Neoliberalism, market fundamentalism and the colonization of Aboriginal policy

"Neo-liberalism is a hungry beast and this 21st Century strain of capitalism is shaping the agenda for control of Aboriginal lands...........Australian Government policy is heavily influenced by neo-liberalism through its extraordinary emphasis on managing access for mining companies to resources on Aboriginal lands. This involves controlling what is still perceived as ‘the Aboriginal problem’ and forcing a social transition from traditional values and cultural practice to ‘mainstream’ modernism of a particular brand. It also involves displacing many Aboriginal people from their traditional lands and concentrating them in ‘growth towns.......To make any sense of the aggression behind most current Indigenous policy in Australia you need to study the impact of neo-liberalism around the globe"  

Jeff McMullen

The Australian journalist, writer and social justice campaigner Jeff McMullen has written two cogent and articulate critiques of the colonization of Aboriginal policy making in this country by the cancer of neo-liberalism (or what others call market fundamentalism). 

One of Jeff McMullen's articles The New Land Grab is available on line here (in The New Internationalist blog). The second piece is a book chapter titled Dispossession- Neoliberalism and the Struggle for Aboriginal Land and Rights in the 21st Century which appears in a new book In Black and White: Australians at the Cross Roads (edited by Rhonda Craven, Anthony Dillon & Nigel Parbury). This article is available here on Jeff McMullen's own website

In drawing on the work of David Harvey and others, and incorporating the voices of Aboriginal people, McMullen makes the case that neoliberalism is a key driver of the agenda for the control of Aboriginal lands and assimilation of Aboriginal people in Australia.  

Neoliberalism, McMullen argues is the ideological underpinning of a uniquely Australian strain of state-corporate capitalism that aims to control Aboriginal communities to enable exploitation of the land and mineral wealth on Aboriginal lands. McMullan argues that the real goal here is the upward redistribution of land and mineral wealth.

McMullen demonstrates the way that successive Federal and State Governments have used the coercive powers of the state to impose an agenda of modernization, control of Aboriginal lands and assimilation and assault on Aboriginal rights and culture.

Drawing on David Harvey's book A Brief History of Neoliberalism, McMullen identifies 4 essential features of the neoliberal agenda and analyses the extent to which they are manifest in Aboriginal policy making in this country:

1. Privatization and commodification of public and community goods. This has occurred through the privatization of Aboriginal lands, via policies that open up Aboriginal land to resource exploitation and attempts to override community land ownership and impose private property ownership rights.
2. Financialization to treat good or bad events as opportunities for economic speculation.
3. Management and manipulation of crises to establish a neoliberal agenda. This includes using the  Northern Territory Intervention as justification for  exerting greater control over Aboriginal communities to enable market and corporate exploitation of the minerals and resources on Aboriginal lands and the use  of 'military style campaigns to exert control and challenge Aboriginal sovereignty
4. State redistribution of wealth, not to the poor but to the rich and powerful.

Analyzing Aboriginal policy through the lens of neoliberalism as McMullen does, helps us to understand what drives social policies such as the Northern Territory Intervention and the social engineering to control Aboriginal people still living on traditional lands, as well as the aggressive land grab by mining and resource companies, aided and abetted by Federal and State Governments, which divides Aboriginal communities, and even Aboriginal families.  He writes:

'Neoliberalism connects the agendas of modernising Aboriginal culture and allowing mining companies to vigorously exploit and minimal cost the mineral treasures on Aboriginal lands'.

McMullen points to the divide and conquer tactics of mining companies and governments in the Kimberley and Pilbara in Western Australia, across the Northern Territory, on Cape York and in parts of NSW and South Australia, as manifestation of these neoliberal agendas.

McMullen is scathing about the role played by influential Aboriginal leaders, such as Noel Pearson, Marcia Langton and Warren Mundine who have become influential advocates and brokers for neoliberal policies and have gathered adherents and supporters in both political parties and corporate Australia.

