he is truly authentic and a real ally, or whether like for so many others that allyship is entirely contextual as it was for Alter Edgo before his woke kid convinced him to start out on the path towards being a better version of himself. Whether Billy, too, has learned and risen above the hometown throng who adore him and have taken him in so close to their hearts yet whose hearts remain firmly closed to others with whom they have shared their whole lives – or co-existence? – through good times, triumphs and loss, simply because they were born blak.
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OK, it seems that you three gentlemen – Niall Ferguson, Bill Ackman and Elon Musk – have taken it upon yourselves to tear down diversity, equity and inclusion (DEI) measures on behalf of the conservative Elites as a part of this broad ‘anti-woke’ agenda so I will take it upon myself to respond to your faulty criticisms.
It is a task that is not especially intellectually challenging.
Now I do not suggest any of you lack the intelligence to figure these things out for yourselves, though I did enjoy the late, great Charlie Munger’s assessment of at least some of you as consistently over-estimating your IQ and/or value to society.
That many intelligent human beings could hold such flawed opinions against DEI and feel the need to viscerally voice harsh and aggressive retorts against measures to achieve – for the first time in human history – inclusive and sustainable societies naturally opens questions that will be answered over the decades and centuries ahead.
This essay will stand, amongst many other sources, as a line in history which aids in indicating how extreme right has become the politics of our so-called Western capitalistic democracies.
Before I begin I will also state that I have no intention of promoting your techno-fiefdom, Mr. Musk. This conversation, or my part of it, will only happen on LinkedIn and my blogsite MacroEdgo.
Dichotomous Decision Division Trees
It may be my training as a biological scientist, but this discussion will in many ways resemble a dichotomous key. It might also read as a type of decision tree. It will emphasise the logic behind the arguments in contrast with conservatives’ emotive and illogical viewpoints.
I understand conservatives’ main objection with DEI to be that it embeds systemic racism against, especially, Caucasians or ‘white’ people leading to the conclusion that it creates division within society.
Messrs. Musk and Ackman, you have both been most explicit as exemplified by these quotes:
Musk: “‘Diversity, Equity and Inclusion’ are propaganda words for racism, sexism and other -isms. This is just as morally wrong as any other racism and sexism. Changing the target doesn’t make it right!”
Ackman: “DEI is racist because reverse racism is racism, even if it is against white people (and it is remarkable that I even need to point this out).”
Professor Ferguson you described DEI as an ‘ideology’ which demostrated your scepticism of it following your long criticism of “the politicization of American universities by an illiberal coalition of ‘woke’ progressives, adherents of ‘critical race theory’, and apologists for Islamist extremism” where you compared in laborious detail the rise of ‘wokeism’ with Nazism.
It is a fine example of the polarisation of our society when essentially the same incendiary article could be written with just a few labels and names changed, i.e. from ‘left’ to ‘right’ and inclusion of the name Donald Trump and ‘copycats’, and a large slice of the population would agree with the polar opposite position.* That is mainly because for emotional effect you mostly talked about Nazism which we all agree is abhorrent. But let’s move on.
To hold a view that DEI is divisive one must believe either: 1) that society is united or cohesive and that there are not already deeply entrenched divisions between Caucasians and ‘others’ in our societies; or 2) that if divisions exist already, then DEI measures will exacerbate them.
The first is clearly a ridiculous proposition which is easily countered by an enormous amount of data and analysis in historical context and modern socioeconomics including studies on inequality. Since I just happened by chance to read it in my email feed during a break from writing, I will include this excellent article as an example of this, but literally millions of articles could be consulted.
Anybody who fails at this level to agree can be considered to be so blinded by their bias as to be considered racist, regardless of whether they acknowledge it even to themselves or not.
Now I don’t say that as lightly or as flippantly as the reader might assume. If you are familiar with my extensive writing on this topic at all then you will be aware that I have discussed how I was raised to be racist within a deeply conservative family within a deeply conservative region of Australia, and many who were previously important to my sense of place within society are racist. I have seen all my life people say deeply racist things and then immediately deny being racist.
So I do know how bias and racism works within cultures, how much division it creates, and how blinded to their own racism are the majority of racists.
As personal examples, I was teased for several years by male mentors for sitting next to a First Nations girl in my year 2 school photograph when we were just 6 years of age, and the enduring consequence of that was that I was leery of developing connections with people of colour for fear of ridicule by the white majority. In that school ground we all said rhymes that included the ‘N’ word which divided the white children from those of colour. And when I moved away to university at 17, to the shock of other young students I repeated some vilely racist statements relating to genocide of First Nations Australians that I had witnessed all of my life being spoken by my male mentors within our conservative society without challenge.
This point is not up for negotiation or debate as it would be equivalent to arguing with a toddler that black is white, just as I said years ago in my writing that racism is wrong. Many conservatives might like to open all of this up for debate, but that is clearly a waste of everyone’s time as that was settled centuries ago.
So then we arrive at the second point, that DEI worsens divisions that already exist.
Two Wrongs Don’t Make A Right
This clearly harks back to a piece of morality taught to every toddler, of anglo-saxon background at least, that two wrongs don’t make a right. It follows the view that even if we accept that there are divisions in society caused by racism and bias it is not appropriate to introduce another bias into the system because that will exacerbate the pre-existing division.
Now that’s a fairly comfortable position for those on the side that perpetrated the wrong on the others, not so much for those who have suffered centuries of wrong against them and their ancestors and carry all of the intergenerational trauma and socioeconomic consequences from it.
Privilege certainly does equate to not being burdened with these consequences.
This, however, loses sight of the fact that DEI measures are not adding a second wrong, but are done to ‘right’ that wrong by countering racism’s consequences.
If you do not deeply connect with the truth of the consequences of racist bias at the social and systemic level, then it will be difficult to see this as righting a wrong instead of compounding the wrong, which you only superficially accept as being wrong in any case, with another one which you definitively and deeply consider wrong because DEI measures reduce opportunities for the historically dominant group.
Explaining this is best done by analogy. If you have ever watched a car wheel/tyre being balanced then you will have seen it being placed horizontally on a spinner which diagnoses the bias and tells the operator where and how much weight must be tacked to the rim to counter that bias for the optimal and efficient use of the tyres.
That is precisely what DEI is doing – countering the imbalance – the bias – that already exists and is factually and obviously apparent within society.
For a while we acted like that bias and racism could be just clamped down upon by making racism illegal as a basis for decision-making when it comes to a host of policy areas. But what was learned, not unexpectedly to anyone who truly understands how pervasive and pernicious racism is in societies, is that this is akin to clamping down on a section of a long sausage balloon where the air bubble just moves around but never shrinks.
This is essentially equivalent to the backlash against ‘political correctness’ where people object even to society exerting on them a morality of not being offensive to others, which nowadays has been subsumed into the anti-woke agenda.
The better analogy is actually one of a wire with retained shape memory so that when a bend is pressed upon the bulge simply shifts along the wire. If a straight piece of wire is needed it must be repeatedly and enduringly bent back in the opposite direction or regular kinks must be put in the wire to correct for that memory to achieve the optimal outcome. The defect, the deviation from optimal, always was the bend and the kinks were corrective because they would not have been necessary had the wire been straight.
Bias from racism, or any of the other ‘isms’, is that defect.
DEI measures are a critical part of the process necessary to correct those biases that already exist, and have existed for centuries in many cases, as a result of deeply ingrained and systemic racism.
Bias is a consequence of racism.
Countering that bias is not racism, it is simply decent and moral.
And it truly is remarkable that this even needs to be pointed out!
Now I realise that conservatives, once they lose the argument over the need for DEI measures, as eventually they must because the lack of logic behind their position eventually will make it untenable, will move on to arguing about the specifics of DEI measures.
DEI measures will need to be continually assessed, fine-tuned, and ultimately phased out as biases are gradually eliminated from society, but given that these biases have built up over centuries, we should expect that DEI measures will be necessary for several generations. This is where much of the great unacknowledged anxiety resides.
The Underlying Fear Of An Actual Second Wrong
I have written extensively on my view that one of the great weaknesses of humanity has been an inability to recognise that our progress resembles the path of a swinging pendulum bob where the pivot point is on a gradual incline. Even though standing back we can appreciate that over long periods we have progressed – and obviously it is a very strong drive amongst human society to achieve progress – our experience is that there are periods where we perceive that our progress has stalled or even gone backwards. That seems to me to be what Prof. Ferguson is expressing in his essay “The Treason Of The Intellectuals”.
This is due to the wide, sometimes wild, swing of the pendulum and because humanity has generally failed to recognise when a ‘sweet spot’ has been reached so that we might stop the pendulum from swinging or at least dampen its swing so that it oscillates around the optimal or relatively stable and sustainable state. For this reason we swing to and from extremes. It is my belief that if we can manage to dampen the pendulum’s oscillations then we will speed our ascent, or our rate of progress, but note that I am talking in a broad sense and certainly not just about economics.
The reason why humanity fails to recognise that sweet spot is because it is the politically astute individuals amongst us that vie to lead in those Resets, or course corrections in the swing of the pendulum, and as they achieve that success they either lack intellectual ability or morality to shift their position to a more moderate stance that is required to settle the swing of the pendulum. Just as the pendulum has maximum energy when it reaches the point at which it would rest if only under the force of gravity, i.e. hanging straight down, political operatives who have had success are captivated by the power that they have achieved from it and instead of seeking a steady state for the good of people they use that momentum in their own political power to acquire more privilege and influence. I have written about this in relation to conservative views over the past half century surrounding the teachings of Milton Friedman.
