And that was the mining boom …
28 August 2012
A delicious spring breeze wafted across Sydney Park as Jesse Dingo and I strolled up the big bald hill and sat down on the bench looking north over Erskineville and the city. The breeze was not quite warm, but had the promise of warmth. Golden morning sunlight sparkled off new gum leaves.
I’d spent days chasing up hidden assets for a receiver who was only going to be able to recover a few cents in the dollar for a mining entrepreneur’s hapless creditors and the big bald hill is a good place to get a perspective on things.
It had only been only a few days since some fat-cat bank chairman on several million a year (plus bonus) advocated cutting the dole to force the feckless unemployed to get off their arses to go and live in a shipping container in some hell-hole on the outskirts of a remote Western Australian mine, when suddenly, the mining boom was staring down into the abyss.
Booms always end like that and they take a lot of people’s live down with them. Maybe this one has another year to run, but probably not.
It’s in the nature of greed, cupidity, and also business journalism One day ninety per cent of economists and business commentators are jabbering away about the good times running on for years – and predicating an entire analysis of the nation’s future on that, and then you wake up the next morning and switch on the radio, and it’s in free-fall and they’re telling you why disaster was inevitable.
The classic case of boom-time hubris is, of course, the proto-neoclassical economist Irving Fisher who opined, on the eve of the 1929 crash “Stock prices have reached what looks like a permanently high plateau”, and that the market disaster was “only shaking out of the lunatic fringe”. He went on to explain why he felt stock prices still hadn’t caught up with their real value and should go much higher and, for months after the crash, continued to assert that a recovery was just around the corner.
In 1929 Fisher was a sleek prophet of the Great God Market (and eugenics) but by 1931 he was just an embarrassment. Stock prices didn’t return to their 1929 levels for 20 years.
I thought of Fisher the other day when some deluded spin doctor for the mining industry, caught out on morning ABC radio, jibbered about the mining sector moving on from inflated prices to a “focus on quantity production” and babbled about how the relentlessly inevitability of growing economies and the aspirations of impoverished Third World nations would drive the boom going forwards, long-term, blah.
Ninety nine per cent of business commentators are capitalist boosters. If they weren’t, they wouldn’t be attracted to the job in the first place. An openly Marxist business journalist would at least offer an honestly sceptical take from an opposite intellectual viewpoint, but on principle, they’d never be hired. The only opposition to the bracing ethos of the robber barons comes from a tiny handful of boring advocates of “business ethics”.
So with relentless inevitability, business journalists are the feckless purveyors of the latter-day myth of capitalism – the little-guy-made-good story. Until the eve of the collapse of a business empire-builder like Alan Bond, or Chris Skase or Nathan Tinkler they churn out hagiographic yarns about commercial wunderkinds.
For their uncritical audience, the myth is so much more glamorous than the story about the hard slog of somebody who, for example, goes into a real business – making, or even just retailing, something – and works their way to modest success. Or even about some persistent bastard who invents a useful widget and gets it into production and onto the shelf.
The seductive story is capitalism as, well, like winning the lottery. It’s the Nathan Tinkler story. A couple of heroic speculative deals and suddenly you’re swimming in money. Suddenly you’re a genius and a billionaire, and you can splash out on the atavistic stuff that dumb, shallow, people who dream of being massively, impossibly, rich fantasise about. Things like multi-million dollar beachfront homes, racehorse studs, football teams and fast cars. And like being a Big Man in your home town – or even on the world stage – and being friends with people who once saw you as a dumb, fat, ignorant loser from the lower orders, if they noticed you at all.
And then it falls apart.