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Exposing the 'game of mates', with Cameron Murray
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Cameron Murray is an Australian author and economist, who specialises in property markets, environmental economics and corruption. His latest book is titled ‘Rigged: How Networks of Powerful Mates Rip off Everyday Australians.’
It’s an extraordinary and shocking story of how boys clubs and backroom deals have come to dominate business and government in Australia, robbing ordinary Australians of half of their wealth.
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Buy 'Rigged' here.
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Transcript
Introduction and Subscription Offer
00:00:00
Speaker
Today's podcast is all about rorts, con jobs, and dodgy deals. There's one deal you can trust. A digital subscription to The Spectator Australia is just $16.99 a month, with one month free to boot. If you're enjoying Australiana, you'll love the insightful articles in the magazine each week, which includes Australian political analysis in addition to all of the great content from The Spectator's UK edition. Sign up at spectator.com.au forward slash join.
Introducing Dr. Cameron Murray
00:00:42
Speaker
G'day and welcome to Australiana from The Spectator Australia, a series of conversations on Australian politics and life. I'm Will Kingston. My guest today is Dr Cameron Murray. Cameron is an Australian author and economist who specialises in property markets, environmental economics and corruption.
00:01:01
Speaker
I was compelled to reach out to Cameron after reading his latest book, Rigged, how networks of powerful mates rip off everyday Australians. It's an extraordinary and shocking story of how boys clubs and backroom deals have come to dominate businesses and governments in Australia, robbing ordinary Aussies of half of their wealth. Cameron Murray, welcome to Australiana.
00:01:24
Speaker
Thanks for having me,
What is 'Game of Mates'?
00:01:25
Speaker
Will. So the title of your book is Game of Mates. That's as good a place as any to start. Tell our listeners what is the game and more specifically, what are its core components? Yeah, so the game of mates is...
00:01:40
Speaker
essentially how we describe with my co-author Paul Freiders, the process of what we call gray corruption. So a lot of attention gets put on bribery and very blatant corruption. And the game of mates is how we describe gray corruption, which is sort of this pattern of repeated and reciprocal favors amongst selected people over time.
00:02:08
Speaker
That's why it's a game and the purpose of the book is to help people identify the game so we go around different sectors of the economy and explain how the game works but also extract some general principles of how the
Gray Gifts and Favoritism
00:02:23
Speaker
game is played.
00:02:23
Speaker
All right, so there are essentially four ingredients. The first one is what we call a gray gift. There's no gray corruption unless you've got the power over society's resources to allocate something valuable to someone that doesn't cost you personally. I'm assuming it's called a gray gift because it may sometimes not actually be illegal. It's in that shade of gray, which is a bit harder to determine.
00:02:47
Speaker
Exactly the point. So at the end of the day, politicians and bureaucrats have to decide who gets a construction contract, how something's going to happen and where the city is going to expand with upzoning, what they're going to build in terms of infrastructure, so which landowners near that infrastructure benefit.
00:03:05
Speaker
The decision has got to be made, right? But you can compare the decisions that do get made with more of a randomized decision-making process and see that there are some pretty obvious patterns of who ends up getting a train line built to their suburb, which developers seem to get their roads upgraded or upzoned and those sorts of things. So, the gray gift
00:03:26
Speaker
is how we describe a discretionary ability to allocate society's resources to benefit someone else and we differentiate that also from what you call a private gift where if i give you something of value it literally cost me the exact same amount so if i'm giving you a birthday present spend a hundred bucks it cost me exactly a hundred dollars to give you a hundred dollars.
00:03:45
Speaker
But if I'm a politician or a bureaucrat deciding on a particular construction contract, I can decide to award you a contract that should cost 1 million, but you've put in a price of 1.3 million, right? And so I can choose you, give you that $300,000 premium and not cost me personally a cent. The rest of society is going to pay that 300,000 premium to you, but I get the discretion over the decision.
00:04:08
Speaker
So that's the great gift, and these are hard to spot, right? That's why we spend some time in the book drawing out the idea that when you have personal discretion over something of value that the rest of society is giving, then you've got a favor that you can start trading.
00:04:25
Speaker
Yeah. That's the gray gift. And without this, you know, in a world without gray gifts, if every time I tried to favor my mate, it cost me exactly exactly that amount. Personally, it's not really a lot of incentive to be corrupt or or to give favors and reciprocate favors because nothing is really a favor. It all costs me exactly what it benefits you.
00:04:44
Speaker
Yeah. We'll go into more detail on what those gray gifts can look like. You said there are four elements to the game. What's next?
Networks and Loyalty Signals
00:04:50
Speaker
The gray gifts are the first ingredient. The second ingredient are the mates. You need someone to give a gray gift to who is going to reciprocate. So there's no point in me, for example, as a politician, as a bureaucrat, making decisions that favor a certain person. If we don't have this sort of friendship network.
00:05:11
Speaker
Right? Where I expect that person to reciprocate either back to me directly or indirectly through other people in our friendship network, let's just call it. So you need this group of mates because it's, and that's what differentiates Grey Corruption or the game of mates from bribery, for example.
00:05:30
Speaker
where bribery is I pay you upfront and you deliver me a favor, right? So your gray gift might be worth a million dollars to me. It doesn't cost you anything and you'll take a price of a hundred thousand dollars as a bribe, right? So you get a hundred thousand, I get nine hundred thousand net. That's bribery. But the gray gift is all about being on credit.
00:05:48
Speaker
So that when you give a favor, you've got this group of mates and within that group, these favors are repeatedly allocated back inside the group instead of outside. So as a collective, we end up capturing the value from all those gray gifts and all those subjective decisions about allocating society's resources.
