As I’ve mentioned a few times, I got a lot out of Erik Olin Wright’s Envisioning Real Utopias, and am still hoping our long-promised book event comes to fruition. The general idea of the book was in line with my thinking that technocratic rationality, of the kind offered by, say Obama or Blair, is not a sufficient answer to the irrationalist tribalism of the right – the left needs a transformative vision to offer hope of a better life, both for the increasing proportion of the population in rich countries who are losing ground as a result of growing inequality and for the great majority of the world’s population who are still poor by OECD standards[2]. So, Utopia matters.
But it’s just as important that utopia be feasible. Utopia as a dream may be comforting, but is unlikely to inspire effective political action. And attempts to implement a utopia that isn’t feasible are bound to end in failure, quite possibly disastrous failure, as the experience of communism showed us.
So, my idea was to think about what kind of transformative vision might be both feasible, and capable of inspiring effective action. I had a first go at this here and here, in relation to education.
Turning to health care, we could start with a utopian ideal where everyone got all the health care that could benefit them. But that would be utopian in the pejorative sense – the scope for expanding health services is effectively infinite, and the resources available to society are not.
Thinking about feasible utopia, on the other hand, it seems to me that the system of socialised health care in modern social democracies is not a bad model. That is, if all of society worked like the health care system at its best, we could regard the political project of social democracy as a success.
Perhaps no country gets it perfectly right. In Australia for example, the basics (general practitioner services, pharmaceuticals, critical hospital services) are covered pretty well, but we don’t do so well on mental and dental health, and there are lots of complaints about waiting lists for elective (=desirable, but not lifesaving) surgery. Still, outside the US, the big worry about going to doctors or hospitals is whether the treatment will be successful, not whether you will go bankrupt trying to pay for it.
The big question is whether this model can be replicated more broadly. Health care has the special characteristics that, on the one hand, there isn’t a big issue of consumer preferences (mostly, people want the treatment that has the best chance of a cure, though there is sometimes a risk-return trade-off) and, on the other hand, markets perform very badly.
The public provision model wouldn’t work for, say, motor cars. Still, it seems that it ought to be possible to limit the domain of inequality in such a way that no one was left without the basic requirements for a decent life and social participation while, at the same time, those who chose to work harder, or worked more productively, could still enjoy higher consumption of discretionary items like expensive cars and granite benchtops.
fn2. A billion or more of whom are poor by the absolute standard of not having enough food to eat, or access to basic housing and medical care
John Quiggin 
“the scope for expanding health services is effectively infinite, and the resources available to society are not.”
Is this really true? Would giving everybody in Australia access to near perfect health care actually bankrupt the country?
You’ve mentioned a few imperfections in our model; Dental, mental, and elective surgery list, but plugging those holes wouldn’t break the bank. Apart from those, are we really so far from having perfect care?
Australia only has a partially socialised medical system. Outside of hospital nearly all medical services (GP, medical centres, pathology, chemists, specialists etc) are provided by private sector organisations even when the funding is government provided. I think we should retreat from government funding as well but keep the government as an optional financier for those with significant medical needs but no current financial means. This wouldn’t be that hard to implement. Essentially Medicare would just send you a statement each quarter and you could either pay the debt or add it to your HECS liability. We could probably cut about 7 points off income tax rates as a result.
Hospitals ought to be privatised for efficiency reasons also with some form of USO for emergency wards if necessary. It is the only real part of Australia’s medical system were government ownership is the norm. There is no good reason for this to continue.
@TerjeP
“Hospitals ought to be privatised for efficiency reasons”
I’ve just been through a number of the countries wonderfully privatised airports, and I do not see one jot of efficiency. I see restricted services (find your bank’s ATM), gouging for parking, worse gouging for train travel, and poor service for exorbitant prices.
Two examples. I was in Sydney Airport when the bikies had their fracas awhile back. As we now know the security footage was unusable, and the crowd control was moronic, repetitious and very, very loud, all through the airport.
Our regional airport just got privatised, has to have a decent return on capital, jacked up its fees, and immediatetly lost one of the carriers with the only direct flights to some interstate captials.
Efficient? Only if your standing on your head. Its a mantra, best forgotten. I prefer John’s search for meaningful ways forward.
It’s hard to comment on the example of your regional airport without knowing which airport it is and some data on performance (including financial) before and after privatisation. Even so I don’t think hospitals are quite the same as airports. For procedures other than emergencies most of the population can choose to attend an alternate hospital if the closest one does not entirely satisfy.
