Notice: Undefined index: hide_archive_titles in /home/chesterf/public_html/wp-content/themes/modern-business/includes/theme-functions.php on line 233

Category: Market Failure

16/04/2021

Amateur Hour in Management and Politics.

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.

Morrison’s minders at the heart of his doldrums

19/03/2021

Murray-Darling Farce- Another Summit.

19 March 2021

One of the more absurd ideas of neo-liberalism was to privatise ownership of all the water in the Murray-Darling and then rely on ‘the Market’ to allocate the water optimally. All that happened was that water was another commodity to be traded with its price more related to its possible future price than any physical or environmental constraint.

I learned a bit about this many years ago from my grandparents. One of my grandfathers was a retired metallurgist who would tell me about world trends in metal demands and buy shares accordingly. His wife, my grandmother, knew nothing about this but would buy shares based on what the market was doing and tell me separately about how she despaired of my grandfather’s share investments. After a few years, she was much richer than he from a much lower base. The moral was that the share price had little to do with reality.

Why anyone would think that turning water into a speculative commodity would optimise its use is beyond understanding. But that was what happened. Joh Bjelke-Peterson built Cubby dam on the Queensland border and used the water to irrigate cotton, so NSW was behind the 8 ball from the start. NSW cotton farmers used surface water and took water from aquifers with no supervision of their meters. Brokers with mobile phones bought and sold water entitlements, and famously recently a Singapore-based company sold a lot of water rights to a Canadian superannuation fund, who felt that growing almonds (which are heavy water users) would be a good thing to do. (SMH 3/12/19) Hey, the price of almonds is good at present and you cannot smell rotting fish from Canada.

The idea that if you fix the money, everything else will come right seems to permeate every aspect of our neo-liberal, managerial society. I think of it as a religion, that ‘the market knows best and will allocate optimally with the unseen hand’. It also seems that religious folk are more prone to believe this, happier to believe that an unseen force can magically fix things and that it morally worthy to suffer now for some future redemption.

But in politics, we do not even have to debate these things; there is another option, ‘kick the can down the road’. Having the CSIRO produce a report in 2008, ‘Water Availability in the Murray Darling Basin’, led to an inappropriate Murray-Darling Basin Authority report in 2009. The CSIRO’s scientific response in 2011 was ignored. There was a Royal Commission inquiry by Bret Walker which found that the Authority has shown ‘gross negligence’. So they had another ‘Summit’, just last month.

All this is not to mention that Angus Taylor spent $80 million in taxpayer money to buy back water rights from a company called Eastern Australian Agriculture registered in the Cayman Islands and run by an ex-rowing mate, with the deal signed off by Barnaby Joyce. (The Guardian 19/5/19)

It is a worry, when the senior counsel assisting Walker inquiry writes a book called ‘Dead in the Water’ and still comes back with an opinion piece like this.

www.smh.com.au/national/murray-darling-basin-summit-a-laughable-response-to-finding-of-gross-negligence-20210318-p57brq.html

18/03/2021

Mutual Obligation and ‘Noblesse Oblige’

18 March 2021

‘Mutual Obligation’ is the new buzz word for unemployed people. If they are to get ‘welfare’ they have to be trying to get a job. An index of this is to make a lot of job applications, that surely must be the bane of every employer in the land, with an obligation of job seekers to apply for 20 jobs a month and about 8 job seekers for every vacancy.

‘Noblesse Oblige’ is a French term dating from when English royalty spoke French after the Norman conquest (of 1066) and refers to the benevolent, honourable behaviour considered to be the responsibility of persons of high birth or rank. The term is so quaint and medieval that is often used ironically. But these days with the growing gap between rich and poor, and the lack of sanction on poor behaviour by the empowered class, it may be that old fashioned ethics is all that remains to help poorer people. And they are in short supply.

If there were mutual obligation, a government would be obliged to give its citizens a decent life. In the 1950 and 1960s it was considered a government responsibility to get everyone a job and governments fell if the unemployment rate was over 1%. In the 1980s when I worked at Sydney Water, it ran employment programmes for ex-prisoners, people who had been unemployed for more than 3 months, and people with disability. The employment was for a 6 month term, and my job was to check that applicants were physically able to do the job. There was a programme to separate sewage and rainwater in inner city areas and a pipe replacement programme. Both of these programmes were simply canned. The Apprentice School, which had about 180 apprentices including plumbers, electricians and carpenters was closed. Sydney Water’s staff went from 17,000 to less than 3,000, and all the wages saved were simply turned into ‘dividends’ from the State Owned Enterprise’. A tax in short. Contractors were used, and mains repaired when they burst. The government had out-sourced the work and outsourced the responsibility for employment. The latter was less obvious.

