Home > Economics - General > Human services for profit: the evidence is in

Human services for profit: the evidence is in

September 7th, 2016

Over at Club Troppo, Nicholas Gruen has a thoughtful piece on the role of competition and choice in human services. He’s responding to the less-than-thoughtful boosterism of the Productivity Commission and the Harper Review on this topic. It’s well worth reading. Before doing so, though it’s important to take a look at the mounting evidence that for-profit provision of human services is almost invariably disastrous.

I’ll write a longer piece on this soon, I hope. But here are three recent examples from the United States, which has led the way in for-profit human services, and is now beginning to pull back

Shonky for-profit educator ITT closes down without notice, right at the beginning of a new semester.

Following a damning report, the US Department of Justice announces it will no longer use private prisons.

Charter schools (some openly for-profit, many others run as businesses) have been failing at a starting rate.

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  1. Newtownian
    September 7th, 2016 at 12:10 | #1

    Interesting and seems sensible on the surface. But there is a flip side challenge to bringing back services back into the public sphere.

    How do you get the government and quasi non government systems to work optimally/socially? And how do you reduce the stultifying control inherent in big organisations which is all the more ferocious these days since the rise of management systems culture. Certainly the neoliberals did a real job in their attacks on government services. But this doesnt means the latter were/are ideal either.

    In the event of ‘unprivatization’ what structures would be used?

    Unfortunately the models for public sector operation are now heavily managerialism oriented and so we have the spectacle of faithful and loyal senior public service being made ‘accountable’ via the process of getting them to reapply for their own jobs under the watchful eyes of parasites like McKinsey and Company.

    Another interesting species are the QUANGOs. Sometimes they can be fine. Then we have the likes of IPART https://en.wikipedia.org/wiki/Independent_Pricing_and_Regulatory_Tribunal_of_New_South_Wales who being true believers in neoliberalism have recently crippled the roll out of renewable energy in favor through the use of dodgy economics models. Being unaccountable to the public they are essentially untouchable.

    A related problem here is that now irrespective of which party is in charge, government agencies have been politicised even more than in the past and the potential is now much higher for ’emperors new clothes’ events.

    A different problem is overbearing control of staff via the corporate mission. In smaller agencies less beholden to control from above and in the past more autonomy and experimentation were possible. Now though staff are disciplined into following management policy often developed by professional managers who dont understand the business they are involved in except based on the claim that all management activities are the same.

    In a word ‘unprivatization’ does not feel like the panacea that taking a manichaean position againts privatization would imply.

  2. Apocalypse
    September 7th, 2016 at 13:01 | #2

    for-profit provision of human services is almost invariably disastrous

    My GP operates for profit, as does my dentist. So far, no disasters.

  3. Julie Thomas
    September 7th, 2016 at 13:07 | #3


    Do you think it is ‘profit’ or ‘a living’ that doctors and dentists work for?

  4. Willy Bach
    September 7th, 2016 at 13:07 | #4

    John, I agree. Back in 1994-95 T worked as a Case Manager for long-term unemployed people for a for-profit company run by a man with the sort of ethics you’d expect from Eric Abetz (I can supply names). I was sole-in-charge of an office in an inner-Brisbane suburb where I did my best to provide genuine, non-coercive solutions for a very diverse range of clients. These clients were mostly pleased with the help I gave them and the jobs they found and statistically, I did achieve slightly fewer outcomes than some of my colleagues. But this was not good enough for the driven business man who was my boss. I was subjected to a psychological test, warnings and threats of dismissal and finally I was dismissed. I was ordered to breach a client who was sent to a boot-camp, taken out to a remote location on the outer ring of Brisbane and dropped off at 4 pm in the afternoon and told to find his own way home. At first I insisted on debriefing my client and hearing his explanation. The treatment he had received was unreasonable and downright dangerous. But I was brow-beaten into signing the form – for which I am ashamed.

    I found it necessary to shield a number of clients who were suffering psychological problems, which I did with the help of a psychologist from the CES (our competitors, who could have been given more lateral-minded management, but were being demoralised and disbanded). Much of what I did was social work which obviously could not be done for a profit.

    Only eighteen months after my sacking I heard that the company had lost its contract to provide employment services. The final slap in the face came when I discovered that I and my colleagues had not been paid our employer contributions of superannuation.

  5. Apocalypse
    September 7th, 2016 at 13:25 | #5

    @Julie Thomas

    First, it is highly likely that your friendly local Dr Smith’s practice is owned by a company, Dr Smith Pty Ltd. Second, company structure or not, in order to make a living, Dr Smith aims to take in more in revenue (what you and Medicare pay him or her) than it costs to operate the practice (rent on the premises, equipment, salary for the receptionist, insurance, electricity, cleaning, etc). If Dr Smith succeeds in this aim, then he or she has made a profit.

  6. Julie Thomas
    September 7th, 2016 at 13:36 | #6


    So clearly you don’t have any idea that there is a difference between profit and making a living.

  7. Apocalypse
    September 7th, 2016 at 13:44 | #7

    @Julie Thomas

    In accounting terms, there is no difference. There is a difference in being (primarily) motivated by profit, or not, and most doctors, at least in my experience, are primarily motivated by the desire to improve the health of their patients. But they also like to make money.

    John’s statement was that “for-profit provision of human services is almost invariably disastrous.”. The “almost invariably” part of that statement is just not true. There are actually very few disasters in the provision of human services, delivered either by for-profit or not-for-profit providers.

  8. Julie Thomas
    September 7th, 2016 at 14:06 | #8


    In accounting terms there is no difference a profit taker and a caring health professional and no human disasters because if people make the wrong choice it is their own responsibility.

    But we are not all accountants and for many of us, there certainly is a big difference in human terms for an individual who needs services, between a doctor who is a profit taker and a doctor who lives in a community and who works in that community to make a living.

  9. Apocalypse
    September 7th, 2016 at 14:17 | #9

    @Julie Thomas

    You and I have different definitions of profit. On your definition, profit is synonymous with greed. On my definition, profit is simply where revenues exceed costs, which might or not might not be the result of greed. The opening piece, I think, referred to profit as I have defined it.

  10. September 7th, 2016 at 14:55 | #10

    I think the “for profit” model that Professor Quiggin has in mind is one where investors own the business. So in the case of the local GP, it is where investors own the clinic, and pay the doctors and other staff a salary. Only after that has been done are they left with a profit.

    And therein lies the problem. Where you have a group of doctors managing their own practice, I assume that they do it moderately efficiently, and pay themselves reasonably well. How is a business supposed to do the same, and still have money left over for profit? I suspect the explanation usually involves the underpants fairy.

  11. Julie Thomas
    September 7th, 2016 at 15:12 | #11


    Yes narrow definitions of profit are good for accountants but useless for understanding how profit driven services are failing to deliver good and efficient outcomes for the human beings who need them. Usually these people are not accountants.

  12. Apocalypse
    September 7th, 2016 at 15:18 | #12

    @John Brookes

    This is a good question. The short and simplistic answer is that investors make a profit the same way as investors do in any industry, after paying their staff. But this might not work in medicine because the prices can charge are regulated, or strongly influenced, by the Medicare benefits schedule. There’s anecdotal evidence that big corporate medical clinics churn patients with short appointments, unnecessary tests and getting them back for needless discussion of test results. The patients don’t care because everything is bulk billed. If this practice is widespread it needs to be stopped, but it’s hardly disastrous.

  13. Ikonoclast
    September 7th, 2016 at 17:41 | #13

    We hate to tell the neoliberals “We told you so!” No we don’t, so here I go.


  14. Stockingrate
    September 7th, 2016 at 19:19 | #14


    n a word ‘unprivatizatio

    “Unprivatisation does not feel like the panacea that taking a manichaean position againts privatization would imply”

    Indeed. Lets take G8 universities with the head admin extracting $1mpa from the public selling out Australians by selling off places to foreigners for the perverse incentive of higher fees.

  15. rog
    September 7th, 2016 at 22:33 | #15

    @Newtownian To the best of my knowledge IPART is a regulatory body comprised of individuals who lack the necessary skills to properly evaluate claims. Therefore, they take advice from those making the claims.

  16. jrkrideau
    September 8th, 2016 at 00:00 | #16

    @ 2 Apocalypse

    My GP operates for profit, as does my dentist. So far, no disasters.

    Not sure about Australia, but in Canada we have something of a free-market in GP’s and dentists. I can just walk away from either if I am displeased.

    We also have a strong regulatory environment in medicine and the practitioners typically subscribe to a very strict ethics code. While I am rather sure that doctors and dentists like to make money, it seems unlikely that their desire is simply to maximize profits like a hedge fund manager.