00:06:08
Speaker
I have the image of the Eton suburb Sydney private school network in my mind. Is it that simple or is there a less obvious group of mates here that I'm missing? It can be that simple. In fact, we talked about private schools in the book saying in, for example, the United States, it's more of a university thing. And hence getting into one of those prestigious universities is highly valuable because of the network that you get once you're in there. But in Australia, that network is more of a high school network.
00:06:34
Speaker
That's certainly true. But it's also the case that some of these groups sort of form for other purposes initially and then evolve into being these professional networks. You can think about clubs and churches, cricket clubs are famous in Sydney for being places of networking and golf clubs. And although it's not that membership of that club itself, which is part of the mateship network, that's one of the ways you access it or become a member.
00:07:02
Speaker
Which actually leads nicely to the third ingredient, which is a signal that you want to be part of this mateship group, right? It's important that we don't accidentally give out favours to people who aren't going to reciprocate, who aren't going to be part of that group over time. All of whom they expose you.
00:07:19
Speaker
That's the risk you give a favor to the wrong person they feel like they can get some credit for dubbing you in and that becomes a huge mistake and that risks you and the other mates in the group so like any social creature.
00:07:35
Speaker
We have an elaborate signaling network it's almost like the peacocks of corruption here we've gotta show people our true colors to show that we want to be members of that club that we're gonna be loyal that we're gonna reciprocate now that can be as simple as political donations and we call this sort of expensive signaling burning money.
00:07:54
Speaker
Basically, you want to show that, hey, I'm willing to just throw money away to prove loyalty to you so you can donate to political parties, you can join the right professional groups, you can join the right golf clubs. And the more of these you do, the more credible your signal becomes because you've already invested a lot of money for no reward. The reward being acknowledgement that you're part of this group. So, you need some credible
00:08:19
Speaker
signals and sort of one of the ways, one of the puzzles we try and resolve in the book is political donations. A lot of analysis and a lot of the anti-corruption thinking amongst the legal profession in particular is that political donations are bribes, right? You essentially give 20, 30,000 to a political party or 100,000, whatever it is, and you expect a particular favor back for that. But of course, one of the problems with that
00:08:46
Speaker
is that it's not clear that donating money to a political party is really a good bribe, especially when half the donations in Australian politics are from donors who donate to both sides of politics equally. So it's not really convincing to me to say, hey, I'm going to help out your campaign by giving you $50,000 if you do me this favor. Oh, sorry. But I'm also giving your opposition $50,000. So the net effect is that you're no better off than they are.
00:09:14
Speaker
in your campaign right so that's a real puzzle like why would you do that if these are bribery attempts you're essentially by donating to both parties you're undermining the effectiveness of the bribe to one of the parties right because it's less valuable to them because you're you're also donating to their competition
00:09:29
Speaker
So, I guess the solution to that puzzle is that if political donations are not bribes, but actually signals about wanting to participate in this mateship network, then the point is it's not about giving you an advantage. It's simply about giving away money and it doesn't for no return. So, it's the very fact that I dropped 100,000 on each political party that shows, hey, he's dropped $200,000. He gets nothing for it.
00:09:56
Speaker
The net effect on changing the political outcome is zero. He must want to participate in this game. He's shown he's willing to burn money. The analogy I like to use is that political donations are like the facial tattoos of the political mafia. They're like a high-cost thing you do to show loyalty. The biggest donors in the country, the Pharmacy Guild and things like that, they donate equally to both sides and have done for decades.
00:10:19
Speaker
And the reason is they're showing they want to participate in this game and when there's a great gift to be give, they want to be on the receiving end. That's interesting. So we have a slightly dodgy gift potentially. We have a group of mates that's willing to accept it. We have a signal to suggest that there is a willingness to receive this favour. What's the final element of the game?
Myths Justifying Corruption
00:10:39
Speaker
Well, the last element is what we call a myth or a story. You can't just say, hey, upzoning me is good because I want to make money, right? I'm not going to flood the market and bring prices down. Or you can't just say paying me this much for this contract is good because I'm a nice guy and we're mates. You need to essentially hide this activity behind a shield of a plausible story that the rest of the public can
00:11:04
Speaker
see and go, oh, yeah, it kind of makes sense that politician really should have discretion over that decision and do it arbitrarily rather than requiring some kind of randomization or some kind of jury of peers, something like that. No, no, no, we can believe that. So this myth making becomes this really important ingredient. And a lot of the lobbying in Australia is really about myth making to keep up appearances that this game of mates, which is good for all the insiders, should continue and that it's actually good for outsiders because we've got this sort of
00:11:33
Speaker
plausible myth for why that's true. And that sort of covers your tracks at the end of the day. And that's the final ingredient. I found that ingredient particularly interesting because it forced me to reevaluate my own thinking on my own worldview. When I started reading this book, I responded instinctively by going, well, that's just kind of the way the world works. And having read that final ingredient, I realized, well, that's probably the reason I think that's probably because that mythology is so entrenched that it has conditioned me to think that way.
00:12:02
Speaker
Well, I think that's true. And I was very much like you. I sort of took on face value what the press reports and what the lobby groups say, thinking that there must be some merit to this. You've got this organization of people employed making these arguments and participating in the political debate. You can't all be for show.
00:12:20
Speaker
Now I really see it for what it is and I find it very difficult to take any of these stories told by vested interests in the policy debate. I find it very difficult to give any credibility to any of it when at the end of the day it's obvious that it's all talking their own book. And unless for some random chance you get a retired politician, quite often I've noticed politicians who retire or heads of organizations that retire become very honest all of a sudden.
