globalisation has changed the whole ball-game and that "financial services" , corporate management and militarism is how the new globalised neo-colonial world is held in thrall - not just the "working classes" in Europe and the USA.
I know you write "some would argue that" before that bit, but it still seems to inform your overall argument. Globalisation per se has not changed the whole ball game. Globalization compounded by deregulation and liberalisation has done that. But that's a political choice, not a hard un-changeable reality.
If for whatever reason, this source of cheap labour becomes unavailable, either through political re-alignments, tariff barriers or wage inflation in China/India - then the impact on "western economies" will be even more devastating than the rise in Oil prices.
It is "cheap" only because externalities are not priced in - and they are not priced in because politicians won't do it, thinking that "cheap" (monetarily) is all that matters, whatever the damage we do to others and to ourselves.
What's required is a conscientious decision to show the very real price of that "cheapness." That's what regulation is about - re-internalisation of externalities, ie making those that cause the externalities bear the consequences, like making polluters pay (or, better, clean at their cost). Suddenly producing in China won't look so "cheap" Because the real cause of their "cheapness" today is not so much low labor costs (that's a marginal factor except in a few industries), but the ability to ignore safety rules, pollution regulation and the like.
And the "impact" of that on the West is likely to be a net plus, in the long term, just like renewable energies will be, because they are cheaper in reality - it's just that the costs of the alternatives we currently use are not directly associated with their use (think oil - military budget, coal - health care for asthma patients, etc...).
Being sustainable is cheaper in the long run - the real kind of "cheaper."
In other words I don't think what you guys advocate is all that radical - and any "western economy" can and will adopt those strategies if military adventures fail, financial services crash, energy prices rise and Unions re sufficiently organised and militant about wage rates and social services. But what I think is lacking is an alternative intellectual paradigm which makes those changes the obvious "common sense" policies visible to all - particularly to the voters.
It's not that radical - it's been done once already, in the second half of last century, and it created the first real middle class ever on the planet. But as our economies grew fat, the temptation to "harvest" the middle classes rather than to create became overwhelming. It would be nice of we can go back to what worked without a major economic crisis, but it seems unfortunately unlikely - and too late anyway.
But long term, planified government regulation is an alternative paradigm - and it has the advantage of being a proven solution. In the long run, we're all dead. John Maynard Keynes
But long term, planified government regulation is an alternative paradigm - and it has the advantage of being a proven solution.
OK so we at least have a name for an alternate paradigm - Government planning/regulation - as opposed to "the magic of the markets" - or whatever metaphysic lies at the heart of monetarism/neoliberalism. Unfortunately the Soviet Union rather gave "Government planning" a bad name, so we have to be more specific as to what dynamics should drive the planning process.
Jerome a Paris:
What's required is a conscientious decision to show the very real price of that "cheapness." That's what regulation is about - re-internalisation of externalities, ie making those that cause the externalities bear the consequences, like making polluters pay (or, better, clean at their cost).
OK - that could be part of the dynamic driving the planning process - make sure that the producer/buyer pays the full replacement/recycling costs of the products created and consumed. Presumably we would be charging a levy on Chinese goods to take account of their larger CO2 footprint - but how do you price in human rights violations, safety etc. - and Charging a levy on Brazil for the destruction of the amazonian global carbon sink. Could get complicated - but at least it raises some of the right issues.
But the biggest problem - even with the Keynesian mixed economy advocated by Migeru - is that: a. Public sector planning is seen by the dominant paradigm to encroach on individual freedom and productivity/efficiency b. There isn't a clear paradigm/ideology which provides a rationale for such planning and gives a clear measure of how effectively it is being carried out - i.e. to demonstrate how much value is being added by the process
Thus the civil service is seen as largely parasitical /non productive and driven by internal self-interested, empire building priorities rather than making an active and positive contribution to social justice/economic productivity.
Social democracy is an uneasy compromise between "socialism" - seen as a failed economic system - and unfettered capitalism - seen as an unjust economic system - but their is no clear rationale as to where that "compromise" should ideally be. We have no effective measures of the value a good planning process can create - where is the cost benefit analysis for any Civil service activity?
In other words its not good enough just to argue we need more regulation/state intervention - we need a socioeconomic political science which defines precisely what those interventions should be - to fulfill what objectives - and to demonstrate how much better those objectives can be fulfilled by state planning than by any other method. After all the "magic of the market" is a fairly ridiculous concept - but we have to do better than the "magic of Government" if we want to argue how value is added by government processes. Pointing to some good examples is not a theory. Precisely why and how will giving increased power to "unaccountable bureaucrats" add more value than deregulating markets - on a grand scale - and precisely what standards and measures should those bureaucrats be held accountable to?