The Global market place that was created in 1944 to lessen the chance of wars allowed countries that produced things cheaper due to cheaper labour costs to prosper, and multinational corporations moved their factories. The Americans call it ‘off-shoring’. But our governments have acted as if none of this exists. An abstract entity, ‘The Economy’ is now responsible for job creation and unemployed people are responsible for getting them. The government has outsourced job seeking to private corporations, and as we know, their duty is to make as much money for their shareholders as possible. So if it is better to churn many people through short-term jobs to get a commission every time someone starts, hey that is the way to go. So it is about how the rules are written. If the old CES (Commonwealth Employment Service) clerks could find someone a job they did. No one complained that they did not try to place people, and there was no incentive for them to do anything other than to try to place people in the best way possible.

I work with the Workers Compensation insurer, iCare, whose remit seems to be to minimise the cost of claims by saving on both claims managers and payments to injured people, and they are still paid a bonus if the ‘customer’ (i.e. patient) gets back to work, so there is pressure to force them back. The CTP insurers are always in a total conflict of interest position. They get the premiums and every dollar they avoid paying out goes to their bottom lines. The idea that a private market will fix things is complete nonsense.

Now we have revelations of gaming the system in the privatised job placement agencies. The whole dismantling of the public system relies on the assumption that people will not work without incentive payments and private is always better than public. I was in the public sector for many years as a salaried doctor and then in Sydney Water. My experience was that the public sector did its job quite well and thought about better ways to act, undistracted by incentive schemes that would distort resource and time allocation. The Dept. of Public Works built most of this state; Sydney Water built Warragamba Dam.

Privatised rorting is now a major industry draining resources from CTP insurance, Aged Care, the NDIS and now job search. This is not to mention over-priced private monopolies in toll roads, transport, land titles office or oligopolies gaming electricity supplies.

Will there ever be a government that rebuilds the public sector to put an end to this? Will Labor just roll over as Liberal Lite as they did to get an extra $3.50 on ‘JobSeeker’?

But the key issue is that everyone has the right to decent life, and if the government cannot provide jobs, it should provide income support. Noblesse Oblige. As one of my more insightful friends said, ‘There is no shortage of work. Everyone I know can think of things that need doing. It is not a shortage of work, it is an unwillingness to pay’.

Watch this video re the privatised employment agencies.

https://nsfuw.com/?secure_token=8fb90d8862532ccff17c55370720566372b28b851af78200f9c4a13b9171c28e&t=GZ1ZJT09R&utm_campaign=Expose_predatory_job_agencies&utm_content=30518&utm_medium=email&utm_source=blast

06/03/2021

Scathing PWC Report Finds Perottet’s iCare Incompetent

6 March 2021

A 100 Page report by consulting from international PWC (Price Waterhouse Coopers ) found weakness in performance and governance, and the Board did not hold management to account.

We might also consider that the Minister, Dominic Perottet did not hold the Board accountable, and appears to show no interest at all in the injured people for whom the whole scheme supposedly exists. We might note that no doctors or patients appear to have been interviewed either- Hey, it’s all about money you know! One could ask why PWC did a report when Justice McDougall was simultaneously doing one that it coming out in April? Perhaps he is a lawyer and does not know enough about money.

The bottom line is that it was run from the top by people who only knew about money with little input about its proper function from the people at the coal face, who presumably should have some knowledge of the people that they are supposedly helping. (I say that with reservation, as the case managers that I deal with have high turnover, little insight and seem to assume that a large percentage of their cases are fraudulent, the doctors are hell-bent on inventing pathologies to over-treat and they have to follow elaborate protocols designed to ensure that no one could under any circumstances get one cent more than was absolutely necessary).

So we digest the Management-speak of this report and await the McDougall report which had terms of reference that allowed little input from patients or doctors, held no hearings and seemed to exist principally to take the heat off the Minister from last August until its April release.

It seems that there has been a generic concept since the 1980s that managers know best, that other degrees and knowledge from lesser beings or lesser ranks and incomes are not of value or to be listened to. It has come unstuck in so many situations that its time that some little boy (or girl) points out that ‘The Emperors have no Clothes’. Then we can go back to an older time, where people had appropriate training, worked their way up, knew their jobs, were promoted on merit and had small salary increments reflecting their incremental status rise. But I suppose that this would rely on people having permanent jobs and depower the whole new managerial class and their symbiotic consultants and reduce the workplace ‘flexibility’ that allows the obscene salaries at the top and insecurity at the bottom.

