Encouraged by a conversation with my Dad, I figured it would be interesting to maintain this page like a diary, to observe how events play out, and to see where it all ends up. Each entry is preceded with the date it was written.
9 July 2000
If you’ve glanced at my earlier rave, Designer Superstition, you’ll have guessed that I don’t place a heck of a lot of store in prophecy. But you don’t have to be Nostradamus to be able to foresee the inevitable.
Take Jim Anderton’s (Alliance Party) "People’s Bank" for example. Like most of the muddle-headed ideas promoted by – no doubt – well-meaning Liberals, this one is motivated more by wishful thinking than by reason. For those who are far away, or just uninterested in the daffy machinations of the New Zealand left, Jim Anderton is proposing to raise NZ$60M by public subscription to a non-voting share float, to create a trading bank which will offer cheap and cheerful services to the masses. Of course it will have offices in all those little provincial towns where the major trading banks have closed theirs. Where the free market has failed, Jim will succeed.
Let’s look at that. For a start, who in their right mind is going to buy non-voting shares in a venture like this? Who is going to willingly give their hard-earned cash to a minority coalition party leader to administer on their behalf, willingly concede any right to say how the money will be spent, forever, in return for a promise that – if everything goes well – they’ll be paid a "good return." Nobody in their right mind will do it, but doubtless lots of Jimbo’s supporters will … and never mind the seeming paradox between supporting the left wing and making a good return.
The IT infrastructure, alone, for a modern trading bank is fantastically complex and expensive. If the established banks have found it uneconomic to operate basic services in small, rural communities, then how the hell is a start-up – lacking both the expertise and the infrastructure to leverage off – going to achieve this? The simple answer is that it won’t; the small branches will be uneconomic. They’ll be just as uneconomic for Jim’s bank as they’ve proved to be for everyone else. The difference, of course, is that being a socialist institution means that Jim’s bank doesn’t have to be economical. Unfortunately, that also means no returns for the investors. (Sorry guys.) And they won’t be able to do anything about that, because they don’t have any voting rights. But the stupid bastards will only be getting what they deserve; you can’t cheat an honest man, and all that.
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Finally, there are already credit unions and the like operating in this space. They are small, with low overheads, and they don’t attract much attention or competition. So, they survive. These are not big, glamorous institutions because … primarily because this is a market segment which is dying out [® sidebar]. Between ATMs, credit cards, EFTPOS and, more recently, Internet banking, there just isn’t much demand for the services Jim is proposing to offer and what demand does exist is declining by the month. Like all his ilk, Jimbo is living in the past, offering something his mother might have wanted.
No, you don’t need to be a Nostradamus to work this out. You don’t need a detailed analysis or even a superficial one like we’ve just done. Far cleverer men than Jim Anderton have been trying to make socialism work for the last 150 years and nobody – read my lips: nobody – has even come close to succeeding. China and Russia both gave it a good crack, and millions starved to death. Starved. To death. Millions. Russia has spectacularly abandoned the attempt. China no longer makes much pretence either: Deng’s "socialism with Chinese characteristics" has clearly succeeded best where the distinction between it and plain old capitalism is weakest. Only Cuba is still blindly flogging away at the dead horse, and you don’t need me to tell you what a shit hole Cuba is. Jim: you might mean well, but if you think you’re going to succeed where 150 years of history tell you that you ain’t, then you’re barking mad.
My crystal ball says: Jim might get his bank off the ground. If so, there will probably be an initial rush of enthusiasm until everyone finds out that they didn’t really want what it can offer. Then it will be propped up, for a while, by inventively hiding it’s losses. Finally, one of the existing trading banks will buy its client base for some paltry sum, probably from a National government. The left, while secretly heaving a sigh of relief that the damn thing has gone away, will criticise them for under-valuing it. The new owners will shut down the uneconomic branches.
Or, maybe, the Labour-Alliance coalition will be the usual one-term affair that is all the New Zealand left ever gets, and Jim’s bank won’t get off the ground at all. All around, that might be for the best.
16 March 2001
Well, the bank, now variously known as the People's Bank or the Kiwi Bank, is to go ahead. New Zealand Post is the lucky public agency chosen as the vehicle to host the new operation. (Those of us beyond a certain age will well remember the old "Post Office" which lumped together postal services, telecommunications services, and the Post Office Savings Bank under one roof. And did them all so badly that the behemoth had to be dismantled and sold off.) There have been several changes of plan to improve its chances of success. It will no longer be financed by public prescription; the government is going to finance it with NZ$80M of my goddamn taxes. That's another point of course: the price has gone up 33%. Perhaps the most telling development, however, is that there is little talk these days of minimal fees or targeting low-income earners. In the last month or two there have been hints and noises about commercial rates and more affluent market segments.... More as the saga unfolds.
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