Banks, how do we loathe thee? Let us count the ways. Credit:Peter Riches Meanwhile, the big four generated $31 billion in profit last year. People don't generally hate on businesses for making a profit. But when that profit is made off the back of something you really need, then there's the potential to feel exploited. If banks were privately owned, we could hate on their greedy owners. But the big four banks are publicly owned, meaning we (the millions of Australians with some bank shares) are their greedy owners. Like all publicly owned businesses, the executives of banks can genuinely say their job is to maximise profits for shareholders. The wider question society is wrestling with – albeit in a roundabout way – is whether that's fair when you're a business dealing in needs rather than wants. This is the same fundamental tension generated by electricity retailers, NBNco and health insurers. They all have products we (to some degree) need. They are also set up to maximise profit. If you need something, and feel the person giving it to you is charging more than is fair, then you feel taken advantage of. Banks are particularly susceptible to this because their profits are so large and the value they create is a lot less tangible. When life insurance and financial planning scandals are thrown in, feelings of exploitation progress to justifiable anger. But investigating the scandals won't solve the fundamental disconnect between executives' need to generate profits and society's need for cheap loans, power and internet.

Illustration: Matt Golding What we are dealing with here is society waking up to the full consequences of the wave of privatisations that have happened over recent decades. It's no coincidence that new privatisations have become a lot less popular. While politicians acted in good faith in saying there was no practical reason for a government to be running a bank, power retailer or health insurer, they didn't adequately predict the social ramifications of providing citizens' "needs" solely via for-profit companies. "Cost of living" has become No.1 on the list of talking points of any politician running for office. But governments have largely forfeited their control over the cost of our needs. So you have a populace feeling exploited, powerless and like their credit card fees are going into the pockets of wealthy shareholders (which they are), who then see that governments won't or can't do much about it. It's manna from heaven for populists like Pauline Hanson. In the case of banks specifically, the way in which they generate their profits can particularly distort our concept of a fair society. Imagine for a second a hypothetical scenario (I'm not advocating for this) where the big four banks were all government-owned, but collecting the exact same profit as they do now. Then that profit would be thought of as a tax.

It would not be considered a very progressive tax. We have a long established tradition of income tax taking more from high earners than low earners. But bank fees are based largely on your levels of debt. So in fact we'd be taxing the most vulnerable members of society more, with some correlation to income (higher earners have bigger loans) but nowhere near as clearly cut as income tax. Meanwhile, people with no debt, and only assets, would be largely avoiding these taxes. If bank profits were a tax then the government could decided how to spend them. This could potentially be on the betterment of all society. But at the moment, the profits go to shareholders. This means the money generated by something all Australians need goes into the hands of those lucky enough to own shares in the big four. Now a lot of those are the same people – presumably a very high percentage of Australians own some part of the big four at least through their super funds. But again, the distribution of these profits is far from equal. So that leaves us with a "tax" that is taking money from pretty much all Australians but not in a progressive way, and redistributing that money in a cleary regressive way that favours the rich far more than the poor. As a system, it has the opposite effect of Robin Hood. And we wonder why wealth disparity is growing in society. How to deal with the now-scrambled egg of "privatised needs" requires serious public discussion at a level I worry we're just not capable of in Australia right now. (Can you imagine the newspaper headline war?) But not having the discussion is even more dangerous. Because it is one of the fundamental forces fuelling growing disillusionment with government and capitalism. Loading

While it's heartening to see past misdeeds investigated, the banking royal commission may create unrealistic expectations from the public that "something is being done" about the banks. Improved governance and accountability will be a welcome result from this process, but it won't solve the fundamental disconnect. It's time we had a serious discussion about why we hate banks. Conal Hanna is a Fairfax senior writer.