Home > Politics (general) > Socialised health care as feasible utopia (crosspost from CT)

Socialised health care as feasible utopia (crosspost from CT)

September 8th, 2011

As I’ve mentioned a few times, I got a lot out of Erik Olin Wright’s Envisioning Real Utopias, and am still hoping our long-promised book event comes to fruition. The general idea of the book was in line with my thinking that technocratic rationality, of the kind offered by, say Obama or Blair, is not a sufficient answer to the irrationalist tribalism of the right – the left needs a transformative vision to offer hope of a better life, both for the increasing proportion of the population in rich countries who are losing ground as a result of growing inequality and for the great majority of the world’s population who are still poor by OECD standards[2]. So, Utopia matters.

But it’s just as important that utopia be feasible. Utopia as a dream may be comforting, but is unlikely to inspire effective political action. And attempts to implement a utopia that isn’t feasible are bound to end in failure, quite possibly disastrous failure, as the experience of communism showed us.

So, my idea was to think about what kind of transformative vision might be both feasible, and capable of inspiring effective action. I had a first go at this here and here, in relation to education.

Turning to health care, we could start with a utopian ideal where everyone got all the health care that could benefit them. But that would be utopian in the pejorative sense – the scope for expanding health services is effectively infinite, and the resources available to society are not.

Thinking about feasible utopia, on the other hand, it seems to me that the system of socialised health care in modern social democracies is not a bad model. That is, if all of society worked like the health care system at its best, we could regard the political project of social democracy as a success.

Perhaps no country gets it perfectly right. In Australia for example, the basics (general practitioner services, pharmaceuticals, critical hospital services) are covered pretty well, but we don’t do so well on mental and dental health, and there are lots of complaints about waiting lists for elective (=desirable, but not lifesaving) surgery. Still, outside the US, the big worry about going to doctors or hospitals is whether the treatment will be successful, not whether you will go bankrupt trying to pay for it.

The big question is whether this model can be replicated more broadly. Health care has the special characteristics that, on the one hand, there isn’t a big issue of consumer preferences (mostly, people want the treatment that has the best chance of a cure, though there is sometimes a risk-return trade-off) and, on the other hand, markets perform very badly.

The public provision model wouldn’t work for, say, motor cars. Still, it seems that it ought to be possible to limit the domain of inequality in such a way that no one was left without the basic requirements for a decent life and social participation while, at the same time, those who chose to work harder, or worked more productively, could still enjoy higher consumption of discretionary items like expensive cars and granite benchtops.

fn2. A billion or more of whom are poor by the absolute standard of not having enough food to eat, or access to basic housing and medical care

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  1. sam
    September 8th, 2011 at 21:02 | #1

    “the scope for expanding health services is effectively infinite, and the resources available to society are not.”

    Is this really true? Would giving everybody in Australia access to near perfect health care actually bankrupt the country?

    You’ve mentioned a few imperfections in our model; Dental, mental, and elective surgery list, but plugging those holes wouldn’t break the bank. Apart from those, are we really so far from having perfect care?

  2. TerjeP
    September 8th, 2011 at 21:10 | #2

    Australia only has a partially socialised medical system. Outside of hospital nearly all medical services (GP, medical centres, pathology, chemists, specialists etc) are provided by private sector organisations even when the funding is government provided. I think we should retreat from government funding as well but keep the government as an optional financier for those with significant medical needs but no current financial means. This wouldn’t be that hard to implement. Essentially Medicare would just send you a statement each quarter and you could either pay the debt or add it to your HECS liability. We could probably cut about 7 points off income tax rates as a result.

    Hospitals ought to be privatised for efficiency reasons also with some form of USO for emergency wards if necessary. It is the only real part of Australia’s medical system were government ownership is the norm. There is no good reason for this to continue.

  3. Gypsyland
    September 8th, 2011 at 21:54 | #3

    @TerjeP

    “Hospitals ought to be privatised for efficiency reasons”

    I’ve just been through a number of the countries wonderfully privatised airports, and I do not see one jot of efficiency. I see restricted services (find your bank’s ATM), gouging for parking, worse gouging for train travel, and poor service for exorbitant prices.

    Two examples. I was in Sydney Airport when the bikies had their fracas awhile back. As we now know the security footage was unusable, and the crowd control was moronic, repetitious and very, very loud, all through the airport.

    Our regional airport just got privatised, has to have a decent return on capital, jacked up its fees, and immediatetly lost one of the carriers with the only direct flights to some interstate captials.

    Efficient? Only if your standing on your head. Its a mantra, best forgotten. I prefer John’s search for meaningful ways forward.

  4. TerjeP
    September 8th, 2011 at 22:18 | #4

    It’s hard to comment on the example of your regional airport without knowing which airport it is and some data on performance (including financial) before and after privatisation. Even so I don’t think hospitals are quite the same as airports. For procedures other than emergencies most of the population can choose to attend an alternate hospital if the closest one does not entirely satisfy.

  5. Chris Warren
    September 8th, 2011 at 22:21 | #5

    Whether something is socialised or privatised is not a critical issue. Of course public provision of motor cars would be possible. The real problem is whether a service is provided to earn a capitalist profit, or is provided at natural economic costs, or whether some get quality services at a subsidised cost. This is irrespective of the socialised or privatised issues.

    A co-operative can still aspire to maximise returns, and a charitable private provider can offer subsidised services, A socialised entity can still make huge capitalist profits eg Canberra’s electricity, gas and water provider – ACTEWAGL. Governments can run their housing stock on capitalist lines.

    All these possibilities suggest that the public-private dichotomy is not a key issue – particularly and as long as the elephant (capitalism) is ignored. Theoretically, every service can be provided by workers’ cooperatives (so the public-private dichotomy is removed) but still the problem of how they operate remains.

    Similarly, the issue of whether a market or a plan suits service provision is also a separate issue to whether there is public or private supply. Plans and regulated markets appear to approach each other. Anyway this issue is minimised once a market is viewed as a regulated market with adequate information. A plan can still have competitive elements incorporated (a supposed virtue of markets).

  6. Gipsyland
    September 8th, 2011 at 22:55 | #6

    I agree with Chris. The beauty of focusing on the irrelevant issue of ownership allows the apologists for the rent seekers to avoid the real arguments. Efficiency is a wonderful mantra, but what does it mean. Efficient accumulation of all available money by those who can seems the most reliable definition. In a complex society where long term net gains may well be advanced by temporary sub optimal efficiencies (tertiary education being a classic example, where efficiency as defined by money accumulation is deferred) the need for a constructive and inclusive debate on how that may be achieved is long overdue.

    I dislike obvious waste, and in particular the over-consumption of finite resources for little appreciable gain. In the end a just society must deal with the problem of equity, which for an Australia in denial on most fronts will require a tectonic shift. Making Australians ‘poorer’ will not make anyone else richer. On the other hand, making Australians richer will not make them better, and in terms of consumption, probably more wasteful.