In memory of Elinor Ostrom (1933-2012)

With the death of Elinor Ostrom, activist and campaigners for social and economic justice have lost an important advocate and supporter.

Ostrom who was a Professor at Indiana University was the first woman to be awarded the Nobel Prize for Economic Sciences in 2009.

Ostrom's work challenged and rebutted fundamental economic beliefs, particularly free market and neo-classical economic paradigms. Ostrom was particularly concerned with relational aspects of economic activity — the ways in which people interact and negotiate with each other to forge rules and informal social understandings.

Ostrom's early work focused on what she called co-production. Ostrom argued that many public services depend heavily on the contribution of time and effort by the persons who consume these services, i.e., the clients and citizens.Ostrom believed that services rely as much upon the unacknowledged knowledge, assets and efforts of service ‘users’ as the expertise of professional providers. It was the informal understanding of local communities and the on the ground relationships that make services more effective.

Co-production describes the relationship that exist between ‘regular producers’, like health workers, police, and schoolteachers and their ‘clients’ who may be transformed by the services into safer, better educated and/or healthier persons.

Ostrom defined co-production as

“…the mix of activities that both public service agents and citizens contribute to the provision of public services. The former are involved as professionals, or ‘regular producers’, while ‘citizen production’ is based on voluntary efforts by individuals and groups to enhance the quality and/or quantity of the services they use”

One implication is that privatization of public services and the turning over of services to the market fundamentally transforms the relationship between provider and service user and hampers the development of co-production and democratic governance.

Her later work examined how people and communities collaborate and organize themselves to manage collective shared resources like forests, fisheries and natural and social resources. The research overturned the conventional wisdom about government regulation and challenged the idea that private ownership of public resources is better and more effective. Ostrom's work provides clear evidence that the commons-based traditions of cooperation and communal management of resources is not a violation of basic economic common sense.

Her work undermines political conservatives and mainstream economists who denigrate collectively managed property and government and who argue that only private property and the "free market" can responsibly manage resources. Her work also directly challenges current ideas that privatization and private ownership and expert management of resources is the most effective strategy.

Ostrom advocated a “polycentric” approach to managing shared or common resources involving oversight “at multiple levels with autonomy at each level. Ostrom argued that shared management of resources helps to establish rules that “tend to encourage the growth of trust and reciprocity” among people who use and care for a particular commons.

Ostrim argued that key management decisions should be made as close to the scene of events and the actors involved as possible.

Her work showed that the people most affected by or with a stake in a particular resource are the ones best able to collaborate to use and manage those shared resources effectively and sustainably.

Ostrom's work demonstrates the importance of shared (collective) rather than expert or private management of resources and knowledge and emphasises the importance of active citizen partcipation. She cited a comprehensive study of 100 forests in 14 countries that detailed how the involvement of local people in decisionmaking is more important to successfully sustaining healthy forests than who is actually in charge of the forests.

David Bollier writes of the significance of Ostrom's work:

In the 1970s, economics was quickly veering into a kind of religious fundamentalism. It was a discipline obsessed with “rational individualism,” private property rights and markets even though the universe of meaningful human activity is much broader and complex. Lin Ostrom pioneered a different, more humanistic way of thinking about “the economy” and resource management. She originally focused on property rights and “common-pool resources,” collective resources over which no one has private property rights or exclusive control, such as fishers, grazing lands and groundwater. This work later evolved into a broader study of the commons as a rich, cross-cultural socio-ecological paradigm. Working within the social sciences, Ostrom proceeded to build a new school of thought within the standard economic narrative while extending it in vital ways.

Ostrom's work also has direct relevance to the current economic and environment crises. She wrote:

"We cannot rely on singular global policies to solve the problem of managing our common resources: the oceans, atmosphere, forests, waterways, and rich diversity of life that combine to create the right conditions for life, including seven billion humans, to thrive.....Success will hinge on developing many overlapping policies to achieve the goals,.......We have a decade to act before the economic cost of current viable solutions becomes too high. Without action, we risk catastrophic and perhaps irreversible changes to our life-support system.”

