I believe you are right on every level. When I married in 1972, utility bills while still needing to be budgeted for, were affordable for mid to lower income earners. Now they’re often crippling leading users to significantly pare back their usage, especially gas. My son lives in a rental property which only has gas for heating. He doesn’t turn it on, and instead relies on a steady supply of fencing supplied by his fencer mate to use in the open fireplace. Not really great for the environment but easier on his bank account.
That is a great read Greg. Mariana Mazzucato, in The Entrepeneurial State, lists every single component of the Ipod IPhone, and Ipad, that was invented with taxpayer funding the science, mostly miltary work, funded by DARPA, CIA, or Navy. The internet came from CERN, GPS, USNavy, touchscreens, miniaturisation, cellular technology, all funded by the public and WiFi invented by CSIRO and like every other component of these devices, it was grabbed by the major IT people. CSIRO spent years in court battles seeking payment for its invention and eventually was paid $430 million, on sales of billions.
The corporate world will not invest in blue sky research, they are always after a risk free, fast return. The public take the risk and business takes the profits.
Mazzucato thinks government should take a stake in a project like Apple, and receive a share of the profit.
I say, if business was so efficient it would l d not need to pinch the product of public research, and obviously the civil service produced those inventions and would be well capable of producing all the items we rely on.
Today we were told the federal government will be paying Rio Tinto a couple of billion dollars to keep its Aluminium Smelter operating.
I say the nation needs that smelter, if Rio intend closing it down lest the government put dollars in, then the government should take it over and generate the profit from that operation, for the people.
Of course Albanese has faith in the market, and his job, in his mind, is to manage the affairs of the nationfor the benefit of business.
I agree with this, with one qualification: the lesson isn't that private ownership is inherently bad. It is that governments keep trying to manufacture "markets" in places where the basic conditions for a functioning market do not exist. Markets work when consumers have meaningful choice, good information, the ability to walk away, genuine competition between suppliers and tolerable consequences when a provider fails.
Aged care, childcare, employment services, electricity networks and water fail several of those tests before you even begin.
The ACCC found centre-based childcare fees rose around 20% in four years, faster than inflation and wages. For-profit centres charged higher average fees than not-for-profits. Even more revealingly, childcare prices tended to rise where there were MORE providers - almost the opposite of what competitive-market theory predicts.
The Commonwealth has now acknowledged that competition within outsourced employment services created fragmentation and incentives that could put provider profit ahead of helping unemployed people.
And the latest residential aged-care data show for-profit homes averaging below the government's care-minute target, while not-for-profit homes are above it.
This is the recurring structural mistake. Government privatises delivery but cannot privatise responsibility. It still funds the service, regulates the provider, carries the political risk when it fails and ultimately has to rescue the system when market incentives produce outcomes the public will not tolerate.
So we end up with an extraordinary arrangement - profits are privatised, while systemic risk remains public.
Natural monopolies make the logic even more baffling. Selling an electricity or water monopoly does not create competition. It changes who receives the monopoly rent, then requires government to construct an elaborate regulatory apparatus to stop the new owner exploiting precisely the market power it was sold.
There are things markets are very good at. There are also things societies need irrespective of whether they maximise a commercial return.
We spent forty years pretending those were the same question.
Gianni Infantino has apparently just discovered this principle himself: try selling part of the World Cup to private investors and suddenly everyone remembers that not everything improves when you add shareholders ;)
It is not just that there is a job out there with your name on it (there isn't), but that the jobs on offer have no future built in; it is not something to take pride in, over which you have some control. Renationalising will not solve problems unless the work is worthwhile and workers have the semi-autonomy of consciously contributing to a wider good, if only it is to do something well.
Greg, while I agree with most of your analysis I think you are either viewing the CES through the rose tj ted vision of nostalgia or you were unemployed for s brief period of time jn some hippy paradise 😄. My experience, both in Adelaide and the uK in the 70s and 80s was that you were made to wait hours in a long queue whose sole purpose was to remind you of the indignity of your position. You had to repeat the same information on different forms just to keep you busy doing something. And the job matching? Oh go and look at the board. Privatisation wasn’t the answer but, as with Telecom, there was sufficient antagonism towards many of these “services” that it was easy to sell privatisation as having to be better. Surely anything must be better?
We knew then and it’s been confirmed every time since, that things could indeed get worse, much worse.
I was unemployed for a fairly long while - 2 years on and off (did bit work as a courier, car detailer). The CES in the end got me into a casino blackjack dealing school (cool thing was if I did it I didn't have to look for work while doing it). Got me a job (that I loathed, but paid well enough for me to go back to uni get a PhD in English Lit and... well here I am!
And yeah looking at the board was a bit pointless at times, and tbh the big key was the lack of mutual obligation (not to mention a private company deciding if you should be penalized)
Greg, I acknowledge lots of things were better then. I guess my point is that they didn’t feel better. To many of us at least. And when you’re treated like shit by a government department and someone says “ let’s demolish this” that’s an attractive proposition to many.
And it was then hard for some of us to defend. Yes I know the CES treat you like a second class citizen BUT…. I know Telecom give appalling customer service BUT…. Yes i know your electricity bills have gone up BUT…
Those were hard arguments against lived experience with people who didn’t understand economics, who had no grounding in Marxist theory. Thatcher/reagan/fraser et al sold them in the quick fix and the fairy tail ending.
I’m glad you were able to get a PhD out of that Greg and I’m delighted that my taxes made a contribution to that - and I don’t mean that flippantly. I’m serious in that. We need people who can spend time thinking. You keep us all sharp.
The growth of privatisation has also coincided with a decline in the capacity to actually do things for the market will provide.