    The utopian ideal is to make things better. But like efficiency, what is better? I notice the Wikipedia page on quality of life still has Ireland at the top (as ranked in 2005). That was prescient. I’m sure many Irish now have a much better understanding of terms like prudent, resilient and stupid.

  7. John Goss
    September 8th, 2011 at 23:12 | #7

    The health system is a complex beast, and to keep it healthy you have to keep making changes. So the fee for service system in medical services has had many advantages, especially with regard to efficiency, but its got to the stage where the negative aspects of fee for service are dominating and we need to mix in some more block funding – particularly for preventive actions and complex conditions. The GP workforce supply is now almost back to optimal levels after a period of being too low, but that needs to be continually watched and adjusted with allowance for the large training time lags. And other areas of the system need adjusting. Overall its a pretty good system which delivers good, reasonably equitable outcomes. Its interesting that all the different systems in the OECD countries deliver pretty good outcomes, with the exception of the USA, and there is no ‘clearly the best’ system. And even the US has Medicare for the 65+ population, and a good integrated, efficient health system for their veterans, so they are not too far away from being OK.
    So the various health systems are not too different from a practical utopia.

  8. stockingrate
    September 9th, 2011 at 02:05 | #8

    ” hope of a better life” The best that can be done is to provide a path to making the best of what we have. This, for Americans, should include recognition that the old days of consuming a huge fraction of the world’s resources are gone. Their oil production peaked long ago, the competitiveness of their labour has collapsed, and climate change has not stopped. Utopia are dated.

  9. TerjeP
    September 9th, 2011 at 04:06 | #9

    There is no doubt that private hospitals need not be “for profit”. Whilst I’m no historical expert on the topic it seems to me from casual observation that prior to state ownership of hospitals they were generally run as charitable institutions all be it with a fee for service aspect. I don’t think worker co-operatives was the norm although community co-operative may be a meaningful description. The issue of ownership is primarily an issue of governance. Subsidisation of some services may make sence but this happens in private organisations all the time anyway. The issue with government ownership is that it makes overall management of resource allocation remote and introduces feedback delays. Price signals don’t get used properly. Obviously public ownership of hospitals can work but my contention is that it is sub optimal. If we are to have public ownership we need boards of management with greater accountability, autonomy and responsibility.

  10. Chris Warren
    September 9th, 2011 at 08:28 | #10

    Government ownership is generally more responsive to public demands and concerns about quality etc. Once a service is partially paid for by taxes, price signals at the time of usage, are less useful. In fact, if a service provider uses price signals, some people will get greater access to services, and some will miss out. Over time this misallocation will cause social disruption.

    Using price signals leads to overlooking significant demand. This usually reappears as a queue when a service becomes free or subsidised. Then the hidden inefficiency of the previous pricing regime becomes glaringly obvious. This is not specific to hospitals but to most essential services.

    Government decisions, public decisions or cooperative decisions are no more remote than private decisions but are more transparent, representative of the community and therefore produce better outcomes for the greatest number. Private governance usually evoke “commercial-in-confidence” blockages in information flows, and, in a competitive environment, lead to costly duplications. Private entities resist public accountability thereby introducing less efficient outcomes.

    In Australia services such as removing rotting teeth, baby delivery, resetting fractures, removing cancers, vaccinations etc should be governed by criteria of social and patient need and the capacity of the tax system to pay.

    Combining pricing with privatisation and profiteering leads to the worst of all possible worlds.

  11. Gypsyland
    September 9th, 2011 at 08:36 | #11

    You’re sounding more utopian every post. Now, if all those nice people who want to own hospitals just stopped preying on the sick and suffering we will all get along famously.

    The reality is that the unscrupulous always exploit the questionable to maximise profit, and so force those whom have to compete to adopt similar behaviours.

    Once again it is not ownership, and not even regulation, but governance. I think you almost got your last line right. “If we are to have private ownership we need boards of management with greater accountability, autonomy and responsibility.”

  12. Mulga Mumblebrain
    September 9th, 2011 at 09:12 | #12

    I’d say that the ideal system is that of Cuba. Run on a shoestring, emphasising preventative care and close monitoring by neighbourhood clinics, it has not only maintained high standards for decades despite the US economic siege, but has exported healthcare to numerous other countries in the poor world. The secret is to treat good health as a human right, not a commodity to be sold to the highest bidder in pursuit of the greatest profit.

  13. Ikonoclast
    September 9th, 2011 at 09:42 | #13

    We are at the point where Popperian piecemeal tinkering will not save endless growth corporate capitalism in toto, let alone any component of it. Without going into that topic, I would advocate that persons over fifty (like myself at 57) should adopt a more philosophical and stoical position about their own health and longevity. People over fifty should make the honest judgement that they have lived longer than most humans have ever lived and that the planet and younger people owe them nothing.

    Thus over fifties should consider only seeking very basic health care. In this mindset, all heroic and semi-heroic measures including major operations, heart operations, expensive cancer treatments and expensive, continuous drug treatments etc would not be sought. Over fifties should maintain their own health as best they can by proper diet, exercise and minor treatments and prepare themselves philosophically (or religiously if they wish) to live spartanly and (most often) die when their unaided body would naturally die.

    In this mindset simple preventive measures would be taken especially where they prevent future higher costs (non-financial as well as financial) to the individual and to the system. Heroic and semi-heroic measures (which are financially costly and then usually lead to chronic costs of maintenance) would not be accepted by the philosophically mature over fifty person.

    We need to change our philosphy about life, death and medicine. Reducing costs of medical over-servicing (especially for over fifties) is a personal responsibility. This responsiblity is best met by stoicism, self-denial and realistic assessment of the (generally) poor quality of life after heroic measures and under chronic on-going treatment.

    Anything resembling utopia can be generated only in the mind of the philosophical person who fully accepts his/her transience and inconsequence.

  14. Moz
    September 9th, 2011 at 10:07 | #14

    You missed long term care, particularly disability care (which crosses over to education) and aged care. The NZ accident compensation system is a good model for that, and until it was required to run at a profit it worked quite well.

    Health care payment in Australia confuses me, and I’ve been here 10 years. Exactly what is subsidised and what’s not, and how much I have to pay and to whom is a bizarre mix of public, privatised-public, insurance and private. I visit a GP, pay $50, visit the Medicare office and get reimbursed $37.24 then my insurance covers another $12.76 but my bank pockets $1.25 for doing the shuffling around. Is this some sort of employment scheme for displaced bureaucrats? I took it as an incentive to only use bulk billing providers, which may be the intention.

    Guaranteed Minimum Income is an interesting utopian ideal if you’re looking for ideas.

