For-profit services drive standards down

That’s the key point of my article in The Guardian this week. The intro focused on aged care and the headline picked that up, but the main points are general

There’s nothing inherently desirable about competition. If the alternative is collusion against the public interest, competition is a necessary evil. Far better, when it can be achieved, is cooperation to be the best we can at what we do. That’s the core value of the service professions, professions derided by market reformers as “producer interests”.

Much the same is true of choice. As far as flavours of ice cream are concerned, some people will like butterscotch, some will go for mango and some might even prefer Neapolitan. The more choices the better. But for the human services that matter most to us, it’s not a question of how many choices we have. What matters is the quality of the best choice. We want our doctors and nurses to keep us well, our teachers to educate and inspire us, and our carers to give us comfort and dignity.

9 thoughts on “For-profit services drive standards down

  1. Parkinson must have been speaking to a captured audience. Its probably the only realm he has ever moved in.’

    “It has long been a fact of life in Australia that industry policy has often favoured producer interests at the expense of consumers. Over time, however, governments have been increasingly wary of helping unprofitable firms to remain in the marketplace, instead shifting their focus to assisting with the economic adjustment process — the current government’s response to the threat of exit of automobile manufacturers from Australia being the most marked manifestation.”

    Did they ask him to explain the funds they keep handing to the Murdoch empire in Australia then? Sure they did. Sure he would. Parkinson was/is a crock.

    Look at the section dealing with his Chart 3 and Chart 3 itself. Not a bloody mention from Parkinson at all of the obvious Parkinson’s Treasury’s Big Australia ponzi immigration scam lowering per capita GDP, form the turn of the century, but particularly from the mid-2000s. All scams require the scammers to be silent on the mechanism of their scam. Never tell the punters, and only ever talk the the right kind of punters that dare not ask and reliably will regurgitate the spiel.

    “There are many areas in which governments have built up institutions to implement policy at arm’s length from the political process. I have just mentioned the Reserve Bank. There are many others: the Australian Prudential Regulation Authority, the Australian Securities and Investments Commission, the Australian Competition and Consumer Commission, the Australian Taxation Office. These are some of the largest but the list goes on.”

    Crap. All these are captured. Some by the FIRE/Bankster sector, some by the Big Four and others in the accountancy/auditing sector, and all by government. The latest very public example is the threat made by Agriculture Minister and Deputy National Party Leader Littleproud to the ANZ bank depositors’ guarantee upon the bank’s decision to back away out of future coal investments.

    As APRA first must activate the “guarantee” and the RBA must deposit the “guarantee” by saving the failing bank in some mandated manner or make deposits into new depositors’ accounts opened for them elsewhere Littleproud’s (a long term senior ex-banker) has loudly belled the cat! APRA and the RBA are not independent even when it comes to something as vitally important to savers as an “independent” Australian Government Deposit Guarantee. (Another already “guarantee” open secret hiding in plain sight in the legislation is that if the government activates it, if, it is only good for $20billion all up per ADI. Another crock.)

  2. … I meant to include this link:

    “Last week, the fifth most senior minister in the Morrison Government, Agriculture Minister and Deputy National Party Leader David Littleproud, threatened the ANZ bank with “every lever at the federal government’s disposal – including the availability of deposit guarantees”…”

    And no one in the government from Scummo on down has corrected Littleproud. A “don’t give it any more oxygen” strategy, I guess. Like so many other Scummo instances it’s “Don’t mention our deposit ‘guarantee’ plans. Littleproud mentioned it once, but we think we got away with it. Keep shtum.”

  3. “The more choices the better. But for the human services that matter most to us, it’s not a question of how many choices we have. What matters is the quality of the best choice. We want our doctors and nurses to keep us well, our teachers to educate and inspire us, and our carers to give us comfort and dignity.”

    I disagree. Without a market we have no idea what the best choice is. For all we know, if the education ‘system’ wasn’t so totally regulated and locked in, much better alternatives may have been discovered. Same with the medical establishment. They don’t call schooling ‘the 12 year sentence’ for nothing.