Whether something is socialised or privatised is not a critical issue. Of course public provision of motor cars would be possible. The real problem is whether a service is provided to earn a capitalist profit, or is provided at natural economic costs, or whether some get quality services at a subsidised cost. This is irrespective of the socialised or privatised issues.
A co-operative can still aspire to maximise returns, and a charitable private provider can offer subsidised services, A socialised entity can still make huge capitalist profits eg Canberra’s electricity, gas and water provider – ACTEWAGL. Governments can run their housing stock on capitalist lines.
All these possibilities suggest that the public-private dichotomy is not a key issue – particularly and as long as the elephant (capitalism) is ignored. Theoretically, every service can be provided by workers’ cooperatives (so the public-private dichotomy is removed) but still the problem of how they operate remains.
Similarly, the issue of whether a market or a plan suits service provision is also a separate issue to whether there is public or private supply. Plans and regulated markets appear to approach each other. Anyway this issue is minimised once a market is viewed as a regulated market with adequate information. A plan can still have competitive elements incorporated (a supposed virtue of markets).
I agree with Chris. The beauty of focusing on the irrelevant issue of ownership allows the apologists for the rent seekers to avoid the real arguments. Efficiency is a wonderful mantra, but what does it mean. Efficient accumulation of all available money by those who can seems the most reliable definition. In a complex society where long term net gains may well be advanced by temporary sub optimal efficiencies (tertiary education being a classic example, where efficiency as defined by money accumulation is deferred) the need for a constructive and inclusive debate on how that may be achieved is long overdue.
I dislike obvious waste, and in particular the over-consumption of finite resources for little appreciable gain. In the end a just society must deal with the problem of equity, which for an Australia in denial on most fronts will require a tectonic shift. Making Australians ‘poorer’ will not make anyone else richer. On the other hand, making Australians richer will not make them better, and in terms of consumption, probably more wasteful.
The utopian ideal is to make things better. But like efficiency, what is better? I notice the Wikipedia page on quality of life still has Ireland at the top (as ranked in 2005). That was prescient. I’m sure many Irish now have a much better understanding of terms like prudent, resilient and stupid.
The health system is a complex beast, and to keep it healthy you have to keep making changes. So the fee for service system in medical services has had many advantages, especially with regard to efficiency, but its got to the stage where the negative aspects of fee for service are dominating and we need to mix in some more block funding – particularly for preventive actions and complex conditions. The GP workforce supply is now almost back to optimal levels after a period of being too low, but that needs to be continually watched and adjusted with allowance for the large training time lags. And other areas of the system need adjusting. Overall its a pretty good system which delivers good, reasonably equitable outcomes. Its interesting that all the different systems in the OECD countries deliver pretty good outcomes, with the exception of the USA, and there is no ‘clearly the best’ system. And even the US has Medicare for the 65+ population, and a good integrated, efficient health system for their veterans, so they are not too far away from being OK.
So the various health systems are not too different from a practical utopia.
” hope of a better life” The best that can be done is to provide a path to making the best of what we have. This, for Americans, should include recognition that the old days of consuming a huge fraction of the world’s resources are gone. Their oil production peaked long ago, the competitiveness of their labour has collapsed, and climate change has not stopped. Utopia are dated.
There is no doubt that private hospitals need not be “for profit”. Whilst I’m no historical expert on the topic it seems to me from casual observation that prior to state ownership of hospitals they were generally run as charitable institutions all be it with a fee for service aspect. I don’t think worker co-operatives was the norm although community co-operative may be a meaningful description. The issue of ownership is primarily an issue of governance. Subsidisation of some services may make sence but this happens in private organisations all the time anyway. The issue with government ownership is that it makes overall management of resource allocation remote and introduces feedback delays. Price signals don’t get used properly. Obviously public ownership of hospitals can work but my contention is that it is sub optimal. If we are to have public ownership we need boards of management with greater accountability, autonomy and responsibility.
Government ownership is generally more responsive to public demands and concerns about quality etc. Once a service is partially paid for by taxes, price signals at the time of usage, are less useful. In fact, if a service provider uses price signals, some people will get greater access to services, and some will miss out. Over time this misallocation will cause social disruption.
Using price signals leads to overlooking significant demand. This usually reappears as a queue when a service becomes free or subsidised. Then the hidden inefficiency of the previous pricing regime becomes glaringly obvious. This is not specific to hospitals but to most essential services.