  15. Ikonoclast
    September 9th, 2011 at 10:42 | #15

    One of the flaws in utopian thinking is the often implicit assumption that social utopia (or individual happiness) can be achieved by freeing people from pain and challange; that utopia is a place where nothing hurts and everything is easy. Yet our evolutionary heritage (as animals like any other animals) is that pain and challenge (though not of an overwhelming intensity) are necessary stimuli for overall maintenance of general well being. Immunisation is a moderate challenge to our immune system which is exactly why it works. Over anti-septic environments fail to challenge our immune system properly and this appears to be playing a role in the rise of serious allergies (and other auto-immune disorders) in the modern young child.

    Out health system displays a sort of split personality where we see flagrant and even frivolous over-servicing alongside egregious under-servicing of real need. This occurs because of the money nexus. Older, wealthier people for example are over-serviced while painful need is unmet among the poor, the young and disadvantaged. Health should be returned to a far more socialised model to address this fundamental problem.

    At the same time, we should always remain aware of the dangers of medical over-servicing across the spectrum, for example with antibiotics use right through to excessive pandering to the middle-aged and aged wealthy who expect open-ended medical intervention to overcome health problems often caused by years of physical laziness and all kinds of self-indulgence.

  16. Tim
    September 9th, 2011 at 10:53 | #16

    John,

    Your conception of the ideal level of inequality matches my own. I am not sure if you are familiar with this bible verse, but in it Paul espouses pretty much the same thing, emphasis on the last sentence:

    “Our desire is not that others might be relieved while you are hard pressed, but that there might be equality. At the present time your plenty will supply what they need, so that in turn their plenty will supply what you need. The goal is equality, as it is written: “The one who gathered much did not have too much, and the one who gathered little did not have too little.””

  17. Mulga Mumblebrain
    September 9th, 2011 at 10:54 | #17

    You have a vigorous attack on egalitarian Utopias in todays ‘The Fundament’ from the fragrant Peter Saunders, who has returned to these shores and found a pleasant niche at, where else?-the CIS. Apparently inequality is not only morally justifiable, all those billionaires and merchant bankers having toiled hard for their gelt, and the poor being, basically, scrounging moochers, but inequality has no ill-effects on society whatsoever and the only people who say so are lying ‘socialists’. A Brave New World that has such creatures in it!

  18. Mr MIT
    September 9th, 2011 at 11:26 | #18

    Quiggin: A detailed review of your book has just been posted on Steve Williamson’s blog. You look bad, really bad.

  19. John T.
    September 9th, 2011 at 13:26 | #19

    Your statement that “In Australia for example, the basics (general practitioner services, pharmaceuticals, critical hospital services) are covered pretty well…” is pretty wide of the mark if you imply that we are doing it well in these areas. The whole health system operates under entirely wrong economic drivers where GPs (and most other medical services) are rewarded by providing a short consultation and having as many return visits as possible. In other words, a sickness model – not a health model. Preventative actions are not rewarded – treatment is more rewarding. Furthermore, most health consumers have no idea of the real cost of the service they have purchased because Medicare picks up most of the cost. And of course, this leads to no market or consumer controls on all of the tests that GPs and specialists prescribe.
    And I can’t even discuss the ideological travesty of private health insurance. It has no economic justification. It is a tragic waste of resources (fairly reliably estimated at $6 billion per annum) that could be much more effectively used to improve the haelth system.
    Unless we re-think the whole health economy, we have very little chance of developing a health utopia.

  20. Ikonoclast
    September 9th, 2011 at 15:02 | #20

    @Mr MIT

    Wlliamson is a monetarist. One needs to say no more really other than to point out that monetarism is 100% zombie-voodoo nonsense and proven so by the empirical work of people like Steve Keen, Bill Mitchell and John Quiggin.

  21. kevin1
    September 9th, 2011 at 18:17 | #21

    @Moz

    Moz is on the money by including the proposed National Disability Insurance scheme as a cornerstone of any health utopia. It is a form of “catastrophe insurance” for families who have a child with autism or intellectual disability, and incur long-term expense and care responsibilities, sometimes including early age residential care, which fundamentally changes their lives. As these families are largely randomly selected, it is appropriate for funding by a national levy, like Medicare, which will demonstrate social solidarity for society’s weakest members. Accident insurance and aged care funding arrangements cater for a large political constituency and are well organised, but people with disabilities are a tiny percentage with little political traction until people like Chris Gallus and Bill Shorten took up their case. At present funding is capped by State, local govt and Federal budget allocations unlike sickness benefit, unemployment benefits, Medicare rebates, so the needy beg for support from bureaucratic gatekeepers, and have been too cowered or exhausted to aggressively push their case. This also means measuring need has been difficult: the recent PC report estimates about 400,000 people currently have a significant disability. Reform of this type if successful will improve the quality of life of those people and many others around them who are more able to follow the life opportunities they are entitled to.

  22. Salient Green
    September 9th, 2011 at 20:58 | #22

    I pretty much agree with Mulga@12 and Iko@ 13. Preventative medicine must take priority in a tight health budget along with diseases and conditions of young people.
    I think that a good look at civilization as a whole would identify a myriad of preventative medicine applications. Stop research into longevity and older persons’ medicine. Direct funds into studies on pollution, nutrition, chemical free food. Have better social policy, income equality, education.

    In fact, if you try to achieve a utopia of good social policy, income equity and education, a utopia of health will most likely follow.

  23. John Quiggin
    September 9th, 2011 at 21:01 | #23

    @Mr MIT
    I’ve left this stand, despite the fact that you are a troll, sockpuppeteer and liar.

    I’ll respond to Williamson’s review when I get a bit of free time. Unlike the earlier blog piece, which would have been devastating if it were valid, this one abandons claims like “EMH/DSGE have no implications, and therefore can’t be wrong”

    Now it seems more like the standard response to a critique of the profession (indeed, typical of the standard defence of any profession when under this kind of attack), not so much defending the ideas I criticised as arguing that I’m attacking a straw man.

  24. Mr MIT
    September 10th, 2011 at 05:09 | #24

    Don’t shoot the messenger! I don’t see how I am a liar: for using a nickname, like Freelander, Gypsyland, Ikonclast, or Moz. You are pretty thinned skinned it seems. It nice that you are no longer censoring your site though.

    I won’t censor this one either, but use it for general amusement as an illustration of how stupid sockpuppeters generally are. It’s not that hard to do, but in my experience they nearly always slip up sooner or later. “Mr Mit” has used three sock puppets (pretending to be different people and therefore lying) and an equal number of fake email addresses. But sad to say, he slipped up and used his real email once (or maybe he is being really naughty and spoofing one of his fellow students, who I imagine would be upset about this). And of course his IP address confirms his location, quite some way from MIT. He’s lucky I’m in a good mood today, but if he tries posting again, I might get a bit miffed. To be clear, Mr Mit, you are banned – anything more from you will be deleted, disemvowelled or otherwise treated as I see fit, as well as leading to the publication of the info mentioned above.

    For the record, and as stated very clearly in my comment rules, people who engage in sockpuppeteering or other forms of abuse can have no expectation of privacy here. I have exposed them in the past and will continue to do so as I see fit.