00:12:48
Speaker
when there's no benefit for them continuing to participate in this game. And that's an interesting glimpse, I think, into how substantial the myth-making can be and how loyal people can be to it for decades until really they become honest right at the end of their lives.
00:13:05
Speaker
You alluded to this at the start of that answer and how your mindset has evolved on this topic. What got you interested in this? Yeah, that's a great question, Will. I think mostly I used to work for a couple of property developers in Queensland and I went to one of those well-networked private schools and I'd worked in the government and I'd seen, for example, the staff rotation from the regulator into the lobby group and the regulated sort of industry representative and back.
00:13:35
Speaker
And all of that had really, you know, hadn't quite pieced it together, but these are all signs that a lot of economics and a lot of what I've been doing is very much swept up in this game. And I'd really like to do something useful. I actually decided to become a medical doctor before I did my PhD on grey corruption, because I thought at least then I can get up every day and do something useful for someone.
00:13:58
Speaker
Whereas I feel like I'm swept up in this myth-making game, part of the game as an economist. But I eventually got convinced by Paul Fried as my co-author, who was then my PhD supervisor.
00:14:10
Speaker
who wasn't yet my PhD supervisor to come and do a PhD and sort of unpick what I've been observing and see if what I was thinking made sense or didn't or whether there was better ways to think about these processes. And the book, which is by the way now called Rigged, which is the second edition, came out last year in 2022, that book was sort of the result of my PhD of all the things I'd looked at that
00:14:34
Speaker
potentially didn't get into academic papers, but I thought it was really useful to help communicate all the things I'd learnt in those four years.
Potential Misuse of 'Rigged'
00:14:41
Speaker
Were you and Paul concerned that this could be used as a handbook to play the game better?
00:14:47
Speaker
Yeah, I actually pretty early on had some comments from people saying, hey, this is a good how to guide for building networks in Australian politics. And I guess, yeah, my response to that is that, well, they don't really need the book, right? You learn on the job. And the fact that I have articulated what people happen to learn by doing don't think really changes the process. But what I think it does and where it's valuable is
00:15:15
Speaker
somewhat changing the mindset, particularly of lawyers who are involved in anti-corruption policy, who are very much not thinking along those lines of a long-term game of reciprocity where you can get a favor today, have no exchange of money and get a favor reciprocated, not even from the same person, but a related person in that group in five or 10 years time. You know, you're almost giving the favor on credit.
00:15:43
Speaker
Right. And you're relying on that network as your sort of credit enforcement mechanism. That idea is really absent in our legal thinking about corruption. So we're actually very good at dealing with bribery and nepotism and really some of the more basic corruption I would call it. Basic corruption is a good word, but we're not really good at this more structural institutionalized gray corruption.
00:16:06
Speaker
And the thing is, the value of those gray gifts can be orders of magnitude bigger with gray corruption than with personal or basic corruption.
00:16:15
Speaker
So if I take a bribe from one contractor for one thing, okay, they might benefit a million dollars here, a million dollars there. If all of the senior bank staff rotate through the regulator and exchange favors and work to draft the banking regulations over many years, well, the gains, the value of the great gift there can be hundreds of millions amongst a small group.
00:16:38
Speaker
And this goes to the costs of the game and according to the research and the modeling you've done it's enormous in fact you say in the book that.
Critique of Political Decision-Making
00:16:45
Speaker
The game potentially costs everyday Australians roughly half of their real wealth potential criticism could be that ever since the days of marks people have been bashing capitalism with lines like this is what you're proposing a critique of capitalism.
00:16:59
Speaker
No, not really. In certain areas, we are sort of critical of, for example, universities and public sector institutions. And in other areas, we're critical of the sort of relationship between public regulators and private institutions. And I think it's a pretty pragmatic look. So in terms of that cost estimate, the way we sort of go about it is we go through a bunch of sectors of the economy, mining, banking, property, transport, infrastructure, some of the main gains.
00:17:29
Speaker
And we compare the way Australia operates to the world's best in that area. And so by comparing us to the world's best, we sort of create this artificial utopian alternative that no country actually has because the best banking regulated country is not that great at everything else as well. And compared to that, we think, hey, that's an ambitious benchmark that we should be aiming for because we know we can make big leaps towards that sector by sector at a time as we change things.
00:17:59
Speaker
So in terms of capitalism, the critique is more about the structure of decision making in politics. So we err towards things like lotteries and juries where we realize as a collective, we have to make a decision about something. We have to decide if the city expands up the coast or down the coast.
00:18:17
Speaker
And when we decide that the infrastructure we build is going to advantage some landowners over others. So we have to make that decision. So should we let the decision makers be former property owners from those areas who've rotated in and become sat on the board of that committee?
00:18:33
Speaker
Or should we say, hey, why don't we have a panel of random citizens like we have in the criminal court who can discuss or judge for themselves? Or why don't we, when we're giving out certain contracts, just get a short list of people so it's easy to get on the short list and use a lottery system. For example, you know, giving out grants at university. That's closer to home for what I do these days. It's very much about insiders giving grants to people and topics they like the research on.
00:19:02
Speaker
And the obvious solution to that as well, we allocate by lottery. You get your short list of applicants and then it's a lottery for this year. And that allows you to get some fresh eyes, fresh blood into that decision and means that the decision makers don't really have a great gift to give because they're not really making a decision about who gets a million dollar grant and who doesn't. They're just operating the lottery. I imagine a response to that could potentially be that that's not a meritocratic approach that people with less worthy causes are getting grant money. How do you respond to that?