Government decisions, public decisions or cooperative decisions are no more remote than private decisions but are more transparent, representative of the community and therefore produce better outcomes for the greatest number. Private governance usually evoke “commercial-in-confidence” blockages in information flows, and, in a competitive environment, lead to costly duplications. Private entities resist public accountability thereby introducing less efficient outcomes.
In Australia services such as removing rotting teeth, baby delivery, resetting fractures, removing cancers, vaccinations etc should be governed by criteria of social and patient need and the capacity of the tax system to pay.
Combining pricing with privatisation and profiteering leads to the worst of all possible worlds.
You’re sounding more utopian every post. Now, if all those nice people who want to own hospitals just stopped preying on the sick and suffering we will all get along famously.
The reality is that the unscrupulous always exploit the questionable to maximise profit, and so force those whom have to compete to adopt similar behaviours.
Once again it is not ownership, and not even regulation, but governance. I think you almost got your last line right. “If we are to have private ownership we need boards of management with greater accountability, autonomy and responsibility.”
I’d say that the ideal system is that of Cuba. Run on a shoestring, emphasising preventative care and close monitoring by neighbourhood clinics, it has not only maintained high standards for decades despite the US economic siege, but has exported healthcare to numerous other countries in the poor world. The secret is to treat good health as a human right, not a commodity to be sold to the highest bidder in pursuit of the greatest profit.
We are at the point where Popperian piecemeal tinkering will not save endless growth corporate capitalism in toto, let alone any component of it. Without going into that topic, I would advocate that persons over fifty (like myself at 57) should adopt a more philosophical and stoical position about their own health and longevity. People over fifty should make the honest judgement that they have lived longer than most humans have ever lived and that the planet and younger people owe them nothing.
Thus over fifties should consider only seeking very basic health care. In this mindset, all heroic and semi-heroic measures including major operations, heart operations, expensive cancer treatments and expensive, continuous drug treatments etc would not be sought. Over fifties should maintain their own health as best they can by proper diet, exercise and minor treatments and prepare themselves philosophically (or religiously if they wish) to live spartanly and (most often) die when their unaided body would naturally die.
In this mindset simple preventive measures would be taken especially where they prevent future higher costs (non-financial as well as financial) to the individual and to the system. Heroic and semi-heroic measures (which are financially costly and then usually lead to chronic costs of maintenance) would not be accepted by the philosophically mature over fifty person.
We need to change our philosphy about life, death and medicine. Reducing costs of medical over-servicing (especially for over fifties) is a personal responsibility. This responsiblity is best met by stoicism, self-denial and realistic assessment of the (generally) poor quality of life after heroic measures and under chronic on-going treatment.
Anything resembling utopia can be generated only in the mind of the philosophical person who fully accepts his/her transience and inconsequence.
You missed long term care, particularly disability care (which crosses over to education) and aged care. The NZ accident compensation system is a good model for that, and until it was required to run at a profit it worked quite well.
Health care payment in Australia confuses me, and I’ve been here 10 years. Exactly what is subsidised and what’s not, and how much I have to pay and to whom is a bizarre mix of public, privatised-public, insurance and private. I visit a GP, pay $50, visit the Medicare office and get reimbursed $37.24 then my insurance covers another $12.76 but my bank pockets $1.25 for doing the shuffling around. Is this some sort of employment scheme for displaced bureaucrats? I took it as an incentive to only use bulk billing providers, which may be the intention.
Guaranteed Minimum Income is an interesting utopian ideal if you’re looking for ideas.
One of the flaws in utopian thinking is the often implicit assumption that social utopia (or individual happiness) can be achieved by freeing people from pain and challange; that utopia is a place where nothing hurts and everything is easy. Yet our evolutionary heritage (as animals like any other animals) is that pain and challenge (though not of an overwhelming intensity) are necessary stimuli for overall maintenance of general well being. Immunisation is a moderate challenge to our immune system which is exactly why it works. Over anti-septic environments fail to challenge our immune system properly and this appears to be playing a role in the rise of serious allergies (and other auto-immune disorders) in the modern young child.
Out health system displays a sort of split personality where we see flagrant and even frivolous over-servicing alongside egregious under-servicing of real need. This occurs because of the money nexus. Older, wealthier people for example are over-serviced while painful need is unmet among the poor, the young and disadvantaged. Health should be returned to a far more socialised model to address this fundamental problem.
