Last week convicted fraudster and one time Australian national hero Alan Bond passed away. In many respects Bond’s rise, fall and comfortable dotage tells us much about Australia today.
Originally born in England, Bond was a ‘ten pound pom’ – like this writer and two of Australia’s last three Prime Ministers – whose family took advantage of subsidised immigration programs to leave the cold climate and dismal British economy for sunnier, more prosperous parts.
Building the Australian dream
In Australia Bond prospered. On leaving school he became a sign writer and set up a business where he quickly gained a reputation for sharp practices and cutting corners. However as with much of his generation real wealth was to be made in property speculation.
As Australian cities expanded through the 1960s, developers and speculators were at the forefront of the nation’s economic growth. Perth, Bond’s home town, doubled in size between 1961 and 71 and the once dodgy sign maker made his mark as a wheeler and dealer as he traded properties and build his fortune.
As the 1980s began a cashed up Bond was ready to take advantage of the economic orthodoxy of the time that to compete internationally, Australian businesses had to consolidate domestically to gain the scale required to be global players.
Bond added to his claims in 1983 when he wrested the America’s Cup out of the cold dead hands of Long Island’s Newport Yacht Club. Suddenly businessmen were the national heroes and Australians, particularly politicians, fell over themselves to bask in the glow of the nation’s entrepreneurial summer.
Dancing on the world stage
Around the time of the America’s Cup win the newly elected Hawke Labor government deregulated the Australian banking industry providing a ready supply of hungry financiers prepared to fund the global ambitions of Bond and his contemporaries.
The rest of the decade saw Bond leading a wave of Australian entrepreneurs using easy money to build international empires. Bond himself ended up building one of Australia’s brewery duopoly, holding prime Hong Kong property, buying the nation’s most popular TV station and owning a Chilean telephone company.
Naturally much of his money ended up in Switzerland and Lichtenstein, something that would work in his favour early in the 1990s.
The larrikin streak
Bond’s disregard for the law, investors and anyone unfortunate to get between his cronies and a bag of money – politely described as a ‘larrikin streak’ by many – continued as regulators and governments indulged his behaviour.
One good example of the free pass he received from Australian regulators in the 1980s were his insider dealings with his then mistress Diana Bliss, the latter of whom exquisitely timed a purchase of a small energy exploration company stocks in 1988 a week before Bond Corporation announced a take over offer.
Eventually the 1980s Australian economic miracle and the entrepreneurs leading it proved to be chimeras based upon property valuations. When the 1990 downturn hit, the rampaging Aussie business heroes all quickly fell as their overindebted empires collapsed.
Bond’s personal fortune however survived thanks to his judiciously salting away assets controlled by loyal advisors. His 1994 bankruptcy hearing ended in farce when he successfully convinced the court he was suffering dementia and couldn’t remember anything of his business dealings.
He couldn’t stay too far ahead of the courts however and ultimately Bond served two prison terms totalling four years for dishonestly pillaging companies to keep his operation afloat.
At the same time Bond was being chased through the courts, Australia’s banks were licking the financial wounds incurred from their irresponsible exposure to the nation’s entrepreneurs. The lessons they learned define modern Australia.
Bearing the brunt
The country’s small business community eventually bore the brunt of the Australian banks’ losses as lenders’ balance sheets were rebuilt through high interest rates, massively increased fees and charges and tightened lending criteria. Many of those high fees and rates continue to cripple Australian business twenty-five years later.
Adding to the Aussie small business sector’s woes, the 1998 Basel I Accords were coming into force favoring property lending over business finance. Increasingly it became harder for any Australian businessperson to raise money from local banks while property speculators were welcome.
Over the next twenty years the result was stark. One chart from the Macrobusiness website illustrates the huge growth in Australian residential property lending and the stagnation of business finance since 1991. Only at one stage, in 2008, has business lending matched the levels of the late 1990s.
That shift to an economy based upon property prices, particularly speculation on residential accommodation, has served Australia well with the nation not experiencing a recession since the 1990s downturn.
The Australian economic miracle
Australia’s success allowed Reserve Bank governor Glenn Stevens to sneer in 2010 that Microsoft founder Bill Gates’ warnings about the Australian economy lack of diversity were misguided and foolish – the mining boom coupled with never ending property price growth guaranteed the nation’s prosperity.
In this respect, all Australians have become Alan Bond. Just as the bold riders of the 1980s boom based their future on property valuations so too have Australian households and the entire economy thirty years later.
Hopefully for Australians in general it will end better than it did for Alan Bond in 1996.
One though should not weep too much for Alan Bond, after being released in 2000 he quietly rebuilt his empire and in 2008 BRW magazine estimated his wealth at $265 million and named him among the 200 wealthiest people in Australia.
Time will tell if Australians share the deceased tycoon’s luck but in a way we’ve all become little Alan Bonds now in our dependence upon the valuations of our real estate holdings and the indulgence of those financing our lifestyles.
It may well be having a few bob hidden away in Switzerland might the best way for Australia’s indebted homeowners to protect their future.