  25. TerjeP
    September 10th, 2011 at 06:51 | #25

    Furthermore, most health consumers have no idea of the real cost of the service they have purchased because Medicare picks up most of the cost.

    Most Australians no doubt think the cost of these services is covered by the Medicare levy. This is of course rubbish. The revenue raised by the Medicare levy does not come even close to covering the cost of public health. It is a deceptive little tax that should be abolished in the name of greater transparency.

  26. John Goss
    September 10th, 2011 at 16:40 | #26

    The Medicare levy was introduced in 1984 to cover the extra cost of moving to a universal national health insurance scheme for hospital and medical services from the patchwork schemes we had had previously. And it more than covered the extra cost of the new scheme. It was never intended to cover the full cost of medical and hospital services funded by governments, so I fail to see why it should be criticised for not achieving something it was not designed to do. Also I consider a hypothecated levy like the Medicare levy is a way of reducing deadweight losses from taxation, because the levy is more in the nature of a charge for services rather than a tax.

  27. TerjeP
    September 10th, 2011 at 18:33 | #27

    A compulsory charge such as the Medicare levy does not have less dead weight costs than a comparable tax because they are both taxes. And even if you decide to class it as something other than as a tax it will still have deadweight costs so long as it is compulsory.

    From a transparency point of view I think the Medicare levy should either be abolished or increased to about 9% (with corresponding cuts in the general tax rates) such that it reflected the true cost of public health care. The current setup, whatever the history, is an unnecessary complication that doesn’t even communicate a meaningful message about the cost of medical services.

  28. kevin1
    September 10th, 2011 at 19:44 | #28

    I forgot to add another reason why a disability insurance levy and utopia are linked: it should break the dependency syndrome of clients being shackled to approved service providers and their preferred systems and rules. Modern thinking around methods of support reverse this relationship, granting people financial authority within broad parameters to identify and find the support they need, on a tailored and flexible basis. Because disability strikes across all classes, these families are often people who can use individualised funding to negotiate what they want without social workers or welfare professionals, and if they do need help, can engage case-brokers on a fee basis to assist. Interestingly, individualised funding and case brokerage is premised on ideas that much of the political left and right can sign up to – libertarianism, direct funding, efficiency and effectiveness potential, community engagement.

    A correction to my earlier posting – motor and workplace accident insurance claimants are funded through compulsory insurance in all states as I understand it: other major injuries are proposed to be included in a separate injury insurance scheme. Info about all this is at http://theconversation.edu.au/productivity-commission-hastens-slowly-on-national-disability-insurance-scheme-2776

  29. Ikonoclast
    September 10th, 2011 at 19:57 | #29

    It sounds like people are assuming that taxes pay for government spending. Under a fiat currency this is not true. Spending precedes taxation. The government creates money by fiat and then spends it. Taxation occurs subsequently to soak up (destroy) some of the fiat money to (1) moderate inflation and (2) enforce an obligation to government that is only payable in the fiat currency. This is MMT (Modern Monetary Theory) of course. The plain fact is that what happens empirically (with fiat currency) is most accurately described by MMT.

    “Hypothecation, in the context of taxation, is the dedication of the revenue of a specific tax for a specific expenditure purpose.” – Wikipedia. This form of hypothecation has no meaning under a fiat currency system as taxes do not pay for expenditure under such a system.

    Proof that taxes do not technically pay for expenditure is easy to give. A Federal Budget allocates all money for outlays at the start of the annual budget cycle. Taxes are subsequently levied progressively over the year. At any stage of the year and at the end of the year expenditures can be behind or ahead of receipts. Budget deficits and budget surpluses are simply written off at the end of the year. Neither deficits nor surpluses accrue year on year. This is true of a government that issues fiat currency (like the Australian government) but not a true of a government that does not issue fiat currency (like our state governments).

  30. John Quiggin
    September 10th, 2011 at 21:39 | #30

    “Budget deficits and budget surpluses are simply written off at the end of the year. Neither deficits nor surpluses accrue year on year.”

    This is wrong. In normal circumstances, including those in Australia at present, deficits are financed almost entirely by the issue of debt, which accrues year on year and is paid down when there is a surplus. The value of new currency issue (seignorage) is only a few billion a year, compared to total public spending of several hundred billion per year, and budget balances (deficit or surplus) which are usually in the tens of billions (say -3 to +3 per cent of national income). The big exception is that of a liquidity trap, where policy should aim for inflation and do as much “quantitative easing” as required to get it.

    This is my big problem with MMT. It’s logically OK to start with expenditure, then subtract the new currency issue consistent with target inflation (a small amount relative to spending), and say that the remainder is equal to the sum of tax revenue and net new debt (often omitted as in Ikonoklast’s post). And, in some circumstances, this isn’t a bad description of how fiscal policy works.

    But this is entirely misleading if you want to answer a question like “can we have additional government expenditure without paying higher taxes (now or later)”. The answer, if you think through the MMT logic is “No, the issue of new money is determined by macro policy, so if you want more expenditure you need more taxes”. Of course, you could decide to have more inflation, but in that case it’s more correct to think of inflation as a tax on money balances.

  31. TerjeP
    September 10th, 2011 at 21:57 | #31

    Iconoclast – sounds like you are keen to change the topic. Even under the framework you prefer the Medicare levy does not soak up all the inflation attributable to the health care budget. So it still lacks transparency. It should be much higher if it is supposed to negate the inflation from public spending on health care or else we should do away with it on the basis of it being a pointless complexity. Reframing the mechanics may be amusing but it does not change the conclusion.

  32. Ikonoclast
    September 11th, 2011 at 07:30 | #32

    @John Quiggin

    Initial correction accepted. Perhaps what I should have written was;

    “Budget deficits and budget surpluses COULD simply be written off at the end of the year. Neither deficits nor surpluses NEED accrue year on year.” (Caps used as I don’t know how to underline text in this blog.)

    The fact that monetarist, neoclassical and hard Keynesian economists think that debt issuance under a fiat currency is necessary for standard deficit funding (and act on that thought) is not evidence that such debt issuance is necessary.

    The key issue is the one raised by JQ at the end of his post, “No, the issue of new money is determined by macro policy, so if you want more expenditure you need more taxes”.

    The issue of new money is determined by macro policy. That is agreed. The statement “if you want more expenditure you need more taxes” is only conditionally true. It is not an iron law that applies or should apply all through the cycles. The problem I have with the current system is its acceptance of high levels of unemployment (and underemployment) coupled with macro policy (surpluses) to limit inflation when said inflation is mainly caused by excessive unregulated lending by private banks. MMT descriptions and prescriptions lay bare the ideological, class and wealth distribution bias of current orthodox economics where government spending is constrained much more than it needs to be to act as a stabiliser against the machinations of an under-regulated FIRE sector and increasing wealth inequality. (I would like a JQ answer to this paragraph, please. Interested to know your thinking on my contentions here.)