At the same time, we should always remain aware of the dangers of medical over-servicing across the spectrum, for example with antibiotics use right through to excessive pandering to the middle-aged and aged wealthy who expect open-ended medical intervention to overcome health problems often caused by years of physical laziness and all kinds of self-indulgence.
John,
Your conception of the ideal level of inequality matches my own. I am not sure if you are familiar with this bible verse, but in it Paul espouses pretty much the same thing, emphasis on the last sentence:
“Our desire is not that others might be relieved while you are hard pressed, but that there might be equality. At the present time your plenty will supply what they need, so that in turn their plenty will supply what you need. The goal is equality, as it is written: “The one who gathered much did not have too much, and the one who gathered little did not have too little.””
You have a vigorous attack on egalitarian Utopias in todays ‘The Fundament’ from the fragrant Peter Saunders, who has returned to these shores and found a pleasant niche at, where else?-the CIS. Apparently inequality is not only morally justifiable, all those billionaires and merchant bankers having toiled hard for their gelt, and the poor being, basically, scrounging moochers, but inequality has no ill-effects on society whatsoever and the only people who say so are lying ‘socialists’. A Brave New World that has such creatures in it!
Quiggin: A detailed review of your book has just been posted on Steve Williamson’s blog. You look bad, really bad.
Your statement that “In Australia for example, the basics (general practitioner services, pharmaceuticals, critical hospital services) are covered pretty well…” is pretty wide of the mark if you imply that we are doing it well in these areas. The whole health system operates under entirely wrong economic drivers where GPs (and most other medical services) are rewarded by providing a short consultation and having as many return visits as possible. In other words, a sickness model – not a health model. Preventative actions are not rewarded – treatment is more rewarding. Furthermore, most health consumers have no idea of the real cost of the service they have purchased because Medicare picks up most of the cost. And of course, this leads to no market or consumer controls on all of the tests that GPs and specialists prescribe.
And I can’t even discuss the ideological travesty of private health insurance. It has no economic justification. It is a tragic waste of resources (fairly reliably estimated at $6 billion per annum) that could be much more effectively used to improve the haelth system.
Unless we re-think the whole health economy, we have very little chance of developing a health utopia.
@Mr MIT
Wlliamson is a monetarist. One needs to say no more really other than to point out that monetarism is 100% zombie-voodoo nonsense and proven so by the empirical work of people like Steve Keen, Bill Mitchell and John Quiggin.
@Moz
Moz is on the money by including the proposed National Disability Insurance scheme as a cornerstone of any health utopia. It is a form of “catastrophe insurance” for families who have a child with autism or intellectual disability, and incur long-term expense and care responsibilities, sometimes including early age residential care, which fundamentally changes their lives. As these families are largely randomly selected, it is appropriate for funding by a national levy, like Medicare, which will demonstrate social solidarity for society’s weakest members. Accident insurance and aged care funding arrangements cater for a large political constituency and are well organised, but people with disabilities are a tiny percentage with little political traction until people like Chris Gallus and Bill Shorten took up their case. At present funding is capped by State, local govt and Federal budget allocations unlike sickness benefit, unemployment benefits, Medicare rebates, so the needy beg for support from bureaucratic gatekeepers, and have been too cowered or exhausted to aggressively push their case. This also means measuring need has been difficult: the recent PC report estimates about 400,000 people currently have a significant disability. Reform of this type if successful will improve the quality of life of those people and many others around them who are more able to follow the life opportunities they are entitled to.
I pretty much agree with Mulga@12 and Iko@ 13. Preventative medicine must take priority in a tight health budget along with diseases and conditions of young people.
I think that a good look at civilization as a whole would identify a myriad of preventative medicine applications. Stop research into longevity and older persons’ medicine. Direct funds into studies on pollution, nutrition, chemical free food. Have better social policy, income equality, education.
In fact, if you try to achieve a utopia of good social policy, income equity and education, a utopia of health will most likely follow.
@Mr MIT
I’ve left this stand, despite the fact that you are a troll, sockpuppeteer and liar.
I’ll respond to Williamson’s review when I get a bit of free time. Unlike the earlier blog piece, which would have been devastating if it were valid, this one abandons claims like “EMH/DSGE have no implications, and therefore can’t be wrong”
Now it seems more like the standard response to a critique of the profession (indeed, typical of the standard defence of any profession when under this kind of attack), not so much defending the ideas I criticised as arguing that I’m attacking a straw man.