    This is pretty well completely different than a private prison operator—most prisoners cannot just up and walk to a new prison if they don’t like the one they are in. Judging from some of the things I have heard about private prisonas in the USA, there is no strict guidelines other than “try not to lose money”. and “don’t let the press in”.

    @ 7 Apocalypse

    There are actually very few disasters in the provision of human services, delivered either by for-profit or not-for-profit providers.

    Depends on what you call disasters but private prisions and illegal immigrants centres in the USA come to mind. And in many cases the level of service just is not as good http://www.cbc.ca/news/canada/ontario-to-take-back-control-of-private-super-jail-1.586052. Reports coming out of Nauru regarding the Nauru Regional Processing Centre—privately operated I believe are not reassuring.

    And for non–profits, several of the provinces in Canada (Ontario and British Columbia come to mind) have ongoing problems their non-profit Children’s Aid Societies and have had for years. Some problems are likely due to budget and staffing levels but some appear to be blatant racism, management wasting resources and bob’s–your–uncle.

    The charter school situation in the USA appears insane. A bunch of free-marketeers (neolibs?) have convinced themselves that competition among teachers is the best way to improve education. My uninformed guess is that teaching quality accounts for 12–15% of the variance in student performance with thing such as nutrition, quality of home life, and parents’ educational level being some other major determinants of student achievement.

    Added to this is the fact that it looks like a lot of profit maximizers have decided that with a bit of creative student selection (cherry-picking, purging poor performers) and perhaps a bit of creative accounting one can make quite a nice profit. If US states had adequate legislation and oversight of charter schools even the for-profits might work but currently it looks like it’s more like the wild, wild west.

  17. Ikonoclast
    September 8th, 2016 at 07:55 | #17

    Notice how, when they (the Powers That Be) really want to make a program work they spend like drunken sailors and it is public money on public institutions. The money funnels to private contractors of course. Enormous amounts of money can always be found for Inhuman Services. I mean “Defence” which really means offence and unnecessary foreign wars.

    Headline: “Trump vows US military build-up, proposing more troops, ships, warplanes”

    The solution apparently is more war. I’d say this is like a drunk deciding his problems with alcohol will be cured by a lot more alcohol. And he may be right. After all, enough alcohol will kill a person and enough military actions will bleed a country dry and collapse it.

    Meanwhile the Chinese sit back – or rather incrementally expand and slowly digest each piece (Tibet, Inner Mongolia, South China Sea) – while they watch the USA destroy itself.

    “Never interrupt your enemy when he is making a mistake.” – Napoleon.

    “The supreme art of war is to subdue the enemy without fighting.” – Sun Tszu.

  18. GrueBleen
    September 8th, 2016 at 08:41 | #18

    Your #2

    So does my barber and the cafe where I get my morning coffee and muffin. Is good, yes.

    How about your local hospital ?

  19. Jim
    September 8th, 2016 at 09:00 | #19

    I’m sure it isn’t a case for / against for-profit service providers is not black and white. But putting that aside, even if you did want to bring the service delivery back into the fold of the public service, there will be some major challenges in my view.

    Firstly, after 20-odd years of managerialism, public servants that can actually provide direct services are actually few and far between. A major up-skilling of the public services would be required.

    Secondly, the salary of most senior public servants is a function of the inputs they manage (people and / or budgets), nit how efficient their divisions are. So there is actually a powerful incentive to ’empire build’ rather then be efficient.

    Until governments make a genuine investment in upskilling the existing public servants and remove incentives to be inefficient I fear integrating services back into the public service is also a risky proposition.

  20. Apocalypse
    September 8th, 2016 at 09:12 | #20


    Private prisons, at least in the United States, have a reputation for being awful. Mind you, state-run prisons aren’t exactly Shangri-La, either.

  21. Tim Macknay
    September 8th, 2016 at 09:18 | #21

    Schools, prisons, hospitals and higher education, in Australia at least, are still largely in government hands, and the health, education and custodial services sectors still have large numbers of government-employed frontline workers. I think the point is not so much that large amounts of currently private economic activity needs to be returned to the public sector, but that the experiments in for-profit provisions of these kinds of services have been shown to be failures and any further moves in that direction would be folly. It’s not purely a government versus private sector issue, either. Private schools, for example, have been pretty successful in Australia run as non-profit institutions.

  22. Joe
    September 8th, 2016 at 09:29 | #22

    To believe that private prisons whether in Nauru or the USA are ever going to go well, for the inmates, or for society at large, you need to have a much, much rosier view of human nature than any proud-right type ever confessed to having.
    But who cares, there’s profit there. And the beauty is, that the less you rehabilitate, the more profit!
    Should note that in the USA it is only the FEDERAL prisons that will be un-privatised.
    There is an interesting article at Mother Jones by Shane Bauer who spent 4 months as a guard undercover in a private prison, if you’re interested.

  23. Julie Thomas
    September 8th, 2016 at 09:35 | #23

    “I fear integrating services back into the public service is also a risky proposition.”

    I’d argue that the dynamics of moving toward something positive for society and/or the local community are different from the dynamics that moved us toward seeing profit as equivalent to making an income, and I’d think it will be easier and have less disastrous effects than moving toward profit driven services produced.

    I know my circumstances are not typical but I can see how willingly people out here in my little free range old people’s home would vote for more services. Our only service currently is a franchised Post Office and the operator is paid a stipend or something and is supposed to make a profit to make up the diff between poverty and a living.

    But we are all poor and can’t afford to buy the overpriced useless merchandise the PO try to market to our disgusted and depressed post officer. He is the only public servant in the village. 🙂

    But you know what? Some of the old people out here remember when accountants gave up their time to be the treasurer on the hall committees and progress associations that used to be a feature of our country towns.

  24. John Quiggin
    September 8th, 2016 at 09:48 | #24

    There are actually very few disasters in the provision of human services,

    I suspect we may disagree about the meaning of the terms “very few” and “disaster”. So, to clarify, do you disagree with the application of the term “disaster” to the three examples in the OP. How about:

    *For-profit VET in Australia
    * The US health system as a whole (it’s by far the most profit-driven in the developed world, and has had by far the worst outcomes)
    * For-profit school companies like EdisonLearning in the US

    If you don’t agree that these are disasters, please explain (as the latest member of our coalition would say). If you do agree, how many examples do you need?

  25. Apocalypse
    September 8th, 2016 at 10:22 | #25

    @John Quiggin

    VET – agree
    Edison – don’t know anything about it, but I’ll take your word for it
    US health system – I agree it’s poor, especially per dollar spent.

    But, in Australia, vast swathes of human services are provided by for-profit providers, with very few horror stories. There will always be some, but then there always be some with not-for-profit providers, like at the Bundaberg Base Hospital. It’s just not true that private provision “invariably” is disastrous, because there is variation in the quality of the service, which by definition is not invariably.

  26. may
    September 8th, 2016 at 12:35 | #26

    US with 25% (apparently) of the worlds incarcerated population has people saying that population is being used as very low cost units of production of a large range of products sold on the “free market”.

    as well as receiving public money to run a prison at a profit, a profit is made from the inmates productivity.

    is this true?

    if it is true ,are these products exported under “free trade”treaties?

  27. John Quiggin
    September 8th, 2016 at 14:06 | #27

    The biggest categories of for-profits in the Australian system, AFAICT are pathology labs and nursing homes. Both have been problematic, to say the least, .

    It’s a category mistake to treat individual private practitioners as “for-profit”. The fact that you’re happy with your dentist has little bearing on the question of whether a corporate provider of dental services would do,

  28. Ernestine Gross
    September 8th, 2016 at 14:37 | #28

    “The short and simplistic answer is that investors make a profit the same way as investors do in any industry, after paying their staff.”

    It is indeed simplistic.

    Consider 2 alternative institutional modes of providing services S = {S1, S2, …, Sn},

    1. Maximise [1] the quality of services S provided, subject to the constraint that it is financially feasible, ie. Accounting Profit P = Revenue – Costs is non-negative

    2. Maximise Profits P by providing services S.

    And now apply it to the example of medicine.

    Under mode 1, a single medical practioner or a group of medical practitioners are ‘free’ to determine the quality of services provided according to their professional opinion, subject to financial feasibility. This is the case irrespective of whether or not they channel their costs and revenues via a company (eg a Pty Ltd).

    Under mode 2, the corporate finance model, medical practioners are no longer ‘free’ to determine the quality of services provided according to their professional opinion. As you said, they are employees of ‘investors’, rather than independent professionals. (In this mode, there are no professionals but there are so-called ‘knowledge workers’, or simply workers.)

    I believe this is exactly the distinction Julie Thomas wished to establish. Your digression to motivation such as greed is not required.