    This discussion is related to health spending as unecessary limits on government social spending affect health policy also.

  33. TerjeP
    September 11th, 2011 at 08:48 | #33

    Ikonoclast – to be complete your prefered framework ought to acknowledge government borrowing as an additional means to soaking up inflation pressure (caused by government spending of fiat currency). If this means is not used then more taxation must be used. Reframing the mechanics may be amusing but it does not change the conclusion. In fact it seems evident that the reframing has lead you to a state of confusion.

  34. Chris Warren
    September 11th, 2011 at 09:06 | #34

    @John Quiggin

    As many, many unions have said – inflation effects a general real wage cut and associated mortgage stress for variable rate loans. The stimulus it provides can also act as a tax bill for future incomes.

    If the inflation stimulus does not address the real problem, then it will be required again (later), but with a now elevated level of debt.

    Now, if inflation was introduced (as economic ‘oil’) but only as monthly minimum wage increases paid from Government, then all our business pundits would blanch at the thought. It would be the end of their civili$ation.

    Inflation leads to more debt as debtors expect to pay off loans with cheaper dollars.

    Inflation with depreciation of the currency may have provided benefits in the past, but you cannot depreciate a floating currency.

    The real stimulus we need is cuts in profits. [Example: bank profits have been over 10% continuously - see latest Reserve Bank Bulletin].

    It is possible that taxing profits or international transactions and using the funds for job creation and service provision is all the stimulus we need.

  35. Ikonoclast
    September 11th, 2011 at 09:59 | #35

    It is clear that current capitalist economics and the current capitalist financial system (including the suborned form of current government macroeconomics) are designed to funnel money away from the producers (workers) to the non-producing parasites (owners of capital). Deregulation, privatisation and financialisation of the economy since the Thatcher era and the Adam Smith Institute’s Omega report have been very deliberately designed to reverse worker gains, social policy gains and broad Keynesian economics. The current state of government macroeconomics and the propaganda, false premises and bad faith that go along with it are part of this capture of public policy by the capitalist system.

    The current system is not the only way things could be run. It disingenuously presents itself as the only way. This is the old TINA (There Is No Alternative) prescription beloved by Thatcherites and Reaganites. If there are no alternatives in economics (if this IS the only way things can be run) then, as John Ralston Saul said, “Why bother with democracy? Let’s just install some not too nasty dictator and go to the beach.”

    Of course as soon as someone says, “The current system is not the only way things could be run.” , we get the reply, “Oh so you want communism (meaning soviet style communist dictatorship)?” Immediately, the logical fallacy of the false choice (dichotomy of false choices) is introduced as if the choice of economic system is black and white and there are only two stark choices rather than a full spectrum of possibilities.

    It is important that democracy and democratic decisions lead society and not economics. When (capitalist) neoclassical economics lead society and its governance (as is the case now) then capital runs society not the people. Then you get the kind of mess that occured in the Global Financial Crisis and the current downward spiral of the EU and USA.

  36. Ikonoclast
    September 11th, 2011 at 10:32 | #36

    While notable Australian academic economists like John Quiggin, Bill Mitchell and Steve Keen would disagree on points (sometimes significant points) of technical analysis of macroeconomics, I suspect they would all agree with Bill Mitchell’s statement below. (Of course, Bill would agree with himself.) :)

    “What is required to solve the crisis is a thorough-going re-think of how we run our economies. The neo-liberal years which transferred massive power and real GDP (taken from the workers) to the financial markets and diminished the public oversight of markets has failed.

    All of the dimensions of that ideological approach have failed to deliver on their promises.” – Bill Mitchell.

  37. Salient Green
    September 11th, 2011 at 13:54 | #37

    200 years ago Adam Smith forecast an end to economic growth and a transition to a steady state economy. 150 years ago John Stuart Mill did the same.

    Herman Daly and others have had that re-think of how we run our economies and designed a new system. We are bumping into the limits of growth and need to make that transition from the failed growth economy to the steady state economy before the whole system crashes into depression.

  38. Freelander
    September 11th, 2011 at 14:17 | #38

    @Ikonoclast

    Quite agree. What we have relearned is that the ‘autopilot economy’ just doesn’t work. China is showing, once again, as the West once did, the value of a mixed economy. After ‘trickle down’ was adopted not much trickled down but there was a gush of wealth and income up to the top. The fight by the top to defend and retain that income and wealth is helping to distracting everyone in the West from tackling the big issues, one of which is climate change. The other big distraction is the war on terror.

  39. Ikonoclast
    September 11th, 2011 at 15:29 | #39

    And just to bring it back to the topic of socialised health (me being that party that went OT) …

    The free market mechanism is not properly adapted to deliver health care where it is needed. Capacity to pay is not equal to health care need. There are both humanitarian and self-interested motives across the spectrum for equitable socialised health care for all basic health care needs. The self-interest motives which should motivate (variously) some or all levels of class and wealth consist of;

    1. Proper care for the poor and disadvantaged (in the self-interest of the poor and disadvantaged).
    2. On-going national savings brought about by public health measures and preventative care (in the economic self-interest of all)
    3. Prevention or amelioration of epidemics (in the health self-interest of all).

  40. TerjeP
    September 11th, 2011 at 17:30 | #40

    Capacity to pay is not equal to health care need.

    The same is true of housing. Yet even though the bulk of the housing sector is delivered mostly entirely via the market almost nobody in Australia will be without a roof tonight.

  41. Brendan
    September 11th, 2011 at 18:42 | #41

    @TerjeP
    Treje, you set yourself too low a target when you argue that private provision of housing gives reassurancel about health care. We see in the housing market some with children having to rent one and two bedroom flats, while the size of owner occupied houses expands. They may have a roof, but I suspect we are storing up serious social problems.

  42. Ikonoclast
    September 11th, 2011 at 20:07 | #42

    @TerjeP

    “It is estimated that on any given night approximately 105,000 people will be homeless.[1] – Wikipedia, ‘Homelessness in Australia’.

    Over 100,000 people does not equate to “almost nobody”.

    Even the statement “the bulk of the housing sector is delivered mostly entirely via the market” leaves a lot of factors out.

    “According to the 2006 census, Australia’s public housing stock consisted of some 304,000 dwellings out of a total housing stock of more than 7.1 million dwellings.” – Wikipedia, Public Housing in Australia.

    In addition, the market does not deliver this housing without assistance. Negative gearing plays a role in delivering market provided housing. This subsidy assistance to already relatively well-off landlords would be better targeted directly to public housing and to those in need. House prices and rents are artificially high due to policies which encourage assets inflation and a housing price bubble.

    The notion that there is a dwelling shortage which needs to be addressed by these subsidies is also nonsense. There is not a dwelling shortage but only overpriced houses and overproced rents to distorting policies assisting the landlord class.

