Category: Market Failure

16 April 2016

When friends discuss why the world of politics seems to be going downhill, they mention that there seems to be no respect for knowledge any more.  Because information is so available it is not valued.  But this is not the key.  The problem seems to stem from two sources;

Firstly the two wars last century were over markets and at Bretton Woods at the end of WW2 the key to preventing wars thought to be free markets, where there would be unrestricted trade and countries could rise on fall on their relative advantages, or harder work.  The second item was the notion of neo-liberalism where the duty of a company was to make as much money as possible, with other objectives being looked after by someone else.  But as free trade progressed like a monopoly game multinational companies became more powerful than governments, so there was no one to stop the accumulation of wealth and power.  Power and wealth became the important items.  If you had these, clearly you would know what to do.

A number of small stories often give insights into changing priorities.  When I was at school and aged about 11 another boy, Geoff, went on a trip to the USA, a rare thing to do at that time.  We eagerly asked him what it was like over there.  He said, ‘Money just stands up and talks over there.  If you have money and you say something everybody listens’.  What he meant was that it was not because the rich person actually knew anything.

When I worked at Sydney Water, there were 17,000 employees and there was had a program to separate storm water and sewage in the pipes in the old part of Sydney, where they had all been the same.  There were employment programs for the long-term unemployed, disabled people and even ex-prisoners.  There were quality control units and a well-respected apprentice training school with about 220 people that produced plumbers, electricians and carpenters. The staff worked their way up the hierarchy so everyone knew their job and the tasks that they were supervising.  In the early 1980s these was a major change.  Sydney Water was reclassified as a State owned enterprise. It was to be ‘right sized’ which was the euphemism for downsized to about 3,000 people.  All functions not immediately necessary were stopped.  No pipe replacement programs, fix them when they burst. No apprentice training. No quality control- (has to be out-sourced). No printing. No computerised land mapping program (a world first, given to the Land Titles Office and later privatised) and the government was entitled to a ‘dividend’ from the enterprise which was about a billion dollars a year from all the salaries saved and work not done.  There was a game of musical chairs which went on for about a decade with new management structures, each with fewer places in it, where people repeatedly applied for jobs that had slightly different titles but which amounted to what they had done before.  But more than this there was incredible nepotism and people who knew about money or were politically favoured replaced those who knew about pipes and water.  Deskilling was on a massive scale. Then there was a project to look at salary relativities, which seemed to come to the conclusion that the salary should relate to how many people you managed.  Professionals were hard to fit into this framework, so it was opined that they should get less, but in order to get them at all, there had to be some consideration of what they were paid outside the organisation.  As a professional I was also high enough up the hierarchy to get ‘management training’.  It seemed that the key objective was to create a new culture in the organisation, and the main element in this was the destruction of the old culture, which was naturally assumed to be inferior to the new vision of the new management.   Workshops were held to define our objectives and visions. The silly old guard had thought that it was to provide water and take away the pooh.

This seems to be what has happened throughout the entire public service.  Lifetime employment has gone, and the gradual salary increments that made public servants content to work for less because they had lifetime security of employment and respect for the niche knowledge that they had developed. 

Now the two overwhelming values are power and money. They are assumed to go together.  Money buys political power, and political power gives control of large amounts of money.  So part of this new values hierarchy is the assumption that other values are lesser.  Public interest knowledge as stored in the public service, the Australian Bureau of Statistics or the research community are run down as the new breed of consultants rise. The consultants are chosen by their masters for their political or economic orientation and have to come up with solutions that fit with the views of their masters lest they not get their next job.  It is an incestuous and nepotistic system where ideology and opinion have displaced long-term experience and expertise.

Some years ago, as a NSW Democrat MP, I went to a YADS (Young Australian Democrats) conference in Canberra. The YADs were enthusiastic young people interested in politics, and some of them were lucky enough to work in Parliamentary offices.  On the Saturday they hospitably asked me to come to a party that they were attending.  I felt a bit old for the group, but they insisted.  It turned out that the Party was at a Liberal staffer’s house.  No one took much notice of the old guy in the corner sipping his beer, so I observed a group of very privileged young people telling stories of their exploits in the corridors of power. The striking part of the stories was the extent to which they were merely playing a chess game.  They were the goodies, Labor were the baddies and the whole discussion was about winning. There was no policy content at all. The issue was whether we won or not.  John Howard was Prime Minister and I was left with the overwhelming feeling that power was in the hands of those who had neither knowledge nor respect for the responsibility that they were carrying.

So I was interested to read this article by Jack Waterford, which traces the replacement of the public service by political staffers, ambitious non-experts with a lot of ideological baggage and little time for long-term expertise. 

The replacement of respect for knowledge with respect only for power and money may be the reason for the decline in decision-making in our political and management systems, and may yet be the cause of the decline of Anglo civilisation.