    Since there is no natural limit on profit numbers (real numbers), the corporate finance model, mode 2, allows for competition, not in quality, but in cost cutting to increase accounting profit. The provision of outside finance (other than plain vanilla bank finance) brings with it competition for higher and higher profits. (The corporate finance mode entails additional costs such as marketing managers, cost accountants, risk assessment managers, ….. Only if physical capital expenditure is very high, relative to professional remunerations, and there are some some kind of economies of scale are these managerial costs covered.)

    So, a ‘disaster’ in service provision can be characterised by a reduction in quality, as assessed by ‘free’ practitioners, such that the services provided under mode 2 are s1 < S1, s2 < S2, … sn< Sn. The services remain the same only in the ordinary language classification but not in the opinion of professionals.

    My personal experience is not in medicine but in higher education. The structure of the difference between the two modes of service provision remains unchanged.

  29. Ernestine Gross
    September 8th, 2016 at 14:42 | #29

    I forgot the footnote.
    [1] ‘Maximise’ in this context refers to a math description of an objective rather than an applied math calculation.

  30. Apocalypse
    September 8th, 2016 at 15:29 | #30

    @Ernestine Gross

    But the quality of human services is (supposed to be) regulated, by governments or professional bodies, so there are (meant to be) limits on how much corporates can increase their profits by cutting the quality of services.

  31. Apocalypse
    September 8th, 2016 at 15:36 | #31

    @John Quiggin

    Nursing homes is the classic example of where generalisation can lead you astray. There are very good private nursing homes and very bad ones, and all points in between.

  32. rog
    September 8th, 2016 at 15:52 | #32

    Nursing homes have had to fall into line with increased regulation making it difficult for the more shonky operators. Nursing homes rely on means tested govt subsidy which comes with many strings.

  33. paul walter
    September 8th, 2016 at 17:08 | #33

    Ohhyess, I am enjoying this posting and thread. What a redoubt is John Quiggin.

  34. September 8th, 2016 at 17:39 | #34

    A point not mentioned so far is equity. It is much harder for for-profit organisations to make a profit from low income groups, so you tend to get either a poor standard of services for low income users or a ‘safety net’ second class public system, when services such as health and aged care are mainly provided by private for-profit providers.

    Publicly funded services can have standardised quality of care standards regardless of income level of users because there is no direct link between the user’s income and the funding that pays for the service. In private for-profit services you will generally get a better standard if you pay more money.

  35. Ernestine Gross
    September 8th, 2016 at 17:57 | #35


    Fair point.

  36. Nicholas Gruen
    September 8th, 2016 at 18:20 | #36


    Thanks for bringing the issue to the attention of your audience. And I look forward to your further development of your thoughts in a subsequent post.

    But allow me to confess my disappointment in the ideological nature of your contribution – and as a result the discussion that it has triggered.

    It’s certainly an important high-level question whether ‘the market’ is well suited to the delivery of such services. But it’s the question that everyone loves to debate. You are of course welcome to contribute to it, and I not only respect your contribution, I’m in sympathy with it. But we don’t have a shortage of that kind of debate.

    Would you say government systems or NFP systems have been good at the delivery of human services? I haven’t noticed. They will be better than (bad) market delivery in some ways. And there might be quite a lot of mileage in the naïve assertion that surely markets wouldn’t be any good at delivering all sorts of human services.

    But there are huge difficulties in getting systems to learn what’s working and what’s not and to optimise accordingly. In the meantime we have professionals and bureaucrats supervising systems of soft-tyranny over those who they are supposed to serve.

    I think of my contribution as being to the question of how we can do that. My exposure to these new approaches has led me away from a kind of tragic view of these things – the poor will always be with us but we can at least be generous toward them – to having quite a lot more optimism about what might be possible in the delivery of human services.

    I have another (political) point to make – and I too have another whole blog post on this in me 🙂

    I think if people started seeing improvements of the kind I’m suggesting might be possible, there’d actually be a lot more popular political support for such programs – and they’d stand a much better chance of being funded.

    After all, the basic logic of the welfare state is pretty well baked into the basic values of most democratic voters. They’re all on board with the hand up. They’ll vote for it and not just because it might be them. Certainly Australian culture valorises the ‘fair go’ in a way that continues to resonate in our politics.

    In her nasty way I expect Pauline Hanson feels the same way. The right have been successful in peddling the idea that welfare contains a good dose of elite self-interest, self-absorption and self-righteousness because it’s true! So shouldn’t we be trying to address that point? Shouldn’t that be absolutely central to the concerns of those who profess their concern for the disadvantaged?

    Moreover it’s one of the keys to why systems of human services tend to be much less efficacious than was hoped at the time they began being ramped up in various wars on poverty etc. And things like human centred design, prototyping and testing as one goes seem to be quite powerful. How could we build the institutions to support such approaches and interdict professional business-as-usual at the system level?

    That’s the conversation I’d like to have.

  37. Ernestine Gross
    September 8th, 2016 at 22:00 | #37

    Apocalypse :
    @Ernestine Gross
    But the quality of human services is (supposed to be) regulated, by governments or professional bodies, so there are (meant to be) limits on how much corporates can increase their profits by cutting the quality of services.

    To clarify, the two institutional modes of service provision I characterised do not imply a difference in regulatory requirement or the usefulness and role of professional bodies, although there may be differences in how regulatory rules are implemented. That is, the institutional difference between mode 1 and mode 2 is preserved for given regulations and professional associations. (For example, professional accreditation has a role in mode 1 and mode 2 but without ensuring equality in the quality of services provided.)

  38. Ernestine Gross
    September 8th, 2016 at 22:17 | #38


    ” But the quality of human services is (supposed to be) regulated, by governments or professional bodies, so there are (meant to be) limits on how much corporates can increase their profits by cutting the quality of services.”

    To clarify, the two institutional modes of service provision I characterised do not imply a difference in regulatory requirement or the usefulness and role of professional bodies, although there may be differences in how regulatory rules are implemented. That is, the institutional difference between mode 1 and mode 2 is preserved for given regulations and professional associations. (For example, professional accreditation has a role in mode 1 and mode 2 but without ensuring equality in the quality of services provided.)

  39. James Wimberley
    September 8th, 2016 at 22:26 | #39

    @John Quiggin
    The word “corporate” is missing from the OP.

    It’s clear that the Gruen essay is focussed not only on fair-sized capitalist corporations but on modern managerialist ones. There are still successful companies operating under old-style patrimonialism (look at the wine industry). But the projectors who have worked their way into education, health, and prisons do not argue: “I am am enlightened tyrant from a family with a hundred years’ experience in this industry”, but “we are MBAs with superior Management skills who can do much better than the public-sector bureaucrats innocent of magic Management.”

  40. Ernestine Gross
    September 8th, 2016 at 22:34 | #40

    On ideology vs terminology.

    The suggestion has been made by Nicholas Gruen that JQ’s post has triggered an ideological discussion, involving “high-level question whether ‘the market’ is well suited to the delivery of such services. ”

    Speaking for myself, my post #12 contains characterisations of two institutional modes of service provision, both of which belong to the general conceptual framework of ‘the market’ (as opposed to central planning), with the only difference being in the legal policy framework (institutional environment), if implemented.

    It is indeed the case that there are many discussions on the internet that really are echos of the mid-1940. However, these discussions have largely disappeared from JQ’s blog for several years, IMO.

  41. Ernestine Gross
    September 8th, 2016 at 22:56 | #41

    On what ‘markets say’.

    In the world of ‘high level’ abstract theoretical models in economics, ‘markets’ don’t talk but they say something – relative prices.

    Today I read in the Sueddeutsche Zeitung statistics on the entry income levels of university graduates in Germany; relative prices.

    The average entry income of graduates from ‘private’ (for profit) universities are 7% lower than those of ‘public’ (government funded) universities.

  42. GrueBleen
    September 9th, 2016 at 01:16 | #42

    @Ernestine Gross
    Your #39

    Isn’t that what the markets say about women and men ? The market values the work of men more highly than the work of women – even in exactly the same job – so therefore men are paid more.

    Is the market ever wrong ?

  43. GrueBleen
    September 9th, 2016 at 01:57 | #43

    @Ernestine Gross
    Your #38

    I’m just trying to understand where Hotelling’s Law comes into this. Certainly multi-outlet publicly provided services could, and should, be completely standardised, thus achieving the ‘principle of minimum differentiation’.

    But under your model 2, we seem to reach the Hotelling paradox: “Businesses in fact follow both product differentiation and Hotelling’s law, as contrary as they may seem.” But I guess it doesn’t seem all that contrary if one is trying to present a ‘service level compliant’ public face whilst trying to cut costs “to the bone” (as we say) out the back.