Don’t shoot the messenger! I don’t see how I am a liar: for using a nickname, like Freelander, Gypsyland, Ikonclast, or Moz. You are pretty thinned skinned it seems. It nice that you are no longer censoring your site though.
I won’t censor this one either, but use it for general amusement as an illustration of how stupid sockpuppeters generally are. It’s not that hard to do, but in my experience they nearly always slip up sooner or later. “Mr Mit” has used three sock puppets (pretending to be different people and therefore lying) and an equal number of fake email addresses. But sad to say, he slipped up and used his real email once (or maybe he is being really naughty and spoofing one of his fellow students, who I imagine would be upset about this). And of course his IP address confirms his location, quite some way from MIT. He’s lucky I’m in a good mood today, but if he tries posting again, I might get a bit miffed. To be clear, Mr Mit, you are banned – anything more from you will be deleted, disemvowelled or otherwise treated as I see fit, as well as leading to the publication of the info mentioned above.
For the record, and as stated very clearly in my comment rules, people who engage in sockpuppeteering or other forms of abuse can have no expectation of privacy here. I have exposed them in the past and will continue to do so as I see fit.
Most Australians no doubt think the cost of these services is covered by the Medicare levy. This is of course rubbish. The revenue raised by the Medicare levy does not come even close to covering the cost of public health. It is a deceptive little tax that should be abolished in the name of greater transparency.
The Medicare levy was introduced in 1984 to cover the extra cost of moving to a universal national health insurance scheme for hospital and medical services from the patchwork schemes we had had previously. And it more than covered the extra cost of the new scheme. It was never intended to cover the full cost of medical and hospital services funded by governments, so I fail to see why it should be criticised for not achieving something it was not designed to do. Also I consider a hypothecated levy like the Medicare levy is a way of reducing deadweight losses from taxation, because the levy is more in the nature of a charge for services rather than a tax.
A compulsory charge such as the Medicare levy does not have less dead weight costs than a comparable tax because they are both taxes. And even if you decide to class it as something other than as a tax it will still have deadweight costs so long as it is compulsory.
From a transparency point of view I think the Medicare levy should either be abolished or increased to about 9% (with corresponding cuts in the general tax rates) such that it reflected the true cost of public health care. The current setup, whatever the history, is an unnecessary complication that doesn’t even communicate a meaningful message about the cost of medical services.
I forgot to add another reason why a disability insurance levy and utopia are linked: it should break the dependency syndrome of clients being shackled to approved service providers and their preferred systems and rules. Modern thinking around methods of support reverse this relationship, granting people financial authority within broad parameters to identify and find the support they need, on a tailored and flexible basis. Because disability strikes across all classes, these families are often people who can use individualised funding to negotiate what they want without social workers or welfare professionals, and if they do need help, can engage case-brokers on a fee basis to assist. Interestingly, individualised funding and case brokerage is premised on ideas that much of the political left and right can sign up to – libertarianism, direct funding, efficiency and effectiveness potential, community engagement.
A correction to my earlier posting – motor and workplace accident insurance claimants are funded through compulsory insurance in all states as I understand it: other major injuries are proposed to be included in a separate injury insurance scheme. Info about all this is at http://theconversation.edu.au/productivity-commission-hastens-slowly-on-national-disability-insurance-scheme-2776
It sounds like people are assuming that taxes pay for government spending. Under a fiat currency this is not true. Spending precedes taxation. The government creates money by fiat and then spends it. Taxation occurs subsequently to soak up (destroy) some of the fiat money to (1) moderate inflation and (2) enforce an obligation to government that is only payable in the fiat currency. This is MMT (Modern Monetary Theory) of course. The plain fact is that what happens empirically (with fiat currency) is most accurately described by MMT.
“Hypothecation, in the context of taxation, is the dedication of the revenue of a specific tax for a specific expenditure purpose.” – Wikipedia. This form of hypothecation has no meaning under a fiat currency system as taxes do not pay for expenditure under such a system.
Proof that taxes do not technically pay for expenditure is easy to give. A Federal Budget allocates all money for outlays at the start of the annual budget cycle. Taxes are subsequently levied progressively over the year. At any stage of the year and at the end of the year expenditures can be behind or ahead of receipts. Budget deficits and budget surpluses are simply written off at the end of the year. Neither deficits nor surpluses accrue year on year. This is true of a government that issues fiat currency (like the Australian government) but not a true of a government that does not issue fiat currency (like our state governments).