00:19:31
Speaker
Yeah. Well, I think the risk with that approach is that you end up back into the myth making situation and the person you give it to, obviously you think is the most deserving. So you then tell stories about why that's true. Of course you must because that's the person you chose. So for sort of your internal mental consistency, that's what you do. And I think we just have to acknowledge that we have to design a system that's meritocratic.
00:19:58
Speaker
knowing that the people in the system are human beings with personal biases who are seduced into these games of reciprocal favor trading, this game of mates. And then if you think about it from a system design perspective, you would say, hey, the lottery there is meritocratic because on average people get the same chance at winning.
00:20:18
Speaker
Yeah, that's I think a nice nuance and we'll get back to what your proposed solutions look like at the end. But I want to now go to a few examples of the game in action, taking that industry view that you, you take in the book.
Corruption in Property Development
00:20:33
Speaker
Let's start with property development. What does the game look like in property?
00:20:37
Speaker
Yeah, so the gray gift in property is what we call the golden Pentec, which is where you get a new regulation, a new town planning rule that means that the land you bought that was cheap because it was, for example, zoned for agricultural uses.
00:20:53
Speaker
Now gets the golden pen tick and the planning system says, hey, now you can do a residential subdivision. You didn't have to buy that right to do it because you bought the right to operate an agricultural business. But now we're giving you that for free. And so the game there is all about persuading decision makers in councils and state governments to upzone areas where you have property rights.
00:21:16
Speaker
And that can be very valuable. And obviously, this is my background in property development. So what we sort of did to illustrate this, and it's in the book was also part of my PhD, is in Queensland between 2008 and 2012, there are a series of ups earnings where the state government power from the councils and said, hey, we want these to be high density, fast track,
00:21:38
Speaker
New areas and what was interesting about it is if you looked at the map the shapes of those areas were very bizarre right it's not obvious why they were drawn that way why they weren't three times bigger and so what we could do is look at the landowners who were just inside that line on a map you got the benefit of now being able to develop bigger and faster and with fewer regulatory controls.
00:22:00
Speaker
and the landowners who are next door or across the road who happen to just have essentially the same merit, right, for being upzoned, but happen to miss out there on the other side of the line. And the question was, is it a characteristic of the land that determines where these areas are, or is it the characteristic of the land owner? And I initially thought that looking at political donations and the landowner registry and matching all this up, that I would see that political donations mean that you get the line drawn around your block of land.
00:22:29
Speaker
But it wasn't so. What we ended up having to do is look a bit deeper. We looked at clients of professional lobbyists. There's a register of those. We looked at corporate records of landowners that were companies or organizations. And we looked at form of records of state politicians, biographies. And we mapped this relationship network of over 250,000 relationships for 12,000 individuals and companies.
00:22:52
Speaker
And it was quite interesting because what you could do is then once you saw this, it was very easy to predict where that line was drawn on the map and who got up his own by where the property owner was in this relationship network. And so that's sort of indicative of this mateship network, right? That where possible, where you've got this discretion, do I draw the line here or the line here?
00:23:13
Speaker
here, you make sure you include your mates. And so the other interesting part about that is those same measures of connectedness in the social network have been used by social scientists to look at the Italian mafia and the Japanese Yakuza for organized crime gangs to predict who has the highest incomes in those criminal gangs. Right. So the more well connected you are in the criminal gang, the higher essentially the more money gets sucked up towards you through the gangs operations.
00:23:43
Speaker
So there's something innate about how we structure human relationships in this unregulated human world, right? Where it's hard to enforce contracts, right? The mafia can't enforce contracts with each other except internally. And it's sort of the same thing with the game of mates and these gray gifts. You sort of have to rely on those signals to enforce or learn who to favor and who not to favor.
00:24:06
Speaker
The analogy or the comparison with criminal organizations is a fascinating one. I'm curious, this isn't an economics or a political question. This is almost a question around morality. As you've gone through this work and you've seen those types of comparisons, has your view on human nature changed as you've learned more about this?
00:24:23
Speaker
That's a funny question and I think I can now see more the benefits and the risks to human nature. I guess I can appreciate it more because in a world without gray gifts, where gift giving cost me personally, these networks still exist.
00:24:43
Speaker
Right? Friendship networks and family networks, and you build up trust, and as a collective, the benefit to every individual is high, even without great gifts and not being corrupt at all. Right? So, I see that as a real positive insight into human nature.
00:25:00
Speaker
And now and i guess what i can do also see the risks of that where we don't design our decision making about how we allocate resources collectively so that really deep part of human nature doesn't end up sort of costing out the rest of us right where where you don't end up with a group of mates who happen to be able to give great gifts doing the same thing as we do in our personal lives.
00:25:24
Speaker
So I guess I have an evolved view of human nature. I don't think I've become more cynical. I mean, I'm more cynical of reading the press and taking the myth making seriously, right, of certain interest groups. But in terms of human nature, I guess I appreciate the social, the ingrained sort of social ties that we build automatically.
00:25:46
Speaker
And that's also worth reflecting. The game of mates is not, I try to say it's not a conspiracy. We didn't sit in a room to do this. It's just human nature means we're very good when we get looked after by someone, recognizing other people in our groups and looking after them and feeling good about being part of a tribe.
00:26:04
Speaker
We don't have to sit in a room and tell each other, this is what you do, this is what I do to get to that point. So that's one of its greatest benefits in terms of personal friendship networks and building trust in communities. But then, you know, there happens to be risks as well.