    And would you be so kind as to elaborate on what are these “echos of the mid-1940.” to which you refer. And why would “these discussions” have largely disappeared from ProfQ’s blog ?

  44. Julie Thomas
    September 9th, 2016 at 07:04 | #44


    Is it a fact that the work that women do that men can’t do, like giving birth to the next generation is difficult to marketise? It is dangerous work. Women die giving birth. Where is our profit?

    I’m sure that accountants could work out how to make pregnancy and childbirth a profitable activity in this economy that we live in. Apocalypse must have forgotten his four horsemen when he came here.

  45. may
    September 9th, 2016 at 12:37 | #45

    so which ever way it’s looked at the public purse pays for services.

    non-government providers accept recompense for providing those services.
    their aim is to benefit their bottom line.
    they are in the market and are constrained by the neccessity to stay solvent.
    if they don’t manage to do that the public purse pays for the damage.

    also, why does “the market” seem to be referred to as an entity when as far as i can see it is a process?

    if Megan is around:

    balk derives from baulk.

    and Bork is an American political expression referring to a judge who had a bit of a problem sometime in the 1980’s.

  46. may
    September 9th, 2016 at 12:41 | #46

    PS looks like sammy cut a bit close to the bone questioning the banks earlier this year.

    one way or another he was in the firing line.

  47. Ikonoclast
    September 9th, 2016 at 13:08 | #47

    In my analysis there is always ideology. It is either explicit or implicit or denied but it is always there. I am highly suspicious of any argument and indeed any scholarship in the economic or political economy realms, which claims to be ideology free. I mean even fully mathematicised material. Both the abstractions and idealisations made to mathematicise an analysis and the resulting prescriptions (if any) to apply the results of mathematicisation in political economy practice in any way, unavoidably contain ideological assumptions. The ideology (any ideology) is a doctrine or credo which unavoidably makes all sorts of ontological, epistemological and moral philosophy assumptions about physical and social reality.

    In arguments about economic efficiency, I always ask “Efficient at what? Efficient for whom?” We have to choose goals first and then methods for the goals. The choosing of goals depends on your picture of reality (ontology), your picture of knowledge (epistemology) and your picture of moral philosophy or ethics. I have, for quite a while, liked the way John Ralston Saul points out that economics is a relatively low order concern for a democratic (and scientific-technological) society. Given what I have listed here (ontology, epistemology and ethics) it is pretty clear, at least to me, that economics is properly a fourth order concern.

    So why have we made the decision that economics should lead our society? I agree with JRS when he points out that this is a really, really stupid decision. It is very much akin to taking one’s hands off the steering wheel and letting the car lead us i.e. letting the car “decide” where to go. Each is an example of a system. (Here I go again.) A car is a human created system. An economy is a human created system. FFS people steer the system, don’t let it automatically take you where it will.

    Neolioberals and neocons like to mystify the (market) system and claim that it is automatic and automatically best. It is only automatically best for plutocrats and oligarchs and it is automatically best for them because it is axiomatically constructed to be so.

    GrueBleen has spoken about Hotelling’s Law. It’s a good example of whether you let a market system solely steer results (e.g. the market optimum in the two competitor model) or whether you apply other standards (e.g. a social optimum criterion) to get a result which in itself would not hurt the competitors. Letting markets solely run your society (any construction or variant of markets) would be a really, really stupid thing to do. And we don’t do that in practice anyway. Completely removing markets (absolute central planning) would also be a really, really stupid thing to do.

    We must decide social goals and then apply appropriate tools. Sometimes some form of market is the appropriate tool and we certainly need to work on how to complete incomplete markets as far as possible. Sometimes no form of market is the appropriate tool. Sometimes a degree of central planning, nationalisation of natural monopoly is the the appropriate tool. It’s case by case after the social values and goals are set.

  48. GrueBleen
    September 9th, 2016 at 14:58 | #48

    @Ernestine Gross
    Your #40

    Oh I’m slow; I’ve just realised that your “mid-1940. ..discussions have largely disappeared from JQ’s blog for several years, IMO.” is Hayek and his ‘Road to Serfdom’.

    Ok, slow but steady gets one thwere in the end 🙂

  49. September 9th, 2016 at 15:05 | #49

    I agree with you ikon about the ‘ideology’. I was quite puzzled by Nicholas Gruen’s claim that this discussion (presumably suggesting that his discussion wasn’t). I went and read his discussion and of course there is ideology there, in your sense.

    However in fairness I used to use the term in a similar way when I was working in politics – I used to say that the LNP obsession with privatising services was ‘driven by ideology’. In that sense it meant that they believed ‘the market’ was always superior to publicly funded and publicly provided services.

    In your sense, I guess ideology means a set of ideas and assumptions about the world (which we all have, and which tend to affected by our personal circumstances and experiences even if we don’t always recognise that) – in the political sense in which I was using it (similar to what Nicholas Gruen means I guess) it means something more like strong beliefs (in an almost religious sense) which you won’t subject to empirical verification or non-verification (you will prefer not to see empirical evidence that contradicts your beliefs).

    I don’t think Mr Gruen is being quite fair in criticising this blog in that way, btw (if that’s what he is doing).

  50. September 9th, 2016 at 15:07 | #50

    ‘Nicholas Gruen’s claim that this discussion was too ideological’ I mean of course

  51. GrueBleen
    September 9th, 2016 at 15:13 | #51

    @Julie Thomas
    Your $44

    Yeah well Julie, women will insist on doing those things that nobody values, won’t they – all focussed in some way on nuclear and extended family, of course.

    Trouble is, with so many women prepared to do it – and several times over, too – basically for free, making it profitable isn’t easy. Once you get past paid surrogacy or breeding for adoption, then basically all that remains is breeding for organ harvesting. Now that could well be the future – but probably not for very long once the biochemists finally master the application of stem cells.

    Even breeding ’em for blood to be transfused to he likes of Peter Thiel won’t be profitable for long. And besides, you can only do it around 30 or so times in a breeding lifetime. So if you take an average of 30 times over, say about 35 years (say 15 to 50) then compare that to say an average of $60grand after tax income for 35 years, then you’d have to clear about $70grand per birth (assuming all births were ‘quick’).

    Sorry mate, I just don’t think the business plan is a goer.

  52. GrueBleen
    September 9th, 2016 at 15:18 | #52

    Your #47

    You always leave out the phenomenology, don’t you. 🙂

  53. GrueBleen
    September 9th, 2016 at 15:41 | #53

    Your #49 and #50

    Now please keep in mind that Nick Gruen is a ‘managerialist knowledge worker’ who wants to design and implement ‘optimum systems’ within a defined structure – hence his extensive use of motor car production lines, and specifically the Toyota experience (which made significant use of the work of W Edwards Deming). The fact that Toyota degenerated into a messup over the last decade or so with quality deterioration and large scale product recalls seems to have totally escaped his attention.

    But Toyota’s failure – largely because of its ambition to be ‘world’s biggest real soon now’ took over from the previous ambition just to be ‘world’s best and cheapest’ – is basically inevitable. There’s only just so many ways that ‘worker productivity teams’ can improve large scale mass production systems, and when you’ve worked your way right down to the bottom of the list, then there’s only one thing to do: call in the radically creative designers and build an entirely new production line; this time with basically no human workers involved.

    So, I don’t really see that Nick Gruen’s approach has any significant or lasting benefit in a process – say providing aged care to old and often senile human beings – is amenable to the Deming/Toyota methods.

    I think Ikono (for once 🙂 ) basically has it right: the first rule of doing anything, and particularly human services is:

    First, do the right thing, only then work out how to do the thing right.

    For Toyota, it was easy to work out “the right thing” – at least earlier in its history – for governments in modern welfare capitalist democracies, not so easy.

    And besides, if we’re looking at ideas and structures and inputs and outputs and outcomes, be sure you fully understand Max Weber’s ‘structure of bureaucracy’ analysis. A short summary can be found by googling “Bureaucratic Form According to Max Weber — His Six Major Principles” at the bustingbureaucracy blog (if I include links, I just get chucked into ‘moderation’).

  54. sunshine
    September 9th, 2016 at 16:22 | #54

    What is not ideological ? Values are always (i think) involved even if only by choosing to spend your time on that and not on something else. People usually say something is ideologically driven as a put down for something they dont like. Similar to when they say something is politically correct. Its just a way of dismissing things they dont agree with -rather than engaging with the logic. Market extremists want to $ marketise everything ,for them that is aprori better. Its axiomatic -not questioned ,natural ,said to be ideology free ,as its just people making up their own minds what to spend their own money on.

    A general comment ;- governments and markets have gradually taken over more and more functions that families used to do .Eg ; health care ,aged care , medical care , education, defence etc. Centuries ago someone cut adrift from their family was in a dire situation.