Today’s links include a look at the complexities of the Charlie Hebdo discussion, how Lithuania intends a passive aggressive response to a Russian invasion and how Winston Churchill was not always Britain’s most admired figure.
Having the Russians occupy your country is a living memory in Lithuania. With the troubles in the Ukraine, the Lithuanian authorities are planning for a future invasion. Their advice is to be passive aggressive.
It’s been a tough week for Apple, after the spectacular launch of the iPhone 6 the company has had two humiliating and worrying setbacks that indicate standards may be slipping at the once untouchable giant.
Both problems, or all three problems if it turns out the stories of Genius Bars charging to replace damaged phones, show Apple isn’t paying attention to detail to the degree they’ve become known for.
The botched iOS8.0.1 rollout is sloppy work while the bendable phone is very much an uncharacteristic lapse in design.
For a premium brand with a large dose of arrogance, shipping defective products is both an embarrassment and damages the company’s name.
This inattention to detail is horribly reminiscent of Microsoft’s horror days at the turn of the Century where the company repeatedly rushed incomplete products to market — Windows ME being the most notorious example.
So maybe we are seeing Apple become the new Microsoft and the iPhone 6 Plus as the Windows ME of our time.
That doesn’t mean we’ll see the end of Apple, Microsoft is still a huge corporation, but it may be the tech industry’s most iconic business is beginning to lose its edge.
Linda’s concern was based around our talk on 4D printing and the future of design and she’s absolutely right – life is going to be totally different by the end of this century.
We won’t be the first generation to experience such massive change to society and the economy, our great grandparents at the beginning of the Twentieth were born into a world without electricity, the motor car or antibiotics.
Those who survived the two world wars and lived to a ripe old age in the 1970s saw life expectancy soar, childhood mortality rates collapse and the western economies shift from being predominately agricultural to mainly industrial and service based.
From our position, it’s difficult to comprehend just how radically life changed in western countries during the Twentieth Century.
When we wonder where the jobs of the 21st Century will come from, it’s worth reflecting that many careers we take for granted today didn’t exist a hundred years ago and the same will be true in a hundred years time.
The technology we’re using may be new, but adapting to massive change isn’t.
Yesterday’s passing of folk singer Pete Seeger at age 94 is a chance to think about old age, the Twentieth Century and how we use technology might be restricting us from seeing the opportunities around us.
As the ‘Weeds’ opening credits imply, we are probably more conformist today than our grandparents were in the 1960s.
In business, that conformity is born out of modern management practices that insist employees be put into their own ‘little boxes’ – if you don’t tick the right boxes then the HR department can’t put you in the right box.
With big data and social media expanding, increasing computer algorithms are used to decide which box you will fit into. One of the boxes that managers and HR people love ticking is the age box.
Little Boxes’ writer Malvina Reynolds would never have fitted into one of the modern HR practioners’ little boxes as she only entered the folk music community in her late forties.
Despite being a late bloomers, Malvina wrote dozens of folk and protest songs through the 1960s and 70s – The Seekers’ Morningtown Ride was another of hits – before passing away at age 77 in 1977.
Were Malvina Reynolds born 60 years later, she would expect to live to at least Pete Seeger’s age and expect to switch careers several time during her working life.
Modern age expectancy means the modern workplace’s age discrimination and the box ticking of HR managers is unsustainable; there’s too much talent being wasted while individuals, business and governments can’t afford to fund a society where the average person spends the last thirty years of their life in retirement.
With technology there’s no reason why a forty year old air pilot can’t retrain to be an accountant or a sixty year old farmer get the skills to become a nurse, the very tools that are being used to keep workers in boxes are the ones that enable them to break out of those boxes.
Similarly modern technology allows an accountant, farmer or young kid in an obscure developing nation to create a new business or industry that puts the box ticking HR managers in downtown high rises out of work.
Just as today’s box ticking manager might be confronted by a threats they barely know exist, so too is the business that spends all its time looking at data that confirms its owners’ and executives’ prejudices.
Life, and data, doesn’t always neatly fit into little boxes.
In many ways this parallels the original Special Economic Zones set up by the People’s Republic of China at the beginning of the 1980s – these areas’ separate legal, immigration and economic status attracted foreign investment and trigged the economic boom that’s seen China become one of the world’s biggest economic powers.
Just as manufactured goods were the key to the nation’s development 30 years ago, today it’s information as the PRC leadership works on moving China up the global value chain.
For a nation of knowledge workers to succeed, the workers have to have access to knowledge.
It’s claimed the humble fax machine was responsible for the fall of the Soviet Union, how true that is open to debate but an open flow of information is never good for those who rule without the support of their citizens.
With the explosion of Chinese social networking sites, it’s become harder for the government to control the flow of information between citizens and the opening of the internet in parts of Shanghai is another small change.
How the Chinese Communist Party manages to keep the support of its increasingly affluent and better informed citizens will define the course of 21st Century history.
As China shifts from being a low cost manufactured goods supplier to a more sophisticated, diverse and expensive economy the government has no choice to face these challenges.
Beijing’s cadres would be hoping our children aren’t talking about Facebook in 2012 Shanghai in the same way that we talk of fax machines in 1982 Leningrad.