00:26:18
Speaker
Some governments around the world have recognised that human psychology and human nature plays a large role in decision-making, and they've tried to put in place behavioural psychology or behavioural science as units within government to recognise that. I think of the Nudge Unit, which is now very well known, which is part of the UK government decision-making,
00:26:39
Speaker
I'm not sure actually if we have an equivalent in Australia, you might be able to help me there. But do you think those sorts of units are effective? Pretty sure we did get on board with that nudge trend about 10 years ago, maybe in the Productivity Commission or something like that. I guess my attitude to that is more, there are good insights.
00:26:58
Speaker
For example, I think one of the changes we made is when you do your tax return, it actually tells you how your taxes are spent. When you get your return, you go, this is retirement, this is unemployment, this is the military, this is whatever. With the inference being that if you can see where the money is going, you're less likely to be dodgy on your tax return.
00:27:19
Speaker
Yeah, correct. You're sort of saying, oh, I've stolen from these recipients of this money if I am dodgy. So that's exactly right. And so all those small insights are really good, I think. At the end of the day, my fear is that in general, a lot of political decisions are made and laws passed that really don't consider economic incentives.
00:27:43
Speaker
And not just the basic sort of textbook economic incentives, but there's more social incentives to how you gain the system over time. And and that's a bit of a worry. And I guess that's also why we wrote the book to sort of demonstrate that sometimes you write laws for so that some person has this discretion so that they can be accountable for what happens. Right. But maybe that's not the best outcome for society. Maybe you just want
00:28:10
Speaker
We're sort of big on randomizing decision makers and big on randomizing decisions themselves to just remove that gray gift ability. But that hasn't quite been picked up too widely and doing stuff like that overcomes a lot of biases and nudge issues in general anyway.
00:28:28
Speaker
To make this real for our listeners, you actually mentioned a couple of well-known names, specifically in the property sector. Campbell Newman and Flahn, there was a couple of others. Can you give an example of what it looks like in practice?
00:28:40
Speaker
Yeah, so it works in both ways, right? So politicians have incentives and so do organizations in regulated industries. Some listeners might be familiar with Springfield Land Corporation. So Springfield's a suburb between Brisbane and Ipswich that was bought by Maha Simathambay for $7 million in 1990 or so. It was a former federal government military base, I believe.
00:29:04
Speaker
And no one wanted this property because it didn't have any road connection. It needed a huge amount of investment in roads and drainage and clearing. So no one really wanted it. But Maha embarked on a fairly long period of lobbying and donating to politicians and hosting events and really doing that signaling game to say, hey, I'm the person who's worth favoring here.
00:29:27
Speaker
and ultimately got council and the state to decide to include roads through his land on their capital works programs and then later he got a four-lane highway widening to his property and then a rail extension with two stations and remember this is just one suburb master plan subdivision he got a rail extension with two train stations
00:29:53
Speaker
and a four-lane highway when only 20,000 people were living there and at the same time at the Sunshine Coast there were 200,000 people living there begging for a rail extension and a highway upgrade at the same time. So it turns out that Maha had various, I think he had Campbell Newman do some consulting work, he had various senior bureaucrats and former heads of department come and sit on his board and do other sorts of things in his business to sort of
00:30:19
Speaker
reward those decisions with later, I'll go out on a limb and just say token jobs, right? Jobs for the boys, I think is the term. How could I forget? Yeah, that's exactly right. That's how it works. And that process has taken 30 years and there are still people with sort of outstanding IOUs from that process, right? Who are likely to be favored and back and forth. So, you know, had we instead, for example, you know, tossed a coin to decide which train line to extend.
00:30:48
Speaker
You know, maybe the Sunshine Coast would have a rail extension, but we didn't. We used the minister's discretion and the minister's discretion had, you know, being a human being was about a bit of loyalty, feeling good, looking after your mates, telling those same myths, sort of buying into that story. I mean, the more interesting part there is I worked with a journalist uncovering, you know, how much the state government had spent on this guy's subdivision in terms of roads and whatnot.
00:31:13
Speaker
And the really funny thing is that it came out in a trade magazine that all these numbers this journalist had got from the state government records. And then Mahasanathanbe said, take this down or I'll take up a defamation suit against you.
00:31:30
Speaker
Right, really playing hardball just for revealing this thing because that's sort of a taboo, right? The myth making is all about hiding this and providing a cover story. And we were doing the opposite and signaled that we're real outsiders. And, you know, if you let us get too carried away, we might expose more favors. And so he felt the need to threaten us with the defamation suit with some really dubious claims that certain things have been misreported, which weren't even in the in the article. Right.
00:31:59
Speaker
And it's funny, and the funniest part about that, sorry, and that's in the book, is how he brags about using frivolous lawsuits to get his way during this project. So he recounts in his own book, he wrote a motivational sort of self-help book about how to become a billionaire. And in it, he explains how he was going to go broke because he owed all these builders money and he didn't have the cash flow early on in this project. And so he said,
00:32:25
Speaker
Well, the only solution of that was to take up a legal case against them for poor quality completion of their construction contract so we can defer paying them. And he literally brags about it in his book, which sort of shows the sort of mentality involved when you get sucked into this game that when we come along and say similar things, we're outsiders and we get cast out in lawsuits against us. But when he brags about it, he feels like he's talking to his other insider mates.
00:32:55
Speaker
about it and so he can write it in his book. Well, I can say with absolute certainty that spectator Australia journalists wouldn't be cowered by that form of intimidation, which is a wonderful segue to say that for just $16.99 a month with one month free to boot is a wonderful deal. I strongly suggest everyone listening gets a yearly spectator Australia digital subscription.
Critique of Compulsory Superannuation
00:33:17
Speaker
Now, Cameron, the superannuation industry you have said is almost the emblematic example of the game in Australia. Before we get to how that actually works, I was interested in the quote that you included in Rigged.