Articles written in memory of her work are here, here, here and here.

A reading list of her work is here.

The last article she wrote before she died is here

Her last book, published just before her death was titled Working Together: Collective Action, the Commons, and Multiple Methods in Practice, and describes the advantages of using several different research methods to study a problem.

Service provider's religious views to determine public services

There are plenty of reasons to oppose the Barnett Government's privatization of public hospitals and public health services at Fiona Stanley Hospital and the Midland Hospital.

Here is another one (article here).  

The Acting Health Minister has confirmed that religious beliefs are likely to affect what services are provided at the Midland Health Campus which is due to open in 2015.

At this stage of negotiations, procedures such as vasectomies and abortions would not be carried out at the new hospital because the likely service provider, Catholic, not for profit group- St John of God Health Care does not allow their staff to perform them.

Acting Health minister Troy Buswell confirmed that he did not expect such procedures to be done at the Midland Health Campus.

Opposition health spokesperson Roger Cook said the service provider would not carry out procedures that they considered to be interfering with the process of life and this was a concern to the community.

Mr Cook said the public would be given a truncated service dictated by the private operator.

He said this outcome was a result of privatisation.

"The moment you privatise, you lose accountability and the ability to govern what goes on in the public hospital system," Mr Cook said.

St John of God Health Care is the Government's preferred tender for the health campus and contract negotiations are ongoing.

The religious views of the provider of a public hospital should never determine what services are provided. We must oppose the imposition of outdated catholic theology on the provision of a public service.

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.

Andrew Thackrah on a mining boom built on myth

In the piece below Andrew Thackrah shows how much of the political and economic logic that underpins Western Australia's so called "mining led economic boom is built upon a series of myths.

In particular, the wealth generated by the mining industry, which enriches some at the expense of many, is built on the back of massive public investment and active intervention by the State Government to advance the interests of mining corporations and WA's business and corporate elite.

This piece first appeared in the online publication Australian Policy and History.

Mining, Myths and making it up in Western Australia

by Andrew Thackrah,
Postgraduate candidate, School of Humanities, University of Western Australia

Following then prime minister Kevin Rudd's announcement in May that the Commonwealth Government would introduce a new 40% 'super-profits' tax on the profits of some mining companies, a wave of hysteria swept through sections of the political class of Western Australia. In its Foundation Day editorial the state's main newspaper, The West Australian, said its inhabitants could be forgiven for feeling like 'they are living in a state under siege'. Prominent Western Australian identity and boss of Fortescue Metals, Andrew Forrest, has predicted the new tax could result in 30,000 job losses.

Julia Gillard's ascension saw a new deal negotiated with the mining companies. The rate of taxation was reduced to 30% and the number of companies affected by the new arrangements was drastically cut. The hyperbole, however, has not subsided. Fresh mining industry-funded ads have claimed that electricity prices will rise and the value of superannuation funds fall if the new arrangements are introduced. With Tony Abbott promising to oppose Labor's 'big new tax', the proposed changes have become a red-hot election issue - nowhere more so than in the mining-centric state of Western Australia.

Western Australia is a mining state whose citizens' obsession with resources has shaped almost every facet of their lives. A degree of parochialism commonly creeps into political debates in the West. Ironically, however, in their strident defence of the significant role played by resource companies in maintaining Australia's prosperity, mining tax opponents have clearly highlighted just how much the dominant framework of political economy in Western Australia draws upon globally ascendant free-market ideology. In short, the history of mining in Western Australia bears striking parallels to the wider history of contemporary free-market capitalism. 

This reality becomes clear when one considers two of the key arguments deployed against the mining tax. First, it is suggested that the mining industry is a 'golden goose' that spreads prosperity throughout society and that government regulation will only succeed in 'killing off' the good times. The 'golden goose' defence of the mining industry was quickly deployed following the announcement of the super-profits tax. Shadow Treasurer Joe Hockey, for example, declared that Kevin Rudd was 'about to take money off the golden goose that's delivering Australia an age of prosperity'. 

