JIM COOMBS. Do We choose reason and proportion or “Economic Reform” ?

Feb 22, 2017

So long as government vacates the field, the balance between rich and poor lurches further towards the rich. 8 individuals control half of the world’s wealth. Is that Balance or proportionate ? 

Australia has lost its sense of proportion, of appropriate, sensible balance. We spend billions persecuting a few tens of thousand refugees who could be accommodated for a few million. We incarcerate a substantial number of mentally ill people with little chance of treatment, when their illness is often the substantial cause of their offending, when cheaper treatment in the community would address those causes, at around $350 a day. Our bail laws do the same to the “innocent until proven guilty” on remand, at the same cost to appease shock jocks. Never mind that most will not get a prison sentence, and that an injustice might well be done.

We have adopted economic doctrines which are demonstrably false: that giving money to businesses, by tax reductions, will lead to a trickle down of improvement in the lot of us all. The last forty years demonstrates that to be untrue as a fact, apart from the obvious truth that if you give an advantage to a powerful person, he is unlikely to empower the weaker. Deregulation has undermined the protections of workers, increased the power of employers to exploit their workers. More and more work is casualised, unpaid overtime commonplace, and unpaid work (“internships”) exploit the young and enthusiastic.

So long as government vacates the field, the balance between rich and poor lurches further towards the rich. 8 individuals control half of the world’s wealth. Is that Balance or proportionate ?

At the funeral for Gough Whitlam, Noel Pearson remarked that he had given us free education, universal health care and the protection of workers from exploitation. Since then we have had what has been termed “economic reform”. Education has been commodified, so as to be purchased by our children and even more expensively by the offspring of the minority of grossly rich (as opposed to the deserving but poor) citizens of neighbouring nations. Health care has been pushed into the private sector, with the cost of insurance, except as made tax deductible by government, prohibitive, except for the well off, and another place for profits to be made by the private sector. Our workforce, especially the young, has become increasingly casualised, removing the protections that tenured, permanent employment provides by award or statute. Unpaid overtime is commonplace and working hours often well over the hallowed 40 hours a week. Average earnings may be higher, but the gap between the rich and poor is now much wider, with home ownership beyond the reach of most persons under 30. You call this reform ?

Reform used to mean an improvement in the situation, the lot of ordinary people. For most the prescriptions of the economic rationalists have made things worse, not better, it is regression, not true reform.

Well, what about education ? Before the Friedmanite ideologues took charge, education was regarded as a national asset, an investment in the future, given to all and advancement through the system was on merit, not class or capacity to pay. Now we have the squalid spectacle of universities flogging off courses to wealthy overseas students, suitably dumbed down, on subjects designed to get Australian residence, with content of little academic value on such valuable subjects as marketing (how to get people to buy what they neither need or want, wasting valuable resources) or advertising (persuading them to do so).

In living memory, the “Economic Question” was to find the optimum use of scarce resources to meet society’s needs. Current “reform” suggests that the optimum is what will make a profit in the shortest time, regardless of the misdirection of needed resources to frivolous or wasteful ends. The question as to whether resources are “scarce” never enters into it, it is always assumed to be inexhaustible ( which for nearly every resource is simply wrong). Once, a long time ago, governments, careful of their people, took this into consideration. They nationalized (i.e. the reverse of privatized) public goods (water, power, communications) to ensure fair access to all.

So, now, stock markets “reward” companies that sack workers by buying up their stock in the hope that an increase in short term profits so gained will raise the price of the share and immediate dividends. Little attention is given to the long term good of the company, the social value of its enterprise, let alone the good of the nation.

One canon in the dogma of the improperly named economic rationalists is the wonder of privatization: place any activity in the hands of a seeker after short term profit and it will necessarily produce results that best use resources, and be best for consumers or citizens. Sadly, regulation to prevent misuse of those resources, protect the environment, ensure safety of workers or the community at large, has barely kept up.

Exploitation of workers is rife. Privatised employment agencies garnishee the wages of workers for whom they find jobs, rather than charge the employer. Unscrupulous primary producers imprison backpackers at little or no pay, under the threat of losing their visas. Increasingly jobs are casualised and low paid – forget holidays and sick pay. No wonder the young despair of home ownership.

Services which had originally been nationalized to guarantee universal availability such as water and sewerage, electricity, gas supply and public transport have been sold off and divided into a number of unaccountable, needlessly and expensively competing companies, and surprisingly have not led to cheaper prices.

Paul Keating was told by “rationalist” Treasury officials that he was the best Treasurer Australia had ever had (they had said the same to the hopeless Billy McMahon) and he proceeded to deregulate the Banks, promising increased competition, lower charges and so on. We all know that banks now virtually collusively charge the same high fees without justification or regulation, their number has reduced on the high street from 7 to 4.

So much for economic “reform”.

But more fundamentally, the need for balance (i.e. between the sectors of the economy, the government, the private sector and the workers) has been lost. The idea that we should seriously examine the cost of government policies that do no good, when better and much cheaper ones are available, is urgently needed on cost grounds, but also in the name of reason, balance and proportion.

Jim Coombs is a recently retired magistrate and former economist.

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