    “Around 10 per cent of private dwellings (830,000) were identified in the 2006 Census as unoccupied on census night. Unoccupied private dwellings included dwellings that were vacant for sale, to let, for repair or for demolition, newly completed dwellings, holiday homes and dwellings that were vacant for other reasons or for no apparent reason.” – Australian Govt National Housing Supply Council.

    Having 100,000 homeless people and 830,000 unoccupied private dwellings is a clear case of market failure and social policy failure; the mismatch caused by capacity to pay not equalling and not dealing with real need.

  43. Chris Warren
    September 11th, 2011 at 20:21 | #43

    @TerjeP

    Caravans, tents and shelters provided by churches, governments, and charities are not delivery by the market. Couch surfing is not delivery by the market. Car occupancy is not delivery by the market.

    The capitalist market converts a human right into a commercial right distributed according to ones demand, not need.

    This is a paradise for the greedy few.

  44. TerjeP
    September 11th, 2011 at 22:49 | #44

    Ikonoclast – of those 105,000 people 84% will sleep under a roof tonight. Only 16% will sleep rough. That is just over 16,000 people out of a population of 22,000,000. And it is not due to a general lack of dwellings but due to social and mental health problems. I see no problem with the example.

    In any case my suggestion was to retain Medicare but to turn it into an income contingent loan by requiring repayment through the HECS system. Many people would opt to avoid any debt risk by taking out private insurance but even if they didn’t nobody under such a scheme would be without the capacity to pay for approved medical procedures.

  45. TerjeP
    September 11th, 2011 at 22:51 | #45

    Caravans, tents and shelters provided by churches, governments, and charities are not delivery by the market. Couch surfing is not delivery by the market.

    Where did I claim that they were?

  46. Chris Warren
    September 11th, 2011 at 23:45 | #46

    @TerjeP

    Derr…They all provide roofs. Where did you exclude them?

    If not these – what roof’s were you talking about.

    If you say roofs, then why not these roofs?

    Have you ever seen a caravan without a roof?
    A couch without a roof?
    A tent with no roof?

    So if these are not included, then your statement:

    “via the market almost nobody in Australia will be without a roof tonight.”

    is false by your own hand. How convenient to not include the roofs provided by churches, government and charities.

    Is this how capitalist dogmatists really conduct themselves?

  47. TerjeP
    September 11th, 2011 at 23:56 | #47

    This is what I said:-

    The same is true of housing. Yet even though the bulk of the housing sector is delivered mostly entirely via the market almost nobody in Australia will be without a roof tonight.

    The analogy is that if most medical services were provided by the private sector there is no need to assume that a lot of people will subsequently miss out on medical services. Housing is supplied predominately by the private sector and almost nobody misses out. Nowhere did I claim what you seem to think I claimed. Nowhere did I exclude the contribution of the voluntary sector or even for that matter the government sector.

  48. Chris Warren
    September 12th, 2011 at 08:16 | #48

    @TerjeP

    The what you should have said was:

    ….delivered entirely by via the market and planning ……

    But then to jump to the private sector, only indicates more confusion. A “market” does not imply “private”. They are not synonyms.

    If medical services were provided by the private sector huge swathes of people would miss out on medical services.

    If you include the government sector and the voluntary sector, all your statements “mostly entirely via the market” are false.

    Opportunistically changing to “predominately by the private sector” without understanding the nuances is just inane.

    Under capitalism the private sector always under-supplies services, because, “via the market” it must sell at cost plus normal profit (if any), plus capitalist return.

    The inefficiencies are likely to worsen over time and we end up in a GFC – simply because too much economic activity was based on the capitalist private market.

  49. TerjeP
    September 12th, 2011 at 11:20 | #49

    Speaking of inane I think your assessment is off with the fairies.

    The private sector feeds and houses the world. The fact that charity and government is somewhat active in both areas does not change the broad assessment nor the analogy with health care. We are talking about the degree of involvement not absolutist positions. We can increase the involvement of the private sector by making hospital services private like medical centers and general practitioners. We can withdraw government funding without withdrawing government financing (via HECS style income contingent loans). We can leave space for meaningful private insurances services (rather than the highly regimented regimes on offer today). We can leave space for people to broadly manage their health care needs without the current level of autocratic state involvement. We can let price signals function to disperse services to where they make the most sence without abandoning those too poor or two sick. In short we can strike a far better balance than what is on offer today. This does not represent an abandonment of a mixed economic approach rather a shift in the mix. I contend that government financing (as opposed to funding) ought to be part of the mix. Certainly until some alternative for the very poor and the very sick reveals itself.

    I don’t expect you to agree with me on this position but it would be nice if you engaged honestly with it rather than trying to score cheap points.

  50. J-D
    September 12th, 2011 at 11:23 | #50

    I’m still puzzling over the concept of a ‘transformative vision’.

    Does it mean more than ‘good ideas’?

    I can see why good ideas are needed. If a ‘transformative vision’ means no more than that, why use the fancier language?

    If there is something more to the concept of a ‘transformative vision’ than good ideas, I don’t know what the extra element is and so can’t see why it would be needed.

  51. Chris Warren
    September 12th, 2011 at 12:55 | #51

    @TerjeP

    You need to take a reality check.

    The private sector DOES NOT feed and house the world. It only feeds and houses the rich. The rest are serviced by UN agencies, gifts from the West, or survive on food stamps in the US, and various other schemes in OECD economies. In Australia the private sector cannot feed and house workers on (or near) minimum wages, pensioners, or unemployed.

    Increasing the ” involvement of the private sector” within capitalism will automatically contract services due to higher profits required by capitalists.

    You misunderstand HECS. It is not a income contingent loan. The repayment is income contingent. There is no meaningful difference between “government funding” and “government financing”. HECS is funding matched by latter progressive taxation. The same as all government spending.

    The current level of state involvement is not autocratic, and private providers are secretative, autocratic, unaccountable, and often misrepresent quality.

    Price signals plus a privatised sector, result in overservicing and over charging in richer postcodes and service deprivation and cost-barriers in poorer postcodes.

    Price signals coupled with the anti-social function of profiteering, disperse services to where they DO NOT make the most sense. Poorer people get less dental, mental, preventative, and elective health services, and wait longer for non-elective services outside the emergency category (unless they have a Gold Card).

    In OECD economies, the private sector is a capitalist sector – a paradise for fools.

  52. Chris Warren
    September 12th, 2011 at 14:59 | #52

    @J-D

    “Transformative vision” is a post-modernist religious concept that I associate with the middle class ‘wannabe’ Left.

    In most cases it suggests that if ‘progressives’ argue their case well enough, a values revolution will occur and capitalist society will change. And they point to a whole raft of micro-reforms where social movements have changed slivers of society for the better. Women’s Liberation, the Vietnam Moratorium, anti-slavery, and reforms arising out of “identity” issues generally.