Globally, this line of argument commonly has been used to defend the interests of domestically dominant industries. Yet, as British geographer Doreen Massey highlights in World City, her book on the City of London, the golden goose analogy serves to conceal more than it reveals. Massey notes that instead of the concentration of economic activity in London's finance sector over the last two to three decades being seen as '…an element in the production and reproduction of inter-regional inequality… it is taken as given and then interpreted as a source of London's largesse to the nation as a whole'.

The point here is not to deny that the finance and mining sectors have produced substantial wealth. Rather, the golden goose analogy serves to promote the notion that minimal government regulation actually spreads that wealth throughout society, obscuring the creation of inequalities (both local and global) upon which economic growth may actually rely. One only has to think of the economic stagnation in areas of northern England and Scotland and the continuing poverty of some indigenous Australians to be reminded of the losers in periods of rapid growth. 

The second key argument deployed by mining tax opponents is that mining fosters an entrepreneurial spirit that is entirely independent of government involvement in the economy. West Australian newspaper columnist Paul Murray, for example, recently made the extraordinarily simplistic assertion that 'mining has always met its own risk - and provided its own infrastructure. It doesn't want, or need, the Government as a "silent partner" in its business'.

The notion that mining has thrived when government has left the industry to its own devices simply flies in the face of history. As academic (and now Vice-Chancellor of Victoria University) Elizabeth Harman noted in the early 1980s, a paradigm has reigned in Western Australia where state and capital have worked together to ensure that the need for development is prioritised over other interests. Premier Charles Court was particularly pro-active in attracting mining investors to the state. 

A more recent analysis of WA economy by Peter McMahon of Murdoch University reveals that, while private enterprise has played a vital role in the state's history, it has not done so as a solo operator. McMahon notes that 'successive governments…were absolutely critical in developing W.A.' Recently the Barnett Government committed $3.5 million for the development of plans to build a new port in the Pilbara and boasted that the Government's decision to construct new power lines had ensured that a large resource project went ahead. Just as the finance industry was lured to London by conscious government regulatory and tax changes, so, too, the Western Australian mining industry is aided and abetted by the state. 

The 'golden goose' and 'entrepreneurial spirit' arguments outlined above follow from a specific aspect of free market thought - the notion that commercial enterprise guided only by a minimal state sees wealth 'trickle down' to almost all in society. Ideas like these have not emerged in a vacuum. David Harvey in his Brief History of Neo-liberalism explains how such free market notions have become dominant since the Western economic crises of the 1970s. They were championed by leaders such as Ronald Reagan and Margaret Thatcher as part of a conscious political strategy. The continuing reality of inequality reminds us that, rather than being grounded in common sense, free market ideas are a product of a historically specific context that leaves them open to revision and debate. Voters in Western Australia and beyond should look carefully at the rhetoric used by anti-mining tax campaigners. It says much about how the political and economic logic of the present is grounded in myth-making about the past.

Australians thinking and writing about Markets and Society

Damien Cahill  is an Australian academic who has written extensively about the influence of neoliberalism and the use of market solutions to an increasing number of social issues. Some of his writings can read here and here.

Damien is also the co-convenor of the Markets and Society Research Network at the University of Sydney, which  brings together social scientists concerned about markets and society to discuss the social foundations of markets; the regulation of markets; the social effects of markets; and the shifting boundaries between the state, private sector, and civil society.

Like this blog, the Market and Society Research Network aims to challenge orthodox conceptions of markets at a time of increasing ‘marketisation’. This  includes critical examination of the role and nature of markets, the legitimate scope of markets as well as investigations of markets as sites of contestation.