“Budget deficits and budget surpluses are simply written off at the end of the year. Neither deficits nor surpluses accrue year on year.”
This is wrong. In normal circumstances, including those in Australia at present, deficits are financed almost entirely by the issue of debt, which accrues year on year and is paid down when there is a surplus. The value of new currency issue (seignorage) is only a few billion a year, compared to total public spending of several hundred billion per year, and budget balances (deficit or surplus) which are usually in the tens of billions (say -3 to +3 per cent of national income). The big exception is that of a liquidity trap, where policy should aim for inflation and do as much “quantitative easing” as required to get it.
This is my big problem with MMT. It’s logically OK to start with expenditure, then subtract the new currency issue consistent with target inflation (a small amount relative to spending), and say that the remainder is equal to the sum of tax revenue and net new debt (often omitted as in Ikonoklast’s post). And, in some circumstances, this isn’t a bad description of how fiscal policy works.
But this is entirely misleading if you want to answer a question like “can we have additional government expenditure without paying higher taxes (now or later)”. The answer, if you think through the MMT logic is “No, the issue of new money is determined by macro policy, so if you want more expenditure you need more taxes”. Of course, you could decide to have more inflation, but in that case it’s more correct to think of inflation as a tax on money balances.
Iconoclast – sounds like you are keen to change the topic. Even under the framework you prefer the Medicare levy does not soak up all the inflation attributable to the health care budget. So it still lacks transparency. It should be much higher if it is supposed to negate the inflation from public spending on health care or else we should do away with it on the basis of it being a pointless complexity. Reframing the mechanics may be amusing but it does not change the conclusion.
@John Quiggin
Initial correction accepted. Perhaps what I should have written was;
“Budget deficits and budget surpluses COULD simply be written off at the end of the year. Neither deficits nor surpluses NEED accrue year on year.” (Caps used as I don’t know how to underline text in this blog.)
The fact that monetarist, neoclassical and hard Keynesian economists think that debt issuance under a fiat currency is necessary for standard deficit funding (and act on that thought) is not evidence that such debt issuance is necessary.
The key issue is the one raised by JQ at the end of his post, “No, the issue of new money is determined by macro policy, so if you want more expenditure you need more taxes”.
The issue of new money is determined by macro policy. That is agreed. The statement “if you want more expenditure you need more taxes” is only conditionally true. It is not an iron law that applies or should apply all through the cycles. The problem I have with the current system is its acceptance of high levels of unemployment (and underemployment) coupled with macro policy (surpluses) to limit inflation when said inflation is mainly caused by excessive unregulated lending by private banks. MMT descriptions and prescriptions lay bare the ideological, class and wealth distribution bias of current orthodox economics where government spending is constrained much more than it needs to be to act as a stabiliser against the machinations of an under-regulated FIRE sector and increasing wealth inequality. (I would like a JQ answer to this paragraph, please. Interested to know your thinking on my contentions here.)
This discussion is related to health spending as unecessary limits on government social spending affect health policy also.
Ikonoclast – to be complete your prefered framework ought to acknowledge government borrowing as an additional means to soaking up inflation pressure (caused by government spending of fiat currency). If this means is not used then more taxation must be used. Reframing the mechanics may be amusing but it does not change the conclusion. In fact it seems evident that the reframing has lead you to a state of confusion.
@John Quiggin
As many, many unions have said – inflation effects a general real wage cut and associated mortgage stress for variable rate loans. The stimulus it provides can also act as a tax bill for future incomes.
If the inflation stimulus does not address the real problem, then it will be required again (later), but with a now elevated level of debt.
Now, if inflation was introduced (as economic ‘oil’) but only as monthly minimum wage increases paid from Government, then all our business pundits would blanch at the thought. It would be the end of their civili$ation.
Inflation leads to more debt as debtors expect to pay off loans with cheaper dollars.
Inflation with depreciation of the currency may have provided benefits in the past, but you cannot depreciate a floating currency.
The real stimulus we need is cuts in profits. [Example: bank profits have been over 10% continuously – see latest Reserve Bank Bulletin].
It is possible that taxing profits or international transactions and using the funds for job creation and service provision is all the stimulus we need.