Moreover, I believe that this is something that most human beings understand intuitively even if they are not necessarily consciously aware of it.
In Australia we often talk about a societal characteristic which we refer to as ‘the tall poppy syndrome’ meaning that just as someone is becoming confident in their social standing and status, historically we Australians have ‘cut them down’ like a tall poppy standing out above the rest. It occurs essentially because we become subconsciously irked by them getting ‘too big for their own boots’.
So what does this have to do with racism and DEI?
Another analogy in the form of a personal anecdote. My brother is 8 years my senior and he was a bit of a bully so that I would often tell him that when I grow up I will be bigger than he and I will get him back. I did get bigger, a lot bigger, so much so that he would tell people that we were twins, but I was Arnie (Schwarzenegger) and he was Danny Devito. I didn’t follow through on my threat.
I cannot speak to the feelings of disempowerment and traumatisation of being a member of an oppressed peoples, and to attempt to would be completely inadequate and inappropriate. But I listen intently whenever I hear such people bravely speak their truth.
The consequence of intergenerational trauma and inequality at pivotal moments in American history has been displayed, as in other colonialised nations, and for me one of those moments was encapsulated by the powerful words of Kimberley Jones during riots following the murder of George Floyd.
Kimberley’s final words would have rang loud and long in the ears of many white Americans and invoked a level of fear and anxiety:
“…they are lucky that what black people are looking for is equality and not revenge!”
The same anxiety about the potential for revenge is no doubt held by many in societies where a dominant group has severely oppressed others, and that is certainly true of my country Australia and the oppression of especially Aboriginals and Torres Straight Islanders.
Given that humanity has been poor at Resetting to achieve an optimal state, besides the immediate self-interest of Caucasians not wishing to lose any privilege at being presented with opportunity within society – opportunity that has not been equally accessible to ‘others’ within the same society – subconsciously they also fear that the pendulum might swing past the steady state and momentum builds such that circumstances become extreme in the opposite direction and the historically oppressed become the oppressor in vengeance.
And realistically you do not have to look hard to see this in the dog whistling inherent in the writing of conservatives.
For this very reason there is a limit to how much privilege many from the side of the historical oppressor will accede to being imparted to the oppressed, and often it is very little if any.
It’s Anything But The Economy, Stupid
Finally, I will state a degree of agreement against the economic justification for DEI, but not for the same reasons as conservatives.
It’s not unlike the ‘need’ to provide an economic justification for saving the planet from the fossil fuel burning-caused climate crisis. What value do we place on the health and quality of life of future generations and the natural world? Why would we even try?
As social beings we have always appreciated that some things are just right – moral – like being kind and decent to others, typified by how we teach children to play nicely together and share, and there is no need to justify it. If we do justify to our children, it is on the basis of morality and that this is how we develop a society in which we feel safe and where we belong.
This need to provide an economic justification for everything is symptomatic of our increasingly Extreme capitalism that has meant that the social aspect of socioeconomics has been almost forgotten.
This effort to economically justify DEI measures is a direct consequence of Extreme capitalism’s deleterious knack of turning any thing or deed into a saleable commodity, in this case the deed of teaching corporate leaders and staff to be aware of their and others’ unconscious bias. In other words, because an industry has developed around DEI, to present a business case for a corporation to pay for such services it became necessary to put dollars and cents figures to costs and returns.
This opens up the opportunity to argue over those analyses of dollars and cents, inputs and outputs, and return on investment, which dilutes intent and threatens progress.
In reality it is simply a matter of fairness and decency, and for healthy and cohesive – sustainable – societies we must stay the course on DEI until our compassionate collective humanity makes specific measures redundant.
100+ years of White Australia Policy in Australia, and other instruments of systemic racism in other countries and regions, has left racist biases and prejudices deeply scarred into the systems that underpin our societies, and these will not be removed by chance even with time, or by the free hand of the market (which instead of being free is controlled by those with deeply entrenched privilege in this age of Extreme capitalism).
* For example Prof. Ferguson, I would write this paragraph, the hook to your article:
“A century later, American academia has gone in the opposite political direction—leftward instead of rightward—but has ended up in much the same place. The question is whether we—unlike the Germans—can do something about it.”
…in this manner which I am certain would strike an accord with a very large slice of Americans, including some Republicans who fear the consequences of another Donald Trump Presidency, along with many others in western society and including European leaders:
A century later, American [society] has gone in the [same] political direction— [extreme] rightward—[and is at risk of ending] up in much the same place. The question is whether ‘we’—unlike the Germans—can do something about it.
Note: I said “at risk” because I am more measured in my analysis and words because I am sensitive to the power and the dangers of incendiary language. If actually writing that passage I would probably also make the point that this is the nation that saved the world from, and presumed to lead it away from, fascism and communism only to lose its way and lead the world back to the former as I discussed in depth in my “Reset” writings.
I would then conclude making the point that if that is to occur – the rightward slide be arrested – then the best hope lies in the progressive-minded university communities because they are the last areas of resistance in American society, and that is why they are under such vociferous attack from the conservatives where the prefix ‘ultra’ has become redundant…
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I only learned about the latest anti-woke attack by the Technofeudalist Elon Musk Tuesday evening as I watched Jonathan Ferro and Lisa Abramowicz on Bloomberg.
Ironically a few days earlier I had decided to interrogate Open AI’s Dalle 2 about wokes by asking it to draw “a pencil sketch of a person being ‘woke'” which I had hoped to use in my T-shirt design. Some generated results are above and suggest, along with the results of slight modifications on the query, that the software struggled. The results were, however, suggestive of a level of stereotyping of what is a ‘woke’.
Honestly I hoped it would express a modern interpretation of what it is to be woke by representing diverse people being compassionate to each other, but I feared it might already have been biased by inputs and showed angry people.
And it has incorporated ‘passionate’ activism to a level with some characters that could be interpreted as depicting anger, but most responses also centred the meaning of the word as it relates to waking from sleep.
Musk’s latest salvo in the conservatives anti-woke agenda (this week) was complaints that Alphabet’s AI tool Gemini produced ‘woke’ results that reflected the company’s “insane racist, anti-civilizational programming” echoing similar comments he has been making of late as I read in the press (I do not use his platform/fiefdom and refuse to promote it by mention).
But Musk was far from alone in the online mob ready to pounce on this story.
The example given by Jonathan on Bloomberg, and mentioned widely online, was that when asked to generate images of Nazis Gemini incorporated diverse peoples which was interpreted as woke through the assumption that the imperative to incorporate diversity overrode historical fact, that being that because the Nazis were white supremacist Aryans they would not and could not be inclusive of ‘others’.
If it weren’t for the repugnance of Nazism, Musk’s and other conservatives complaints would be comical.
An organisation formed out of the underlying premise of white supremacy and vile racism towards others is misrepresented by including those ‘others’ and that apparently is more evidence of racism… against white people!
Seriously, you couldn’t write this into sci-fi because it is beyond warped!!
A little mind test for readers – others can instead focus on the Allied forces’ D Day landings in WWII, but I will ask Aussies to visualise in their mind Australian soldiers at Gallipoli in WWI.
Did you have included in visualisation people like Billy Singh and Harry Freame, Australian war heroes of Asian descent, or any of the 1000+ Aboriginals and Torres Straight Islanders who fought to protect England and the Commonwealth but were not even counted as human beings by the Australian Government for another half century? Or what about the Indian battalion that freed swathes of the Abruzzo region of Italy from under Nazi tyranny in WWII?
The sad reality is that popular culture – through systemic racism – has tended to omit these people from the way these events are ‘popularly remembered’, as if they were airbrushed out. That is precisely why people like author and Labor parliamentarian Tim Watts spend time and effort in reminding us of their efforts, achievements and sacrifices which is necessary to airbrush them back in through books like “The Golden Country: Australia’s changing identity“.
They should never have been brushed out, but 100+ years of White Australia Policy in Australia, and other instruments of systemic racism in other countries and regions, has left racist biases and prejudices deeply scarred into the systems that underpin our societies, and these will not be removed by chance even with time, or by the free hand of the market (which instead of being free is controlled by those with deeply entrenched privilege in this age of Extreme capitalism).
With this new technology, it is critical that the mistakes of the past are not repeated and compounded. For the sustainability of humanity, it is absolutely necessary that effort is made to prevent these systemic biases being incorporated in AI learning, a bit like from the outset ensuring that years – following the Gregorian calendar, no less (yes people, other cultures follow different calendars) – are presented in 4 digit form.
This whole strawman debate makes me wonder how AI might draw a crowd of people attending a Trump rally, and whether the result may be a crowd of diverse people. You could not blame any AI software if it did because visual media records of the crowd behind the lectern where Trump speaks can almost be guaranteed to contain a level of diversity belying the written accounts from those rallies – in publications that know the importance of reporting this as an aspect of balanced coverage – which usually highlight the over representation of Caucasians in the crowd. (It’s a little like how the Liberal party strategically places women in the television frame at parliamentary question time and in pressers to counter their ‘women problem’ – an impression reached from these images alone would lead to a belief that female Liberal parliamentarians outnumber males by 2 to 1 when in fact the opposite is true!)
So let’s not pretend that even actual images that we are presented with always tell the full facts and are never misleading to the point of being incorrect.
Anyone truly concerned about addressing the underlying causes for the emergence of Nazism or similarly divisive ideologies would recognise the need for AI to avoid stereotyping and include diverse representations of humanity in its output.
These example highlight that AI still leaves a lot to be desired, and that it’s a long way from fulfilling the potential that is now the primary narrative driving the crescendo melt up phase of the bubble in US stock markets especially in tech (which has benefited Musk enormously).
