Phillip Pullman and the greedy ghost of market fundamentalism

"there are things above profit, things that profit knows nothing about.. things that stand for civic decency and public respect for imagination and knowledge and the value of simple delight"   Phillip Pullman

This speech by the British novelist and writer Philip Pullman describes the 'greedy ghost of market fundamentalism' that haunts the offices, meeting rooms and conference rooms of Governments all over the world. 

Pullman describes how everything that sustains the fabric of a decent society and of communities is destroyed by the onslaught of the market fundamentalists and their acolytes. He is right. A great speech.

 "And it always results in victory for one side and defeat for the other. It’s set up to do that. It’s imported the worst excesses of market fundamentalism into the one arena that used to be safe from them, the one part of our public and social life that used to be free of the commercial pressure to win or to lose, to survive or to die, which is the very essence of the religion of the market. 

Like all fundamentalists who get their clammy hands on the levers of political power, the market fanatics are going to kill off every humane, life-enhancing, generous, imaginative and decent corner of our public life. I think that little by little we’re waking up to the truth about the market fanatics and their creed. We’re coming to see that old Karl Marx had his finger on the heart of the matter when he pointed out that the market in the end will destroy everything we know, everything we thought was safe and solid. It is the most powerful solvent known to history. “Everything solid melts into air,” he said. “All that is holy is profaned.”

Market fundamentalism, this madness that’s infected the human race, is like a greedy ghost that haunts the boardrooms and council chambers and committee rooms from which the world is run these days"

Market based approaches are a threat to vulnerable people

images by Simon Bosch, courtesy of the Sydney Morning Herald

State and Federal Governments of all persuasion continue their love affair with "market based approaches" to the provision of health services and human and community services. 

These market based approaches take many forms, including privatization and contracting out of government services, competitive tendering of services to not-for- profit and for profit agencies, increasing use of for-profit providers and the private sector  to provide services, use of user pay and cost recovery principles, the application of business metrics and the imposition of corporate management models and approaches that have their origins in the for- profit business context.

But they all are predicated on the assumption that applying market principles to the delivery of health and human and community services will drive innovation, deliver greater efficiency and better quality services and save Governments money.

However, the worsening crises we face in so many areas of social and public policy are largely the result of an over reliance on market based approaches in service delivery and/or the increasing reliance on the private/corporate sector as a provider of services.

The crises in affordable housing, the collapse of corporate provider ABC Learning in childcare, the crises enveloping aged care, the problems resulting from the privatization of employment services, the costs and inaccessibility of many health, medical and dental services, the accelerating cost of public services such as water, gas and electricity, the rationing of services for children and families, are all examples of social policy problems that have been created or compounded by market based approaches.

Adele Horin's piece in the Sydney Morning Herald Sad Truth behind Closed Doors is further evidence of the dangers of relying on market based and for- profit approaches in the delivery of health and human services. Horin shows that a reliance on market based approaches is a threat to the health and well being of vulnerable people. 

Horin argues that the reliance on for- profit providers of boarding houses  to accommodate and support people with mental illness has failed to protect and improve the lives of  vulnerable people. Horin draws on the work of Sydney academic Gabriel Drake who calls the rise of licensed boarding houses in Sydney, as "the privatisation of the back wards". 

In a study of inner Sydney licensed boarding houses, Drake describes a situation where large numbers of people with only their disability in common,  live together with little to do, receive poor mental and physical health care, and have few chances to learn skills. Their pension is handed over. They can't afford a bus fare. They become highly dependent on the boarding house owner.

Horin describes how the failure by Governments to provide the funds  and support to people with mental illness who were "de-institutionalized" and moved out of large psychiatric institutions meant that they were thrown to the vagaries of the "market"

And so hundreds moved into the boarding houses which were run for profit with minimal or no accountability or monitoring. People with sometimes serious conditions, such as schizophrenia, went from the state being in charge of their welfare to a boarding house owner.

The state passed a law to license boarding houses that accommodated people with psychological or intellectual disabilities. But three Ombudsman's reports in nine years - two of them secret and the latest delivered to the Minister for Disability Services last month - testify to the failure of the responsible government department, Ageing, Disability and Home Care, to do its job of inspecting and monitoring the boarding houses properly.

