Family secrets and economic growth

Most families have secrets that have been kept behind closed doors for generations. It could be that your grandparents lived happily together for 50 years or more, brought up their children extremely well (careful – it’s your parents you are judging here!) and contributed to society to the day they died but were never married. The ‘shame’ of being not married would have removed any respectability that the family had managed to gain should the secret have ‘come out’ when they were young. In other families, it could have been that Nana was a few years older than Gramps, that either of your grandparents had been in trouble with the law before marriage or horror of horrors, that your grandparents conceived a child before they were married. In the ‘good ol’ days’, it was assumed that two people of the same gender were living together for years were doing so for economic reasons as they couldn’t find a partner. In 2018 it doesn’t matter if they are together for economic reasons, are partners or married for that matter. Apart from the elimination of adverse psychological effects because people don’t have to hide information that really is no one else’s business but their own, it is a demonstration that times move on and social norms change over the years.

So far the change in society’s norms in terms of personal relationships over the last 100 or so years has not lead to war, famine or pestilence. Your local community continues to function despite the number of people who aren’t living in the ‘traditional’ environment of years past. Your local community is probably better for the skills and diversity different lifestyles bring to it.

Earlier this year a small group of the usual conservative political culprits formed a ‘group’ to promote the use of coal in Australia. They decided to call themselves the ‘Monash Group’, in memory of Sir John Monash who was a General in World War 1, known for alternative solutions to seemingly intractable problems while looking after the people in his charge. Following the war, he produced a lot of the intellectual wherewithal that ensured Victoria was a manufacturing powerhouse in Australia for most of the 20th century. Monash led the development of coal power stations in Victoria, which at the time was innovative.

While there is probably no concern for most of us, it’s a shame that the names of people like Monash don’t have some form of trademark protection as
Seven members of the Monash family wrote to ask them to stop using the title. It was not just impolite, they wrote, but inappropriate and incorrect for a forward-thinking intellectual and scientific general and engineer such as Sir John to be associated with the group's plans. Such a man, they explained, would not have favoured propping up old technologies that science would not support, and which could require substantial subsidisation to profit.

"At the very least,” they said, “it was discourteous to use it without informing us. More than that, we disassociate ourselves specifically from the forum's use of the Monash name to give their anti-science and anti-intellectual argument an air of authority and we ask that they withdraw the name.”

They continued: "While Monash himself was no left-wing radical in his personal politics, he was intellectual and scientific. He certainly led the development of coal for power generation in Victoria for the benefit of the community, but that was in the context of the time almost a century ago, when coal-fired electrical generation was the leading technology.

“We are sure that, today, he would be a proponent of the new technologies, eg: wind and solar generation, rather than revert to the horse-and-buggy era.
Would Monash support the use of brown coal in 2018? We’ll never know, but chances are his family have a better idea than Abbott and his pressure group’s version of reality.

Business is no better than politics. As politicians and business have told us over the years, business in general is there for the good of society and won’t do harm if left alone. As a result, there has been an ongoing and gradual reduction in regulation of business and the gradual building of the attitude that the business must maximise short term profit at all costs. Let’s look at a couple of examples.

There is a small shopping centre close to my house. It has a mid-sized Coles Supermarket, a butcher, bakery, chemist, medical centre, dentist, a couple of cafes as well as some other services. There is a major shopping centre about five minutes’ drive away and one of Brisbane’s behemoth shopping centres about 10 minutes further away (depending on traffic). Until recently, the local centre had a nice ‘feel’ where the small store owners seemed happy, staff and customers seemed to genuinely prefer to go there and while it didn’t have the ‘wizz-bang’ features you would expect to attract customers, it seemed to be well supported.

Recently, the ownership of the local shopping centre changed hands. The first sign of change was the installation of ‘3 Hour’ parking signs to, it is claimed, reduce commuter parking. Now while there are a few bus routes that stop outside the centre, it is by no means one of Brisbane’s ‘every 15 minutes or better’ services and there is no advantage in parking at the shopping centre to catch the bus, as each bus that will stop at the centre continues down the main road to the terminal a few kilometres away.

Also claimed on various social media groups is that shop rents will go up as soon as the lease is renegotiated and the new owners have made various demands that change long standing practices of some of the tenants at the centre. While social media is not necessarily all that accurate, some of the shop owners have suggested to me that they will have to seriously consider the economics of renewing their lease due to financial considerations. So it seems that if the new owners continue to attempt to ‘sweat’ the last dollar possible out of the local shopping centre, gradually the quality and quantity of services offered will fail and reduce the number of customers, reducing the incomes and financial viability of those that are left.