That’s been my experience with AI, also.
That is hardly surprising, though, and objectively – stepping outside the febrile anti-woke environment – it will likely in the fullness of time prove to be less of a hiccup than ‘shatter-proof’ windows on the Cybertruck in fact shattering during a live demonstration broadcast around the world.
How embarrassing was that!
If Alter Edgo the woke slayer ever went on his fiefdom he would probably ask Musk whether that was why he was so against DEI (diversity, equity and inclusion) – whether he “had a sheila in charge of that shattering ‘shatter-proof’ glass project?” as he will ponder aloud when the second series of “Alter Edgo and His Bloody Woke Kid” goes to air on YouTube in the near future.
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There are articles in financial press stating that Australian pension funds (industry super funds) are ramping up bets on risky private credit, with some intending to triple their allocation to the asset class over 18 months!
Now I am just sceptical enough to wonder what is to stop an owner of an asset turning around and buying into the capital structure of the financing facility for that asset, either directly or through an intermediary, to aid the extending and pretending that is typical and critical to preventing mark to market losses in less liquid asset categories, such as commercial realestate which has been stressed from changed conditions in interest rate markets and worker behaviours (WFH) since the pandemic.
Besides being unethical, if it is indeed against the law or at least against fund covenants, I have no doubt that backroom quid pro quo deals are struck amongst some in times of stress to achieve the same ends to their mutual benefit.
The opacity inherent in private markets, including private credit, is also concerning given the public nature of pension fund participants.
Before starting a SMSF I utilised a well-known industry super fund for a period including through the depths of the GFC. I found the stability of the Fund’s property fund… odd. It felt unnerving and eerie – a bit too similar to Bernie Madoff’s fund in the way its unit value consistently climbed irrespective of economic and market conditions. It was obviously avoiding mark to market losses at times (imagine Mark Burry in “The Big Short” complaining on the phone to his price-setting counterparties that their offered price for his CDO swaps went down when they should have increased with rising mortgage defaults). In fact this apparent stability is often advertised as a positive of the fund.
The truth is that this sort of gaming of asset markets is not a net positive for small-time investors because it is not an authentic free market where genuine price discovery occurs so that prices paid are a true and fair reflection of the intrinsic value of the asset based on its utility to society.
It introduces asymmetry – heads I win, tails you lose – into markets so that assets are nearly always overvalued which maximises fee flow to the managers and bonuses to Elites and Elite ‘wannabes’ extending to bankers, deal-makers and hangers-on.
This asymmetry is inefficient and anti-capitalistic, and it is a major feature of the vacuum apparatus that constantly sucks their modest wealth resources away from the everyday person, while the many human beings making up the pieces of the vacuum apparatus kid themselves that they are really doing it for the everyday person relying on constant returns into their pension and retirement funds.
No, gamed systems only ever favour ‘the house’ and the real wealth generated flows to the privileged, so that they are never in the interest of the everyday person.
With WFH, the utility of offices is changing, so must the price.
Now for an analogy which inspired the above graphic…
Just imagine a cart being pushed up a hill that never rolls backwards... sounds reasonable... looking closer the cart periodically stalls but to stop it rolling back chocks appear behind the wheels... still seems reasonable, right... but look closer at the chocks and realise that they are actually thousands of small people leaning into the wheels, the same small people who collectively are pushing the cart up the never-ending hill... moreover, look around and notice that there was another path that could have been taken, less steep and with regular flat resting spots... a path kinder and more compassionate to the small people... But the privileged big people riding on the cart insisted on following the tortuous path because along it there are more grains of gold to vacuum up from the ground as they pass and from the small people who can not properly secure it while they work unceasingly to support the upward trajectory of that privileged cart on the tortuous path...
The analogy can be applied to another property asset category, Australian residential property which has been in a two decade plus price bubble... Executive bankers and property developers, etc can be seen riding the cart and most other Australians are the small people pushing it... When it has slowed periodically, the big people on the cart could be heard to yell loudly "negative gearing" or "capital gains tax concessions" or "first home owners grants" or "leveraged SMSF buyers" or "first home owners boost" or "NRAS to soak up extra supply" or "looser lending standards and regulations", and the pavlovian-trained small people leaned into the wheels and chocked them, some deluded that they might somehow climb onto the cart with their gold intact, others just following everyone else living in constant fear that they might be crushed by the cart wheels in any direction...
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In my “Open to Offers” post I gave credit to Jeremy Grantham of GMO for much of my understanding of bubbles.
While accurate, absent context this gives a false impression of my own evolution.
The truth is I have always been naturally contrarian. In reality I think all authentic contrarians are that by nature.
I have often pondered on why this is and I consider it, like most character traits, a product of nature and nurture. I have a cautious innate nature mixed with a learned anti-authoritarian streak from my father both as a result of his comments when I was young and as a consequence of major setbacks he suffered which I witnessed (as I have discussed on my ‘About Me‘ page and in other posts on MacroEdgo).
My father’s parents were adults with young children in the Great Depression and his comments to me as a young boy about bank and national finances not being as certain as many assume remained with me.
I understood very early that few people understood risk, or even tried to, so it was wise to approach commonly accepted ‘truths’ and consensus with a degree of scepticism.
I became interested in economics, finance and investing in 1996 when I was 26 as I approached the completion of my PhD. Having become acutely aware of just how much income I had forgone until then to become a research scientist, and understanding the impact of that on my future family with my wife, I had a strong drive to learn as quickly as possible how to use our savings optimally to give us financial security.
I began reading weekend newspapers mainly for business and economics coverage. And soon I began reading books. Even though share market participants were almost unanimously exuberant, the first book I chose to purchase was “How To Handle A Bear Market” by Bill Harper which was published in 1998.
Choosing to read that book at that time was no more by chance than it was for Bill writing it then.
Besides the typical general financial planning books by Paul Clitheroe amongst others, I read Robert Shiller’s “Irrational Exuberance” and did so soon after its release in 2000. Moreover, after reading it I wrote to Robert Shiller from Germany in 2002 when I was there on a Humboldt Fellowship, asking Prof. Shiller for some reprints of his papers.
So even though I have tried to read everything Jeremy had to say over the last decade, I already had a natural interest in learning about speculative manias and bubbles well before I knew of Jeremy or GMO, the funds management firm he co-founded.
I wrote most of the content on the Australian house price bubble on my former blogsite homes4aussies before I began reading Jeremy’s writing, and my commentary at Bubblepedia, at Steve Keen’s blog ‘debtdeflation’, and at many other places, was influenced from my broad reading on speculative manias, though I instantly recognised much of my own viewpoints in Jeremy’s writing (and even his writing in his Latest Viewpoints reminds me of what I was saying back 15 years ago – that ‘analysts’ countering the bubble viewpoint always insist on the identification of a catalyst or pin prick, but that the dynamics of bubbles create conditions so a pop is possible without an obvious catalyst).
Soon after, Jeremy commented on the Australian house price bubble in one of his famous quarterly newsletters which led one member of a (friendship?) group of economists – who gave all appearances of being very protective of the bubble – to attempt to ensnare Jeremy in a wager, which I presumed was to counter the negative publicity around such a highly regarded ‘bubble-spotter’ highlighting it and that being presented to the Australian public through the press.
Another member of this group, who had been described publicly by the above almost as Australian economists’ answer to Crocodile Dundee (pig hunting, rodeo-riding, etc, etc – CRINGE!), had publicly ambushed Steve Keen at a speaking event apparently because he had dared to point to the house price bubble. I listened to a recording of the engagement and it sounded to me like Steve was embarrassed into the wager.
I, myself, tried to establish a wager with someone who gained broad media coverage in releasing ‘research’ which simply applied the recent exponential growth in Brisbane house prices in perpetuity to forecast a $1 Million median price by 2015. Even though that market displayed several more periods of irrational exuberance, in concert with the broader Australian housing market as a result of repeated Government interventions whenever housing markets looked shaky (discussed below), till this day (now double the forecast period) the Brisbane median house price has not gotten nearly that ridiculous to reach that level, although the most recent bout of craziness through the pandemic years was impressive (see graph at end). *
This article about that bet with Steve Keen gives a flavour of the strength of opinions around Australia’s house price bubble, and the prolonged nature of the debate. Note also that the economist who initiated the bet with Steve Keen had a very high profile at the time and was frequently on television, but his public-facing profile fell shortly afterwards and has remained that way over the intervening decade which may or may not be indication of the consequences of behaviour which I, personally, feel fell short of professional within the public eye.
In writing this account I conducted a brief search to learn the extent of my digital footprint from this period and was surprised by how little is available, at least to the broader public. That’s a shame. If the reader ever happens to see the ABC footage of the first day of Steve Keen’s walk from Canberra to Mt. Kosciuszko, after losing that bet, you will see a balloon inflating until it busts with someone’s voice saying “negative gearing… capital gains tax discount… first home owners grant… first home owners boost….” – that’s my voice 🙂
These other bits and pieces should give a fairly clear view of what my activism was then about:
This article in the Sydney Morning Herald was inspired by my questioning of recently installed Prime Minister Rudd at a community cabinet meeting in northern Brisbane, and was entitled “Rudd Grilled On Housing“. The article at the header of this post was then published in the South East Advertiser on 16 April 2008. What these reports do not capture, though I have stated it online on occasion and in my submission to the banking royal commission, is that at the same meeting the then Treasurer Wayne Swan looked me straight in the eyes and said that I was dreaming if I thought negative gearing would ever be ended. Given my vulnerable state at that time, it literally took every ounce of restraint that I could humanly muster to control my emotions and not react to his arrogant provocation;
This is a comment on Open Forum in response to an article by Stan Small, an Anglicare outreach co-ordinator who worked with disadvantaged and/or homeless young people, which explains much of my motivation to help the broad community; and
Still, that Australia’s housing bubble has not yet popped has confounded many of us contrarians, and it really is worthy of discussion. I will share my own thoughts based on 20 years of observing it, partly in hope that it might encourage Jeremy to do likewise.