A weak law, and some aggressive licensees, did not help the hapless bureaucrats in their role of protecting and improving the lives of the vulnerable residents.

It is time the state government took a serious look at boarding houses, both the licensed kind, and the unlicensed, which cater to a slightly different clientele of poor, single tenants often with alcohol and gambling addictions.

More evidence of the failure of market led reform in Australia: market reform in water threatens Australia's future

"Australian water is now effectively commoditised: allocated to whoever is willing to pay the going price"
Ian Douglas

Excellent article by Ian Douglas of Fair Water Use Australia on the failure of market approaches in national water reform.:

"This blind commitment to growth, which also suffuses the policy platforms of the major parties, is being used to justify public-private partnerships and the construction of ill-conceived and untenably costly water infrastructure, most notoriously desalination plants. Our governments appear quite comfortable entering into public-private partnerships with multinationals whose track record in terms of corporate responsibility on the global stage is, at best, in-glorious."

Douglas argues that the reliance on market based approaches and the privatization of water is incompatible with the idea of access to water as a public good and poses a serious threat to Australia's water future:

Douglas argues that despite the fact that polling indicates that at least 70% of Australians are opposed to water privatization it continues to be imposed on the nation, under the guise of water reform:

"Australian water reform was conceived in 1994 by the Council of Australian Governments; nurtured by the prevailing mantra that free-market exposure was the ultimate panacea for undercapitalised and inefficient public utilities. COAG went one giant leap further, in deciding to establish a national water market; arguing that this would direct water to its most productive use.

In the years since these sweeping changes were announced, the wisdom of applying free market principles to the management of an essential natural resource has been largely discredited by events overseas: In the water-supply sector, major corporate players have been accused and, in more than a few instances, convicted of price-gouging, anti-competitive behaviour, corrupt practice and fraud. On all continents there are moves to wrest control from private corporations. Globally, more than 90 per cent of water services are now publicly owned.

In Australia there are valid concerns that water reform is leaving crucial decisions, with respect to the “where”, “when” and “how” of water distribution, in the hands of entities whose priority is profit rather than socially and environmentally responsible water use. Questions are being raised as to why our governments have been prepared to implement these radical policies without seeking and obtaining prior electoral mandate and in the absence of adequate constitutional protection of water.

The failure of market driven reform in Australia

John Quiggin is one of a growing number of Australian economists who continue to make the case that the market-based reforms imposed by Federal and State Governments over the last two decades have not delivered the anticipated benefits for consumers and ordinary citizens, and in many cases have been unmitigated failures.

Market led reform assumes that market-based solutions are always best, regardless of the problem.

Other important contrarian economic voices about market driven neoliberal reform championed by mainstream economists and Australian governments of all persuasions can be found on the pages of Dissent, the excellent journal edited by the Age and Sydney Morning Herald economics writer Kenneth Davidson and in the Journal of Australian Political Economy produced out of the University of Sydney. Bloggers such as Billy Blog (Bill Mitchell) also provide important critiques of mainstream economics, as do academic economists and public commentators such as Con and Betty Walker.

In today's Australian Financial Review John Quiggin argues that:

The failure of reform is most dramatically evident in the infrastructure sector, and particularly for utilities such as electricity, telecommunications and water.

Quiggin argues that the benefits of market led reform that were promised by its proponents have not resulted. Whilst there were some benefits in the short term, in the longer term the proposed benefits for consumers and society have not been sustained. Prices have not lowered but increased. Supposedly, allowing the market to rip would bring more choice and better quality of service. Neither have happened.

As Quiggin points out, the privatization of telecommunications and electricity have been unmitigated failures for consumers and society. Electricity price inflation has reached double digit levels and the break up of electricity utilities into separate generation, distribution and retail sectors has created massive new problems.

Quiggin argues that it is time for policy makers, politicians and commentators to accept that the mantra of market led reform has been a complete failure in the infrastructure sector. He writes that:

Faith in reform has proved utterly impervious to contrary evidence. The only answer to the failure of reforms has been to conclude that more reform in needed.

But as John Quiggin notes the lure of market led reform is still all powerful:

Despite this and other failures, the incantation of ‘reform’ retains its magical power. The politically and economically disastrous privatisation program in NSW was justified entirely on the basis that it was needed in order that reform could continue.

