In part I the question was posed to the readers which privileges bothered them most about Australia and what they thought could be done to reduce them. In this part I want to start to consider the barriers by talking about the ‘face’ of any privilege and how this creates particular difficulties in tackling them.
The reaction to the first part though revealed a lot of people have pet hates when it comes to privilege. Apart from my own particular bones of contentions (mining chief amongst them), there were those bothered by welfare privileges (Mike Russell), the whole secret system of military expenses and PV subsidies (Ben), captured markets for GPs (Selzick), allocations of water rights (Sam Wylie), subsidies to private schools (Michael Stanley and Mary jenkins).
The proposed solutions were varied, including electoral reform (Alan), the use of taxation measures when it came to the subsidisation of elite education (conrad), better general education on these issues (Sam), or the removal of particular laws pertaining to this or that privilege.
Rather than discuss all these, I want to give you an idea of what one is up against when it concerns privilege and then re-assess what can be done.
What is not commonly understood by economists about existing privileges is that they invariably have a defensive story that surrounds them and protects them. This defensive story, its ‘face’ or ‘cloak’, has as its central tenet that the privilege is in fact a good thing for society and that one should expect nothing but bad from removing it. The particulars of the protective story are entirely dependent on the audience: whatever the audience is prepared to believe will be in the story so whatever the favourite ideals or delusions of the audience are, the protective cloak of privilege will cater for it. And invariably, many people are fooled by the cloak and turn into willing protectors of the privilege because they are so enamored of the cloak.
Let me give two examples. One concerns medical specialists and one concerns the mining tax.
On medical specialists, the basic economic story is of an almost childish simplicity; medical specialists have a legally guaranteed monopoly on particular medical activities (like heart surgery or providing anaesthetics). Moreover, the medical specialists have organised themselves into cartels wherein they as a group decide on the minimal requirements of new competitors, ie more specialists, via the number of training places. As a result of this legally guaranteed cartel as well as a deliberate policy of having few medical places at university, wages of medical specialists are now astronomical (though, of course, partially secret), easily close to a million a year for particular specialism like anaesthetists. It’s a clear case of a privilege, perfectly well recognised by most economists and economic think-tanks. Solutions are debated and then resisted, such as when governments try to get more foreign doctors but the Australian Medical Association is uncooperative in recognising qualifications (or setting impossibly hard exams for foreigners) or checking them.
Now, whilst this reality is known by the insiders, this is not the public face of medical specialists at all. In the eye of the public, these are the heroes in Dr House and Gray’s Anatomy. They are the saviours who have rescued a family member. The public image of medical specialists is hence very different from the grabbing self-interested behaviour as a cartel.
It is this face you continually have to battle when talking to the general public, politicians, or journalists. It creates an immediate hurdle to rationally debating it in the open.
A similar cloak surrounds the mining deal that Gillard struck to cement her elevation to the top political job. I am pretty certain that in reality the deal cost us many billions per year and is the direct cause for all the budget problems the commonwealth and the states now have. It was a humiliating climb-down that makes the commonwealth the protector of the mining industry vis-a-vis the States. Without the deal, royalty rates (which are set by the States) would probably have continued on their rising trajectory and many billions would have flooded the Australian treasuries.
But the ‘face’ of this deal is entirely different. The face is one of a necessary deal that ironed out the difficulties with the original proposal and that supposedly makes us billions. In order to hide what a botch-up it really was, many of the real figures on tax receipts are secretive, which protects both politicians and civil servants from accountability on this issue.
Now, in both cases will any civil servant or interested journalist or member of the public first have to pierce the cloak.
That is not easy to do because everyone in power has an interest in maintaining the cloak: it is not just the protected privileged group that benefits from the cloak. Politicians also perpetuate and support the cloak because it allows them to save face themselves as they can claim that there is no problem for them to address. Furthermore, it allows them a lubricant in their interaction with the privileged group: if they cannot mount a successful campaign against the privileged group, then to a certain extent they must join them up until the time they can betray them. So the logic of politics, which is that one makes no open enemies up until the moment you shaft them simply because until then you will need them, means they are forever framing everything in terms of the privileged cloak.