In my submission to the ‘Henry Tax Review’ I gave a detailed account of the early period of the Australian house price bubble, both in the body of my submission and in the appendices including the paper “Anatomy of Australia’s Housing Bubble” which I wrote in 2008 and which I consider stands as a very good record of what had occurred to that point.
It is fair and accurate to say that in 2007-08 I thought that the chances that Australian house prices would not drop back to more normal levels, i.e. a price to income ratio of near 3x, over the following decade were extremely low.
(In my defence, nobody foresaw such ridiculous central bank shenanigans as the quatitative easing and negative interest rates that we became desensitised to over that period, and which further lifted global debt levels.)
Nonetheless, we did personally buy our one and only family home in 2011 during a lull in the market, not because we thought it was a smart financial decision, but because it was at a period of least financial disadvantage relative to the emotional premium gained from raising our (then young) family in our own home. With over a decade of hindsight we will freely confirm that emotionally we gained everything that we had hoped and probably more.
I do not consider that decision to have been especially financially advantageous, because I still expect that long term price correction, even though financially it has not been as disadvantageous as it could have been – i.e. had the market correction occurred early in our ownership and through misfortune in employment and/or health we became so vulnerable that we needed to sell.
It is equally important to note, however, that even though several specific events/factors have allowed us to pay out our mortgage recently, including the windfall capital gains from positioning for strong falls in the sharemarket as the world was shocked by the challenge posed by the COVID-19 pandemic, these have served to make me realise just how challenging it was to pay out such a large debt with a young family, wanting to provide life-enriching experiences for developing young children, even when we had a very large deposit (40% of the purchase price – almost half of that a windfall from a property sale that was never intended to be an investment), and borrowed significantly less than lenders would have given at the time, for a significantly more modest home than we could have purchased if we borrowed to the max.
In this sharply rising interest rate environment I truly feel for those who were naive and believed lenders when they told them that they had the capacity to pay back mega mortgages and so mortgaged themselves to the max. Our experiences suggest that even people who borrowed a decade ago, irrespective of whether they are well into positive equity, will find it challenging to pay down their debt.
That is the main problem with house price bubbles – the market price of the asset is ephemeral and set based on the transfer of a small proportion of the market, but the debt is constant and is only reduced by paying down principal on top of the interest.
Therein lies another major vulnerability with Australia’s house price bubble. Many small scale Australian property investors don’t pay, and never intended to pay, any of the principal back to the lender. They have been sucked into the market by Government incentives known as negative-gearing (borrowing heavily so that costs including interest and property maintenance outweigh earnings with the deficit claimable as a refund through the personal income tax regime) combined with capital gains tax concessions such that in the bubble many have increased their book wealth by borrowing to the maximum through interest-only loans to buy multiple investment properties.
Look at my submission to the Henry tax review to see an example of how schemes to buy an investment property annually to maintain leverage were spruiked to Australian property speculators who considered themselves investors.
I’ve seen the excitement grow in the eyes of recent arrivals to Australia as I’ve explained these tax perks to them, but the problem is immediately apparent to non-Australians – what happens when prices fall and/or, even worse, stagnate over a prolonged period?
The truth is that this serious vulnerability to the Australian economy has long been identified by international investors. In the period after the GFC there was much discussion about the potential for our housing markets to implode taking down our economy and banking sector like the bursting of the US house price bubble. In the face of these persistent questions from the international investment community, which RBA officials and bank executives frequently admitted, the CEO of Australia’s largest bank took it upon himself to do an international roadshow with the aim of soothing these concerns. When the slides of that presentation were released to the public an eagle-eyed contrarian in Australia noticed how the data that were supposed to ‘prove’ that Australian property prices were just high, but not in a bubble, appeared to be cherry-picked in a less than ethical manner to support the claim (i.e. house price data were used inconsistently which had the effect of lowering price to income multiples).
The intended takeaway from that presentation, which was dutifully reported in the Australian press, was that although Australia indeed had very high house prices relative to income by both global and historical standards, the supply of new housing was constrained such that demand for its actual utility – as shelter – continually outstripped it, and since that situation appeared intractable, it could not be a bubble because the price would never strongly correct downwards.
If I was an intelligent analyst at those presentations I would also have reflected on the concentration of banking in Australia, noting that the small number of major lenders to house buyers were also major sources of funding to developers.
In other words, the businesses and their self-interested executives that have the most to lose from the house price bubble popping have had an enormous level of control over all of the supply and demand levers of relevance, as long as the supply of capital remained unconstrained. Even then the RBA used the cover of the GFC to provide funding to the banks and it was only with that period distant in the rear view mirror that the public was informed about near collapses amongst our smaller banks that had been rapidly growing market share selling mortgages.
What about the regulators, you say….
Well I think the abundant systematic biases which create enormous asymmetry – and disadvantage – in Australian housing markets are well inferred to this point, but if we fast forward and concentrate on the period from 2017 until now a very clear picture of it emerges.
An interesting year in the Australian housing market was 2017 because one member of our quartet of heads of financial bureaucracies (which together make up the Council of Financial Regulators) actually admitted that we had a bubble in housing markets, and another essentially admitted it in all but name.
“I have been saying for a while that I thought it was a bubble and other people are catching up now,” was what Greg Medcraft, head of the Australian Securities and Investment Commission, said.
Wayne Buyers, head of the Australian Prudential Regulation Authority, clearly had similar concerns when he was asked whether he thought it was a bubble and responded, “I don’t use the B word. I refuse to use the B word. It is superficial.“
Clearly these very senior bureaucrats had become spooked by the sheer level of irrationality in the exuberance that had been reached surrounding our housing markets for a decade and half.
APRA then enforced tighter lending standards especially on interest-only loans which some fretted might – in itself – cause a ‘US-style meltdown’. Capital city housing markets weakened. Mortgage stress also rose and commanded attention.
The banking royal commission ran through 2018 and the banks finished up the year on the ropes.
My own submission centred on expanding the Terms of Reference to look at the roles of the financial regulators in perpetuating the housing bubble and especially the RBA, mainly discussing events that happened under the leadership of Glenn Stevens.
The year was literally full of the most shocking revelations – just when you thought you had heard the worst possible ways in which people would mistreat others on behalf of organisations, another even worse revelation was unearthed. Truthfully I don’t want to be reminded of them by searching, so I would suggest the reader google “banking royal commission” for the period 2018 if they wish to be ‘sold’.
For me the real low point, however, was the pompous testimony of the National Australia Bank Chairman Ken Henry, who had left his post as head of the Australian Treasury early in the decade as one of Australia’s most highly regarded economic bureaucrats. Both he and CEO Andrew Thorburn resigned their lucrative banking executive positions in February 2019 as a direct consequence of revelations and their perceived lack of contrition displayed when testifying.
All through 2019 there was much discussion of which of the royal commission’s 76 recommendations would be enacted.
It seemed that, finally, the stranglehold that the banking industry had over the political system in Australia was utterly broken, and along with it the preferential place that property speculation had in our economy. It seemed that the housing bubble could no longer be perpetuated by vested interests.
It is accurate and fair to say that, given the sheer shock and outrage at the bankers, most in the public expected significant actions to be taken.
The banks and their lobbyist clearly had a different viewpoint, unsurprisingly.
In May 2019 the failure to elect a new Labor Prime Minister, in Bill Shorten, who had struggled with personal popularity, but who ran strongly on clamping down on inequities which favoured those with asset wealth, by dismantling negative gearing and other tax advantages, showed that those in the financial services industry could still influence political outcomes.
Then, less than a year later, the first fast-moving global pandemic in a century provided distraction so that the public lost focus on the issue altogether. As we all know, nothing much else at all mattered more than whether we were entering or exiting lockdowns, and what was the current situation for mask mandates.
By January 2021 less than half of the recommendations of the Royal Commission had been enacted. Worse still, in September 2020 the Morrison Government sort to loosen responsible lending laws by removing the obligation on the lender to check the capacity of the borrower to repay the debt.
Of course, the instruments of political interference in markets go beyond those made explicit in policies, laws and other official documents.
When the pandemic began to bear down on our economy, it was hardly any surprise that the first thing the Morrison Government sort to do was stimulate the housing market, as had been the economic ‘playbook’ in Australia for the past 2 decades of the bubble. The HomeBuilder grant was spawned and announced to the public on 4 June 2020.
The curious thing for me was that already by August, a family member who is in the building industry – a co-owner of surveying businesses that had been in business for over 25 years – was telling me that June 2020 was a record month for them, that was until it was beaten by July, which was on course to be bettered by August! And they did not know what do with the piles of money they were given for the JobKeeper program (though their accountant thought it a good idea to keep it in the bank for the moment, just in case they were asked to pay it back!)
The point is that it was clear to me that such a rapid activation was not by accident or chance, and it would seem highly likely to me that bankers were told (by Government representatives) to shovel money out the door without fear of reprisal for how exactly they did it!
Now we have even more heavily indebted young households that are extremely vulnerable with interest rates rising, still heavily indebted less young households that have planned for continual price appreciation to numb the sensation of standing in debt quicksand increasingly stressed, older Australians who have realised that there is more to life than working into old age to accumulate even more housing ‘wealth’ after their own mortality was highlighted in the pandemic, and we have several generations of Australians tired of being told they should go without ‘luxuries’, such as smashed avocado, to enter a lifetime of debt servitude and financial vulnerability to buy a home while being afraid that they will not have a home to rent because $billions given to ‘investors’ over decades has failed to deliver sufficient supply of new homes… because it was never meant to!