At the moment we are being given graphic detail on a daily basis of the various misdemeanours or worse perpetrated over the past decade or so by the banking and finance industry. Years ago, banks had a reputation for looking after their customers and while at times it was hard to accept that the bank wouldn’t lend you money for some investment that probably didn’t stack up financially, sometime after the event most customers could see the reason for the decision. Bank staff used to have some prestige in the community as fair and ethical dealers as a result. While generalisations are dangerous, the Royal Commission seems to be discovering that in more recent times, that at least in some banks, management expects the staff to promote the investment that doesn’t stack up financially.

While misappropriation of Sir John Monash’s name for something he would probably attempt to distance himself from is sadly almost expected from politicians, why is business seemingly tarred with the same brush?

Surely, retention of a customer who is happy with your service is a far easier task and has the prospect of greater profitability to you than continually needing to attract new customers to retain your customer base. A few weeks ago in passing, we discussed Johnson & Johnson’s ‘Credo’, which has been hanging on walls in company offices and factories since 1943. As their website suggests, the ‘Credo’ was written
long before anyone ever heard the term “corporate social responsibility.” Our Credo is more than just a moral compass. We believe it’s a recipe for business success. The fact that Johnson & Johnson is one of only a handful of companies that have flourished through more than a century of change is proof of that.
Yes, there is a requirement for the business to make a profit in a responsible manner – the alternative is to go out of business, however in the words of Johnson & Johnson
We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services. In meeting their needs everything we do must be of high quality. We must constantly strive to reduce our costs in order to maintain reasonable prices. Customers' orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to make a fair profit.
Think about it for a minute. That is the blueprint of a successful business, not getting every cent they can in the short term with no regard for the morals of their actions or the long-term profitability of the concern. A successful business doesn’t have to continually attract new consumers because they don’t annoy their existing customers to the extent that alternatives are found. At times Johnson & Johnson products may not have been the cheapest or best fit for the consumers but their reputation for good and honest products would ensure that there are repeat sales anyway. You could argue Toyota works on the same principle. Their vehicles may not be the best or have the latest advances in technology, but they offer an honest product that ‘does what it says on the box’ without apparently fleecing the consumer during the initial purchase process or after the initial sale.

Years ago, this seemed to be far better understood than it is now. Even in the days before “consumer rights’, most industries had some government department or external body that regulated the operation of business. While regulation of business does cost money for both the business and the (usually) government agency that was tasked to oversee the industry, it is also clearly obvious that the morals of a lot of business have also changed for the worse since the regulatory oversight bodies were either disbanded or reduced to a minority role. You could say the changes for the good in our society when it comes to acceptance of individuals in ‘unconventional’ relationships (anything but the family where the male partner is a year or two older than the female partner) have not been reflected in the changes in corporate and political morality. And the same corporate entities have successfully run the case they do care about the consumer so they don’t need regulating!

Johnson & Johnson claim on their website they were cognisant of corporate social responsibility before the term was invented. In other words, a long time ago one of their senior management realised that sustainable profit will enable the company to continue long into the future. Sustainable profit is not trying to win every last cent from the consumer or trying to run the opposition into the ground but making enough for a reasonable return to the shareholders after the payment of all the costs involved in running a business. While a lot of Australian business operate on this basis, the Royal Commission into banks and finance is a demonstration that some in the finance industry don’t. The example of the local shopping centre demonstrates that the finance industry is not the only offender. The recent successes of the ACCC against Ford and Telstra also illustrate the point.

While the social norms of our society have changed for the better and people can now generally live their lives without fear of continual discovery of ‘dark secrets’, it’s a shame that corporate and political norms appear to be heading the other way. For each voter who is angry that the promises are not matched by the reality, each tenant that leaves the local shopping centre or customer that moves to a smaller (and seemingly less corrosive) financial institution, the management have to find two new customers to deliver the conventional economic reasons for the political party, shopping centre or bank to exist – increased popularity and growth.

Perhaps sustainability is more than an environmental term. Sustainable economic growth (or in the politicians’ case, presenting a rational argument rather than tearing the opponent down) where everyone in the supply chain is rewarded appropriately will lead to greater prosperity in the future.

What do you think?

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Thank you for your incisive piece.

It is a shame that corporate and political norms are heading downwards.

The obscene findings of the Royal Commission on Banking have exposed corporate dishonesty and criminal fraud in financial services to be the norm. The malfeasance of executives, the so-called pillars of our financial system, who have knowingly, deliberately, and arrogantly perpetrated these misdemeanours, has shocked everyone, except of course the culprits, who knew what was going on all the time.

If the mafia or a bikie gang had committed these crimes, nobody would have been surprised, but when they were committed by those we have trusted all these years, we were shocked.

As these scions of society have set such an appalling example, it is no surprise that the events affecting your local shopping centre, which you describe so poignantly, can actually occur.

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