The Network recently ran a 2 day conference to critically analyze the increasing reliance on market-based solutions in Australia  in areas such as  climate change, provision of human services, childcare services, health, education, superannuation and housing. The program and the papers can be read here.

The crisis in the Murray Darling and the failure of market mechanisms

Bruce Haigh on the madness of using market mechanisms to manage water in the Murray Darling Basin and the need for a radically different approach to the management of Australia's water resources:

"The management of water should not be left to markets where the pursuit of profit has water abused, devalued and often powerless with respect to sustainability. Water needs a voice and a value beyond the market. At the moment it comes a very poor second in calculations relating its use - agriculture and industry have the upper hand and water is required to comply".


"The National and Liberal Parties presided over the slow decline of rural Australia. They had the opportunity to reverse this during almost 12 years of government. They declined to do so and as a result many jobs were lost and economic opportunities that may have come through the provision of better services and infrastructure were not created, but were lost. This neglect saw the rise of rural Independents who now hold the balance of power". 

The ideological straitjacket of economics

"We need to develop a new way of conceiving the economic process. In calling for an end to economics, I am not suggesting that we should dismiss everything that economists have learned about the economy. Some economic insights are useful. Our goal should be to build up an understanding of the economy in a context that transcends the narrow context of economic theory that characterizes modern economic theory. In doing so, we may lay the groundwork for an economy that transcends our outmoded capitalist way of life." 
Michael Perelman Railroading Economics

Stephen Marglin calls it the "dismal science". Michael Perelman writes about the ideological straitjacket of modern economics. James Galbraith describes contemporary economics in terms of a god that failed, a governing creed whose fallacies have been exposed by events of recent years.  In his book Economia Australian Geoff Davies writes that we have all become so accustomed to the current economic regime that we fail to see how absurd it is. He is right.

I am currently reading the books pictured and all present a radical and sustained critique of contemporary economics. They challenge the idea that market and market forces are a solution to our social, environmental and economic problems.  

These books don't just expose discredited contemporary economic orthodoxies, they also document the destructive effects of those orthodoxies in the real world (rather than the theories of economists and business leaders). These authors more importantly set an  alternative and radical economic agenda for the future.

The books pictured include:

  

Stephen Margeli (2008) The Dismal Science

Michael Perelman (2006) Railroading Economics

James Galbraith (2008)  The Predator State: How Conservatives Abandoned the Free Market and why Liberals Should to

Geoff Davies (2004) Economia: New Economic systems to empower people and support the living world

James Gustav Speth (2008) The Bridge at the End of the World

Barry Lynn (2009) Cornered:The New Monopoly Capitalism and the Dynamics of Destruction

Crisis in WA hospitals

This op ed piece by Professor Gavin Mooney appeared in the West Australian on Friday September 24th in response to ongoing problems in the WA health care system, highlighted by a recent crises involving ambulance ramping at the city's major public hospitals.

Ambulance ramping

By Gavin Mooney

The accounts of the ramping of ambulances at the major Perth hospitals last week are worrying and one feels very much for the patients involved and their families. Something clearly is going wrong and, while last week was particularly bad, these events do occur with some regularity.

 But let’s stop and think this through a bit more. There will never be a health care system in WA or anywhere else that can meet all demands and needs for health care. No society can ever achieve that. If we tried to, it would be so expensive and we would end up with very poor educational, transport and justice systems. Or we would have to cut back markedly on private consumption as we paid more and more in taxes. Or, if we went further down the private road, we’d be spending enormous amounts on private health insurance.

Taking public and private together, as a country or as a state, do we spend enough on health care? Well in comparison with other countries we seem to be getting it about right – although out of the total we do spend rather a high proportion on hospitals.

But then of course we need hospitals!  My questions however are these.

First have we got the right mix of types of hospitals? And second have we got the right mix of types of health services? The Reid Review of 2004 which is the most recent assessment of the WA health service indicated that 80% of patients in our big teaching hospitals did not need to be there. That is a staggering figure, especially as these are very expensive places to be. 