If Anglo society does not want to fall to more realistic societies in Germany and Asia, there needs to be a large rethink of the Harvard 1980s management nonsense that is the foundation of these sort of debacles.

www.smh.com.au/national/nsw/scathing-icare-review-finds-a-need-for-cultural-change-20210301-p576tq.html

30/12/2020

Privatisation of Research will Kill Millions due to Vaccine Non-Availability 30/12/20

The COVID vaccines were an international race. Many countries and companies competed. The Uni of Queensland one fell over because it made the AIDS test a false positive. There are now 5 principal ones in the media; Pfizer from Germany, Astra-Zeneca/Oxford from the UK, Moderna from the USA, Sputnik 5 from Russia, and Sinovac from China. Over here we ignore the two from Russia and China, for some reason. Do we not trust them, are we just racist, or do we want to support Big Pharma in ‘The West’?

I recently met with some medical sceptics, who said that there is no public proof that the vaccine works, i.e. published papers. I said that it was in the media that there had been a 43,000 person trial with not very many side effects. They conceded that this was correct, but pointed out that you could inject water into 43,000 people with few side effects, and that it was a question of how many of the 43,000 had been exposed to the virus, compared to a group of 43,000 in the same environment who had not been vaccinated. And you could not ask a volunteer who had just had the vaccine to cuddle up to a COVID case- that would be foolhardy. Their key point was that all the data was still in the drug companies’ hands and not publicly available. Presumably the regulatory authorities have it, and hopefully they are still being rigorous under the pressure. We have to assume the vaccines work as we need to open up the world economy.

Our government promised a fortune to these companies before they even had a product to sell, and all the bluster about having an equal world in terms of vaccine access does not seem to have dollars attached. At present there is not enough vaccine to go around, but it still matters where you start. Logically, vaccinating Australians where there is very little infection would likely save fewer lives than vaccinating people where the virus is rampant.

I have told the story before about Jonas Salk, who developed the polio vaccine with public funds and did not patent it so that the maximum amount of vaccine could be distributed to rid the world of polio. This was in sharp contrast to Glaxo, the drug company, which found that an old unpatented drug worked against AIDS, patented it and then insisted that the price of it be at least $US2 a day, although an Indian company said that they could produce it for 7 cents. The result was several million extra AIDS cases in Africa.

Sadly the Human Papilloma Virus (HPV) vaccine, Gardasil was a similar story. HPV was found to be the cause of cervical cancer. The vaccine was developed at Uni of Queensland by Prof Ian Frazer, and then marketed by CSL and Merck. Its roll out was considerably delayed by its cost, despite the fact that the Uni of Qld declined to insist on royalties from sales in developing countries. It is still $73 a shot in Australia (2 needed, 3 recommended), though our government makes it free to Australian schoolchildren.

This article says that the Coronavirus vaccines will worsen inequalities. This is true, because not only will poorer countries not be able to afford the vaccine, they will also have more people die and have higher health costs as they will have to treat the cases. It will also have a bigger impact on their economies. The fine rhetoric about sharing world knowledge will certainly be tested. It might be noted that the Chinese released the draft genome of the Coronavirus to the world in January 2020 (Sciencemag.org) in the interest of stopping the outbreak, which was a credit to China and gives credence to their vaccine. On the other hand, I seem to recall that Pfizer declined to be involved in information sharing, but have been unable to find the reference for this.

Pfizer did not get public funding but their development partner, BioNTech, did. The question is how much profit will there be in all this, and how much will the price stop poorer countries getting the vaccine.

The fact that governments no longer fund the research directly and go into ‘private-public partnerships’ gives rise to the feeling that governments put in the funds but the private partners both determine the priorities in research with a bias towards research that can make a profit and then make that profit. The governments then either largely fund the profit, or leave their populations unable to benefit from the research that they as taxpayers funded.

I have two relevant articles on this, one below, and one coming shortly.

www.internationalhealthpolicies.org/featured-article/why-does-pfizer-deny-the-public-investment-in-its-covid-19-vaccine/

https://amp.theage.com.au/business/the-economy/a-pitiful-response-global-economic-inequality-a-side-effect-of-vaccines-development-20201226-p56q99.html

28/07/2020

Workers Compensation in NSW and Victoria- ‘Immoral and Unethical’ – 4 Corners Exposes It. 28/7/20

This is what I have been saying for years. If you think the banks are bad, you have not dealt with insurers. They will do anything rather than pay people’s legitimate medical and living expenses.

My poor patients literally starve. They change their addresses each visit as they couch-surf their friends. The foreign patients with no Medicare cannot even get GP treatment, and because they are often paid sub-award wages in cash cannot even prove their incomes. Most specialists simply will not operate for the Medicare rebate, and even if they will the waiting time is a year. I tell the patients where the soup kitchens are. They are in huge pain and the most I hear from governments are warnings that they have been on narcotics too long, as they wait for the surgery that the insurers have refused to pay for.

The patient Scott with his supportive wife, at the beginning of the 27/7/20 4 Corners tells the story of his shattered life, which is just like what my patients tell me.

The Victorian the Ombudsman, Deborah Glass did an investigation into WorkSafe Victoria, the callous government insurer there. She found appalling behaviour and says so very clearly.

In NSW it is the same- the appalling, hopeless iCare, who should be called ‘I Don ‘t Care’ put together a bunch of insurance executives who had no experience in working with people. They all got awarded huge salaries and set about having computer algorithms to replace claims clerks. So when a claim goes wrong (which takes a while to figure out as 3 week delays are pretty much the norm), you call and ask to speak to the case manager. You can’t. But if you persist eventually you find one, but he or she only got the claim yesterday. i.e. There had been no person managing it until you hassled like hell, and it is often refused anyway.

Meanwhile the patient had no treatment and the fat cats at the top had not noticed that their system had a few glitches. And most of the concern in both the management echelons and the media is about some financial deficit which, if we are to believe the totally out-of- touch iCare CEO, Ken Nagle, depends how you do the accounting.

No one seems to remember that this is just a health insurance scheme to help Workers’ Compensation and Motor Vehicle accident Victims. If Medicare worked it would be completely unnecessary, and it cannot even manage to function like a private health insurer. It assumes that all doctors are crooks who cannot be trusted to order just the tests and operations necessary- they all have to be evaluated and denied by insurers who get every dollar that they refuse to pay, and who seek out dodgy doctors to carry out ‘Independent Medical Examinations’ (IMEs) to deny normal treatments. If the IME doctors do not do what the insurers want they get no more work from them.

The directors and top executives of iCare should be sacked and the whole thing given to ICAC to examine. ICAC needs more resources also.

SIRA (State Insurance Regulatory Authority) has been more hopeless than ASIC and APRA were with the banks, and should be abolished also. This story came from a whistle-blower, not from SIRA, the responsible agency, though some of us have been trying to get SIRA to act for years.

SIRA became a bit more interested after the Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry reported in February 2019, presumably as they realised that if the Commission has been given enough time to look at insurance, they would have had their own hopeless regulatory efforts scrutinised. They had an internal investigation, the Dore Inquiry (no, you almost certainly have not heard of it), but it did actually find that iCare was behaving appallingly. The report release was delayed 5 months (July-December 2019) and released just before Christmas with iCare’s reaction, which was to admit that they had made ‘mistakes’ and that they accepted all the recommendations. Great PR! Released on a busy day to avoid scrutiny and if you as a journo were a tiny bit interested, there was no story because iCare accepted the changes suggested. The SIRA strategy worked- no scrutiny of either iCare or SIRA.

At last there is a 4 Corners on this! Watch it if you missed it!

Let us hope that when it goes to ICAC some major changes are achieved. It seems that 4 Corners is the only regulatory force in the country. I guess that is why the government wants to de-fund the ABC.

https://youtu.be/fxIvKogrE2Q

26/04/2020

Centrelink- an Encounter 9/6/16

Sometimes we have little experiences that are wake up calls. We need to note them, and act on them. I have little to do with Centrelink. Like most North Shore doctors I assume it does its job, and also tacitly assume it has nothing to do with me. It wrote to me about 6 months […]

22/04/2020

Saving Virgins

22 April 2020 Ansett Airlines collapsed in 2002 and nearly took Air NZ, its owner with it. It had 40% of the market at that time. It had had subsidies, but continued to lose money. Virgin Blue, a cheap carrier had just come into the market and may have gone broke had Ansett not collapsed […]

22/04/2020

COVID-19 crisis highlights Market Failures

22 April 2020 The COVID-19 crisis highlights the failure of market mechanisms. The lack of good health care in the USA will highlight how private medicine simply does not deliver the health care people need. The same can be said in Australia, though we still had a bit more public system to build on. But […]

01/07/2017

NDIS- National Disability Insurance System.

1 July 2017 I have grave fears for this system. I am unsure even of the goodwill of some of its advocates. I was on the Social Issues Committee of the NSW Parliament and we looked at Disability services and the way that these were delivered. Basically if you ask how big the disability problem […]