It is, perhaps, too much to ask that such an appealing word should be abandoned. But can’t we at least admit that the 1980s reform program has had its day, and look for some reforms more appropriate to the 21st century?

The failure of market driven neoliberal reform in the infrastructure sector (water, telecommunications, utilities, and public infrastructure) and in many other areas of Australian social and economic life, including health, housing, social welfare, retirement incomes, aged care, education, child care, human and community services and the environment and climate change, are core themes in Australian journals such as Dissent and  the Journal of Australian Political Economy, which in each edition document the harm that has been done by market driven neoliberal reform in this country.

More Australians need to support and read the important work done by economists such as John Quiggin, Bill Mitchell, Con and Betty Walker and all those associated with journals such as Dissent and The Australian Journal of Political Economy.

COAG healthcare reform: A perspective from WA

This week the Gillard Government finally reached an in-principle agreement with state Governments about reforms to the Australian heath care system. In this piece WA health economist Luke Slawomirski consisers the implications of the in-principle agreement. This piece first appeared in Online Opinion (here).

Health (Care) Reform

by Luke Slawomirski

The in-principle agreement struck between the Commonwealth and the States at COAG on Sunday is good. It is not great. While Australians have reason to be cautiously optimistic that health care reform is back on, it is also disappointing that it doesn’t go far enough.

More transparency

Firstly the positives. These revolve around the emphasis on transparency, accountability and efficiency. The key drivers will be

(a)    introduction of Activity Based Funding (ABF) for hospital services - paying public providers an agreed fee per care episodes such as a knee replacement,

(b)   the development of ‘efficient prices’ for episodes - a difficult, but not impossible task as some commentators have indicated

(c)    a more transparent, pooled federal funding mechanism.

Health care is one of the most opaque industries around and reforming the ‘blank cheque’ block funding approach, at least for hospitals, has to be a good thing. Increased scrutiny brought about by these measures can help reduce pernicious aspects of health care such as unwarranted variation in clinical practice and over treatment. 

Efficiency

The creation of Local Hospital Networks (LHNs) also has the potential to translate into better, more efficient services. In metropolitan and semi-rural regions, hospitals will be able to establish partnerships with nearby peers, and consolidate and rationalise services. This can not only enable economies of scale but also improve quality and safety because increases in the volume of cases for procedures and treatments increases are often accompanied by improvements in quality and decreased complications. 

Also encouraging are the provisions built in to ensure smaller, rural hospitals are not swept away by the utilitarian calculus and rationalisations of ABF.

Lack of integration

Now to the not so good parts. Setting aside the likely mess of establishing Medicare Locals and GP Super Clinics, a key problem is the non-integration of primary and tertiary care. The health care system could operate much more efficiently if there was more clinical and administrative coordination between primary providers such as GPs, pharmacist etc, and hospitals. LHNs would be much more effective if the network included at least some local primary care providers.

Much of this is a result of the funding split between the Commonwealth and state budget – and this is, unfortunately not rectified in this agreement, counter to a key recommendation of the National Health and Hospitals Reform Commission’s 2009 Report.

No prevention or promotion

It is all very hospital-centric, much to the disappointment of those who know that in the long run, the most value for money in health is in prevention and promotion. This makes all the talk of ‘efficiency’ ring a little hollow.

Implied in the agreement is the misconception that the principal driver of health, and preventer of ill-health, is health care. It is now accepted that this is not the case at all. Health care (especially tertiary care) is, at best, only a modest contributor while the dominant factors are structural and societal. Even in developed nations such as Australia, health and disease rates are predominantly influenced by things like education, literacy, income equality, social mobility and cultural factors.

There is also not much mention of mental health and nothing on addressing Indigenous health status. Both are essentially a prevention problem, whose long-term solutions reside within the sphere of the cultural, social and economic determinants, well outside the health care sector and

Of course, selling prevention is politically extremely difficult as it lays outside the reach bio-medical technology. However, Julia Gillard explained parts of the deal very well on the 7.30 Report on Monday night (14.2.2010). There is no reason why she and other political leaders cannot begin to communicate with the community the real need for and benefits of prevention.