We can, in theory, refuse to buy a capitalist's products (unless they have a monopoly). We cannot escape the regulation of a bureaucrat - because it usually has the force of law - so a much higher standard of proof is required to demonstrate its efficacy as far as the common good is concerned. Most civil servants resist such accountability like the plague and thus undermine the legitimacy of their enterprise. We need a better way and system for measuring their performance and contribution if their legitimacy vis a vis the markets is to be enhanced.
In other words there is good Government planning and bad government planning and at the moment the average citizen has no way of telling the difference and no way of doing anything about it even if he does know the difference. There are almost no internal systemic mechanisms in place for systematically weeding out poor perforce/contribution and rewarding/enhancing the good. The whole process is opaque to the average citizen and thus lacks real accountability and legitimacy - and thus has been easy meat for the neo-liberal "reformers" to destroy.
We need an entirely new paradigm by which public services are managed, monitored. measured and enhanced and it is simply not good enough to say we need more of the same - we don't. We need something which is demonstrably much better, more efficient, more accountable, and measurable against democratically set standards and goals. Without that the free-marketeers will continue to win every ideological argument hands down. "It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."
By talking about "regulation by bureaucrats" and just in general you're formulating the whole discussion in the "neoliberal reform" frame, and in that frame our arguments are just awkward. We need to change the frame.
Government planning reduces to the question of should the government set long term goals, or not? And certainly it should. It's just that right now the only government goals set for the long term seem to be to attain a certain high level of market liberalization. What the market does with its free rein (for instance, whether growth is sustainable or based on eating the seed grain) doesn't seem to figure in the governments' long-term goals. And that is a failure of the imagination. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
You seem to be conflating economic planning with a command economy
Not at all - but certainly that is the image conjured up by neolib parallels drawn with the Soviet Union. We are talking here of regulation which comes somewhere between planning and command.
But you ignore my central point - the the ideology of state planning provides no frame of reference for measuring the quality and value added of regulation and for differentiating between good and bad, and for providing citizens with the tools to reinforce the good and reduce the bad. You are expecting people to buy into the state regulation ideology en block and on trust - and not providing the evidence of what is working well and what is not, and what mechanisms are provided to ensure a move from bad to better. The state will always be on the defensive without such detailed democratic accountability, because the neolibs can always point out that the markets ensure bad capitalists (sometimes) fail. You can't give Governments a blank cheque - and that is essentially what the state regulation ideology is looking for - "were disinterested experts, trust us" doesn't cut it any more. "It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."
Suppose the government has a plan. what tools are they allowed to deploy to attain the plan's goals? When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
The Government planners otoh have been lousy at marketing their successes and even worse at dealing with their failures. They have created a new kind of class society where privileged civil servants can lord it over the rest of the populace who don't have the same security of tenure, pensions, unsackability, and unaccountability for their performance. The democracy of the marketplace is very unequal, but it is better than no democracy at all. "It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."
I would phrase the question like this: How do we build more accountable governmental service systems, so that we as citizens can make sure they work for us and not lord it over us? A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!
To take a simple example, in most parts of Denmark it is literally impossible to buy food without financially supporting the wars in Vietraq and Afghanistan. I can vote against those wars in the ballot box. I cannot vote against them with my euros. Much the same can be said for textiles produced in SE Asian sweatshops. And cell phones containing copper from cyanide heap-leech mining.
Alright, you might argue that I can manage without a phone if heap-leech mining bothers me so much. But you'd be hard pressed to argue that I can do without clothes and food.
So the reality is that lamenting the lack of transparency in government bureaucracies (and thus tacitly implying that there is transparency in the "free market") is simply not an apples-to-apples comparison. And that is the first point we'll want to make, I think.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
There isn't a clear paradigm/ideology which provides a rationale for such planning and gives a clear measure of how effectively it is being carried out - i.e. to demonstrate how much value is being added by the process
Erm... do EDF, TGV, Airbus ring a bell? Why do you think that there is such a large side-dish of French-bashing in the promotion of neoliberalism? France is the inconvenient proof that strategic behavior by the State over the long run works.
It's a pity that the French elites have been to a much too large extent brought into the fold by their neoliberal cousins, and have forgotten how to defend their model, but the model is still there, and still works. And people in France know it. And foreign investors know it.