It is clear that current capitalist economics and the current capitalist financial system (including the suborned form of current government macroeconomics) are designed to funnel money away from the producers (workers) to the non-producing parasites (owners of capital). Deregulation, privatisation and financialisation of the economy since the Thatcher era and the Adam Smith Institute’s Omega report have been very deliberately designed to reverse worker gains, social policy gains and broad Keynesian economics. The current state of government macroeconomics and the propaganda, false premises and bad faith that go along with it are part of this capture of public policy by the capitalist system.
The current system is not the only way things could be run. It disingenuously presents itself as the only way. This is the old TINA (There Is No Alternative) prescription beloved by Thatcherites and Reaganites. If there are no alternatives in economics (if this IS the only way things can be run) then, as John Ralston Saul said, “Why bother with democracy? Let’s just install some not too nasty dictator and go to the beach.”
Of course as soon as someone says, “The current system is not the only way things could be run.” , we get the reply, “Oh so you want communism (meaning soviet style communist dictatorship)?” Immediately, the logical fallacy of the false choice (dichotomy of false choices) is introduced as if the choice of economic system is black and white and there are only two stark choices rather than a full spectrum of possibilities.
It is important that democracy and democratic decisions lead society and not economics. When (capitalist) neoclassical economics lead society and its governance (as is the case now) then capital runs society not the people. Then you get the kind of mess that occured in the Global Financial Crisis and the current downward spiral of the EU and USA.
While notable Australian academic economists like John Quiggin, Bill Mitchell and Steve Keen would disagree on points (sometimes significant points) of technical analysis of macroeconomics, I suspect they would all agree with Bill Mitchell’s statement below. (Of course, Bill would agree with himself.) 🙂
“What is required to solve the crisis is a thorough-going re-think of how we run our economies. The neo-liberal years which transferred massive power and real GDP (taken from the workers) to the financial markets and diminished the public oversight of markets has failed.
All of the dimensions of that ideological approach have failed to deliver on their promises.” – Bill Mitchell.
200 years ago Adam Smith forecast an end to economic growth and a transition to a steady state economy. 150 years ago John Stuart Mill did the same.
Herman Daly and others have had that re-think of how we run our economies and designed a new system. We are bumping into the limits of growth and need to make that transition from the failed growth economy to the steady state economy before the whole system crashes into depression.
@Ikonoclast
Quite agree. What we have relearned is that the ‘autopilot economy’ just doesn’t work. China is showing, once again, as the West once did, the value of a mixed economy. After ‘trickle down’ was adopted not much trickled down but there was a gush of wealth and income up to the top. The fight by the top to defend and retain that income and wealth is helping to distracting everyone in the West from tackling the big issues, one of which is climate change. The other big distraction is the war on terror.
And just to bring it back to the topic of socialised health (me being that party that went OT) …
The free market mechanism is not properly adapted to deliver health care where it is needed. Capacity to pay is not equal to health care need. There are both humanitarian and self-interested motives across the spectrum for equitable socialised health care for all basic health care needs. The self-interest motives which should motivate (variously) some or all levels of class and wealth consist of;
1. Proper care for the poor and disadvantaged (in the self-interest of the poor and disadvantaged).
2. On-going national savings brought about by public health measures and preventative care (in the economic self-interest of all)
3. Prevention or amelioration of epidemics (in the health self-interest of all).
The same is true of housing. Yet even though the bulk of the housing sector is delivered mostly entirely via the market almost nobody in Australia will be without a roof tonight.
@TerjeP
Treje, you set yourself too low a target when you argue that private provision of housing gives reassurancel about health care. We see in the housing market some with children having to rent one and two bedroom flats, while the size of owner occupied houses expands. They may have a roof, but I suspect we are storing up serious social problems.
@TerjeP
“It is estimated that on any given night approximately 105,000 people will be homeless.[1] – Wikipedia, ‘Homelessness in Australia’.
Over 100,000 people does not equate to “almost nobody”.
Even the statement “the bulk of the housing sector is delivered mostly entirely via the market” leaves a lot of factors out.
“According to the 2006 census, Australia’s public housing stock consisted of some 304,000 dwellings out of a total housing stock of more than 7.1 million dwellings.” – Wikipedia, Public Housing in Australia.
In addition, the market does not deliver this housing without assistance. Negative gearing plays a role in delivering market provided housing. This subsidy assistance to already relatively well-off landlords would be better targeted directly to public housing and to those in need. House prices and rents are artificially high due to policies which encourage assets inflation and a housing price bubble.