Cost escalation and lost opportunities

Health care is extremely expensive. Its costs, as a percentage of GDP, are rising. The reasons for the escalating cost are erroneously attributed to demand side drivers including demographic change and an ageing population. This is largely incorrect. The main driver of escalating cost is actually on the supply side - the constant development of new medical and pharmaceutical technology. The rising expectations these foster in the community then serve to amplify an already rising demand.

There is no mention of addressing these in the part of the agreement on efficient cost growth. One hopes that this will be adequately tackled in the setting of efficient prices outlined in the agreement. However in its negotiations with this (admittedly pre-Gillard) government does not have a solid track record in tackling vested interests within the medical industry.

The other problem is opportunity cost – each public dollar spent on a hospital bed or PBS prescription is a dollar unspent on schools, playgrounds or other preventive expenditure.

Likewise, each interview minute spent by the PM talking about hospital beds and Super Clinics is a minute not spent communicating the value of programs and initiatives that keep people out of hospitals.

Prevention, of course, requires expenditure of financial and political capital. In a world of scarce resources (and three year electoral cycles) it is often more expedient to talk about ‘more beds and more GPs’ than tackling the root causes of disease, which are notoriously difficult to explain to the public.

In summary, the agreement reached at COAG was definitely a win for the Prime Minister. However, it is very pragmatic and there is a lot of detail left to sort out. Most importantly, it could have been a lot better. If Julia Gillard wishes to be remembered as a reformist like her political hero Nye Bevan and mentor Bob Hawke, some of the shortcomings briefly outlined above may need to be addressed before the next election.

Luke Slawomirski is a Health Economist and has worked as a clinician in Australia and overseas. The views expressed here are his own.

Phillip Pullman and the greedy ghost of market madness

"there are things above profit, things that profit knows nothing about.. things that stand for civic decency and public respect for imagination and knowledge and the value of simple delight"  Phillip Pullman

Fantastic speech here by British author Phillip Pullman on what he calls "the greedy ghost of market madness" and the social, cultural, and democratic dislocation that it causes. 

In this speech Pulman attacks the British Government for its austerity cuts which are resulting in the closure of hundreds of libraries throughout the UK and are hitting the most marginalized and disadvantaged the hardest, whilst delivering tax cuts and more public funds to the wealthy, the corporate elite and business and corporate interests.

Pulman points the finger directly at all those who advocate for the unfettered freedom of the market  and who measure the success of an endeavor or a public responsibility by the metric of profit .

"...........And it always results in victory for one side and defeat for the other. It’s set up to do that. It’s imported the worst excesses of market fundamentalism into the one arena that used to be safe from them, the one part of our public and social life that used to be free of the commercial pressure to win or to lose, to survive or to die, which is the very essence of the religion of the market. Like all fundamentalists who get their clammy hands on the levers of political power, the market fanatics are going to kill off every humane, life-enhancing, generous, imaginative and decent corner of our public life. I think that little by little we’re waking up to the truth about the market fanatics and their creed. We’re coming to see that old Karl Marx had his finger on the heart of the matter when he pointed out that the market in the end will destroy everything we know, everything we thought was safe and solid. It is the most powerful solvent known to history. “Everything solid melts into air,” he said. “All that is holy is profaned.”

Market fundamentalism, this madness that’s infected the human race, is like a greedy ghost that haunts the boardrooms and council chambers and committee rooms from which the world is run these days.

So decisions are made for the wrong reasons. The human joy and pleasure goes out of it; books are published not because they’re good books but because they’re just like the books that are in the bestseller lists now, because the only measure is profit.

The greedy ghost is everywhere. That office block isn’t making enough money: tear it down and put up a block of flats. The flats aren’t making enough money: rip them apart and put up a hotel. The hotel isn’t making enough money: smash it to the ground and put up a multiplex cinema. The cinema isn’t making enough money: demolish it and put up a shopping mall.

"...............The greedy ghost understands profit all right. But that’s all he understands. What he doesn’t understand is enterprises that don’t make a profit, because they’re not set up to do that but to do something different. He doesn’t understand libraries at all, for instance. That branch – how much money did it make last year? Why aren’t you charging higher fines? Why don’t you charge for library cards? Why don’t you charge for every catalogue search? Reserving books – you should charge a lot more for that. Those bookshelves over there – what’s on them? Philosophy? And how many people looked at them last week? Three? Empty those shelves and fill them up with celebrity memoirs.