  4. JQ’s argument works for teaching.The missing link today is lack of cooperation and mentoring within the profession. Teachers should be in and out of each other’s classrooms all the time. The people teachers can learn from are other teachers, rarely students. (Plenty of good stuff on this from Harry Brighouse at CT). But research operates quite successfully on an essentially competitive model. In a growing number of areas, cooperation has become efficient and normalized: often driven by big data and big facilities like CERN. (The HTTP protocol was invented to meet the needs of cooperative projects in particle physics, involving large teams scattered around the globe, and big-data experimental results from cloud chambers.) Science of this type works rather like team sports: micro cooperation for macro competition.

  5. It turns out that gold-plating public and human services is the correct economic strategy. Some of us knew that all along. Gold-plate public education, including tertiary. Gold-plate national and state infrastructure; water, power, communications and public transport. Gold-plate medicine, hospitals, aged care facilities, quarantine facilities and medical and other scientific research and development.

    How do we afford this gold-plating? Easy. Stop gold-plating the following practices and industries with their current massive subsidies: negative gearing, corporate welfare, fossil fuels, tourism, sports, entertainment and wealthy people with low taxes. The funds are there, at zero percent real interest rate. The real resources are there if we stop wasting them on frivolous non-essential spending.

  6. “producer interest”. IMHO, this phrase seems to be based on a misunderstanding of the notion of a ‘producer’ in GE theoretical models and agency models in so far as the space on which the characteristica of ‘a producer’ is defined has not been taken into account, namely the ‘commodity space’. And, a ‘commodity is described by its physical characteristics, time of availability and location of availability. The crucial part is ‘physical characteristics’.

    Services such as teaching, caring for the old and the sick, does involve input commodities (lecture theatres, …. hospital beds, ……) but the service provided by teachers and age and medical care personnel are not an input commodities because the successful delivery of these services involve joint inputs. I use teaching as an example because this is something I have experience in. A teacher provides a stimulus for the brains of the students. This stimulus may be structured information or it may be questions, which may include questions on the structured information that had been provided (eg examinations) or it may be questions to prepare students for future teaching material or open questions. Quite clearly, unless the students respond to this stimulus (by providing mental input from their heads) the ‘output’ of teaching is zero. Strictly positive ‘output’ is a joint product. The notion of a ‘producer interest’ is therefore not meaningfully defined.

  7. Parkinson, a choice bit from the hopeless treasury’s link again: “Over time, however, governments have been increasingly wary of helping unprofitable firms to remain in the marketplace…”

    Sure thing, Parky. Wary, that is, of disclosure/exposure when they help their mates and themselves. Further, like Parky says, he’s done alright too. Occasionally though, just occasionally, they get caught out:

    Foxtel given blank sheet for spending govt’s $10m handout
    …The $10 million grant is an extension of a $30 million program that has been controversial since it was announced through a single line in the 2017 budget.
    Fox Sports is available only by paying a subscription to Foxtel, meaning taxpayers must pay to watch the sports they are already paying to broadcast.
    …Hundreds of pages of documents from the offices of the Prime Minister, Communications Minister and Foxtel – including personal emails, letters and cabinet submissions obtained through FOI – reveal the speed with which the broadcaster was awarded a $10 million extension to the existing $30 million contract.
    Neither payment made to the company, which is majority owned by Rupert Murdoch’s News Corporation (65 per cent) and part-owned by Telstra (35 per cent), were ever put out to any form of competitive tender.

  8. It occurs to me that in this situation we at least have good data to compare private vs public provider quality.

    In the case of Aged Care & education the federal government has deliberately made it difficult to access this information. I’m thinking of the my school website which allows you to compare different schools but you cannot access the aggregated data. This means researchers effectively cant study the data which is collected at great expense. Why would a labour government cave in to the right in not being transparent with information that is politically sensitive. The fact that school performance and socio economic disadvantage is politically sensitive is itself ridiculous.

    If the government suppresses information about service quality whos side are they on? Certainly not the publics.

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