  55. Ernestine Gross
    September 9th, 2016 at 16:58 | #55


    “Is the market wrong?”

    I don’t understand this question. Please ask people who use expressions such as ‘the market is right’ or ‘… wrong’.

  56. Julie Thomas
    September 9th, 2016 at 17:04 | #56


    “Sorry mate, I just don’t think the business plan is a goer.”

    Damn you missed my not a point again. I am not subtle enough am I?

    I’ve been wondering about that irrational and incredibly brave choice so many women make. I’m currently watching and trying to help my daughter reconcile the loss of freedom and status and income that she has suffered – yes it is suffering – since having a child with the incredible but totally unprofitable experience that it all was.

    One thing we agree on totally – my daughter and I – is that the nuclear family model is not good enough to provide all children with the best start in life that they can have. You be cynical and all, but that isn’t the same thing as Hawke said. In a small community one can see how this would be possible.

    Not only that but all the other young mums we know who are trying to do stay at home wife thing living on one income, and the old women I know who have lived to regret the trust we had a ‘husband’ as the breadwinner agree that there is a big problem with the conservative christian patriarchal marriage as an economic plan for our old age.

    Women are still having children but the birth rate keeps dropping. So bad that the wingnuts are worried about the Muslims outbreeding us. Women might be slow learners or something, but I think the penny is dropping.

    Do you have any serious thoughts or is this diff between women and men just, as Timmy Wilson is reputed to have said; ‘just biology and nothing to do with economics or politics’? And lets muddle through without bothering..?

  57. Ikonoclast
    September 9th, 2016 at 18:12 | #57

    @Julie Thomas

    Once I became a “left winger”, thinking at least somewhat in my own right, it always annoyed me that the supporters of capital and its machinations would bleat on about the “risks” of investment and that the lender, capitalist or rentier (as the case might be) should get a reward for that risk. To me, working in an unsafe industry at the time, it was pretty clear that many workers risked life and limb, some much more than I did. I used to think as follows and still do. The investor is only risking money, I and my fellows are risking life and limb. Is life and limb worth less than money? Very quickly, of course I realised the answer to my question. Yes, my life and limb was worth less than than their money… to them.

    In turn, women risk much more than men in reproduction. People who don’t run the direct risks and pay the main costs don’t understand. The revolutionary liberation of workers needs to progress into all forms of unpaid work including motherhood. I don’t want to make out that I am particularly enlightened. As a male, over my lifetime, I have regularly gotten ticked off that I am losing privileges, as male privilege is slowly wound back. I have had to remind myself over and over that losing excess privileges, over women in this case, only feels like oppression (as someone on this blog has mentioned). It isn’t real oppression. The real oppression of male workers does not come from women’s liberation. It comes from capitalists.

  58. September 9th, 2016 at 20:16 | #58

    @ Blugreen
    I have read Weber.

  59. September 9th, 2016 at 20:17 | #59

    (Not all but W on bureaucracy, yes. I can give you a lecture on W and patriarchy, if you wish)

  60. September 9th, 2016 at 20:21 | #60

    Patriarchal hierarchies were the precursors of capitalism too, ikon.

    Actually I think both Nicholas Gruen and John Quiggin fail to appreciate that their respective economic ideologies are still rooted in patriarchal epistemologies. I suspect they haven’t fully read and understood Marilyn Waring. Julie I presume you would have, but you probably don’t need to anyway!

  61. Ernestine Gross
    September 9th, 2016 at 22:30 | #61


    Mode 2 #28 is an alternative road to surfdom.

    (Stating the obvious for some, mode 1 doesn’t exclude strictly positive profits in practice. For a lough I once asked an accountant what is the colour for zero profits (they use black for + and red for -). The reply: “This doesn’t happen in practice”.)

  62. September 9th, 2016 at 23:06 | #62

    I reckon its pretty simple. Take a coffee shop. You like the coffee, they have a good range of food, and the service is good. You go back again. They do it badly, they change or fail. In this situation I reckon private providers do a better job. And that is what our experience tells us.

    Now take a TAFE course. You don’t know a good TAFE course from a bad one, because you’ve never done one before. And you pay a lot of money up front. The provider has a good incentive to sign you up, and keep you happy until its too late to pull out. After that, why do they care? Its a scam, and like all scams it relies on the gullibility of the customer. The customer who doesn’t look at reviews or do any research.

    So don’t let private providers deliver services where the incentives are all wrong for the result you want. Of course if your desired result is some scam artists getting rich…

  63. Ernestine Gross
    September 9th, 2016 at 23:06 | #63

    Social innovation and entrepreneuship on the ground.

    There is the small group of young Australian guys who got the idea of installing washing machines and dryers into a van and driving the van to places where homeless people live and offer their washing service to them. This group not only invented a useful service, they also innovated by installing showers into a van and brought this service to the homeless. Yes, as the ‘business’ grew, they depend on donations.

    See http://www.orangeskylaundry.com.au

  64. Donald Oats
    September 9th, 2016 at 23:45 | #64

    @Ernestine Gross
    I saw that too. I applaud the idea, and there is no doubt that it helps homeless people in some manner. The far bigger question though is why are homeless numbers growing—as observed in the wild, so to speak—in a supposedly good economy? Every day I see another new homeless person in the Adelaide CBD, more than I’ve ever seen before. Why does it fall upon a few good people to ensure that homeless people have access to a working lavatory, and a shower? Strange times indeed.

    This issue of homelessness is appearing and growing in whole sections of first world economic countries, sometimes because of refugees, but there are internal forces causing more citizens to end up on the street. This is really the wrong time to be pulling up the drawbridge on human services, but a break-even or for-profit motive has that isolating effect.

    Health insurance, workers compensation. There are two human services for whom a break-even or a for-profit motive has a major distortionary effect. Both kinds of insurance are meant to provide health services for sick and/or injured people. The trouble is, if we wish the reach to be across all strata of society, the government has to pay funds into these agencies to cover the full cost of the service: it is subsidised by design. In a pulling back from the principles of equity upon which such services depend, the only option remaining is to find creative ways of getting the expensive cases out of the system entirely, leaving those people behind, to fend for themselves. Given that most of those people have paid their taxes, and quite probably done so for a considerable number of years, to lose access at the time they need it is a bitter irony. Actually, just bitter.

    Trepalium indeed 🙁

  65. Ikonoclast
    September 10th, 2016 at 08:27 | #65

    @John Brookes

    I have a similar point of view. There are plenty of cases where providers of large, essentially one-off packages of goods or services can do a bad job and keep finding new customers. Shonky house builders are a case in point. In an economy that is big enough they can build a sub-standard house with sub-standard materials at a sub-standard pace. They can even leave it unfinished indefinitely. The customer is “burned” and broke. The customer will never again be commissioning a house from this builder or any other builder. In a big enough economy, this builder can simply move on to fool another naive, gullible or vulnerable customer.

    Note that I leave regulation out of the discussion at this point. Without regulation, there is no market discipline for such a bad builder. At least there has not been in the past where only word-of-mouth criticism could possible have any effect and word-of-mouth had little reach in the past. Matters might be different now. People could start farcebook and flitter accounts I suppose and “blacklist” bad builders that way. There would be legal issues and the next “mark” might not see these anyway.

    This situation represents a type of problem with markets. It can only be dealt with properly by municipal, state and federal regulation. There is no way any market system on its own can deal with this problem so far as I can see. It is the substantially the same problem that John Brookes raises. I don’t know if there is a technical term for this type of market problem. This is another example, just like Hotelling’s Law, of how markets can’t solve everything, and fail to address overall social utility or the achieving of optimum social outcomes.

  66. GrueBleen
    September 10th, 2016 at 08:52 | #66

    @Julie Thomas
    Your #56

    The old stay-at-home solitary nuclear mum ? No, no, that’s the worst possible business plan – no profit in that at all. And when dad goes off elsewhere later in life, leaving mum with years of not having contributed to her retirement super, well then …

    Now, correct me if I’m wrong, but the nuclear family was largely a British creation in the Industrial Revolution era – the men had to leave the villages and rural towns to go to cities to work in factories and their womenfolk had no alternative but to go with them leaving the non-nuclear family behind – and then end up in factories too. So a broader kinship family based life was lost.

    And I don’t think there’d be much interest in, say, establishing a Borneo longhouse style communal ‘family’ with children being the responsibility, and the joy, of the whole community. Because if anybody wanted that, there’d already be moves in that direction, wouldn’t there. And employers, even large and profitable ones, and government departments too, won’t contemplate providing child facilities for working mums, will they.

    So I guess your daughter is stuck with it, Julie.