That’s all the greedy ghost thinks libraries are for.

Now of course I’m not blaming Oxfordshire County Council for the entire collapse of social decency throughout the western world. Its powers are large, its authority is awe-inspiring, but not that awe-inspiring. The blame for our current situation goes further back and higher up even than the majestic office currently held by Mr Keith Mitchell. It even goes higher up and further back than the substantial, not to say monumental, figure of Eric Pickles. To find the true origin you’d have to go on a long journey back in time, and you might do worse than to make your first stop in Chicago, the home of the famous Chicago School of Economics, which argued for the unfettered freedom of the market and as little government as possible.

Gavin Mooney on the difference between compassionate acts and a compassionate society

photo courtesy of the Age and Getty

This piece first appeared in Crikey.

Floods aside just how compassionate is Australia
by Gavin Mooney, Health Economist and co convener WA Social Justice Network

The recent devastating floods have brought out all sorts of emotions. We have seen expressions of great compassion and generosity. And these are emotions that we seem genuinely to treasure when we see them, whether these be in our fellow citizens or in our leaders. In all the heart-wrenching devastation of lives and property, it is heart-warming to see so many showing their compassion for those who have lost so very much.

The question of compassion is one in which as a health economist I have a particular interest. I have recently sought to make a case that strong, compassionate communities are good for people’s health.
I also argued a few years ago, for example, that countries that were more compassionate treated drug addiction and drug addicts better and, while it was difficult to "prove", some leading drug experts expressed the view that I was on to something.

One of the difficulties here is how to quantify compassion. Can we find a measure that will allow us to see how compassionate we are as a society compared say to the Swedes or the Americans or the Brits?

Earlier I used just public expenditure as a proportion of total national income and Australia didn’t come out of that well. Across 33 OECD countries, for example in 2008, we came fifth from the bottom on 27.1%. On this indicator, the countries that came out well -- perhaps predictably -- were the Scandinavians with Denmark at the top with 48.2%.

Another possible measure is public social expenditure and here we do rather badly again.
These are somewhat crude but not silly measures of social compassion. In this context, public expenditure matters. It is difficult to see how we can build a caring society if we rely too heavily on the market. That may be OK for Tim Tams and TVs but for addressing poverty, inequality, Aboriginal disadvantage, mental illness and flood protection, we need public monies.

But I have just come across a paper that has some really worrying stats on Australian compassion. Well not strictly compassion but what is called "generosity" but it is pretty much the same thing. It examines what it calls "the generosity of social insurance".

What it does is rather neat. It argues that we can use certain public-sector programs to get an estimate of how generous (or in my language compassionate) a country’s welfare state is.

So, for example, we can take unemployment insurance. One measure of that program’s generosity is what proportion of income that replaces. Added to that is the "coverage ratio" i.e. the proportion of the population covered. Multiplying these together gives an index of "generosity" for that program. Clearly the higher the index, the greater the generosity.

The paper then does the same for sick pay and for state pensions. It adds the three indices together and comes up with an overall generosity index.

Not perfect but an interesting exercise.

Now the scary bit. Australia comes bottom of 18 OECD countries! Oh dear, we are the least generous of them all. Even the US, which is often seen as being the land of free enterprise, individualistic and unwilling to provide decent health care for its people (especially its poor), comes out quite a bit above us. According to this index, in comparison, countries such as Sweden and Norway are dripping with compassion.

I think we are a compassionate people -- if we are given the chance and all sorts of private acts in the past few days and weeks show that. But we need our governments to recognise that. We need leaders prepared to lead. Many -- most? -- of us who are well off would be willing to pay more taxes to help the less fortunate.

We do want a compassionate society. We do believe in the fair go.

Julia: stop messing about. Recognise that we Aussies really do have a decent streak in us -- we have just shown it. We want a caring community. We cannot get it -- and you will not get it -- if you continue to pander to our baser selfish interests and instincts.

Tax us more. Build a caring public sector. We want to be the custodians of a decent society. We want to be led to that compassionate society. It will also make us a healthier society. Let’s get on with it.