So what are the lessons here?
For me it is very simple. No matter what we are told, the answers to this apparently intractable problem have always been easy to determine in big, empty Australia (the words of Sir David Attenborough – see here in “The Conundrum Humanity Faces But Nobody Admits“).
The problem is the politics amongst our elites who have grown fat on power for the sake of self-interested influence rather than doing good, or even leading.
The general public must also share blame because enough have allowed themselves to become deluded that they have become wealthy, far more than genuinely are, while others have become fearful that their poor financial decisions will haunt them, such that many are willingly complicit in the increasing entrenchment of a two-tiered society of owners and vulnerable renters.
But why has the bubble not popped?
Because what happened in the US forewarned the elites that our even larger housing bubble needed to be managed as an utmost priority at all times.
Thus successive Governments and economic bureaucrats, not wanting it to pop on their watch, became stewards of a house price bubble not a national economy. That is why genuine economic reform has been off the table for over 2 decades!
The US economic bureaucrats were (almost comically, if not for the harm done to everyday Americans) blissfully unaware of the risks that had been allowed to build in their housing markets and broader economy before it popped in 2006.
On the other hand, RBA Governor at the turn of the millennium, Ian Macfarlane, has on occasion indulged himself with a congratulatory lap of honour for taming an early period of irrational exuberance in our house price bubble in 2002/03, which in that 2020 interview he put down to “something that was really harmful, which was pure speculative activity, particularly through negatively geared acquisition of second, third, fourth, fifth properties [so much so that] it was starting to get pretty crazy then and it was starting to get pretty close to a bubble.“
It has been clear since this period that confidence at the RBA runs high at being able to repeat such ‘feats’.
I guess they now have some reason for that confidence, but I do wonder whether it really is something of which to be proud. Moreover, I do wonder whether the ‘Tin Tin’ that emailed me at homes4aussies all of those years ago with a research paper empirically proving the extent of distortion in housing markets caused by negative gearing and capital gains tax concessions would be satisfied with what has occurred over the intervening period. For those who do not know, the little known nickname of the current RBA Governor Phillip Lowe is ‘Rin Tin Tin’, and to be clear, yes, from the moment I read a biography on him when he assumed the position of Governor, I have believed it was he that emailed me.
The really interesting thing is this. The debate the RBA was involved with 20 years ago, and by the way, which ‘Tin Tin’ wrote on during his time at the Bank For International Settlements, if I recall correctly, is whether a bubble can be leant on to prevent damage to an economy when it busts.
What the RBA has proven is that a bubble can be perpetuated a very long time. In doing so, I would suggest that as much damage to the economy and society has been done, perhaps even more.
Will the price of Australian houses ever be around 3x earnings again, the commonly accepted level for affordability?
Yes!
When?
When will we have a prolonged period of quality political leadership? Okay, I did answer with a question, but if you know the answer to that one, let me know.
The current Government looks good, but with so much work to be done, will they be able to progress a full program without losing electoral favour – just out of the whims of a general public that struggles to hold its attention on much any more – and how high up the order of priority will fair housing policy be placed?
Sometimes I do wonder whether the Whitlam strategy is not better, even if it takes 50 years for the broad public to catch up with what an enormous achievement it was to heave the nation through major roadblocks.
Then again, if we get really bad bubble managers and/or a confluence of difficult to manage factors, which might just prove to be the current situation, more the latter than former, then the once in a generation bust that would ensue will wring out the exuberance for generations such that homes will cease to be valued as casino chips and will be priced again based on their utility… probably around 3x annual earnings.
*For those inclined to be sympathetic to the realestate agents’ ‘optimistic’ forecasting, and might point out that my own forecast made at a similar time (that I published within my Tax submission – to hold myself accountable, I might add) proved to be too ‘pessimistic’, I will point out the Australian Bureau of Statistics measure for the median priced Brisbane house was $483,500 in the March quarter of 2016. So my forecast was 30.9% less than the actual, whereas the realestate agents’ forecast was more than 100% above the actual median price! The wager that I had proposed was for $20,000 to the winner (him if median price was over $1million, me if less) and $10,000 for each complete $100,000 over/under as the case might be. I was, however, prepared to negotiate and use the average of our respective forecasts at $667,000, though with some modifications of amounts and increments. If the realestate agent accepted the challenge I probably would have used the wager as a ‘hedge’ and gone ahead and bought then. Finally, remember who got the publicity of having their forecast published in national newspaper, whereas the editor of the paper that I contacted to help establish the wager was not at all interested in the story… lest they promote someone providing an alternative view to the bubble spruikers.
Postscript: I leave the reader with a graphical representation of all of this – a graph of the Brisbane median house price over the total time that I have observed it… This picture tells a million or more words, not a thousand… The ABS series was ceased after the December 2021 release… nice to end it on a bubble high… in a once in a century global pandemic!
Finally, just for fun, here is my forecast (as available in my submission to the Henry tax review, available for download above) overlayed over a graph of actual, with the ‘actual’ part of my forecast (solid black line) aligned so scaling is correct…
Edit: Two paragraphs dealing with when I began reading Jeremy’s newsletter were edited significantly within a few hours of posting because a reader, clearly familiar with my work, viewed the file below which showed that I began reading Jeremy’s newsletter in late 2008 (I believe it was likely the newsletter of his that I discussed in the paper that led me to become a regular reader).
COVID-19 was a catalyst that ensured Reset occurred at this moment in human history, and the shock to global humanity associated with it ensured that the Reset would be significant in magnitude.
(Note, I have always accepted – and acknowledged – that other and/or future analyses may time the Reset at 2008 after the Global Financial Crisis, but in that case COVID-19 was certainly a very significant accelerant).
My use of the adjective ‘Great’, however, does not only relate to the magnitude of the Reset but also to the potential for it to be great for humanity if quality leadership and broad engagement puts humanity on a more optimistic and healthy path towards truly inclusive global societies with equal opportunity to experience a reasonable standard of living in close connection with a healing natural world.
I was always clear that this outcome is far from certain.
High quality, effective leadership will nurture [The Great Reset] so that the best outcomes are realised to the benefit of humanity. Scoundrels will try to harness it to bend society to a more warped and less inclusive version. We all must show leadership and engage with the process to achieve the best outcome for ourselves and those we love, and those who succeed us. And we should all prepare to be flexible and supple in thought to make the best decisions that we can with the information that we have as we emerge from the shock of our altered existence and as our future comes into clearer focus.
Although I have devoted most of my time to thinking about how these changes will affect societies, and trying to play a thought-leadership role in helping to ensure the Reset is indeed Great for humanity, by necessity I have been contemplating broader impacts on those closest to me ranging from purely social through to financial.
Obviously a significant Reset within society has significant implications for investors. That includes every Australian due to our world-leading defined contributions retirement savings system.
In late 2023, after much internal processing, I decided on my own investment strategy and began implementing it.
Then I purchased a copy of Yanis Varoufakis’ latest book “Technofeudalism: What killed capitalism” and as I read it I found so much commonality with my own thinking that I became even more certain in my strategy.
Before I explain my strategy, however, I need to restate the salient points that I have already made in my various articles and writing including on LinkedIn, delving a little more deeply in places, and comparing and contrasting with Yanis’ thoughts.
As I have said previously on occasion, historically I have found much commonality between my investing views and those of Jeremy Grantham, so I should declare up front (again) a natural inclination to contrarianism, and I will discuss where I believe Jeremy’s base framing for bubbles is being and will increasingly be challenged.
Like Yanis, I have been observing strange movements in markets, and the actions of those in both private and public sectors integral to their function, with increasing suspicion over the previous decades. I need to say upfront that as an Australian our residential property markets have for all of that period been especially irregular such that we have probably the biggest ever national property bubble that has been maintained by intense management that has confounded even the great bubble spotter, Jeremy Grantham (more on this later).
I, too, decided through the pandemic that our economies were now underpinned by entirely gamed markets. I had increasingly realised over those decades that our markets were far from ‘free’ – and Australia’s residential property market is a classic case in point where both public and private interventions for two decades have been aimed at keeping homes unaffordable to the detriment of anybody who did not own property before the new millennium and including, obviously, future generations – but actions became so extreme in the pandemic that it was clear that our system could not any longer be considered true capitalism.
First I must be clear that in early February 2020 I anticipated central bank interventions which I said in my Coronavirus Update of 11 February would constitute “absolutely extraordinary actions (as opposed to the already “extraordinary” actions that we have become desensitised to over the last decade)“. Moreover, in “Repeat After Me, This Is NOT Sars: COVID-19 is much worse” I was clear that such efforts were reasonable on this occasion as “a financial panic on top of a growing panic about an increasingly obvious pandemic will be devastating” and that this is “why Governments, even though they always prefer to egg on markets, will be right in trying to prevent it from happening“.
However, to a wary contrarian those measures clearly went much further than were openly discussed within the broader market, and in Australia this likely involved making sure that banks lent heartily, generously and without fear of future reprisal for speculators to continue their two decade-long obsession with residential property, and in early February 2020 I even suggested that public and private institutions were at work preventing (or delaying) corrections in stock markets in less than transparent fashion.
