Home > Economics - General, Oz Politics > Rachel Nolan on the case for privatisation

Rachel Nolan on the case for privatisation

December 2nd, 2012

During the long debate over the Bligh government’s sale of public assets, I was frustrated by the government’s refusal to mount a serious case in favour of the sales. The official argument, that the money gained from the sale of income-earning assets could be used to finance the building of schools and hospitals was such obvious nonsense that even strong advocates of privatisation like Henry Ergas were willing to sign a letter I organized pointing this out and calling for a proper debate. Now finally, former Transport Minister Rachel Nolan has given us some idea of what the government was really thinking.

Nolan has a piece in Quarterly Essay (paywalled, but there is a summary from Laura Tingle here), in which she laments that Australians “have little philosophical grasp of the (rightful) diminution of governmental power which deregulation has brought” . She retails some anecdotes of being besieged by “rent-seekers” wanting her to direct Queensland Rail in various ways[1], and complains about constituents wanting her to fix various things outside her control.

Some notable features of the piece:

* While complaining that we haven’t accepted the implications of deregulation, Nolan doesn’t acknowledge that we never asked for deregulation in the first place, nor does she present any positive case for deregulation. It’s just part of her background assumptions about the way the world works and should work

* There is no mention at all of the Global Financial Crisis and its implications. Nolan’s world view, formed in the 1990s, has been utterly unaffected by this massive failure of capitalism

* The remaining role Nolan sees for government is minimal, even by the standards of market liberal orthodoxy. She briefly mentions a “social safety net” (the preferred term of the most residualist market liberal view) but otherwise says nothing about equality, or even equality of opportunity. There’s a handwave in the direction of basic public goods, and a nod to sustainability. And implicit in the post is the assumption that all of this is already baked into the cake and that the only problem is that the voters aren’t yet willing to accept the offer they can’t refuse.

Overall, there’s nothing particularly remarkable about Nolan’s views. They are what would be expected from someone who absorbed the prevailing conventional wisdom 10-15 years ago and hasn’t reconsidered them since then. At least she does a reasonable job of articulating her position.

Looking at Nolan’s bio, it’s representative of the more able section of our political class these days – straight from university (where I assume, but don’t know, that she learned the ropes in student politics) to a couple of political advisor jobs, then into Parliament at an early age (at the time the youngest woman elected to Queensland Parliament, according to Wikipedia), and early promotion to a ministry. Particularly in Queensland, it’s natural that she went for Labor rather than LNP: more urban seats, more friendly to women and more completely dominated by career politicians.

For those of us who don’t think much of the diminution of government power that deregulation has brought, what lessons can be drawn here?

First, I think, that despite the awfulness of Campbell Newman, those of us who refused to support the Bligh government were right to do so. Only by making it clear to Labor that embracing market liberalism is a path to electoral oblivion is there any hope of pushing them to provide an alternative.

Second, Labor needs to reform itself so as to ensure that career politicians like Nolan are the exception rather than the rule. Affirmative action has done a great job in ensuring gender balance in Labor’s Parliamentary representation, to the point where this balance is probably self-sustaining. What is needed now is affirmative action for the people Labor is supposed to represent – members of working families. I’d suggest that future Labor candidates shoud be required to show a minimum requirement of five years working in paid employment (excluding political advisor and union official jobs[2]), a small business or raising children.

Third, this shows the necessity of keeping up public debate on issues of more relevance than the decades-old indiscretions of Abbott and Gillard, and at a serious philosophical level, rather than the kind of trivial Tweedledum vs Tweedledee pointscoring that dominates the news. In this respect at least, Nolan’s essay is a welcome contribution.

fn1. I met her on one occasion at an official event when the government was in office, and heard some of the same anecdotes first-hand. This is one of the rare occasions I’ve actually had such direct contact with politicians, beyond handshakes and chitchat at awards events and the like.

fn2. In the old days, this requirement wouldn’t have mattered for union officials, since almost all of them got their start working in the trade or industry whose workers they represented. These days, lots of union secretaries and presidents have never worked outside a union office. Craig Thomson (not a typical example in most respects, but with a typical career path) went straight from university to an industrial officer job.

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  1. Newtownian
    December 5th, 2012 at 18:03 | #1

    An interesting article from the dreaded George Monbiot on this topic of neoliberal philosophy and what its doing to us.

    http://www.guardian.co.uk/commentisfree/2012/dec/03/break-grip-corporate-power-secure-future

  2. Jim Rose
    December 5th, 2012 at 19:25 | #2

    @Newtownian Monbiot has a short memory. in 2008, the Republican Party presidential nominee also supported cap-and-trade.

    David Cameron wrote to Julia Gillard to congratulate her on passing her carbon tax. he supports a carbon tax in the UK too.

    Monbiot’s call for a ‘democratic mobilisation against plutocracy’ forgets that it was the voters who lost interest in action on climate change first because it started to cost something. the political parties followed suit. that is how democracy works. The will of the people.

  3. John Smith
    December 5th, 2012 at 19:28 | #3

    Rachel Nolan seems to be saying quite openly, ‘the purpose of privatising QR was to stop rent-seekers from bugging the government.’ It would appear that analysis of economic benefits had nothing to do with it.

    She misses the possibility that it could be regarded as the job of a competent government minister to tell the rent-seekers to talk to the company CEO.

    Similarly in Sydney at present: the government seems determined to privatise operation of the $8 billion North West Rail Link in some way, purely to keep it out of the clutches of the complacent managers and rent-seeking unionists of the government owned Railcorp.