  67. Ikonoclast
    September 10th, 2016 at 09:52 | #67


    “So I guess your daughter is stuck with it, Julie.” – GrueBleen.

    Doesn’t your own statement strike you as callous and dismissive? Have you ever tried to look after babies or very young children? If you had you would realise it is not easy. I’ve done labouring, builders labouring, machinery driving in extractive and farming industries, contract cleaning (of truckies terminals no less and believe me that is filthy work), factory work (in James Hardie in the bad old asbestos days… think about it), bank johnny work, government clerical work, supervisor work, programming, research and report writing… oh and looking after new born twins for extended periods (ie. many months on end with a working wife).

    Want to know the hardest job by far? It was looking after baby twins. IMO, most men just have no idea. I also remember the female South African born banking CEO (forget her name but she worked as CEO at St George at one stage) being quoted in the press saying that being a mother was harder than being a CEO. Since I’ve never been a CEO, I will take her word for it.

  68. GrueBleen
    September 10th, 2016 at 10:38 | #68

    Your #67

    “Callous and dismissive” ? Or simply acknowledging a reality that I had no hand in creating and have no capability to alter ? What would you expect me to say, Ikono ? Gush about how wonderfully satisfy and fulfilling stay-at-home solitary nuclear motherhood really must be ? Is telling lies to each other the only response we can have because everybody knows we must have mums bearing (and raising) kids ?

    And the lady you’re thinking of is Gail Kelly who was also CEO of Westpac for a while. I can’t recall anything memorable she ever did other than becoming the first female CEO of a major Australian bank – but she hasn’t had many followers, so I guess that permissive era is over.

    But alright, just for you: Julie, please tell your daughter that I recognise she has a hard row to hoe. I have no idea how hard a row, because I’ve never been involved in the birthing and raising occupation, even as a standby male. So I trust you and she will forgive me if I don’t – despite Ikono – attempt to confect some deep sympathy for a situation I simply know nothing about. But I hope she will be able to reclaim her other life some day.

    As to your other matters: no, I have no idea about the diff between women and men in this respect, but I wouldn’t be paying much attention to a gay wingnut in respect of biology versus politics and economics. However I might ask why, with so many more women in State and Federal parliaments now (and some of them mothers), why absolutely nothing is being done about the indentured serfdom periodically imposed on non-wealthy women by this wonderful caring and sharing society. Maybe because all the women politicians are too busy avowing how they are not now, and never have been within even 100m of a feminist.

    But I think you may have to ask Ernestine Gross about the economist’s side.

    Otherwise, yes, our natality has been dropping these many years – from several decades before the exceptional Baby Boom bubble too. But then you see, they tell me that everywhere on this planet that women have (a) achieved a minimal level of freedom and autonomy and (b) gotten any kind of half-decent formal education, that family sizes decrease and the local natality falls markedly. So it will happen with many Muslim groups in the not too distant future. Look to Japan as a major example (though Shinto, not Islam).

  69. Julie Thomas
    September 10th, 2016 at 10:44 | #69


    “So I guess your daughter is stuck with it, Julie.” Empathy fail, …. sigh …. again…. as Ikon points out.

    But also untrue because we are creative people and as I have already said there is a real interest by the other young stay at home mums in this small town who are trying to make the western traditional family model work, not in the Borneo longhouse model that is far too masculine, they take the boys into the mens hut at 5 or so I think, but we are interested in the Aboriginal model.

    I recommend Sarah Blaffer Hrdy and any of her works but particularly Mothers and Others if you are interested in understanding things from a different perspective and the importance for child development of alloparenting.

    The young ladies on the local P&C are wanting to know how they can re-create the community driven and managed support networks that worked much better than the privatised services that they don’t have now because poverty, with the aim to give all the kids in our town the best we can provide by working together. We are building a community for our kids; it seems the right thing to do.

    Self organisation in a small population with a defined aim that everyone believes in works well particularly when the actors can communicate via mobile phones.

    And it is not only difficult hard and unrelenting work to raise a good citizen particularly when you begin with a ‘difficult’ temperament, the first few years of a child’s life are critical for the development of the capacity not only for empathy but for rational thought, spatial manipulation and all the other abilities that underpin what we call intelligence.

    I think that Fred Engels wrote a very good piece about the way marriage and the family developed in western society but I think that he didn’t of course he didn’t, realise the effect gay men would have on the process that he saw happening to marriage. Would he have been amused do you think?

  70. Julie Thomas
    September 10th, 2016 at 10:51 | #70


    “Or simply acknowledging a reality that I had no hand in creating and have no capability to alter ? What would you expect me to say, Ikono ? Gush about how wonderfully satisfy and fulfilling stay-at-home solitary nuclear motherhood really must be ? ”

    lol are these they only options that spring to your mind? Why not just think about it and not reply if you have nothing to say? You could check Freud’s defence mechanisms to see if any of them make sense as you make a start on understanding your own motivations.

    C’mon we are supposed to be agile and innovative and there you are whinging about bloody women and how it’s not your problem. 🙂

  71. Ikonoclast
    September 10th, 2016 at 11:24 | #71


    Come on, we all need to try to recognise our faults and shortcomings. It’s called insight. I’ll acknowledge some of mine before I go on, in the interests of a kind of moral equality. Such as an exercise is really for the person applying self-insight since our faults are actually terribly obvious to other people.

    “O wad some Pow’r the giftie gie us
    To see oursels as ithers see us!
    It wad frae mony a blunder free us,
    An’ foolish notion:
    What airs in dress an’ gait wad lea’e us,
    An’ ev’n devotion!” – Burns.

    What are some of my faults, at least as I have exemplified them on this blog?

    1. I suffer from Dunning-Kruger effect. I think I am a lot smarter than I am and my education is not nearly up to the theorising I attempt to do.

    2. I am hypersensitive to criticism. When my ideas are rejected or refuted (validly or invalidly) I initially get angry instead of immediately re-examining my ideas and improving them or their expression where I can.

    3. I am “precious”. I think my little, obscure productions are more important than they really are by a long shot.

    4. I suffer from an inferiority complex about my relatively poor education (compared to real intellectuals), my mediocre (average) achievements in working and in thinking. I over-compensate for this by aggressive and disrespectful argumentation with my intellectual superiors.

    Yep, I can be a real pain in the ass and clearly I rely on considerable tolerance from others.

    In turn, you need to examine statements like “simply acknowledging a reality that I had no hand in creating and have no capability to alter” and several other statements in that post. For example, what would a person’s gayness have to do with the quality of their intellectual work? There’s no correlation between gender, straightness, gayness and intelligence that I know of.

    There are correlations between one’s social situation and one’s justifying ideologies which can in turn bias one’s intellectual assumptions/foci and work. But these (different but all substantial) biases/foci apply to all types of people. None are exempt from bias and differential focusing as such.

  72. Julie Thomas
    September 10th, 2016 at 12:02 | #72

    “None are exempt from bias and differential focusing as such.”

    And Spinoza recognised this way back when he said something like “to see the truth one needs to have no opinions either for or against.” He said that “to set up what one likes against what one dislikes is a disease of the mind that can only be cured by the science of nature”. I’m not sure what he meant by the science of nature that but I’ve found a new translation that looks interesting.

    Spinoza is very underrated or misunderstood or something because from what I read about him he was one of the most insightful – into human nature – of the philosophers I have read. It was his nifty saying that provincialism is in the person not the place that hooked me initially.

  73. GrueBleen
    September 10th, 2016 at 15:50 | #73

    @Julie Thomas
    Your #69

    “Empathy fail”, eh ? Oh dear Julie, fancy running up against somebody who has “empathy fail” – and on the web, of all places, where as we know empathy flows, well, like the Colorado River flows into the Gulf of California, or like the Darling flows into the Menindee Lakes.

    But before I cast myself into the outer darkness crying “I’ve failed, I’ve failed, Julie and Ikono reckon I’m not a ‘true human people'”, tell me whether you did, or did not write, in your #56:

    “I’ve been wondering about that irrational and incredibly brave choice so many women make. I’m currently watching and trying to help my daughter reconcile the loss of freedom and status and income that she has suffered – yes it is suffering – since having a child with the incredible but totally unprofitable experience that it all was.”

    So we have “irrational but incredibly brave choice” – why “irrationa” and why “brave”, Julie. What adversity has to be suffered ?

    “help my daughter reconcile the loss of freedom and status and income that she has suffered” – that’s “reconcile”, “loss (of freedom, status, income)”‘ So much deprivation and loss, there.

    “She has suffered – yes it is suffering”. And such suffering, too.

    So when you say: “But also untrue because we are creative people ” then what are you saying ? That after all that, what you said about the loss and suffering is untrue ?