00:33:32
Speaker
from roskitens and ross says the government compels employers to take ten percent of their workers wages and this over the financial services industry then look the other way while these fat cats rip off the mugs the government has delivered into their hands i take it from the inclusion of this quote in your book that you're not a fan of compulsory super is that fair.
00:33:54
Speaker
Yeah, if anyone follows me on Twitter at Dr. Cameron Murray, you will be bombarded with arguments against superannuation. Before we get into the game, tell us your ideological position on that, because I do follow you on Twitter and I have found it absolutely fascinating. I think our listeners will too.
00:34:13
Speaker
Yeah, so it's funny, you know, I was raised in a pretty, not conservative, like politically, but socially conservative household. And that basically, you know, thought that saving was good and virtuous and compulsory super seems sensible. And I didn't put a lot of thought into it until I started really studying it in more detail and came to the conclusion that this system doesn't do anything.
00:34:39
Speaker
that it's claimed to do. My position these days is that the ideal retirement system is what we have minus superannuation, essentially an age pension for everyone, probably with a little bit more adjustment for renters versus homeowners so that old age renters.
00:34:55
Speaker
And probably with a retirement age at 65 or younger, we've just increased it up to 67. And that would be completely fine because the super system is extremely expensive in terms of management. It doesn't achieve the insurance function. So for example, people who don't earn a lot of money during their working life don't benefit from it. So it doesn't like redistribute money around the community.
00:35:20
Speaker
What would you say to someone who says that a poor person saving a little bit for their retirement is better than a poor person saving nothing at all? Yeah. Well, I would say, you know, it's even better than that. Having a collective insurance system, just like a poor person doesn't have to save up in case they crash their car, they can buy insurance. So they're not out of pocket at that point. And essentially their car is fixed by the premiums of other people in the insurance pool.
00:35:44
Speaker
We can do better than individual savings for retirement, just like we do better for in insurance generally. And you know what? The broadest pool of insurance at a national level is going to be the most efficient way to do it. So that would be my point. And I think my other part of my response to poor people saving a little is good. The bottom 25 to 30 percent of households, when they age onto the age pension, get a pay rise.
00:36:08
Speaker
So they earn more. When they get onto the age pension, they earn the year before. So the question you've got to ask is why would we have a system that makes them poorer when they're poorer than they are on the age pension, right? Which we already think is pretty basic. And that's also true of even younger people. So if you're in your 20s, let's just say you're 27, you've got three kids at school or young kids, right? And you got, you know, one income earner.
00:36:34
Speaker
At the same time, we're saying, hey, we're going to give you a family tax benefit because you don't have much enough money because you've got five mouths to feed, whatever. We're also saying, but do you know what? You've got too much money. So we want 10 percent of it as well for super like it can't be both. Right. So economists call this the income smoothing function of super, whereas you save during your peak income years for retirement years. But the problem is that's not how it works. It's saved every single year.
00:37:00
Speaker
when your peak income is actually age 45 to 60. So the optimal super is actually borrow money from your future self when you were young, when between 45 and 60 save 40% of what you earn, right? And then use that again later. That would smooth your lifetime income the best, right?
00:37:20
Speaker
So there's a whole bunch of things that Super doesn't do. It amplifies all the working age inequalities into retirement. The tax breaks are just a huge upward distribution of wealth. So predominantly, the tax breaks go to people who weren't going to be on the age pension. And it barely shifts anyone off the age pension anyway, even after 30 years. And all projections are for that to continue. And I've just gone through, so I've got two kids in high school now. I've just gone through this stage of, why are you taking all my money?
00:37:48
Speaker
I'm in the highest expense period of my whole life. The probability of me even aging to be on the age pension is only like 84%, right? So I've got a one in seven chance of dying before I can get the age pension. And you're telling me the optimal thing to do is be poor while you have young kids in a lovely family and can't buy a house so that you've got an 84% chance of, you know, having a few dollars extra then.
00:38:14
Speaker
It didn't make sense to me then. It still doesn't make sense to me now. The myth-making around super, and this is the perverse part for me, is that the notionally left of politics has sort of taken on board this idea of privatized tax-advantaged retirement systems as its key policy platform.
00:38:37
Speaker
And I guarantee you, if this was a Liberal Party policy, okay, Labour would be out against it. They would hate it. This would be the first thing they would want to get rid of, right? But, you know, politics is not about principles. It's about people. And historically, the Labour Party
00:38:55
Speaker
you know, now has union members and organizations benefiting from this system. I think it was you who made the observation on Twitter that Périté's suggestion of basically kind of a copayment for putting some savings away for your kids' education was effectively super for kids. And the Labour Party opposed it, and that's despite being firm advocates of the superannuation system.
00:39:21
Speaker
Yeah, exactly. So the New South Wales Premier proposed giving every kid born in New South Wales like a few thousand dollars at birth or a few hundred dollars a year each year till they're 18 and then using that for, you know, education or housing or whatever the purpose was. And that's also perverse because at the end of the day, you're essentially just giving 18 year olds money, but you've got this accounting trick to do it at different points in time. Had he come out and said, we want to give 18 year olds 10 grand each, right? He would have been laughed at.
00:39:47
Speaker
but he's dressed it up like this, taken advantage of the sort of labor party myth and said, hey, this is essentially your policy, still couldn't sell it. Yeah, that's sort of emblematic of when we get sucked into policy debate by taking the myths and the stories that get told by these interest groups seriously and not being able to sort of see through it to see the content of a policy, which is sort of
00:40:09
Speaker
What I've spent the last 10 years learning to do and it's very difficult right because people like to talk about the social aspect of it and like talking about the political drama of it and it's very hard to sit down and go. How is this decision made who does it who's responsible what mechanism exist to hold them to account and so on and so forth.
