Scammers, bankers and pollies: Who can we trust if not ourselves?

Last week, an assistant governor at the Reserve Bank, Sarah Hunter, said: “If we can be confident about anything, it’s that our forecasts will be wrong at least in some way.” Hunter referred to a recent speech by the RBA’s deputy governor, Andrew Hauser, which he described to journalist Michelle Grattan as a “plea for humility”. Hauser said he had recently attended a speech in which US Federal Reserve chair Jay Powell had declared the “limits of our knowledge … demand humility”.

Humility should not be limited to central bankers. In early 2023, Assistant Treasurer Stephen Jones pointed out many households would soon feel the “brunt” of rate rises. So, “we think inflation has peaked … I’m hoping that if this is not the last it’s near the last of the rate increases.”

To be fair, Jones was right – inflation had peaked. And he was expressing a hope that interest rates had also peaked, but not a prediction. Over the next few months, Jones’ hope – shared by quite a few Australian families – was dashed several times.

Which takes us back to former RBA governor Philip Lowe’s unfortunate 2021 suggestion that rate rises were unlikely for some time. Lowe was fairly criticised for the strength of his assessment. But there was always a question hovering over that debate, one that never got much of an airing: how much responsibility do individuals have for their own financial decisions? Were families really betting their finances on Lowe’s words? Should they have been?

It was a question that arose again recently when Lowe’s replacement, Michele Bullock, said that some people on lower incomes may have to sell their homes. To some, the comment was callous; to others, an honest declaration of reality. Between these two views the more difficult questions floated. Was there really any way to avoid these unpleasant facts? Surely, in any economy, some people will make calculations about the future, and will end up being wrong?

On the other hand, in a world where buying a house has become so difficult, who can blame people for doing whatever they can to get a foothold? Especially those on lower incomes, for whom the dream is even harder to reach.

Last week, that same Stephen Jones made an announcement about scams. Jones has made this a focus – and arguably, he’s done a fair bit. Earlier this year, the government claimed credit for halving the number of scams. On Friday, draft legislation was released. Companies that don’t take adequate steps to prevent scams face fines of up to $50 million.

There is some recognition here that individuals aren’t really responsible for being scammed: big businesses must do far more. This is cold comfort for those who have already been scammed. And it will be cold comfort for those who are scammed in the future – inevitably, thousands of us – because what Australia has not yet done is follow the United Kingdom in demanding banks reimburse people for the money they have lost.

As Waleed Aly argued in this masthead, framing scammed customers as “gullible” is useful to the banks: it turns it into an individual problem. And there is a broader issue here. In a long essay on scams, writer Hannah Zeavin points out that the urges behind being gullible “originate in our shared social ties: the desire to depend on someone, and the desire to protect”. In other words, we must all trust – the question is how much trust to give? When we imply that the victim of a scam deserves it, Zeavin writes, we are drawing a line between ourselves and the victim: “We have an appropriate level of belief; they have too much.” In fact, these lines are not as sharp as we imagine – something we only recognise when we become the victim.

This is the same distinction that lies behind blaming those who may now need to sell their homes. Yes, some people make poor decisions. But it is largely those on lower incomes who suffer the consequences: they are the ones who have to sell their homes. There is some evidence, too, that people on lower incomes are more likely to be the victims of fraud. Zeavin’s disturbing suggestion is that in fact we are all gullible because we all place trust in systems that don’t deserve it – but only some of us are penalised for this.

Interestingly, last week the government also made a series of announcements around tech companies. Misinformation would be tamed; an age limit would be imposed on social media. All of this implied that responsibility did not lie with individuals – with parents, or those fooled by fake news – but with larger structures and big business.

Questions were raised about whether such laws would really do much. Does the government really think it can restrain an irresponsible internet? A clue perhaps lay in the suggestion by Communications Minister Michelle Rowland that the age limit would “give some normative value to parents … who are questioning what is appropriate for their own children”.

In other words, the government was not so much acting as trying to give an accurate picture of the world and how to act in it: “Don’t be so trusting. You need to watch this.” Which is more or less its message on scams: “Don’t be so trusting. We can do a bit, but you need to keep your wits about you.” And in some ways the recent message of the RBA as well: “We are not infallible experts. We will exercise caution, and so should you.”

It is hard to know what to make of this. Are those in power simply giving up? At a time when trust in institutions and experts and our fellow citizens is so low, is it helpful to tell us to trust even less?

Well, perhaps it is. If we are fumbling our way to some new version of society, the central bankers are right, at least, in this: humility will be needed, as we admit that what we have built no longer works. The great difficulty is that, to build something else, we will have to learn to trust each other again. That will likely take some time.

Sean Kelly is a regular columnist and a former adviser to Julia Gillard and Kevin Rudd.