    And what about this business of “trying to make the western traditional family model work”. What traditional model ? The one created in the late 1700s in order to allow the British oligarchs to reapply a kind of indentured serfdom to the lower class people at the time ? I really am curious here: what “tradition” do you mean ?

    And really, Julie, are you so gauche and thoughtless that if I mention Borneo longhouses you think that can only mean an exact copy of Borneo longhouses ? That if the basic idea of commu8nal participation and responsibility is good – and I don’t personally know whether it is or not – that variations couldn’t be introduced to make it better conform to your “traditional family model” values ?

    I was going to ask Ikono what he’d done with J-D – I was getting to enjoy J-D’s single minded literalist approach to trolling, but you’re doing just fine in his place. Go for it.

  74. GrueBleen
    September 10th, 2016 at 16:00 | #74

    @Julie Thomas
    Your #70

    Oh frabjous day. I just knew you had to be a Freudian. That touch of deep personal irrationality, the inability to see past your own very limited worldview and a total incapacity to interpret other people.

    Now while you while, think just a little about Attribution-Projection and how much of it you exhibit.

    And of course, blood women aren’t my problem. So why are you whinging about unempathetic men who aren’t your problem ?

  75. GrueBleen
    September 10th, 2016 at 16:25 | #75

    Your #71

    That’s a very fine act of confession, Ikono – pity I’m not a Freudian “priest” ready to receive it. But I should point out that it isn’t only me who has already appreciated your “attributes”.

    However, there’s a few small things I’ll waffle on about a bit.

    Seeing ourselves as other see us. No thanks, mate, others are generally insensitive idiots when it comes to “seeing” themselves or anybody else. As indeed you and Julie have exhibited here. I am enjoying your trolling though.

    And here’s a fine exmple: “what would a person’s gayness have to do with the quality of their intellectual work?” Now you see, Ikono, here you go again, inserting your own words and then claiming they came from me – you are a master at it. I didn’t mention ‘Freedom Boi’s’ intellectual work at all, I just indicated doubts about a gay wingnut having much capability to differentiate between “biology versus politics and economics”. But I grant you I was careless in my wording: it’s not so much that I’m doubtful about gay wingnuts in general, but I am very doubtful about the abilities of Tim Wilson in particular having seen some of his IPA stuff, some articles for the Murdoch press and some of his pronouncements as Human Rights Commissioner prior to him being elected to the Senate [sigh]. In short, he’s very much a libertarian dobadder.

  76. Ernestine Gross
    September 10th, 2016 at 19:15 | #76

    @Donald Oats

    I concur with you regarding the homeless. I mentioned the orangesky laundry because of Gruen’s interest in social innovation and entrepreneurship. Note, no managerial guidance was required for these young guys to do something that is immediately helpful in a practical sense to at least some. It is no solution to the growing number of homeless.

    You mention the growing number of homeless in Adelaide. I live in a suburb in the leafy North Shore in Sydney. I don’t remember the exact year – some time after the GFC – homeless people who looked destitute appeared in the shopping strips and around train stations in the suburbs of the North Shore – 20 and more km from the CBD. My friends, acquaintances, neighbours, chance meetings with locals who are strangers to me, saw it for what it was, namely growing homelessness. They didn’t like. Contrary to what some people might presume, the said locals on the North Shore didn’t like it not because they didn’t want their vista’s disturbed by ‘riff ruff’ that had invaded their patch but because it was evidence of how widespread and serious the problem of homelessness has become. People are seriously concerned about government policies regarding housing, health, education, employment insecurity, etc. etc. Although ‘they’ are in a blue ribbon liberal LGA, they are not blind to social division and the growing income and wealth inequality and associated problems. (Sometimes it seems to me focusing on ‘the left’ and ‘the right’ is not helpful.)

    One point of clarification regarding my mode 1. This mode also applies to public service providers who get a fixed amount of ‘revenue’ (or according to some formula) from the government. Corporatisation of public sector services tends to provide a bridge into mode 2 in my experience in higher education.

    I take your point about health and safety matters.

  77. jrkrideau
    September 11th, 2016 at 00:32 | #77

    @ 26 May

    as well as receiving public money to run a prison at a profit, a profit is made from the inmates productivity.

    is this true?

    It seems very likely.



    if it is true ,are these products exported under “free trade”treaties?

    No idea

    The Canadian Federal prison system had/has(?) an office furntiture industry but I believe would only sell to Canadian goverment entities. Very nice products. I believe the inmates were paid a small amount of money—probably well below minimum wage.

  78. Ikonoclast
    September 11th, 2016 at 06:13 | #78

    @Ernestine Gross

    It’s a strange two-speed economy. I see the opposite near where I live. People seem to be able to afford massive automobiles these days. I’ve looked up their prices. I see for example;

    (a) numerous medium SUV AWDs ($55,000 to $65,000);
    (b) numerous new Prados ($ 65,000 plus);
    (c) a fair sprinkling of Series 200 Landcruisers ($90,000 plus)
    (d) A few Audi Q7s ($100,000 plus).
    (e) A few BMWX5s ($185,000 plus);
    (f) A few Rangerovers ($250,000 plus);

    And there are plenty of luxury sedans in the $75,000 to $100,000 bracket. Many of these are in driveways which have 2 or 3 automobiles in total. This is not the north shore of Sydney, just the western periphery of Brisbane. One certainly does get the impression of wide disparities of wealth in our economy. Do so many people really have enough loose change for these indulgences or are they spending everything they have and re-mortgaging the house? I do wonder.

  79. September 11th, 2016 at 15:44 | #79


    I propose the following universal means test. “See that car you are driving? Who owns it?” If it turns out that the driver actually is the owner, they pass the means test. But if it is owned by a company, trust, or leased under some fancy tax arrangement, they fail the means test.

  80. GrueBleen
    September 11th, 2016 at 16:58 | #80

    @Ernestine Gross
    Your #76

    It was interesting to hear about the travelling laundry cum shower service. However, if it is to service the homeless, doesn’t that mean there are sizable concentrations of homeless somewhere ? Unless the service can be called like an Uber.

    It caused me to consider just a few things that are done for the ‘non-homeless’: Meals-on-Wheels, for instance and Royal District Nursing Service’s home nursing service just for two. And I remember way back when – in my case 60 years ago – we young cubs ‘n’ scouts did ‘bob-a-job’ which was in part a cheap labour service to oldies and pensioners who couldn’t do things like they used to. It disappeared for a while, but apparently now it’s back – as a major undertaking in the UK, I believe, but also under the local title of Scout Job Week. Now alongside such old stayers as Rotary and Lions Clubs etc.

    But yes, they are mainly for us ‘non-homeless’. Though it used to be that for the homeless in or near the City they could get a bit of a wash and shower at the Melbourne City Baths. There were toilets there, too, as well as at the Melbourne City Hall. Entrance fee for the MCB is currently $6.20, but I have no idea how much begging in the street it would take to earn that much.

    As to increasing numbers of homeless, well, consider this: the population of Melbourne grew by 91,600 in 2014-2015 – an average of 1760 people per week. I would be very surprised if some percentage of that 1760 didn’t end up as new homeless, and/or displace some oldies to become new homeless, wouldn’t you ?

  81. Julie Thomas
    September 11th, 2016 at 18:49 | #81


    As I understand it, meals on wheels is not a thing anymore because there are no volunteers who will do this voluntary unpaid work. The women who usually did it back in the day are now working. If not they might be homeless.

    The type of person becoming homeless is changing.

    A man is not a plan: from a recent radio national program.

    “Up until quite recently, there was an idea among Western society that “a man is a plan”.

    Young women should find a man, get married and take care of the kids.

    It was seen as unusual for women to go to university or have a full time job.

    In fact in some cases, that would’ve been considered rebellious.

    Now, society has changed its expectations and values around how women should work and live.

    And the divorce rate is higher than ever.

    Now, many of those women who were sold the idea of marriage, kids and part-time work are over the age of 50.

    Many have been divorced, their kids have moved out, and they’re probably struggling to find work.

    Some are also struggling to find a home.

    This generation of women – the over 55s – is the fastest growing demographic among Australia’s homeless population.”

    So many things have changed. Some of us have noticed more than others.

    I can’t imagine how the old bob a job thing would work now. It isn’t in our culture to do things like that. It’s much too dangerous to let kids go house to house without supervision in a suburb of a city or a big town. Perhaps not in the area where you live though?

    That is one thing that has changed in our society; the way poor people all live together whereas once there was more integration when there was less inequality. It was said that the well off were a good example for the less lucky. Not any more.

    But for the young couples who move out here they have only been able to afford to live in suburbs where they say, you just wouldn’t send your kids raffle ticket selling unless you drive around with them and watch from the car at each house after giving them all the rules about not going inside no matter what the potential bad person says.

