Worse than the Bourbons

I have a couple of pieces in The Guardian. The first, which came out a few days ago, points out the consistent failure of market competition and for-profit firms to deliver human services effectively and equitably. The second gives the mainstream economic analysis of the problem, in terms of market failure and the mixed economy, developed 40 to 50 years ago, and ignored by the policy class of today, which takes the assumptions of market liberalism (aka neoliberalism) for granted. My summary:

The problem is that the political class, along with much of the economics profession, have done worse than the Bourbons, of whom Talleyrand observed “they have learned nothing, and forgotten nothing”. … Our leaders, and the economists who advise them, have not only shown themselves incapable of learning from experience, they have forgotten much that we once knew.

35 thoughts on “Worse than the Bourbons

  1. @GrueBleen

    Your 22:

    You ask: How can “the governance structure of the firm” be “decided by market competition.” ?

    I don’t know.

    Perhaps the origin of the words in question are taken from creative writing where the meaning of words is determined by choice exercised in a ‘free market’? [1] Perhaps the word ‘market’ has acquired a similar role in some communication circles to that of a joker in some card games? Endless possibilities, none of which amenable to empirical verification.

    [1] This is not meant to be toung-in-cheek. I recall being given a questionnaire by a research manager. The questions could be interpreted in many ways. In reply to my inquiry about the meaning of particular words in questions, for which quantitative answer were sought, I was told the words mean whatever I want them to mean. This gave me the idea we are at a stage in civilisation where the quantification of nonsense is being practised, with averages and the distribution of the said quantities being calculted and compared across departments. Incompetence? If so on whose part? Or an instance of evidence of misallocation of resources?

  2. @paul walter
    As far as i can see, only relation with those two articles are the actors, they are the same:”the political class, along with much of the economics profession, have done worse than the Bourbons, ”

    It is the political class that is encompassed by neoliberalism that keeps failing doing the same no matter outcome. Government is avoiding to enact stimulative fiscal policies that monetary policy is allowing them.

    Verender is prescribing correct solution: “Rather than rethink the balance between monetary and fiscal policy between central banks and Governments, the response has been to continue with the broken formula.”

    But, Verender is putting the blame in the wrong place, he is blaiming Central Banks which is wrong. CBs are doing their part and CB governors are consistently begging politicians to do their part with fiscal policy.
    “The balance between monetary and fiscal policy” is CBs keep low rates and save banks(prevent run on the banks) while governments borrow in low interest for stimulus spending. Balance is that they do not counter each others policies but act in expansionary policies. Low interest is expansionary, austerity is contractionary.

    It was never CBs role to enact fiscal policy, Verender is asking for exactly that, that “experts” in CB enact fiscal policy and coordinate that with government. Funny thing.

    Failing is with political class that is not responding to cry from populace to enact proper fiscal policies. Politicians are neoliberals, enacting neoliberal policies of helping rich become more rich on the expense of everyone else. And what is even worse, they are enacting stimulus that is destructive; they are enacting more spending on wars only. But that is the part of the neoliberal lore that wars are the reason that we got out of depression, not spending itself that stoped deleverage and solved private debt problem.

  3. @Jim Rose
    When looking at private education you need to realise that private schools in Australia are not profit making organisations.
    The end result of private education is a set of externally set university entry exams. This external assessment means that private schools have to do a good job.
    The students at private schools have parents who care about their children, and can (and do) move their kids away from schools they aren’t happy with.

    I private schooling, the parents are paying for a lot more than just education. They are paying for their kids to have great experiences in sport, music, drama, travel etc. They are paying for their kids to meet other kids who may later be useful contacts.

    All these things make private schools work reasonably well, although at a pretty high cost.

    The problem with most of the market failures in human service provision is that the factors that make private schooling reasonably successful just aren’t there.

  4. @Ernestine Gross
    Your #26

    Ah yes, that questionnaire is surely a lovely example of open-ended deconstruction. Which, of course, is just an example of “words mean whatever I want them to mean”.

    So, words have “connotations” (roughly synonymous with intension) and denotations (roughly synonymous with extensions). So, with the application of copious goodwill, your research manager might have been inviting you to search your mind for the connotations/intensions of the words and thus to apply a denotation/extension that is appropriate to you.

    It all sounds like an exercise in meaningless self-psychoanalysis to me. But maybe its just that our civilisation has fallen into the hands of mystics. Do you have any clear idea what was done with the “data” after it had been collected ? I’m assuming we don’t have a Sokal exercise here.

  5. @GrueBleen
    No Sokal exercise was involved. Can’t say more because otherwise people involved could potentially be identified, which would not necessarily be a good thing.

  6. @paul walter

    Please don’t expect a comprehensive answer to your question from me. I’ll try.

    The link of the content of the abc article to JQ’s thread is not straightforward, although it exists.

    JQ’s thread deals with:
    a) the provision of services (are services like marketable ‘goods’ that can be provided by profit motivated private enterprises. (I commented on question in my post #21).
    b) the change from the ‘mixed economy’, the kind of institutional environment people older than about 40 years grew up with and considered to be normal, to an institutional environment where the underlying assumption is ‘privatise and regulate’.
    The 2 points are linked via the notion of ‘market failure’.

    The article you linked to is primarily concerned with the deregulation of the financial system and the policy reactions (monetary policy only).
    In a sense, the deregulation of the financial system, compared to the system during the Keynesian era, is also based on the assumption that financial securities are just like marketable goods. This resulted in the GFC, which some economists consider a prime example of market failure. (I say, yes, it is a market failure but for different reasons – my repetitive reference to Radner’s mid-1970s work on a competitive private ownership economy with a sequence of commodity and financial securities markets.)

    Let me know further questions, if any.


  7. Ernestine Gross, you are a magical person, never not an effort to offer constructive advice.

    I understand you are an academic and you would be the vocational sort, you love exploring and finding out things, have the cognitive horsepower to find things out, understand what you have discovered, even complex examples and somehow the character to want to share your knowledge and efficiently, with others for the enjoyment of it, rather than hoarding it in a brown paper bag like Ralph Nickleby. Your spiritual ancestors would include Socrates and Epicurus and people like yourself restore my faith in human nature

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