The notion that there is a dwelling shortage which needs to be addressed by these subsidies is also nonsense. There is not a dwelling shortage but only overpriced houses and overproced rents to distorting policies assisting the landlord class.
“Around 10 per cent of private dwellings (830,000) were identified in the 2006 Census as unoccupied on census night. Unoccupied private dwellings included dwellings that were vacant for sale, to let, for repair or for demolition, newly completed dwellings, holiday homes and dwellings that were vacant for other reasons or for no apparent reason.” – Australian Govt National Housing Supply Council.
Having 100,000 homeless people and 830,000 unoccupied private dwellings is a clear case of market failure and social policy failure; the mismatch caused by capacity to pay not equalling and not dealing with real need.
@TerjeP
Caravans, tents and shelters provided by churches, governments, and charities are not delivery by the market. Couch surfing is not delivery by the market. Car occupancy is not delivery by the market.
The capitalist market converts a human right into a commercial right distributed according to ones demand, not need.
This is a paradise for the greedy few.
Ikonoclast – of those 105,000 people 84% will sleep under a roof tonight. Only 16% will sleep rough. That is just over 16,000 people out of a population of 22,000,000. And it is not due to a general lack of dwellings but due to social and mental health problems. I see no problem with the example.
In any case my suggestion was to retain Medicare but to turn it into an income contingent loan by requiring repayment through the HECS system. Many people would opt to avoid any debt risk by taking out private insurance but even if they didn’t nobody under such a scheme would be without the capacity to pay for approved medical procedures.
Where did I claim that they were?
@TerjeP
Derr…They all provide roofs. Where did you exclude them?
If not these – what roof’s were you talking about.
If you say roofs, then why not these roofs?
Have you ever seen a caravan without a roof?
A couch without a roof?
A tent with no roof?
So if these are not included, then your statement:
“via the market almost nobody in Australia will be without a roof tonight.”
is false by your own hand. How convenient to not include the roofs provided by churches, government and charities.
Is this how capitalist dogmatists really conduct themselves?
This is what I said:-
The analogy is that if most medical services were provided by the private sector there is no need to assume that a lot of people will subsequently miss out on medical services. Housing is supplied predominately by the private sector and almost nobody misses out. Nowhere did I claim what you seem to think I claimed. Nowhere did I exclude the contribution of the voluntary sector or even for that matter the government sector.
@TerjeP
The what you should have said was:
….delivered entirely by via the market and planning ……
But then to jump to the private sector, only indicates more confusion. A “market” does not imply “private”. They are not synonyms.
If medical services were provided by the private sector huge swathes of people would miss out on medical services.
If you include the government sector and the voluntary sector, all your statements “mostly entirely via the market” are false.
Opportunistically changing to “predominately by the private sector” without understanding the nuances is just inane.
Under capitalism the private sector always under-supplies services, because, “via the market” it must sell at cost plus normal profit (if any), plus capitalist return.
The inefficiencies are likely to worsen over time and we end up in a GFC – simply because too much economic activity was based on the capitalist private market.
Speaking of inane I think your assessment is off with the fairies.
The private sector feeds and houses the world. The fact that charity and government is somewhat active in both areas does not change the broad assessment nor the analogy with health care. We are talking about the degree of involvement not absolutist positions. We can increase the involvement of the private sector by making hospital services private like medical centers and general practitioners. We can withdraw government funding without withdrawing government financing (via HECS style income contingent loans). We can leave space for meaningful private insurances services (rather than the highly regimented regimes on offer today). We can leave space for people to broadly manage their health care needs without the current level of autocratic state involvement. We can let price signals function to disperse services to where they make the most sence without abandoning those too poor or two sick. In short we can strike a far better balance than what is on offer today. This does not represent an abandonment of a mixed economic approach rather a shift in the mix. I contend that government financing (as opposed to funding) ought to be part of the mix. Certainly until some alternative for the very poor and the very sick reveals itself.
I don’t expect you to agree with me on this position but it would be nice if you engaged honestly with it rather than trying to score cheap points.
I’m still puzzling over the concept of a ‘transformative vision’.
Does it mean more than ‘good ideas’?
I can see why good ideas are needed. If a ‘transformative vision’ means no more than that, why use the fancier language?
If there is something more to the concept of a ‘transformative vision’ than good ideas, I don’t know what the extra element is and so can’t see why it would be needed.