For me the strange stock market behaviours in February 2020, when participants stubbornly refused to recognise and price in what should have been obvious to anybody with even a basic undergraduate understanding of epidemiology and biosecurity, was the final piece to the puzzle. I am certain that internally and within the investment banking industry there were many keyed into what was heading our way which I likened to an impending tsunami on a well-known Australian fund manager’s blogsite on 18 February 2020 with links to my “Coronavirus Updates” page where on 12 February I had explained the tsunami analogy.
At that moment in time, however, I was caught up in the emotions I drew on in my (ultimately reasonably successful) efforts to get politicians to act in the interests of broader humanity, exemplified by how I allowed my frustration to get the better of me in “Politics Vs Society In The Coronavirus Outbreak” and ‘wonder’ aloud whether we were already living in an “Idiocracy”.
Thus my processing of the socioeconomic implications of these odd market behaviours was more gradual than an actual ‘Eureka’ moment as Yanis described for himself. However, in the following months I came to realise that this was the definitive evidence that I had been looking for of the totally gamed markets I had been increasingly observing over the previous 2 decades because the only viable explanation was that elites who ran the market required a period of time to get their affairs into order prior to the sharp market correction commencing so the music was made to continue until they were ready. My insignificant affairs, on the other hand, only required me to buy regular put options which I had done by 7th of February (and I made 30x on the $5K I spent on them which amply covered the cost of provisions should things really fall apart, e.g. a generator – remember in those early months the best available data yielded a potential mortality rate range north of 2% – and provided a level of surety against lost family income if it came to that).
The evolution of my thoughts on contemporary markets, especially Australian residential property, are available in my electronic footprint including on my former blogsite homes4aussies and on the discussion board Bubblepedia, whatever remains of them, and over recent years at MacroEdgo where in May 2020 I described stock markets as uninvestable as they had been overrun by short term speculation, a view I reiterated in brief updates a year later and again in January 2022 where I spoke about other peculiarities such as SPACs – special purpose acquisition companies – and cryptocurrencies.
Another issue worthy of mention is that so-called private markets have expanded, one consequence being a drastic reduction in opportunities for everyday investors to buy early into new and emerging listed businesses whereby wealthy investors are holding these businesses longer to extract greater investment returns when they publicly list (through an initial public offering or SPAC) later at much higher valuations in large part because risk has increasingly been downplayed and underpriced.
It is true that the opportunities to invest in private markets have increased via private equity fund offerings, but this is little more than Visa and Mastercard extending conditions on platinum cards so that the ‘aspirationals’ feel special while these businesses clip the extra fund flows from expanding eligibility. Meanwhile, the truly elite clients have long moved onto other much more exclusive and rewarding product offerings.
This is also reminiscent of the situation with the private schooling market in Australia where many ‘aspirationals’ use up so much of their time and energy, and most importantly their emotion, earning additional income to pay for middle-class private schools that offer no real benefits above (almost) free public school education, other than self-perceived status benefits.
All of these ultimately are representations of the same pervasive phenomenon – the vacuuming up of financial resources to the truly elite in society, and when it comes to private markets, it is simply an additional channel by which naive funds flow is created which can be clipped providing real and enduring privilege to the elite class.
So I have declared my hand and by now it should be apparent that I am highly sceptical of contemporary asset markets, especially those for US stocks and Australia’s residential property.
Once you consider a market totally gamed and manipulated, then you have to accept that if you allocate capital within it then your activity is not really that of an investor, and depending on what assets you buy, might in fact be outright speculation even if some are considered by many at the time to be the premier assets of the era. It is not dissimilar to gambling in a casino when you know that the odds are against you, but maintaining a delusion that you have special (legal) skills that can tilt the odds in your favour.
This is pure speculation because the most important consideration relates to the degree to which the system will be gamed in the future. Will this extreme form of capitalism, or indeed technofeudalism, persist into the future or will society resist the trend and if so, do ordinary people collectively have the power to turn the system towards one fairer to all?
In the final part of this essay I will give my views on the politics inherent in those considerations, but I do not need to do that prior to discussing the details of my investment strategy because it is just that – an investment strategy – and by definition that rules out speculation.
Many markets are entirely gamed and overrun with speculation, and thus are massively overpriced, and chief among them in my sphere of observation are American stock markets and Australian residential property. Of course there are always exceptions, and what makes them exceptions is that they do not fit the prevailing narratives and practices of the era. In America that is a corporate structure that actually allocated capital to growing real businesses rather than borrowing to pump up share prices in concert with the narratives that the Wall St salespeople promulgate to create churn, often referred to as ‘rotation’, to create a continual flow of fees from clipping fund flows. The best example of capital allocation agnostic to the whims of Wall St is Berkshire Hathaway, and after the passing of Charlie Munger I have re-instigated a small position with the view to increasing that position with another catalyst sadly inevitable (I suspect that some of their significant organically-acquired cash pool will also be deployed at that time).
The remainder of my strategy should be seen through the lens of overlaying my views of the socioeconomic system of the times as discussed above with the 7 investment themes that I laid out in my earliest writing on MacroEdgo, those being: Emerging Asia ex-China; Product and Food Miles; Defence and Military Spending; Autonomous Vehicles; Debt Monetisation; More Time for Personal Fulfillment; and Education Revolution. Those views are amply stated and remain in tact, so I will not restate them. To this list I now add minerals and resources required for the energy transition, but in countries with high environmental, social and governance (ESG) standards.
As I discussed in 2019, my moral compass (no doubt ‘anti-wokes’ would say my ‘virtue signaling’) prevents me from seeking to profit from factors with which I vehemently disagree, so I will not invest in military spending (in Australia, America, China, or wherever), just as I decided against shorting through put options retirement homes during the COVID-19 pandemic in early February 2020 (to me it was perfectly reasonable to seek to profit from the inevitable massive impacts on entertainment, travel and general economic activity, but I did not wish to profit from the misery of vulnerable elderly people in society – I shorted Crown Casinos, Qantas and Macquarie Bank).
So my strategy is to invest heavily in equities (all with 10 years+ horizons), especially in 1) resources required for the energy transition in regions with high ESG compliance; 2) in Asia, especially developing Asia ex-China, but with more strategic allocations to China and Japan, with close observation of developing geopolitics; 3) slower-paced allocations to Australian and European equities when value relative to economic circumstances allow; and 4) very careful, very slow-paced allocation to US equity, but only when a history of capital allocation for growth rather than share price manipulation is apparent.
These investments are primarily through the lowest cost possible index tracking exchange traded funds (ETFs) with an ESG overlay. However, I do agree with the barbell approach advocated by many in that I have a ‘scattergun’ approach to making small allocations to highly speculative recent IPOs consistent with my long term investment themes in the understanding that many – perhaps most – will go to zero, but that even one that becomes a leader of future industries will have a very significant positive affect on the overall portfolio performance over a 20 year period.
I expect elevated inflation for at least the next decade, as central banks are well past their peaks in independence from prevailing politics of the day and will baulk at imposing the societal pain Volcker did to tame inflation, and will likely see positives to Government debt being monetised by a period of higher inflation. For this reason, and because I see bond markets as not far behind equity markets in the degree to which they are gamed, I am cautious of deploying capital to fixed interest and instead prefer allocation to precious metals to hedge against inflation and also against the potential for increasing civil unrest which is possible if this Reset is not great for humanity in that society becomes less inclusive and the climate crisis worsens with continued political resistance to implementing necessary responses.
This actually marks a change in strategy for me personally and that is primarily based on my views on the developing socioeconomic circumstances.
I was right out of the Jeremy Grantham mold of contrarian investing, alert to bubbles and prepared to wait out highly speculative periods to invest in the bust when better value emerges – even before I began reading Jeremy’s brilliant insights – e.g. I went to cash in 2007 and managed to get fully invested just a few weeks before the US indices bottomed in the GFC.
However, I have come to believe that markets have become so gamed that even the boom-bust cycle has been disrupted, as we have witnessed very rapid busts since the GFC when even Jeremy regretted not managing to get fully invested as markets did not get as cheap as he forecast. Since then the corrections have become shorter and shorter.
My belief that the nature of bubbles and their busts has fundamentally changed is heavily influenced by my observation of the Australian residential property bubble which has lasted two decades. Jeremy has never given an answer to why the Australian residential property bubble has lasted as long as it has. For one, I think he disliked being called out for his predictions of a bust by voracious local commentator, something that has been a feature of this bubble whereby self-interested individuals fiercely protected the bubble by trying to discredit and embarrass, often through challenging them to wagers, those who pointed to the irrationality of residential housing markets where median prices have consistently been 7 to 10 times median incomes in virtually every major city in a nation with so much available land that a historical national anxiety has been the low population density over the landmass. (These men, full of bravado, and lacking in self-awareness, also have a habit of tediously and immaturely labouring on about their ‘exploits’ even years later.) Perhaps, also, Jeremy didn’t like the only answer he could arrive at to explain essentially the only bubble that he has identified which has not returned to historical long-term relationships over a two decade period.
I explained my own views in “[RESET]> The ‘Great’ Australian House Price Bubble” which essentially boil down to it being a totally gamed market where the public and private sectors are hell bent on preventing the bust within a system of Extreme capitalism where society has been convinced that this is either the best situation for them (the ‘aspirationals’) or at least it is an insolvable problem (the ‘vulnerables’).
Importantly I pointed out the complicity of the highest financial bureaucrats, a major distinction from the US housing bubble where they were blissfully ignorant of the potential for and damage from a bursting housing bubble which caused the GFC. The most recent previous Reserve Bank of Australia (RBA) governor, Dr Phil Lowe, actually wrote a research paper when at the Bank for International Settlements, before the GFC, on the desirability of ‘leaning against’ property bubbles to reduce these risks and the RBA governor at the turn of the millennium, Ian Macfarlane, has bragged about using that approach to address a period of rampant speculation in 2003. Moreover, it is likely that it was Dr Lowe who wrote to me from an email account using his nickname of (Rin) Tin Tin to provide me with a paper empirically proving the degree of distortion to our markets caused by tax benefits to property speculators as he was rising through the upper ranks at the RBA and while I was blogging intensely on the housing bubble, suggesting that he had concerns then.