00:40:28
Speaker
It's part of the broader trend, which I think has been one of the real tragedies of the last 10, 20 years. And that is turning politics into sport. And now you no longer evaluate particular policies based on their merits. It's overwhelmingly whether or not they come from the left or the right side of politics, and then you retrofit your principles to support what is now your team.
00:40:53
Speaker
Yeah, look, I totally agree about the sport aspect. Can you just remind me to come back and talk about this values and identity-based stuff? But you reminded me of a Jerry Seinfeld bit where he talks about sport and how in professional sport, players will just change teams from one week to the next. And he says, at the end of the day, you're not cheering for a team, you're cheering for laundry.
00:41:20
Speaker
for the clothes they're wearing not the players of the team right so and i think that's what politics has become like like it's very superficial returning for the laundry we're not concentrating on the game and so the football analogy would be.
00:41:35
Speaker
How are the rules enforced? Do we draw referees from the countries playing the test match? Or do we draw random referees from third-party countries so that they're not biased when they're refereeing the game? How do we do match review? Is this rule efficient? Does it increase the speed of the game or lead to more points? We need to focus on that substance. And my experience
00:41:59
Speaker
is that there's another distraction apart from the laundry and the political identity, and that distraction is sort of a value identity-based thing. Like, I'm a person who thinks this, therefore this. And we saw that actually this week. I think it's Julie Collins is the minister for housing in the federal government at the moment, a Labour Party minister who's trying to push this housing future fund. And she, this is the line. It was like, well, you
00:42:22
Speaker
You either believe that Australians deserve housing and you're for this policy, or you don't believe this and you're against it, right? I'm like, but the content of the policy is unrelated to whether you believe this. If you believe people deserve housing, it doesn't mean this is a good way to get it because you actually have to understand the content and the mechanisms drawn into the law and how it's going to play out and the incentives for the participants involved. And you don't even seem to care.
00:42:50
Speaker
And I was actually giving expert testimony to the Senate inquiry a couple of weeks ago into that. My impression was a lot of the senators didn't even understand what was written in the bill. They kept saying, oh, this is secure long term funding insulated from politics. And I'm like, can you point to the paragraph? Because what I see is high risk funding.
00:43:12
Speaker
That's insecure, where you defer decisions to future ministers and basically grant them all this discretion while also limiting how much they can spend with discretion. You have no sort of mechanism to force them to spend, you have no particular types of ways they can spend and which ones they can't. You know, you're representing this as the exact opposite of what's written down, but no one seemed to care.
00:43:34
Speaker
It's really hard because if you're the type of person like me who now really cares about the content of what's there and I don't, I just do not care about the politics anymore. I just, I'm disgusted with just about everyone and it's very hard. You know, you, you kind of feel like the world's going crazy. And in fact, it's one reason I propose actually having the upper house be just a random drawn. Like a jury is for a criminal trial, just literally just pick people out of the street.
Impact of Identity Politics on Discourse
00:44:00
Speaker
Cause at least then they don't have this,
00:44:02
Speaker
baggage of being loyal to a party or loyal to these mates and they just, they're going to be more representative of Aussies, they're going to have more common sense rather than this sort of like, I don't know what you call it, intellectualizing political brain that you get. I think the experience of the last 20 years of people like Ricky Muir and Jackie Lambie and just non politicians who got there, look, they gave it a good crack.
00:44:22
Speaker
I don't agree with them, but if I had 70 or 80 of them have to hash out what they think makes sense, gee, I think we'd get some really, really different policy settings.
00:44:33
Speaker
Yeah, I agree entirely. There was an elephant in the room there as you were speaking, and that was the voice debate. I think the exact same thing is playing out in the voice, where unfortunately, there are too many people who support the voice that say, agree with this legal change, or else you are a racist, or else you're a bad person. We saw the same thing in Brexit. It's a real tragedy for the way that we talk about politics, and unfortunately, it doesn't seem to be ending any time soon.
00:44:57
Speaker
Oh, look, I'm 100% with you. And on the voice, look, I've just not been able to say anything because I feel like it's just this shadow boxing. It's this pretend game to keep the media entertained, right? There's no substance to it. On the one hand, it's going to be really, really important, right? The voices, this representative body is going to have all this power. And on the other hand, it's not going to have power because it's not going to undermine other power. Like if this is the state of the discussion, I'm just not going to participate.
00:45:24
Speaker
I'm a trained economist, so sometimes people misread me into thinking I'm a big lefty and I want the government to fix things. Well, I want systems that work, and sometimes that means some subsidisation, and you don't get that voluntarily very much, right? So, yes, governments are going to play a role.
00:45:45
Speaker
But and I also think that dealing with issues close to where they are is best. I really don't see a body sitting in Canberra helping out back Northern Territory Indigenous communities. Yes. Right. We've tried lots of different things. I just think keep trying. Right. I'm really wary of people very far from an issue sort of saying I stand up for these people.
00:46:06
Speaker
So that's a general rule. I don't even know what's going on in the voice because it's so bizarre. So it's weird. We're going to go through all this cost and hassle of dealing with the voice. I wonder how many schools or teachers or how much care can be given
00:46:24
Speaker
to actual Indigenous youth in areas to sort of integrate them and get them off the street, occupy them, give them some future possibilities. People say there's a tension between, oh, they're just living on welfare or whatever. I'm like, yeah, but OK.
