Banking, and bankers, have evolved.
Mayer Rothschild was born a pauper in 1744 and founded a dynasty of bankers that endures to the present. John Pierpoint Morgan was a titan of American capitalism, whose ideas, tenacity and braggadocio helped drive the railroad and manufacturing industries.
At some point, banks moved from big to massive. They stopped being businesses and became institutions. And inside every institution, you will find the salary man. The bureaucrat. The human abacus toiling, unseen, ineffectual, and uninspiring.
Today’s banks are so large, complex and incomprehensible that they are not run by their boards or even by the top executives, but by mandarins on the lower floors.
These good folks find themselves promoted within a machine that can run without them, but not without people like them. A bank, once it assumes sufficient size and capital base merely requires managers who pass a minimal level of competence.
Which, in the worst segue imaginable, brings me to Gloriavale.
Banks become large for three reasons. Capital breeds capital. There is inertia that leads to concentration. This concentration is reinforced by a thicket of regulation that inhibits new entrants challenging the dominant oligopoly.
It is the third reason that is relevant today. Banking has become essential. As our economy has become more complex individuals and commercial operations require banking in order to function. If you don’t have a bank account you become a financial leper. You become, economically, dead. This universality of the need for banking combined with regulated nature of the sector makes banking lucrative.
Does this create an obligation on the banks when it comes to who they must offer services to? Can the banks pick and choose their customers, as we assume a private firm should be permitted, or must they be like the local hospital; obligated to offer their services regardless of the moral worth of the person on the gurney?
The BNZ provides banking services to the Christian Church Community Trust; better known as Gloriavale. A 2022 Employment Court decision found that Gloriavale had breached the law with respect to child labour and the bank elected to end their relationship.
Now. Being a libertarian, you might assume that I’d support the right of the bank to refuse services to anyone for any reason, and you’d be right if we lived in a libertarian paradise. But we don’t live in such a paradise.
Gloriavale, once they were advised by the BNZ of the decision, tried and failed to find an alternative. No one wanted to offer them banking services because Gloriavale is socially unclean. To do business with them is to get your hands dirty. To risk disapproval.
This, no matter how profitable the account, is not something those who find themselves managing the great financial institutions of our economy could bear.
I understand why BNZ does not want to deal with Gloriavale. If that decision was made for reasons of integrity and revulsion at the employment practices of their client, it would be admirable.
But … I believe that it is more likely that the bankers, folks who have never had to worry about making payroll, grift for a sale or hustle to get paid, perceived they could earn personal virtue credit for themselves and social responsibility kudos for the bank.
The BNZ provides an essential service; not because of anything inherently brilliant about the institution and those who built it over a century and a half but because it enjoys a privileged position within a highly regulated sector.
The issue remains before the courts. The bank may win because the law can be obtuse and the issues before the judiciary narrow. If Gloriavale loses access to banking services it is possible that the community shall be pushed into penury. Even failure.
The ability to participate in the commercial life of New Zealand should not depend on public opinion. It should not be subject to the capricious temperament of middle managers who pursue their own advancement ignorant or uncomprehending of the wider societal issues at play.
Ultimately, the BNZ is subject to the oversight of the Reserve Bank; and the BNZ owes its privileged position directly from the benefits conveyed upon it as a registered regulated financial institution.
The Reserve Bank may wish to consider if they are comfortable allowing unelected and unaccountable middle managers in the trading banks the arbitrary power to decide who is permitted to engage in commerce.......The full article is published HERE
Damien Grant is an Auckland business owner, a member of the Taxpayers’ Union and a regular opinion contributor for Stuff, writing from a libertarian perspective
At some point, banks moved from big to massive. They stopped being businesses and became institutions. And inside every institution, you will find the salary man. The bureaucrat. The human abacus toiling, unseen, ineffectual, and uninspiring.
Today’s banks are so large, complex and incomprehensible that they are not run by their boards or even by the top executives, but by mandarins on the lower floors.
These good folks find themselves promoted within a machine that can run without them, but not without people like them. A bank, once it assumes sufficient size and capital base merely requires managers who pass a minimal level of competence.
Which, in the worst segue imaginable, brings me to Gloriavale.
Banks become large for three reasons. Capital breeds capital. There is inertia that leads to concentration. This concentration is reinforced by a thicket of regulation that inhibits new entrants challenging the dominant oligopoly.
It is the third reason that is relevant today. Banking has become essential. As our economy has become more complex individuals and commercial operations require banking in order to function. If you don’t have a bank account you become a financial leper. You become, economically, dead. This universality of the need for banking combined with regulated nature of the sector makes banking lucrative.
Does this create an obligation on the banks when it comes to who they must offer services to? Can the banks pick and choose their customers, as we assume a private firm should be permitted, or must they be like the local hospital; obligated to offer their services regardless of the moral worth of the person on the gurney?
The BNZ provides banking services to the Christian Church Community Trust; better known as Gloriavale. A 2022 Employment Court decision found that Gloriavale had breached the law with respect to child labour and the bank elected to end their relationship.
Now. Being a libertarian, you might assume that I’d support the right of the bank to refuse services to anyone for any reason, and you’d be right if we lived in a libertarian paradise. But we don’t live in such a paradise.
Gloriavale, once they were advised by the BNZ of the decision, tried and failed to find an alternative. No one wanted to offer them banking services because Gloriavale is socially unclean. To do business with them is to get your hands dirty. To risk disapproval.
This, no matter how profitable the account, is not something those who find themselves managing the great financial institutions of our economy could bear.
I understand why BNZ does not want to deal with Gloriavale. If that decision was made for reasons of integrity and revulsion at the employment practices of their client, it would be admirable.
But … I believe that it is more likely that the bankers, folks who have never had to worry about making payroll, grift for a sale or hustle to get paid, perceived they could earn personal virtue credit for themselves and social responsibility kudos for the bank.
The BNZ provides an essential service; not because of anything inherently brilliant about the institution and those who built it over a century and a half but because it enjoys a privileged position within a highly regulated sector.
The issue remains before the courts. The bank may win because the law can be obtuse and the issues before the judiciary narrow. If Gloriavale loses access to banking services it is possible that the community shall be pushed into penury. Even failure.
The ability to participate in the commercial life of New Zealand should not depend on public opinion. It should not be subject to the capricious temperament of middle managers who pursue their own advancement ignorant or uncomprehending of the wider societal issues at play.
Ultimately, the BNZ is subject to the oversight of the Reserve Bank; and the BNZ owes its privileged position directly from the benefits conveyed upon it as a registered regulated financial institution.
The Reserve Bank may wish to consider if they are comfortable allowing unelected and unaccountable middle managers in the trading banks the arbitrary power to decide who is permitted to engage in commerce.......The full article is published HERE
Damien Grant is an Auckland business owner, a member of the Taxpayers’ Union and a regular opinion contributor for Stuff, writing from a libertarian perspective
2 comments:
Au contraire. The Reserve Bank IMO would be boots and all into the whole social pariah path. They already have shown their spots by hugging a giant tree like it is a person and knows how finance works......in point of fact saying that out loud given the state of the Reserve Bank maybe the tree does know more.....
Anyway the RB are not into free speech, democracy but are well evolved now into everything DEI, CRT, TOW partnershit etc. etc....and frankly if they could stick it to christians (good or bad) they would without even an eye blink.
Very well described and put Damien, but I fear Anna is absolutely right.
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