    I associate “transformative vision” with firstly the now debunked “Rainbow Alliance” but also with Dave McKnight a progressive academic imbued with New Left ideology and tainted with a misunderstanding of Western Marxism.

    It is utopian but in its modern guise, I suppose it all goes back to Charles Reich, and his Consciousness I, II, and III that was peddled in Western universities in the 70′s. It is continued today as “New Social Movements” theory but dressed-up with writings from such authors as Habermas. In essense ‘transformative vision’ is a love child of postgraduate students and upper middle class academics. It is only the 60′s ‘counter-culture’ dressed up for academic careers 40 years too late.

  53. may
    September 12th, 2011 at 15:57 | #53

    with for profit activities in high personnel engagement services, how can a profit possibly be extracted without reducing the engagement of those very services?

    good governance in a system provided from the public purse getting best value for the price paid

    vs

    good governance in a system geared to profit taking and market share enlargement,

    are two different kettles of fish.

    in the first, the point is best result for the money,with outcome measured by individual benefit,

    in the second,the point is best result in money,with the outcome measured by market share and dividend and individual benefit be damned.

  54. Ikonoclast
    September 12th, 2011 at 20:04 | #54

    For a change of pace, I will say that TerjeP shows courage commenting on this blog. He usually takes a lot of flak. I haven’t shown comparable courage and gone on a libertarian blog.

    Out of interest, I took a quick political quiz that a libertarian blog pointed me to. I came up as a left liberal (small “l” liberal in the American sense.) My PERSONAL issues Score was 90% and my ECONOMIC issues Score was 20%. I assume 100% in each case makes a perfect libertarian. I am sure my scores won’t surprise TerjeP.

    On personal issues, I lost 10% for indicating only a maybe for decriminalising all drugs. What I meant was maybe for some and probably not for others on a case by case basis. But the quiz did not really allow for that level of discrimination.

    On economic issues, I scored 20% for opposing corporate welfare. Predictably, I want a significant state presence in the other main policy areas.

    In the words of the site:

    “Liberals (small “l”) usually embrace freedom of choice in personal matters, but tend to support significant government control of the economy. They generally support a government-funded “safety net” to help the disadvantaged, and advocate strict regulation of business. Liberals tend to favor environmental regulations, defend civil liberties and free expression, support government action to promote equality, and tolerate diverse lifestyles.”

    TerjeP and I are often at loggerheads, but it’s probably good to remember that we don’t disagree on all matters. It’s important to note areas of agreement too.

  55. TerjeP
    September 12th, 2011 at 20:45 | #55

    A change of pace is occasionally appreciated. I suspect the quiz may have been like this one:-

    http://libertarian.org.au/quiz/

    Obviously such tests are simplistic but they are more useful than the typical left / right dichotomy.

    The difficulty with left / right is that it is used in so many different ways. It gets used to define cultural ideas, economic philosophy, social policy outlook, foreign policy positions etc. None of us fit neatly in boxes like that although there is a degree of tribal policing (sometimes self imposed). Anything that can broaden the possible ways to classify different thinking and yet still be meaningfully descriptive is generaly healthy.

    I comment here because I know I will encounter serious critics. You all help me to polish my arguments and sharpen my message. Nobody builds muscle without resistance. I certainly don’t expect many of you to adopt a libertarian outlook any time soon but none the less I hope I occassionally impart something of value.

  56. TerjeP
    September 12th, 2011 at 20:52 | #56

    May – I suspect you discount too heavily the role of incentives in delivering good governance and quality services. I suspect you also don’t sufficiently recognise what drives innovation. Profit is a price signal that keeps firms responsive to changing circumstances. If the world was static then we probably wouldn’t benefit much from such feedback mechanisms but the world isn’t static.

  57. Freelander
    September 13th, 2011 at 11:00 | #57

    Incentives are exactly what deliver bad governance. Who guards the guardians may be a problem without a solution.

  58. may
    September 13th, 2011 at 12:13 | #58

    suspicion torments my heart.

    nothing wrong with a good profit.

    it’s the lack of it that’s the problem,in a widget or service industry in the private sector going bust hurts no-one but the shareholders.

    for essential social infrastructure going bust and/or cutting costs means harm to more than somebodies bank balance.

    private profit seeking will always trump social benefit and a society without a well governed public purse is reliant on the whim, conscience and philanthropy of the inevitably small group that owns the most.

    being a courtier buzzing around the centre of power in whatever system you care to nominate is to be a part of and perpetuate the sweet pool of corruption.

    tough luck if you are not part of the system.

    innovation payed for from the public purse and taken up by private individuals,put through the wringer of a highly competitive market is the reason this discussion is taking place in this forum.

    the benefit of co-operation never gets the recognition that accrues to competition and it’s about time that it did,for without co-operation we are reduced to what is happening to the USA political process.

    it’s a dogs breakfast(all over the place).

  59. may
    September 13th, 2011 at 12:45 | #59

    and it seems that a conservative audience in USA think it’s a wonderful idea to leave others to die for lack of insurance.

    it’s a bit surprising there was no suggestion to line them up,sell tickets to kick them and then use what’s left as a resource for various industrial processes.

    did i say dogs breakfast?

    i’m reminded of the end of the mccarthy era, brought about by the words—

    have you no decency,sir,have you no decency?

  60. Jarrah
    September 13th, 2011 at 12:50 | #60

    “The private sector DOES NOT feed and house the world. It only feeds and houses the rich. The rest are serviced by UN agencies, gifts from the West, or survive on food stamps in the US, and various other schemes in OECD economies. In Australia the private sector cannot feed and house workers on (or near) minimum wages, pensioners, or unemployed.”

    It serves the rich the best, obviously, but not ONLY them. Most of the feeding and the housing of the poor happens through the private sector. Also, you are ignoring countervailing forces put in place by the public sector that work against the feeding and the housing of people by the private sector, ie regulations as to quantity, quality, who can do the providing, etc.

  61. TerjeP
    September 13th, 2011 at 13:44 | #61

    for essential social infrastructure going bust and/or cutting costs means harm to more than somebodies bank balance.

    For larger enterprises going bust usually means going into administration which hurts shareholders and managers. It is intended to help protect creditors but usually by that stage they suffer loses also. It isn’t a pleasant process but nor is it that common. And you make it sound like a private hospital that went into administration would be sending nurses home, turning out the lights and leaving patients to die in the dark. This type of image is a nonsense and we have enough private hospitals around to know it is a nonsense. They provide good care and good service.

  62. Chris Warren
    September 13th, 2011 at 14:07 | #62

    Why do these capitalist dogmatists always pop-up like this?

    @Jarrah

    Most of the feeding and the housing of the poor happens through the private sector.

    Where is the evidence, it is certainly not true in the ACT, but even a simpleton can get useful data for NSW.