Why do you think I spend so much time debunking the myth of declining France? Because it has direct relevance. In the long run, we're all dead. John Maynard Keynes
Having worked in a major, rapidly globalising, private sector company for most of my life I am all too aware of the huge structural problems with the management systems that are developing there, and yet they are of a different order and kind to those in large public sector organisations.
The neo-lib myth of the entrepreneur entirely subject to the vagaries of the market place has about a much relevance to today's gloabalising corporations as the "log cabin to White House" myth of American Politics. You are mistaking the ideology for the reality if you think that neo-lib economics has any great understanding of how a large corporation is actually managed.
The difficulties of managing a large global business, most of the internal components and services of which have no direct exposure to any marketplace, are not all that different in kind to managing a large state organisation, but the response has been altogether more dynamic in the private sector. The notion that we can go back to 1940's style state bureaucracy to provide an alternative paradigm to neo-lib economics is reactionary, not progressive, and shows know understanding of the transformation in organisational systems that has taken place in the last 50 years - almost regardless of the economic sectors in which they are embedded.
(As an aside, there are many dimensions to globalisation - far and away more than just the focus on free movement of capital referred to earlier - and organisational development theory is only beginning to address them.) "It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."
The difficulties of managing a large global business, most of the internal components and services of which have no direct exposure to any marketplace, are not all that different in kind to managing a large state organisation, but the response has been altogether more dynamic in the private sector.
For example?
In my experience - even at the top end of the public service - there is huge resistance to any precise targets being set, never mind objective monitoring as to whether they have been achieved. The notion of accountability has more to do with not rocking the boat rather than with the quality and quantity of services delivered to the general public. The objective is often to achieve growth in budget allocation rather than improved quality and quantity of service.
Things are changing, but very very unevenly and slowly, and there is little structural incentive for that change to take place - not least because very few Government Ministers have a clue about running a large organisation, and can be easily sidelines or hoodwinked if they ask awkward questions. Many civil servants have nothing but contempt for their ministers and have made thwarting them into an art form. It is very easy to sabotage a politicians career if he is expected to take personal responsibility for all Departmental decisions - even those he was never properly informed about. "It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."
precisely articulated and measurable targets
The problem, of course, with measurable targets is that very often the things that are important to performance, especially when profit isn't the bottom line, are difficult to measure. So you set targets by what can be measured, even if they're at best tangential to fulfilling the actual aims of the organisation.
A couple of examples come to mind. One is the charge that people have been alleged to be kept waiting in ambulances before being admitted to Accidents and Emergencies in order not to violate a government-imposed target that all patients should progress to a certain stage within 4 hours of admission. The other example is that, after focusing on the number of pupuls excluded from schools for 6 school days or longer, policies have been adopted that discourage schools from excluding pupils for that length of time (by making it a monetary cost for the school), as well as having Local Authority officials do their best to avoid long-term exclusions whether or not the underlying issues are addressed. The same thing happens with permanent exclusions: it is possible for the Local Authority to negotiate a voluntary transfer of a student from one school to another as a way to avert a permanent exclusion. The end effect, the pupil moving school, is the same as it would have otherwise been, but it doesn't show up on permanent exclusion statistics. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
that's cynical ;-) Any idiot can face a crisis - it's day to day living that wears you out.
Read any analysis of private sector charging by health economists (some of Enthoven's early work will do) and you'll see that private health care does not do half of the measurement that you are ascribing to them.
Funny how it is impossible to measure health care quality and efficiencies in the public sector - but no difficulty in charging for it in the private!
It's easy to set price. Cost-plus works fine for the purpose of the health care provider. Determining value, on the other hand, is a much stickier issue.
From a value perspective, cost-plus is nonsense. A simple antibiotic treatment for a lung infection saves your life. It costs - at worst - € 100 and a couple of doctor's visits.
I don't know the price tag for a major cosmetic operation, but I would be very surprised if it is less than two orders of magnitude greater.
Without going too far into the value of purely cosmetic operations, I hope that we can at least agree that curing a patient of TB is more valuable than a facelift?
Further, the comparison of costs across suppliers assume a roughly comparable product and that customers are able to shop between suppliers. In many cases this is simply an invalid frame of reference. Not only is major surgery (nevermind emergency care!) a sufficiently rare event for most people that the marketplace won't work [1], there is also the issue that many aspects of pre- and post-treatment care are not (easily) comparable across facilities.
Applying the kind of metrics that you suggest to medical care is like trying to figure out the mass of the Earth by counting the number of pebbles on a beach. It's not the right way to do it. In fact, it's not even a wrong way to do it.
