Cowboys In Superland: The Democratisation Of Risk

By Tom Morton

The corporate collapses and their effects on global stock markets have shaved billions of the value of our super funds, and many Australians are now seeing their super shrink rather than grow.

We're in the badlands of cowboy capitalism, uncovering what the varmints have done to our retirement savings. Australian superannuation funds haven't escaped unscathed.

Alan White, CEO of the Global Reporting Initiative (GRI) says What we're seeing is the dark side of globalisation the last six to twelve months. Markets now are so interactive, so borderless and Australia's a good case, investors and superannuation funds, I mean 50% of the portfolio may be in the US, very common, with the press of a button one can move shares, buyers sell shares of virtually any company anywhere in the world. So this all demonstrates that when there's a major hiccup or a disease in one market, it can instantly infect others, and that's of course exactly what we're seeing. WorldCom is not a US issue, WorldCom is a global issue, when retirees, when communities, when workers suddenly find themselves out having lost assets, life savings, jobs, security, pensions and so forth. This is no longer just a strictly business and investor issue, it's a broader social issue.

The GRI was officially launched in April this year at the United Nations headquarters in New York. It aims to set global standards for corporations, standards which will require them to report not just on their financial performance, but on corporate governance, on their labour practices and their environmental impact.

What's to be done? Robin Blackburn the author of 'Banking on Death, Investing in Life - The History and Future of Pensions.': "I think it does call in question these institutions of what I've called 'grey capitalism', and I think that really what's been unmasked is the, at best, irresponsibility of the financial institutions, and at worst, the corrupt behaviour of these institutions. That's why the exposure of the cynicism of the analysts employed by the large banks and financial houses, I think that has helped to discredit really a whole model of Anglo Saxon capitalism, and will lead to calls, and has already led to calls for really far-reaching reform and regulation, and perhaps a whole new approach to the providing of pensions. So hopefully to an approach which will move away from individualised investment instruments and which will go much more to collective forms of provision, with democratic and accountable structures."

Morton also talks to Frank Stilwell, from the Political Economy Dept at Sydney University about what Stilwell calls the democratisation of risk, that removes any insulation that vulnerable workers have to the stock market games others play with their money, and to Ian McAuley from the University of Canberra.

Background Briefing; ABC Radio National. First broadcast 18th August 2002)