    Never mind the fact that the privatised model requires operating it as an isolated line, which will be a disaster for train operations and quality of service to customers. Again, analysis of economic benefits has nothing to do with it.

    For the government it’s much easier to spend $8 billion on a lemon than to tackle Railcorp’s institutional problems directly.

  4. Mel
    December 5th, 2012 at 19:42 | #4

    Jim Rose:

    “Monbiot’s call for a ‘democratic mobilisation against plutocracy’ forgets that it was the voters who lost interest in action on climate change first because it started to cost something. the political parties followed suit. that is how democracy works. The will of the people.”

    Are you dishonest or stupid? Public opinion was solidly in favour of taking action until a large chunk of the right decided to promote doubt about the science. Those elements on the right were aided and abetted by right wing plutocrats, gun-for-hire think tanks, various corporate interests and the right wing media. What is most clear about this is how easily public opinion can be manipulated by manufactured doubt.

  5. Newtownian
    December 6th, 2012 at 05:40 | #5

    @Jim Rose

    Fair enough Jim. I threw it in more for information.

    Also I did say ‘dreaded’ because his positions do fluctuate and annoy and language like “democratic mobilisation against plutocracy” can grate. But I dont find this a problem as he always tries to work things out for himself.

    This is in contrast to people like Rachel Nolan who seem more to be parroting ideology, fashion or spin to judge by the reports and then have the gall to say ‘trust me I’m a superior wise all knowing person’.

    Regarding your points about ‘voters losing interest’ and ‘the will of the people’ they are interesting and important ones. The first is correct. But I posit its not so much about will as much as the Rachel Nolan phenomenon – people/politicians sleepwalk, parrot or deny their way through conundra that they dont understand or cant cope with because they really are very hard and challenging.

    As to the (free) ‘will of the people’ – I’m curious (honestly) what you understand by this at an individual or collective level. Its central to democracy, neoliberalism, crime and punishment, religion etc. and loved by left right, mad greenies and Gina Rhineart equally. Yet the PR and advertising industries and the spin consultants operate on the premise that we are manipulable sleepwalkers. The latter regretably appears very credible in which case what does ‘will’ mean?

  6. David Irving (no relation)
    December 6th, 2012 at 11:28 | #6

    “Are you dishonest or stupid?” Mel asks Jim rose.

    I think it’s a bit of each – Jim seems to be some kind of glibertarian as far as I can determine.

  7. Jim Rose
    December 6th, 2012 at 15:59 | #7

    Mel, on you saying ‘how easily public opinion can be manipulated by manufactured doubt’, people say that when their losing the debate. When they are winning, the majority was persuaded by the merits of your arguments and so eloquently put.

    The environmental movements, of course, never used rhetoric, hyperbole or described action on climate change as the great moral issue of our time. always cool and calm. the campaign finance law excuse can only work for the USA but your main guy is still president.

    Rather than blaming vast right-wing conspiracies and the campaign finance laws of one country, look at the business cycle.

    See http://www.voxeu.org/article/concern-environment-luxury-good-evidence-google-searches for data on Google searches for “unemployment” and “global warming”. Kahn and Kotchen’s key points are:

    • Recessions increase concerns about unemployment at the expense of climate change.

    • the decline in global-warming searches is larger in more Democratic leaning states!

    • An increase in a state’s unemployment rate decreases in the probability that Americans think global warming is happening, and reduces the certainty of those who think it is.

    Kahn has previously argued that: income and price effects (rather than ideology) explain most variations in the green vote; and the environmental movement should stop saying that half measures will work and transition to a green economy will be easy and painless.

  8. Graeme Bird
    December 12th, 2012 at 19:05 | #8

    “First, it is now very well established that the GFC was predominantly caused by bad government policy. If there is a lesson to be learnt, it’s that you should stop trusting government to run everything. …”

    Bad government policy John? You are not serious John? Widespread financial crises are always and everywhere, the result of fractional reserve banking. Why are you in denial of this John? You are are not a serious commentator John. We have more than a thousand years of banking history but you are terminally ignorant and you just don’t want to know. Bad government policy John? When was government policy ever good? You see your thesis is made invalid because it EXPLAINS TOO MUCH!

  9. Graeme Bird
    December 12th, 2012 at 19:16 | #9

    There is no case for privatisation. The whole idea is to entice the private sector to outgrow the construction and prevision of gear that used to be constructed by the taxpayer. How can you achieve this by selling the taxpayer-provided gear to a bunch of cronies? For the benefit of bankers, lawyers and consultants? This is not logical, and it has to stop.

  10. Graeme Bird
    December 12th, 2012 at 19:29 | #10

    The age of private railroads in the US went forth before the age of barbed wire fencing. And in fact the age of the American Civil War PRECEDED the barbed wire fence. The song “Don’t Fence Me In” was a song we had on record when I was a child. You all must see that without specific infrastructure property rights, that once the land is fenced off there is simply no way to have non-croniest private supply of this sort of capital goods.

    Consider the situation of New Zealand? Privatisation of New Zealand railways? This is a long thin country. And its already been fenced off. How can you even POSSIBLY have non-crony privatisation of rail in such a long thin country? Or if you are cool with multiple competing rail how can that be affected without serious discussions of the alteration of the legal system in order to accomodate infrastructural questions?

    Set aside your feeble ideologies and support the Professor on a full-blown moratorium. Sure if we can do it right private let us do it that way. But this privatisation has wrung out just another elite-enrichment scheme. You may think the elite and the bankers deserve sundry tens of millions going to them. I don’t think this. You may think that they deserve every million they get, I think otherwise.

    Not every critic of the banking system lies all the time. Not everything that those who criticise the financiers is wrong now and forever.

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