I believe you are right on every level. When I married in 1972, utility bills while still needing to be budgeted for, were affordable for mid to lower income earners. Now they’re often crippling leading users to significantly pare back their usage, especially gas. My son lives in a rental property which only has gas for heating. He doesn’t turn it on, and instead relies on a steady supply of fencing supplied by his fencer mate to use in the open fireplace. Not really great for the environment but easier on his bank account.
That is a great read Greg. Mariana Mazzucato, in The Entrepeneurial State, lists every single component of the Ipod IPhone, and Ipad, that was invented with taxpayer funding the science, mostly miltary work, funded by DARPA, CIA, or Navy. The internet came from CERN, GPS, USNavy, touchscreens, miniaturisation, cellular technology, all funded by the public and WiFi invented by CSIRO and like every other component of these devices, it was grabbed by the major IT people. CSIRO spent years in court battles seeking payment for its invention and eventually was paid $430 million, on sales of billions.
The corporate world will not invest in blue sky research, they are always after a risk free, fast return. The public take the risk and business takes the profits.
Mazzucato thinks government should take a stake in a project like Apple, and receive a share of the profit.
I say, if business was so efficient it would l d not need to pinch the product of public research, and obviously the civil service produced those inventions and would be well capable of producing all the items we rely on.
Today we were told the federal government will be paying Rio Tinto a couple of billion dollars to keep its Aluminium Smelter operating.
I say the nation needs that smelter, if Rio intend closing it down lest the government put dollars in, then the government should take it over and generate the profit from that operation, for the people.
Of course Albanese has faith in the market, and his job, in his mind, is to manage the affairs of the nationfor the benefit of business.
So the people pay up, and dip out, AGAIN.
I agree with this, with one qualification: the lesson isn't that private ownership is inherently bad. It is that governments keep trying to manufacture "markets" in places where the basic conditions for a functioning market do not exist. Markets work when consumers have meaningful choice, good information, the ability to walk away, genuine competition between suppliers and tolerable consequences when a provider fails.
Aged care, childcare, employment services, electricity networks and water fail several of those tests before you even begin.
The ACCC found centre-based childcare fees rose around 20% in four years, faster than inflation and wages. For-profit centres charged higher average fees than not-for-profits. Even more revealingly, childcare prices tended to rise where there were MORE providers - almost the opposite of what competitive-market theory predicts.
The Commonwealth has now acknowledged that competition within outsourced employment services created fragmentation and incentives that could put provider profit ahead of helping unemployed people.
And the latest residential aged-care data show for-profit homes averaging below the government's care-minute target, while not-for-profit homes are above it.
This is the recurring structural mistake. Government privatises delivery but cannot privatise responsibility. It still funds the service, regulates the provider, carries the political risk when it fails and ultimately has to rescue the system when market incentives produce outcomes the public will not tolerate.
So we end up with an extraordinary arrangement - profits are privatised, while systemic risk remains public.
Natural monopolies make the logic even more baffling. Selling an electricity or water monopoly does not create competition. It changes who receives the monopoly rent, then requires government to construct an elaborate regulatory apparatus to stop the new owner exploiting precisely the market power it was sold.
There are things markets are very good at. There are also things societies need irrespective of whether they maximise a commercial return.
We spent forty years pretending those were the same question.
Gianni Infantino has apparently just discovered this principle himself: try selling part of the World Cup to private investors and suddenly everyone remembers that not everything improves when you add shareholders ;)
It is not just that there is a job out there with your name on it (there isn't), but that the jobs on offer have no future built in; it is not something to take pride in, over which you have some control. Renationalising will not solve problems unless the work is worthwhile and workers have the semi-autonomy of consciously contributing to a wider good, if only it is to do something well.
Greg, while I agree with most of your analysis I think you are either viewing the CES through the rose tj ted vision of nostalgia or you were unemployed for s brief period of time jn some hippy paradise 😄. My experience, both in Adelaide and the uK in the 70s and 80s was that you were made to wait hours in a long queue whose sole purpose was to remind you of the indignity of your position. You had to repeat the same information on different forms just to keep you busy doing something. And the job matching? Oh go and look at the board. Privatisation wasn’t the answer but, as with Telecom, there was sufficient antagonism towards many of these “services” that it was easy to sell privatisation as having to be better. Surely anything must be better?
We knew then and it’s been confirmed every time since, that things could indeed get worse, much worse.
Mick
I was unemployed for a fairly long while - 2 years on and off (did bit work as a courier, car detailer). The CES in the end got me into a casino blackjack dealing school (cool thing was if I did it I didn't have to look for work while doing it). Got me a job (that I loathed, but paid well enough for me to go back to uni get a PhD in English Lit and... well here I am!
And yeah looking at the board was a bit pointless at times, and tbh the big key was the lack of mutual obligation (not to mention a private company deciding if you should be penalized)
Greg, I acknowledge lots of things were better then. I guess my point is that they didn’t feel better. To many of us at least. And when you’re treated like shit by a government department and someone says “ let’s demolish this” that’s an attractive proposition to many.
And it was then hard for some of us to defend. Yes I know the CES treat you like a second class citizen BUT…. I know Telecom give appalling customer service BUT…. Yes i know your electricity bills have gone up BUT…
Those were hard arguments against lived experience with people who didn’t understand economics, who had no grounding in Marxist theory. Thatcher/reagan/fraser et al sold them in the quick fix and the fairy tail ending.
I’m glad you were able to get a PhD out of that Greg and I’m delighted that my taxes made a contribution to that - and I don’t mean that flippantly. I’m serious in that. We need people who can spend time thinking. You keep us all sharp.