Sadly, however, that technique advocated by Dr Lowe of ‘leaning against’ – or slowing – the inflation of bubbles to prevent socioeconomic damage from a bust has been used, along with other activities by private and public actors, to perpetuate the bubble longer than any bubble spotter could have predicted, so that the socioeconomic damage to society has been far greater in terms of the inequality it has caused. Moreover, I recall that after the GFC many Australians senior within private and public sectors in the financial and real estate industry visited the US, as they were “feted by think tanks and idealized in the corridors of the Federal Reserve“, and it is my firm belief that much of that was to teach the Americans how to create and protect a housing bubble.
All in all, what has been perfected has been a set of practices, in conjunction with captured bureaucracy, that within an economic system driven by narrative-based speculation has managed to quell the busts so that the boom is perpetuated seemingly into perpetuity.
Now, I do not suggest that a bust will never occur. I strongly doubt that momentum ‘investing’ (i.e. trading) based on rotation following narrative creation and recreation can continue to carry assets prices forever beyond any relationship to their real value to human society. Even Australian residential property has a utility value, and even if Extreme capitalists continue to conspire to restrict its supply so that both renting and buying continues to become less and less affordable, at some stage people are going to realise that they can take their savings and emigrate to Italy, for instance, and buy a home for 1/20 the price, maybe with some land, and enjoy a quality of life far superior than in Australia struggling payday to payday to afford a roof over their heads.
In fact, I expect that a consequence of this gaming of markets is that busts when they do occur are truly historic, on the scale of those in 1929 and the 1990 Japanese collapse.
The simple reality is that bubbles, by their very nature in resulting from speculative euphoria tending to mania, are never accepted as bubbles until they bust. There is simply too much money to be made from denial or at least ignorance. Well-noted bubble spotters like Grantham and Yale Professor Robert Shiller have become known as ‘sages’ at spotting bubbles ahead of the bust only by being rapidly proven correct.
I suggest that the situation has changed, in no small part due to vested interests learning from the success of these two luminaries in particular, so that timing of the bust is far less predictable. I hasten to add that both Grantham and Shiller have always stressed that the timing of the bust is never certain, but both have been confident enough to speak up loudly and promote their views in the past. If I am correct and bubbles nowadays will behave more often like the millennium Australian residential property than the US housing or the NASDAQ dot-com bubbles, pronouncements of a bubble’s existence based on simplistic 2 sigma indicators of deviation from normal trends or relationships, while not incorrect in my view, will remain unproven by the bust for long periods which will allow the vested interests to undermine credibility and use the stopped analogue clock being briefly correct twice a day analogy more and more effectively.
Certainly global and regional events, and especially geopolitical events, will continue to cause reactions and even ructions in global markets just as COVID-19 eventually did. However, recent evidence suggests that the underlying market dynamics that I discussed above now act to reduce the duration, if not necessarily the depth of these ructions, so that confidence is rapidly restored to markets. Afterall, the worst outcomes for elites, and thus to be prevented at all costs, “is a dead market where nobody talks about asset prices and that will only be created by the depths of despair that are associated with a prolonged bear market“.
Others have and continue to take the opposite position to mine allocating to these momentum-based speculative markets, and have profited (at least on paper), so much so that the long record of price appreciation has reinforced the perception of the gaming of the system. For example, any deep discussion with an Australian residential property speculator will inevitably arrive at the underlying proposition that no government can afford for the bubble to pop on their watch so that it will be protected at all costs. In other words, in the speculators perception it is impossible for them to lose.
That clearly is not investing on the basis of the likelihood of future profits. That is speculating that the current inequitable system will be protected out of political and/or financial self-interest so that irrespective of profitability – and, in point of fact, because of Australian taxation laws, profitability of residential property ownership is actually discouraged – so that someone will pay more for the asset in the future.
That is not investing; it is certainly not efficient capital allocation; and thus, it is not authentic capitalism.
It seems appropriate, on many levels, to include here a favourite comment by Charlie Munger at the 2023 Daily Journal Corporation annual shareholder meeting when the then 99 year old legendary capital allocator (i.e. investor), and long time Republican supporter, highlighted just how far American politics and the socioeconomic system had shifted to the right in his lifetime. This is how I relayed it on LinkedIn:
In my opinion the best question asked of Charlie – on the basis that it elicited the most useful response from him, amongst a field littered with gold nuggets of valuable insights actionable to those able to decipher them – was sent in to Becky Quick from Peter Furland (?) from Oakville, Ontario after he had asked ChatGPT to devise the question:
“Mr. Munger, you’ve spoken about the importance of avoiding mental biases in decision-making. In your experience what’s the most challenging bias to overcome and how do you personally guard against it?”
Charlie answered, “denial”.
To prove his point on denial he used a common complaint from he and Warren Buffett; the example of fee collection by fund managers and other custodians of wealth.
His point was that 95% of money managers are “living in a state of denial”, “used to charging big fees and so forth for stuff that is not doing their clients any good” and he described it as a “deep moral depravity”
For me, however, the most critical point was made when he summed up by concentrating on how capitalism done properly is not selfish!
He highlights how he was careful not to misuse his various positions for personal gain, not even drawing directorship fees.
He and Buffett are famous for seeking to align their interests totally with those of the other owners of the business.
Furthermore he provided the example of how he provided an incentive share plan to employees of DJCO by providing his OWN stock, crediting the founder and Chairman of BYD [the chinese battery and electric car manufacturer] by saying he inspired him to follow his own generous actions.
Charlie concluded saying “so there is some of this old fashioned capitalist virtue left at Daily Journal, and there is some left at Berkshire Hathaway, and there is some left at BYD, but in most places everybody is just taking what they need without rationalising whether it is deserved or not“
In other words, the antithesis of Extreme capitalism. But it is exceedingly rare…
In recent years Charlie frequently expressed doubt in his ability to outperform the market if he started out as a value investor under these market conditions, and while Warren Buffett disagreed slightly, he only did so on the basis that there are a lot more people doing dumb things now which is how opportunities arise. Both arguments actually support my argument in that I suggest that in this Extreme capitalism there is a well developed strategy that permits stupidity to run a whole lot longer, delaying the consequences of that stupidity being revealed, and that is why value investors have had difficulty in getting fully invested over now very long periods.
To conclude, and inspired by that late great man Charlie Munger, for the same reasons I did not short retirement homes leading into the COVID-19 pandemic, and I will not invest in military, I will not invest in technofeudalism, and I will not invest alongside and support someone who seeks to use their technology-derived privilege to gain a level of influence over humanity that has never before been possible.
And boy will I miss Charlie’s frequent cutting take downs of Elon Musk…
Now I have to admit that, like everything, the changes spawned in America are being exported within their sphere of influence, and also in the increasingly separate Chinese sphere of influence in a cold war (which I spotted earlier than many others, only 20 years into it!) for technological supremacy, so if this trend continues it will increasingly be a feature also in the equity markets in which I am allocating capital towards and technofeudalism will be increasingly difficult to avoid.
Thus I must now discuss what I sincerely hope will happen from here, and to do that I will critique Yannis’ thoughts on his alternative ‘now’ and contrast them with my own views in an extension on my “Reset” writings.
I commend Yanis for proposing an alternate ‘now’, a different reality had humanity taken different paths in our progress, as I did myself in “Reset“. Moreover, I applaud him for developing a new authentically left idea which I concur is absolutely critical to progress from here because our politics has been dragged so far to the right that many of the most influential contemporary actors who declare themselves on the left of politics, such as the famous banker Jamie Dimon (long time CEO of JP Morgan), in reality express views which may be considered further to the right of even luminary rightwing leaders Margaret Thatcher and Ronald Reagan.
Topically, another who very recently insisted their politics are not rightwing is Bill Ackman after he played a major role in dislodging the first black Harvard President Claudine Gay from that position, after which he wrote 4,000 words which he posted on social media and included a view that diversity, equity and inclusion (DEI) initiatives amount to racism because “reverse racism is racism, even if it is against white people.” (I apologise for not including the primary source but I do not use or promote that particular platform because I am especially concerned about the mental state and motivations of that particular technofeudalist.)
It is by no accident that there are just as many wealthy elites who declare allegiance to the left of politics, but I mention the JP Morgan CEO intentionally because I do consider it the main learning of JP Morgan Jr from his experience under President Franklin Delano Roosevelt that it is not good for business elites when their wealth provides influence over only the right of politics. If wealthy elites are to continually influence policy irrespective of which side of politics is in power then there must be many who support and favour either side of the political spectrum, openly with rhetoric, and explicitly through sizeable donations.
I enjoyed reading Yannis’ ideas, and while I advocate their wide dispersal and debate, ultimately I am not anti-capitalist and I don’t accept that capitalism is doomed.
I do, however, absolutely agree that people power is necessary to break the connection between wealth and political power – in fact, it is the key to stable sustainable societies – and I believe that this is possible with much simpler modifications to our socioeconomic systems than Yanis outlines.
Of course donation reforms must be a key focus. All donations by individuals or organisations to any organisation, from political parties to education to non-profit, should be limited to very reasonable levels (perhaps a certain percentage of the median income so that targeted donations are ‘affordable’ to the median income earner).
