Thirty odd years ago, Richard Cockett wrote a classic analysis of the role of UK think tanks, most notably the Institute of Economic Affairs, in the economic counter-revolution that ushered in the present era of market liberalism. The crucial “unthinkable” idea put forward by the thinktanks was that profit-driven firms might do a better job of providing a variety of services that were then part of the public sector. This contrasted with the dominant view that any failings of the public sector were the result of specific problems such as poor management that could be overcome by better oversight, organizational restructuring and so on.
The resulting policies of privatisation, corporatisation, competitive tendering and contracting, PPPs and so on have transformed the public sector. Their success has also transformed the public debate, rendering their own ideas as part of the common sense of the political class, and making other ideas unthinkable.
The case of for-profit education provides an example. There is now overwhelming evidence that for-profit education has been a disastrous failure wherever it has been tried, and particularly where for-profit firms can gain access to public funds through policies designed to enhance “consumer choice”. Here are some recent examples:
* A New York Times report pointing out that for-profit universities are getting millions of dollars in public funds every month despite a sustained track record of fraud and failure
* One of many reports from Sweden, until recently the poster child for the for-profit sector, now in a state of crisis, with declining performance an growing inequality
* A Senate Committee report, describing “rampant abuse, accelerating costs, and doubling of bad debt” under the FEE-HELP scheme for vocational education
The common element is that the abuses are well known and long-standing, but the proposed remedy is more of the regulation that has failed in the past. The unthinkable option is to shut off the flow of public funds to the for-profit sector and return to the combination of public and non-profit provision that has worked so well in the past.
Of course, once this unthinkable thought is allowed into public debate, the entire premise of National Competition Policy, based on the idea that “contestable” markets are invariably good for the public, would be cast into question. That would open up a reassessment of reforms in electricity, telecommunications, water, health and many other services provided successfully by the public sector over the course of the 20th century.
A couple more observations on the Senate Committee report:
* I was happy to note the Committee’s judgement that ASQA is “not fit for purpose” and particularly its observation that
It is great concern to the committee that the regulator has been accused of being a “paper tiger”, or that one commentator has compared the performance of ASQA to that of the Queensland Greyhound Racing Board.
* As usual, there’s a majority (In this case, Labor and Greens) and minority (LNP) report. But there’s almost perfect consensus. The two reports agree on the following propositions
(a) The FEE-HELP policy is a catastrophic mess
(b) It’s the other side’s fault
fn1. As I regularly observe, ideology always looks like common sense from the inside.