  82. Ikonoclast
    September 11th, 2016 at 19:11 | #82

    @John Brookes

    I like it. I would add in that if the car is currently valued at over $49,999.99 (redbook) they fail the means test no matter what.

  83. Ikonoclast
    September 11th, 2016 at 19:38 | #83

    @Julie Thomas

    I did Bob a Job as a kid (Cubs). It seemed safe enough then going around our suburb. My parents were, relatively speaking, “helicopter parents” for that era. Yet today, my parents’ parenting style would be considered extraordinarily lax about child safety. How times change. Then again, we did make our own fun. I remember cracker night, all sorts of unauthorised a chemical experiments with caustic soda, hydrochloric acid etc., billy carts, go-carts with motor-scooter engines (even had the gear-boxes), land yachts, building crude bridges over local creeks and slashing bush trails and clearing lantana on our own initiative for the high school cross-country. With that last, I am sure the rest of the school and just about all the teachers thought the cross-country route stayed clear all by itself or was cleared by the council.

    Now, if kids don’t have a screen they are lost. Lawd help them if they get a prickle in their foot. I used to run 10km a day in bare feet on stony dirt roads for athletics training. True story. I do admit though that I lived in a house not in a hole in the road. (Apologies to Monty Python.)

  84. Julie Thomas
    September 11th, 2016 at 20:23 | #84


    Trove is a wonderful place to go looking for interesting things about life in the past. There are even photographs. I was looking for ones of Main Street in Brisbane. We lived on Main Street, when I was born just off the Storey Bridge as one drives toward Wooloongabba; the house was opposite the Mt Olivett Hospital which wasn’t there and St Mary’s church which was I think and my grandmothers huge old Queenslander was just down the road and our doctor was just down the road.

    Brisbane, just a country town in the ’50 and now it’s Brisvegas. 🙂

  85. Ernestine Gross
    September 11th, 2016 at 23:58 | #85



    I suppose the mobile laundry service presupposes local concentration of homeless people. I haven’t seen this service on the North Shore in Sydney as yet. Yes, increasing population is likely to increase the number of homeless but not necessarily. To the best of my knowledge, there is statistical evidence that the proportion of people who are homeless in Australia has increased in recent times. (The extent of homelessness in the USA after the GFC gained world attention.) As for the particular local example I gave, I am absolutely sure I had never seen a homeless person 15 years ago, possibly even 10 years ago. There are factors such as public benches in bus shelters which are not (as yet) divided into seats in some localities only. It seems just finding a dry and at least partially protected spot in a safe area to settle for the night seems to have become a ‘challenge’ (managerial word for hard work or impossible task).

    Some of the specific examples you gave of social services for the non-homeless may be dated but there is no doubt that a lot of social services are provided now, which are neither organised via ‘the market’ (ie paid for in money) or via ‘the government’ (paid for in money). They range from driving a neighbour to a train station when their car isn’t working or they missed a bus to local people introducing new immigrants to local customs in a myriad of situations, to John Quggin’s (interactive) public lectures on this blog site. The debate you have with Julie Thomas contains another example. Child rearing is a social service. Without it there would be no future generation (and no pension payments!) Another one is the work done by retired people in persuing overcharging by banks or insurance companies – it takes a lot of time and perserverence to get through the private or public bureaucracy, time not available to working man and women.

    All these are examples, which technically fall into the category of ‘incomplete markets’. Just as well, because otherwise life would be absolutely boring and sterile – IMHO of course.

  86. Ernestine Gross
    September 12th, 2016 at 00:09 | #86


    No Mercs? Very popular on the North Shore. I am reasonably sure you are not the only one who doubts that the relative prices (‘values’ in money terms) we are observing are making any sense.

  87. GrueBleen
    September 12th, 2016 at 03:07 | #87

    @Julie Thomas
    Your #81

    Meals on Wheels still seems to be functioning – at least it still has active websites (one for each State and one central. Plus America, apparently). But I haven’t had to seek their services so far, so I can’t speak from any sort of personal experience. But come the not too distant future, who knows ?

    On the national website, BTW, MoW claims to provide multiple services as per:
    “We provide 3 services in 1:
    – A Meal (nutrition)
    – A Safe and Well Being Check (monitoring of physical and psychological well-being)
    – Social Cohesiveness (strengthening communities / locals helping locals)”

    I’m not familiar with any statistics on gender rates amongst the homeless, and I don’t get into the Melbourne CBD much nowadays (trains are too crowded, even in off-peak times), so I haven’t any anecdotal evidence to quote either, but I would expect an increase in female homeless because of the factors you mention. Just have no idea how many – yes, divorce is common, but both remarriage and ‘common law’ partnerships are also quite common these days. Personally, I have lived in an ongoing ‘common law marriage’ since 1967.

    But in my case, when I sat for Matriculation (in 1960) nearly half of the 20 who passed were girls (as we called them then, and we were boys 🙂 ) and nearly all of the girls went on to Uni. One became a doctor, several became lawyers and so on. All but one – at least of those who turn up to the 1960 Matric Year Annual Reunion Lunch – married and had children and all are still quite “well off”. But that was in the upper middle class Melbourne suburb of Brighton – I have no idea what it would have been like back then out in Yarraville or Seddon. And not everybody comes to the lunch, so I have no idea regarding about half of the Year of 1960 class. (Only one – a male – that we know of has died though – the key being “that we know of”).

    Can’t say how Bob-a-job would work these days either – maybe with scoutmasters and volunteer parents on the day (or week). But then, there’s the Halloween thing now that is fairly recent, and kids seem to wander around on their own – at least the ones who knock on my door do. However, I’d guess that might be location dependent too.

    And yes, my suburb – or at least the part of it where I live – is quite genteel compared to many. My street now has approximately 30% Chinese occupancy rate now, so I expect that to mostly continue. I wonder if/when we’ll see an increasing rate of Chinese homeless in Melbourne.

  88. GrueBleen
    September 12th, 2016 at 03:13 | #88

    Your #83

    Oh yes, but did you ever try Nitrogen triIodide (reaction of ammonia with iodine – which I could get at the local “chemist” (aka pharmacy these days).

    Excruciatingly vibration sensitive when dry – and a great little fun additive to the local footpaths and roads – in small quantities only, though.

  89. GrueBleen
    September 12th, 2016 at 03:32 | #89

    @Ernestine Gross
    Your #85

    Yes, a decent ‘hunkering down place’ can be somewhat hard to find, I guess; which explains the ‘explosion’ of homeless sleeping out in the Melbourne CBD laneways etc. There once was fairly cheap overnight dormitory style bedding down places in Melbourne – there was a quite well known one called Gordon House once upon a time. Now all subject to “knock-down rebuild” as the building industry likes to call it. Office blocks and “studio apartments” etc, so nowhere for the homeless to go. Gordon House was only for homeless men though – I’m not sure whether anybody ever thought that there were homeless women at the time.

    There is, as you say, many different services now – quite a few provided by local Councils too – none of which have I yet had to avail myself of. My learning curve might end up being very steep. The one you mention about pursuing bureaucracies (public and/or private) is interesting: my partner, I think, would be very good at that (I’m way too bad-tempered and impatient).

    So indeed, the ‘incomplete markets’ (as you label them) services are a “very good thing”. Though I must say it all looks more and more like a “precarious living taking in each other’s washing” economy to me.

  90. Ernestine Gross
    September 12th, 2016 at 16:29 | #90


    ” Though I must say it all looks more and more like a “precarious living taking in each other’s washing” economy to me.”

    Indeed. And the precarious living wouldn’t turn into comfortable living if the transactions were to be carried out via ‘the market’ (exchanging invoices and payments) with the help of an innovative service provider, not for profit of course (because the profit becomes income for the managers), even though GDP might increase a little.

    The conversation is really about the growth of income and wealth inequality, which services are best provided by non-corporatised public institutions and which services are best provided by private enterprises and which, among the latter, are best organised via partnerships (where professionals are in control and they risk their own money) and which are best organised by the corporate finance form (physical capital intensive).

    Beside appreciating the linguistic skills of essay writers, I usually do not get much out of these pieces of prose. For example, the only clear cut message I received from Gruen’s essay is that he, like many others including myself, also does not see much benefit from ‘new public sector management’.

  91. GrueBleen
    September 13th, 2016 at 14:23 | #91

    @Ernestine Gross
    Your #90

    The now perennial problem: what, by whom, how. And as always, individual variation obscures systemic success or failure.

    I almost always find Nick Gruen readable, I just don’t very often find him enlightening, though he has gotten through to me a few times in the past. Besides, he’s a big chess fan.

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