For the same reason will civil servants be forced to go along with the face of privilege: they too would face a moral obligation to fight the privilege if a privilege was de-faced and so many of them too want to go along with the face until such moment as there is an active campaign to undermine the existing privilege.
This need for policy makers and civil servants to go along with the facade of an existing (winning!) privilege spills over into the whole public sphere: in textbooks, official documents, research reports, etc., will you find people towing the official line, either because they do not wish to offend the politicians, bureaucrats, or the privileged themselves who benefit from the official line, or else simply because the official line has become the way they truly view things.
Taking the two examples above for instance, I would guess that few people really buy into the official cloak surrounding the mining deal: the journalists, politicians, and civil servants all pretty much know that the Rudd/Gillard government went up against the mining privilege and lost big time. This also means that the willingness of everyone to really go along with the cloak is diminished because it would mean adopting the language of the losers of the battle.
Yet, on medical specialists, there is no doubt that many ardently believe in the fairness of the current arrangements. Because little data is freely available on it (though the Melbourne Institute has unearthed figures), their wages are not widely known. And of course, there is the element of a lottery here in that it is possible for many to hold onto the hope that they or their kids will also be able to cash in on this bonanza by joining the medics. So aspirations, ignorance, and hero-worship maintain public support for medical specialists.
Now, this business of the cloaks is crucial for the whole question of how privilege can be tackled. It namely leads to several crucial points:
- Official support (from politicians and civil servants) to undermine a privilege can only come after another group has shown there is support in the population and semi-official institutions for going after a privilege. Until then, officialdom by necessity has to go along with the face of privilege. Simply put, politicians will only stick their necks out when they believe it is a vote winner, which means others must rustle support from the population and the intellectual and economic elite for change. It hence automatically means there is a role for civic society here. The state cannot itself be an anti-privilege champion for it would not itself rustle support against privilege until entrepreneurial politicians thought on the basis of what they hear and see that there is a real chance they can win.
- By design, one cannot go up against many existing privileges at once, simply because one needs the support of many to have a chance to win against a few. Once there are a few wins, there is the possibility of having a whole wave of reforms, but to set the ball rolling one would need to keep quiet about most privileges and focus on a few in particular. This in turn leads to a very difficult coordination problem: since those opposing privilege are often unorganised and less-informed, the question of which one to focus on is one of competition itself, where accidental champions successfully get issues on the agenda and crises force rethinks. For the vast majority of privilege reforms it must always be an issue of ‘waiting in the wings’.
- There is a need for a perennial back-ground fight against the existing face of privilege. Any book, article, theory, or discipline that has a core story going against a privilege is basically a means of de-facing a privilege. In large part, this is a role that academic economists and official ‘privilege watchers’ (like the Productivity Commission which by its very nature is charged with keeping tabs on inefficiencies in the economic system, such as privileges) have: to keep records of how the privilege really works, how costly it is, and what maintains it. They have little chance of winning all the battles and so there is a real issue as to whether they should leave ‘advocacy to others’, but as ‘keepers of the knowledge of how the rest of society is impoverished by existing privilege’ they are invaluable as a resource to those entrepreneurial journalists and politicians wanting to fight a good fight.
- Since information about what lurks behind the ‘face’ is often known to only a few and since it really often is very hard to pierce that cloak for outsiders (including myself on many areas!) there is a potential role for civic society in organising whistle blowing and aggregation of information. I would for instance love to know where I would have to look for a truly good opinion of what goes on with, say, the NBN or large land-owners. There are a couple of people whose writing on the subject I trust to reflect their real opinion but it doesn’t mean I trust their opinion because it is damned hard in case of the NBN to know what really goes on behind the facade. Some sort of iterative weighing scheme of ‘agrees’ and ‘disagrees’ with what those people say about an existing privilege would certainly help me. Perhaps it is even worthwhile thinking about some kind of ‘voting system’ whereby one gets public signals as to what the real experts think about this or that issue.
Where does this leave us? It leaves us with the question which privileges people think are ripe for the challenging. Well, which ones do you think are up for grab? And, since I want to discuss electoral reform as one of the mentioned options, do people really expect it makes a difference if one goes proportional representation rather than first-past-the-post?