Note carefully, this does not limit the amount that can be donated to a particular aspect or issue within society. However, there is no justification for favouring one entity or organisation above another within a sector. Whenever a choice is made to favour one institution over another it is done for self-interested reasons such as to promote one self and/or to buy influence.
Those who believe in a functioning democracy and want to contribute to it should do just that rather than weaken it by self-serving donations.
Those who believe deeply in the value of education or research can support education and/or research, generally, but not use their privilege to buy influence and ego-driven rewards from targeting donations to achieve maximum return to them.
Large donations to particular aspects of society – a healthy democratic system through to NGOs – should be encouraged, but cannot be allowed to be directed at the discretion of the donor, but instead should be pooled and allocated to all relevant organisations on the basis of fair and objective criteria.
On such a basis, political donations will certainly take an enormous dive due to the lack of opportunity to extract a return to the donor, and no doubt vested interests such as media organisations will moan at the certain reduction in revenue from political advertising, which will serve to prove the point that such measures are critical to cut the link between wealth and influence.
The other great deficiency in modern democracies is the lack of leadership.
Around two decades ago political leaders in capitalist democracies began acting like the private sector could and would solve all problems and so they stopped leading and instead concentrated on winning the political battle which centred around a continually shortened news cycle – from daily down to instantaneous (as social media grew in prominence).
Surprisingly, former rightwing government Treasurer of Australia and Ambassador to the United States, Joe Hockey, likely to the chagrin of former colleagues, admitted as much in February 2020 in an interview with Leigh Sales on television on the Australian Broadcasting Corporation (ABC).
Of course this leaves plenty of time for politicians to attend lavish galas and cheerlead for billionaires who are inclined to support ultraconservatives (in this case, Trump in the US as well as ultraconservatives groups in Australia) in some sort of mutual lovefest.
Now it is increasingly clear that the rudderless ship creates anxiety within society due to its inherent directionless/meaninglessness – the gap filled by people who provide certainty and strength of viewpoint but absent logic – and societies are paying a very high price for that lack of authentic leadership over several decades.
At the same time it is entirely unsurprising that politicians numbers and remuneration have not declined commensurate with their self-perceived diminution of role in leading society.
In fact these politicians still argue for greater benefits to attract and reward their individual ‘talents’, but it is not clear to me on what basis many of these individuals are talented. For example, if we look at the Australian treasurers over my lifetime – from the 70’s – I would suggest that the best by far was Paul Keating in the 80’s (others rode the coattails of his reforms and were more fortuitous with their timing than skillful). Keating is the only one among them to have not been university educated, in fact he left school at 14 and was a pay clerk for a utility company prior to entering politics.
It simply is untenable that we continue to accept ‘followship‘ from those we elect and pay to provide leadership to society. It is time that society imposes real key performance criteria on these individuals, beyond the ballot box, which are linked over the short, medium and long term to performance and outcomes, thereby aligning their self-interest fully with that of the society that elects them to privileged positions of influence.
To do this politicians generous benefits and privileges acquired both during and post their political careers should be closely linked to the outcomes experienced by broader society and those especially related to the affairs over which they had greatest influence. For example, all of those politicians who had influence over housing policy would be assessed on criteria relevant to outcomes in housing over the medium and long term, as well as to other areas of responsibility, and to a broad measure of societal welfare which would extend to all members of parliament.
Since this would necessarily encompass income and privileges received in their post-political careers – which in itself is more often than not directly linked to the privilege and influence that was enjoyed during their political careers – all income above that which sitting members of parliament receive would be paid directly into their ‘superannuation account’ where the balance would be adjusted on the basis of assessment of societal outcomes against those KPIs.
I am certain that such a plan would result in a great deal of complaining by current parliamentarians. I simply say that we will quickly learn who truly thinks they have talent and something to offer society as those who are there mainly out of self-interest will recognise that only those who achieve outcomes for broader society will be well rewarded, and even that will be assessed over the long term.
Let me be clear, in conclusion, that I really do mean well rewarded for achieving KPIs. For example, one of the most intractable problems in Australian society is disadvantage of our First Nations peoples which results in wide gaps in life expectancy and other life outcomes relative to non-First Nations people. Who really could argue that a group of people who came together and made a real contribution towards closing that gap do not deserve to be well rewarded financially for that? Certainly not me.
The reality, however, is that those who will achieve real progress will be driven by much more than financial rewards. But the simple fact is that having long-term rewards linked to long-term outcomes will decrease the likelihood of individuals driven by self-interest occupying positions which would be better held by individuals not driven primarily by self-interest, thereby creating conditions conducive for achieving inclusive progress.
We need to free our members of parliament from any whiff of impropriety, of any potential links between views they express and positions held by major donors to their electoral campaigns which leave them open to insinuation that they would support actions causing human suffering over doing right by those who elected them, or for broader humanity including groups on the other side of the world, such as the linking of higher levels of political donations to those who have supported actions which have led to over 23,000 innocent victims in Gaza, which some are labelling genocide and arguing as such in the United Nations International Court of Justice.
The only real way to protect parliamentarians from such poor perceptions of acting with callous disregard for human rights and societal wellbeing is to definitively and explicitly cut the link between wealth and influence over their actions.
If the ideas laid out above were our ‘now’, there would be no opportunity to suggest a level of self-interest by parliamentarians in supporting actions which hurt so many innocent and vulnerable human beings. Moreover, the longer these links remain eminently plausible without these reforms, the more trust in elected officials and bureaucracy will continue to erode thereby undermining social cohesion and, ultimately, the health of our democracies.
I cannot leave this discussion without picking up on one major point that Yanis misses – besides his decision to sidestep providing views on the personalities of high-profile technofeudalists and on whether the irregular market behaviours of 18 September 2022 perhaps were a part of an agenda to out a newly installed Prime Minister and at the same time elevate an elite of their own (a former investment banker) to the most powerful position in the UK – and this one is absolutely critical in this contemporary world.
In “Technofeudalism: What killed capitalism” Yanis essentially infers that capitalism, prior to being killed itself by technofeudalism, largely killed off the authentic left via the continual weakening of collective actions by workers. While that is correct, it lets the left off much too easily in terms of the major issues it chose to leave unaddressed.
Chief amongst those issues the left refused to address is racism, prejudice and bias.
Today this inability of the left to lead towards diverse, equitable and inclusive workforces in a globalised world is it’s major historical shortcoming, and this deficiency has left humanity weak and vulnerable to opportunism from the extreme right which is further eroding the left’s blue collar base. So in Chapter 7 ‘Escape From Technofeudalism’, where Yannis says “bigotry is technofeudalism’s emotional compensation for the frustration and anxiety we feel in relation to identity and focus“, he sidesteps the truth that the left put leading on diversity in the too hard and too risky basket and thereby sowed the seeds of their own demise. Earlier in Chapter 5 Yanis does express regret that “solidarity between the workers of the North and the South remains an entirely unfulfilled dream“, but he fails to identify the real cause – the workers of the North had no interest in global equality if it meant any reduction in their privilege.
The unavoidable sad reality for humanity is that xenophobic populism has been a force too tantalising in rapidly globalising societies for almost all political actors to resist and all too often it has been harnessed by the left to achieve political ends, also, from labour relations to trade to environmental issues (even in “big empty Australia“, in Sir David Attenborough’s words)… and even with regard to, you guessed it, Australian residential property.
The left needs to learn this lesson for once and for all and provide authentic leadership within this continual race and inclusion vacuum, and never sidestep or slide back from leading on it.
Yannis is entirely correct that the left has been an utter disappointment over the past half century. As strange as it seems to me, the political centre of most democracies has been pulled so significantly right of the 1960s/70’s centre that it has unleashed even more radical actors amongst the far right whose rhetoric suggests that the opposite has occurred, that our democracies have moved dramatically to the left. These actors have then used this political momentum to create coalitions of ultraconservative interests to attack ‘lefty woke agendas’ in a fear-riddled campaign with an underlying message that white masculinity is in a battle not just for relevance but for survival. Their campaign is so broad and clever to appeal superficially to large groups brought into this ‘anti-woke’ movement, for example black men concerned about a perceived challenge to patriarchy, without noticing that they, themselves, are hurt by the attacks on DEI measures to address inequality which is another aspect of the anti-woke agenda.
My prediction from the moment that I realised that we were in a Great Reset has proven accurate to a greater degree than I could foresee at the time, that the battle for hearts and minds would be incredibly intense. I have written optimistically that the goodness at the core of the human experience would triumph over hate and division, and my concept of how Resets occur in society being like the change in swing of a pendulum allows for a period where all seems uncertain as the direction appears undetermined.
I am concerned, however, that those of us on the left who love and believe in inclusive and open-hearted humanity perhaps have too much optimism in it so that we almost believe it is inevitable that it will endure and overcome. While I have a deep belief that goodness always prevails, we also need to recognise that humanity has shown on innumerable occasions that it is capable of inflicting untold sorrow upon itself before enduring progress is achieved.
The far right is well organised and has an enormous head start in the tussle for hearts and minds, and if it weren’t for the goodness at the core of the human existence, we would be in so much worse a position.
But it is time that we stop taking for granted the triumph of good over bad, love over hate, and unity over division.
It is time that the left coalesces and develops a grand coalition that will dwarf the true ultraconservatives – which is really only limited to the minority of human beings belonging to the straight white male demographic group who choose to remain closed off to connection with themselves let alone broader humanity and the natural world – and lead humanity towards that more inclusive and compassionate future that offers the only real chance at achieving stable and sustainable lives for ourselves, those we love, and those many beautiful human beings yet to enter the world we leave for them.
MacroEdgo 
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