And don't get me started on the moral hazard of reducing citizens to "consumers" and medical professionals to "suppliers."
Don't get me wrong; I'm all for transparency and accountability. But making up insane measurements just to measure something isn't accountability. It's accountabilityness, to Colbertize a bit.
- Jake
[1] Recall that the marketplace is only self-correcting if the burnt hand can teach - if each person breaks his leg at most once or twice during a lifetime, there is no way he can amass the level of experience with the different providers of health care to make an informed choice on his own. If you only spend 20 minutes of the rest of your life on economics, go spend them here.
And a lot of that relied on simple things: a willingness to entrust the State with strategic planning, the attendent prestige of working for the State you're not just a bureaucrat, you're part of the elite of the country), and the ability of the government to hire the top brains in the country, via the selective Grandes Ecoles, which are specifically created to train competent administrators and engineers, and instill in them a very real sense of duty.
And it's not something from the 40s. EDF's nuclear programme was decided in the mid-70s and implemented throughout the 80s and 90s. Ditto with the TGV.
Now the people that could renew that spirit work for banks - because they're the places with money, prestige and power. Is that a good thing? Is it an irreversible one? In the long run, we're all dead. John Maynard Keynes
Now the people that could renew that spirit work for banks - because they're the places with money, prestige and power. Is that a good thing? Is it an irreversible one?
Now that idealism and endeavour, that ambition and infrastructure, must become EU and worldwide and much bolder and more ambition to transcend the "greed is good" philosophies of the Chicago school.
We're on the same side of this debate -I'm just trying to goad you into being much more positive and offensive in your approach - instead of always playing defense against the idiocies of the neo-libs. THAT'S TOO EASY FOR YOU NOW. Populations and movements are inspired not by withering critiques of what is, but by dynamic visions of what can be. The EU is one such exemplar, the UN, International court of Justice are others.
We need to be much bolder in confronting our leaders with the idiocies of the current conventional wisdom. Bush/Chaney/Blair should be indicted before the courts. Rendition flights stopped. Sanctions applied for human rights violations whether in Gitmo or Tibet. Mugabe ousted by UN intervention if necessary. MBeki challenged for his complicity. The UK told it can't join the Euro until it gets its financial services sector in order.
In short we have to make the EU/Euro such a success that the Anglo disease will be obvious for all to see. But we also have to tackle the idiocies of the public sector in many countries which will prevent popular acceptance of that model ever becoming more universal. This requires that we articulate a new model of management efficiency and accountability for that sector - yes, built on the successes to date - but also learning from the failures. Otherwise Berlusconi will keep on coming back..... "It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."
The notion that we can go back to 1940's style state bureaucracy
Isn't that a strawman?
to provide an alternative paradigm to neo-lib economics
Didn't you just argue that we would be mistaken in thinking that neo-lib economics had anything to do with the running of a globalising corporation? So why would we need an alternative?
the transformation in organisational systems
Is there any reason why this should be exclusive to the private sector?
Neo - liberalism appeals to the values of the small entrepreneur - who is often subject to fierce market disciplines and bitterly resents regulatory costs and perceived unfairness and inefficiencies. Large global corporations give lip services to competition, but in reality are dedicated to destroying it, by fair means or foul. They need some regulation to be able to operate and often have the power to ensure it reinforces their position and makes life difficult for new entrants or weaker rivals.
However they have also been much more effective at playing of nation states against each other and maximising their advantage. International regulation is a bit like trade unionism, which offsets the weakness of an individual vis a vis a large business through collective bargaining. It is only through a large number of states controlling access to key markets acting collectively that they have any chance of regulating global firms effectively.
There is absolutely no reason why the transformation of organisational systems should be exclusive to the private sector, and every reason why it shouldn't be. But vested interests aren't the exclusive preserve of the private sector, and we lack an informed political culture capable of ensuring the necessary, and in this case real, reforms take place so that public sector organisations can rival the private in inefficiency and effectiveness, but with respect to a much more socially and environmentally responsible set of goals. "It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."
Migeru was arguing that Keynesianism didn't fail, the neolibs didn't succeed, and the obviously solution was to go back to Keynesianism. My answer is a Yes, but... the world has changed,
And Mig and Jerome point out that Keynesianism still hasn't failed. If Keynesianism weren't viable, the economic systems that France, Denmark, Germany, Sweden and several other countries currently have could simply not exist. Thus, we can conclude that Keynes still works. Q.e.d.
