Thursday, April 28, 2011

Economists who document the failure of market driven reform in Australia

John Quiggin is one of a growing number of Australian economists who continue to make the case that the market-based reforms imposed by Federal and State Governments over the last two decades have not delivered the anticipated benefits for consumers and ordinary citizens, and in many cases have been unmitigated failures.

Market led reform assumes that market-based solutions are always best, regardless of the problem.

Other important contrarian economic voices about market driven neoliberal reform championed by mainstream economists and Australian governments of all persuasions can be found on the pages of Dissent, the excellent journal edited by the Age and Sydney Morning Herald economics writer Kenneth Davidson and in the Journal of Australian Political Economy produced out of the University of Sydney. Bloggers such as Billy Blog (Bill Mitchell) also provide important critiques of mainstream economics, as do academic economists and public commentators such as Con and Betty Walker.

In today's Australian Financial Review John Quiggin argues that:
The failure of reform is most dramatically evident in the infrastructure sector, and particularly for utilities such as electricity, telecommunications and water.
Quiggin argues that the benefits of market led reform that were promised by its proponents have not resulted. Whilst there were some benefits in the short term, in the longer term the proposed benefits for consumers and society have not been sustained. Prices have not lowered but increased. Supposedly, allowing the market to rip would bring more choice and better quality of service. Neither have happened.

As Quiggin points out, the privatization of telecommunications and electricity have been unmitigated failures for consumers and society. Electricity price inflation has reached double digit levels and the break up of electricity utilities into separate generation, distribution and retail sectors has created massive new problems.

Quiggin argues that it is time for policy makers, politicians and commentators to accept that the mantra of market led reform has been a complete failure in the infrastructure sector. He writes that:
Faith in reform has proved utterly impervious to contrary evidence. The only answer to the failure of reforms has been to conclude that more reform in needed.
But as John Quiggin notes the lure of market led reform is still all powerful:
Despite this and other failures, the incantation of ‘reform’ retains its magical power. The politically and economically disastrous privatisation program in NSW was justified entirely on the basis that it was needed in order that reform could continue.
It is, perhaps, too much to ask that such an appealing word should be abandoned. But can’t we at least admit that the 1980s reform program has had its day, and look for some reforms more appropriate to the 21st century?
The failure of market driven neoliberal reform in the infrastructure sector (water, telecommunications, utilities, and public infrastructure) and in many other areas of Australian social and economic life, including health, housing, social welfare, retirement incomes, aged care, education, child care, human and community services and the environment and climate change, are core themes in Australian journals such as Dissent and  the Journal of Australian Political Economy, which in each edition document the harm that has been done by market driven neoliberal reform in this country.

More Australians need to support and read the important work done by economists such as John Quiggin, Bill Mitchell, Con and Betty Walker and all those associated with journals such as Dissent and The Australian Journal of Political Economy.

No comments: