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.

And that powerful politician answered to my face the question that I had posed to him as the Treasurer of the country, along with Prime Minister Rudd, and Anna Blye (then Qld Premier, now head of the bank lobby, of course) in a letter as to whether negative gearing might be restricted to new builds before being eliminated.

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) …

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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© Copyright Brett Edgerton 2024

The Problem:

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!)

In fact, the first old coach I heard talk about how these rule changes would affect the game in a way he did not agree with was Graham Lowe back in 1996 when he was coach of the NQ Cowboys, as I said in my first article on the topic “On the 25 Year Bastardisation of Rugby League To Appeal To People Who Do Not Love The Game” in 2021.

Following are the specific changes.

10m rule with increased ruck speed

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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© Copyright Brett Edgerton 2024

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.

Of course I do not suggest that everyone is racist, but I do know that very many are, and I know that it is the dominant majority within society that truly knows the breadth if not necessarily the depth of prejudice and racism even though most will never acknowledge it. Moreover, I am unafraid to state it as a matter of fact.

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.

As I have explained previously in detail, I favour quotas as a critical DEI measure but many approaches must be considered and enacted.

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.

Extreme capitalists’ disagreement with economic justifications for DEI relate to scepticism of the arguments or analysis, and I note that you, Mr. Musk, also linked the well-publicised engineering issues at Boeing with their DEI policies.

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).

That final quote is from “Woke AI” at MacroEdgo.

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* 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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© Copyright Brett Edgerton 2024

A 20 year perspective

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
• My submission to the ‘Henry Tax review’.

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.

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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?

This has become the ultimate weakness of the Australian economy in this new millennium.

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.

Let’s recall, then, that 2018 was the year of the Royal Commission into Misconduct in the Banking, Insurance and Financial Services Industry. The public push for a banking royal commission was prolonged but resisted by the political class until ex-investment banker Prime Minister Malcolm Turnbull was left with no alternative but to give the go ahead in December 2017.

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!

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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.

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*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.

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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…

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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).

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© Copyright Brett Edgerton 2023