    In NSW:

    Public housing
    Property and tenancy management of 128,000 public housing homes and tenancies

    Community housing
    Funding of not-for-profit organisations to provide property and tenancy management for more than 13,500 properties

    Aboriginal housing
    Property and tenancy management for more than 4200 properties owned by the Aboriginal Housing Office

    Rental Assistance
    We provide bond and rental assistance for families or singles on low incomes wanting to secure a property in the private rental market

    Affordable housing due to stimulus spending via public/private partnership is additional to this. Educational accommodation (Halls of College) is not included. Religious organisation provision is also not included.

    So if our dogmatist was right, then a figure for “most” would be in excess of 150,000 homes.

    So where in NSW does the private sector provide more than 150,000 units of housing for pensioners, unemployed, apprentices, young workers, and minimum wage workers.

    Fair rent is either 25% of gross or 20% of after tax income – so where can workers get over 100,000 homes for 20% of $570 [$114] each?

    Private sector search facility is on realestate.com.au or http://www.domain.com.au or allhomes.com.au

  63. Chris Warren
    September 13th, 2011 at 14:09 | #63

    Why do these capitalist dogmatists always pop-up like this?

    @Jarrah

    Most of the feeding and the housing of the poor happens through the private sector.

    Where is the evidence, it is certainly not true in the ACT, but even a simpleton can get useful data for NSW.

    In NSW:

    Public housing
    Property and tenancy management of 128,000 public housing homes and tenancies

    Community housing
    Funding of not-for-profit organisations to provide property and tenancy management for more than 13,500 properties

    Aboriginal housing
    Property and tenancy management for more than 4200 properties owned by the Aboriginal Housing Office

    Rental Assistance
    We provide bond and rental assistance for families or singles on low incomes wanting to secure a property in the private rental market

    Affordable housing due to stimulus spending via public/private partnership is additional to this. Educational accommodation (Halls of College) is not included. Religious organisation provision is also not included.

    So if our dogmatist was right, then a figure for “most” would be in excess of 150,000 homes.

    So where in NSW does the private sector provide more than 150,000 units of housing for pensioners, unemployed, apprentices, young workers, and minimum wage workers.

    Fair rent is either 25% of gross or 20% of after tax income – so where can workers get over 100,000 homes for 20% of $570 [$114] each?

    Private sector search facility is on realestate.com.au or domain.com.au or allhomes.com.au

  64. J-D
    September 13th, 2011 at 14:23 | #64

    Chris Warren:

    Thanks for the attempt. But since it turns out (although of course there’s no way you could have known this) that you have offered an explanation of one term I don’t fully understand in terms of other terms that I don’t fully understand either, it hasn’t helped me.

  65. Jarrah
    September 13th, 2011 at 15:11 | #65

    Chris, since you were talking in general terms, I did also. My point stands for the world as a whole.

    “Fair rent is either 25% of gross or 20% of after tax income ”

    Ah. A not-so-subtle attempt to move the goalposts. Now you want to introduce a new criterion of ‘fair rent’, which you seem to have made up on the spot (for example, the official line deemed to be affordable is 30% of income). But I won’t play your game. You specifically said the private sector “only feeds and houses the rich”. Probably realising you don’t have a leg to stand on regarding food, you’ve concentrated on housing, but even then you’re trying to change your tune.

    And you’re STILL ignoring the barriers to providing housing at affordable prices that governments put up. We have the ludicrous situation where policy decisions and innumerable regulations make housing more expensive, so the government has to subsidise housing!

  66. Chris Warren
    September 13th, 2011 at 16:00 | #66

    So the question remains – where are these 150,000 units the private sector supposedly provides?

    The so-called official line of 30% is a relatively recent fiddle by right-wing labor types. 25% is a suitable benchmark.

    So where does the private sector provide over 150,000 units at any reasonable rent – 30% 25% – whatever?

    So why switch attention to food. You only have to look at the cries from charity outlets to know the private sector has failed here too. Charities claim they are breaking under the strain of having to pickup the slack. In Melbourne there are special shops only for those with Centrelink healthcare cards. If these people had to pay private sector prices they would get less food. In US most poor only get food via food stamps and other welfare payments. The private sector has failed.

    Of course there are no barriers that are relevant unless there are some that also do not apply to social housing. Public housing should meet the same standards as other housing.

    Why would you winge about vague “barriers” without specifying a such thing, when the real task is to explain where are more than 150,000 of housing of the poor.

    So where is more than 150,000 units of housing for the poor in NSW?

    Pick whatever % of income you like, but where is there evidence of the private sector providing “most” of the housing for the poor?

  67. Chris Warren
    September 13th, 2011 at 17:11 | #67

    I suppose socialised housing is probably closer to a feasible ‘utopian’ concept than socialised health. Unlike health, housing obtains most of its inputs inside the national economy and there are comparatively fewer intervening steps from raw materials.

    Social housing only has to cover the real cost of housing without having to factor in opportunity costs (as if the same funds were invested elsewhere) or capitalist interest rates. Social housing is a capital expenditure similar to a main road or railway requiring nothing more than initial construction once only and 100% maintenance thereafter.

    So, on this basis, socialised supply of health, food, housing, transport and education will always provide cheaper services to a greater number. The capitalist private sector (by itself) supplies only to the rich but can be tempted to supply to the poor with massive subsidies to manipulate either demand or supply.

    In Australia the private sector supplies almost nothing ‘brand new’ to the poor, who commonly rely on a substantial second hand market for most serious consumables. However some private sector providers do offer ‘concessions’ to various categories of low income particularly if government hs set a CSO (community service obligation). The public sector provides concessions almost across all services.

    If you are supporting a family on the minimum wage you are unable to purchase decent food, decent housing, decent transport, or decent health care purely from the private sector. This missing access, a failure of the private sector, is made up only through government handouts. If you are on less than the minimum wage, not even this suffices. Dental care, mental health, social networking, clothing and housing are the first casualties. Food comes next.

  68. may
    September 14th, 2011 at 12:55 | #68

    @TerjeP

    leave them on the inside of a tax deductable/saleable asset?

    smelly old people?

    not likely.

    no administrators of any bankruptcy process would be able to justify that to creditors.

    the back stop is

    the public purse and the efforts of those whose rationale is not the profit motive.

    pretending market forces can and do meet all social needs makes as much sense as pretending communism or religion have all the answers.

    the market is a place to go to, no one in their right mind would want to live there.

  69. Jarrah
    September 14th, 2011 at 22:41 | #69

    “So the question remains – where are these 150,000 units the private sector supposedly provides?”

    All around you. Well, if you’re an inner-city dweller, not necessarily. Though you will have plenty of share houses nearby.

    “25% is a suitable benchmark.”

    Says who? When I was poor, I paid close to 50% of my income in rent.

    “So why switch attention to food.”

    Switch? You brought it up, then abandoned it.

    “Of course there are no barriers that are relevant”

    You wish. Severe restrictions on land releases, planning and development restrictions, stamp duty, levies, first home owner’s grant, etc, all push up the price of housing.

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