00:46:39
Speaker
But if they ultimately get a better life in the long run, that's an investment. I'm fine with it. And if you're still going to say that, well, how's the voice going to change anything? If when I propose something practical on the ground, you know, you're going to say no anyway. So these are all the puzzling things that go through my mind and why I don't sort of get bogged down in that.
00:46:57
Speaker
But I'm surprised how many people do who are otherwise politically seen astute by our political standards, but then waste all this time on these signaling games and these sort of media sideshows.
00:47:11
Speaker
Yeah, I agree. And as an aside to our listeners, we have Warren Mundine coming on the podcast in a couple of weeks who would share a few of those reservations about The Voice, no doubt. So look out for that one. A couple of final questions,
Cultural Conformity in Australia
00:47:23
Speaker
Cameron. The first, and this is something which I thought was really interesting in your book, is how the game has changed the cultural fabric of Australia. Talk to us about how you think this game does affect our culture.
00:47:38
Speaker
A few things are the sort of the undermining of the sort of larrikin risk taking to be more towards like loyalty conforming approach, which is you could over read into this, of course, but you know, it's entertainment also the podcast, so we'll go with it.
00:47:56
Speaker
But you can sort of see that in the less risk taking in business and the corporate culture because, you know, you really don't want to upset the apple cart. You just want to keep playing this very basic, you know, dig holes and trade houses or whatever predominant things in the Australian economy. So I think a little bit of a lack of dynamism on that from that loyalty culture. In general, it's a bit conformist in that way, I would say. What would be your thinking on the culture?
00:48:25
Speaker
Yeah, I agree entirely with the larrikin instinct in Australia slowly fading away. And I think whilst this isn't a direct cause, it is swimming with that same current, which is a real, real shame. The impacts on our politics are really clear. I think this is another perverse incentive to encourage mediocre people into politics. And I think it's obvious to anyone with a pulse now that the quality of politicians
00:48:55
Speaker
is really, really poor. You can look at some things like increasing pay, but I think to your point, improving the systems in which politicians operate would be a really good way of then trying to improve the nature of people who are involved.
00:49:09
Speaker
Yeah, look, I think you're right. And actually, I tell a lot of people, so there's this idea that when John Howard was in government for a long time, the Labour Party loyalists would say, oh, we just need to get those guys out and get our guys in and we'll be fine, right? I'm like, okay. And then a lot of independents and minor parties think, well, we just get rid of them and get our guy in.
00:49:31
Speaker
And again, the point being is it's not about an individual, right? Eventually, if that individual doesn't really have enough power to get change or doesn't have a really strong agenda that they're just going to push for and then leave, retire, they're going to get sucked in as well. And so it's really, as you say, it's about systems and why I'm such a big fan of just randomly appointing people to things or making decisions by lottery. That's one of the reasons.
00:49:56
Speaker
My final question is one in which I ask you to take off your economist hat and put on your hat as a parent. You mentioned that you've got two kids in high school at the moment. Would you be encouraging your two kids to play the game or would you be encouraging them to stand up against the game?
00:50:14
Speaker
Look, that's a really good question because the personal game where you look after your friends and the problem there is that when you're very good at that and it's subconscious, if you end up in these positions of power and these gray gifts, then you can't stop doing that because that's what's ingrained.
00:50:31
Speaker
So I think I'm just going to try and tread that line of like, look after your friends and your family, but be aware that there's a social responsibility where if you have power over the resources of the community, you know, you should, you've got to be able to tell your friends know just about and say, look, this is, you know, draw a line. And it's really hard. Look, I've been involved in community groups. I've been, I tried running for politics a couple of times thinking, oh, someone's got to put their hand up.
00:50:57
Speaker
And it's really hard. And in fact, one of the ideas in the book is when we have these public committees or bureaucracies decide on essentially allocation decisions, gray gifts, granting contracts, et cetera, perhaps we could make them private as well as random, because if you are put on this and you're seen not to favor your mates, then it's very hard decision to make, even if you had a reason for wanting to, or even if you think it's in the best interest.
00:51:23
Speaker
So sometimes anonymity can have some benefits also. So again, it's very tricky and I'm very much a experimental type person. I think we should try these at council levels first and then certain parts of the state and Queensland, for example.
00:51:38
Speaker
got rid of its upper house of parliament in the 1920s. So we could reinstate it as a people's parliament where every four years we replace half by random draw of people between certain ages distributed around the state. These are the types of experiments where we'd learn what works and then we'd have some systems where people wouldn't have to be so personally alert to these two tensions of favoring mates when it's great corruption and favoring friends when it's private favors and gifts.
00:52:08
Speaker
Well said, we've only scratched the surface of the analysis that you've done on these range of issues. I strongly suggest to our listeners to pick up a copy of rigged to learn more. A link is in the show notes. We've mentioned your Twitter feed. I think that you are one of the most interesting and insightful people that pops up on my Twitter every day. And I learned a lot from you Cameron. So.
00:52:27
Speaker
I also strongly recommend to everyone to follow you there. Keep exposing these issues and also keep offering these sorts of ideas because whilst change is difficult and slow, it's only through people like you saying this sort of stuff, we've got a chance of actually seeing that change. So thank you very much for everything you're doing and thank you for at least starting the process of exposing the game of mates. Well, thanks for having me Will and I hope you keep it up also.
00:52:51
Speaker
Thank you very much for listening to this episode of Australiana. If you enjoyed the show, please leave us a rating and a review. And if you really enjoyed the show, head to spectator.com.au forward slash join. Sign up for a digital subscription today and you'll get your first month absolutely free.