There is a ‘law’ in health policy that says ‘a built bed is a filled bed’ meaning that if we create more beds they automatically get used. That 80% figure clearly suggests an oversupply of beds in our big hospitals. Many patients could be treated just as well but at less cost in other hospitals. Rather than building the Fiona Stanley Hospital what we should be doing is expanding other, cheaper hospitals. 

But maybe we need to increase services outside of hospitals – GP and community services, preventive services. It is of note that in the “Citizens’ Juries” (of randomly selected citizens brought together and given good information) in this state that I have facilitated, when asked about their priorities, not one has wanted more hospital beds. Indeed to pay for the priorities that they as citizens want – prevention, mental illness, greater equity, community care - some juries have suggested closing hospital beds!

The push for more and more beds is simply not working. I have been in the west for 10 years and over that period we have pumped more and more money into these teaching hospitals and we still have the ramping of last week. These hospitals are ‘sick’ but the ‘treatment’ over the last decade is not working. We need more ‘investigations’ so that we can up with a better ‘diagnosis’. 

What to do? Well the first thing - and I have asked for this repeatedly – is to conduct a detailed investigation into our teaching hospitals. Where is the money going? What is driving costs? Can the services be provided as well but at less cost i.e. more efficiently? That sort of detailed study was not done by Reid and it has not been done since. We cannot make sense of any of this until that study is done.

The second thing is to put in place more policies to keep people in the community – bolster prevention and invest in programs to keep people out of hospital. Most people want to live as long as they can in their own homes. Let’s respect that. And it is cheaper. 

And third let’s find out what the people of WA want from our health services – and they are our health services, not the doctors’, not the politicians’, not the Health Department’s. They are ours, the citizens’. Let’s have a series of these “Citizens’ Juries”, say ten across the state, so that critically informed citizens can have a genuine say in the future of the WA health service.

Early last month I did one of these Citizens’ Juries in the ACT at the request of the Minister of Health in the ACT, with fascinating results for their services.

Dr Hames, Mr Snowball, I make this plea. In response to ambulance ramping, instead of pouring more and more money into these expensive hospitals, let’s have an investigation into how the vast sums of money they are currently getting current are being used. And rather than assume that supplying more and more beds is the answer, let’s work on reducing demand.  And finally will you please fund a program of Citizens’ Juries across the state so that you can learn what we as citizens want from our WA health services?

Professor Gavin Mooney, Health Economist and Co-convenor, WA Social Justice Network 

Industrialising the Kimberley: Colin Barnett's hubris

image of James Price Point, Kimberley, courtsey of Wangle

Excellent piece here by Martin Pritchard, Director of Environs Kimberley about the hubris and nightmarish impact of Colin Barnett's plan to industrialise the Kimberley.

Pritcard shows that the James Price Point development is the first step in the Barnett vision to gift much of the Kimberley region to mining and resource companies and turn into an industrial and mining zone.

Market illogic and the manufacture of "defecit hysteria"

Three hundred US economists have warned that current US economic policies risk plunging the US into a deep depression, unseen since the 1930's. 

As the economic circumstances of ordinary Americans worsen, the economists are warning against "deficit hysteria", the contemporary obsession with short term government deficits which lead governments down the path of severe austerity measures and massive reductions in public spending. 

The economists argue that defecit hysteria is a manufactured crises and is being used as cover for other agendas, including more privatization and slashing of social security and social spending.

The economists stress the need for increased public investment to thrust the US economy back into recovery.

The economic crises confronting the US is borne out by recent data which shows that more Americans are poor than ever before (since data was collected). Unemployment and job losses continues to rise and there are now 43.6 million Americans who are poor, as measured by the US Census Bureau. 


Juxtapose this information with the graph below about US income growth (posted before) and we can begin to understand what David Harvey means by accumulation by dispossession, the process whereby the rich, the wealthy and upper middle class gain greater wealth and power at the expense of the rest.