Freedom of the Press (if you own one?)

by John Quiggin on August 24, 2014

Until I got the boot a couple of years ago, I had a regular column in the Australian Financial Review. Since then, I’ve been freelancing, with mixed success. Friday was a good day, with two pieces appearing within a few hours of each other. This one, at the Guardian is on the obsolescence of the late 19th and 20th century idea of the Press (or the media) as an institution with special rights and responsibilities.

The other was a reply to an editorial in the local Murdoch paper, pushing the case for privatisation. They printed it, which is more than the national Murdoch rag (The Australian) has done in similar cases. It’s over the fold

In a recent editorial, the Courier-Mail bemoans the fact that nearly thirty years after Paul Keating began the privatisation agenda, three in four Queenslanders are still opposed to the sale of public assets. In fact, the situation is more dire than that. Back in the 1980s when Keating ‘instinctively’ grasped the case for privatisation, opinion polls suggested that much of the public was receptive to the idea: publicly owned utilities were seen as slow and stodgy and didn’t have much of a reputation for public service.

Public opposition to privatisation isn’t the result of fear of the unknown or misunderstanding of the arguments. Rather, it’s the product of decades of experience. Far from producing lean, innovative and customer focused organizations, privatisation and corporatisation have given us bloated and overpaid management, higher prices, and customer service that ranges from limited to appalling.

On the other hand, privatisation has been a boon for the financial sector and for the various associated services (legal, accounting, consulting and so on) that dominate the CBD, and the thinking of those who work there. The result is a deep, and enduring, disconnect between the views of the policy elite and those of the general public.

The core of the editorial is the sentence “It does seem amazing that three out of four Queenslanders still can’t accept what is a pretty basic argument that governments don’t have any business running ports or selling electricity”. There are two big problems here.

First this isn’t an argument but an ideological assertion. While the ideology of privatisation is almost universally accepted among the policy elite and in the financial sector, it’s the reverse of the view that prevailed in Australia for most of our history, and worked well enough to provide us with the assets we are now arguing about.

The idea that governments should get out of the infrastructure business, leaving the funding of new investments to the financial sector came into vogue during the economic crisis of the 1970s. For a while, it seemed to be working well, as financial markets boomed in the 1990s. But, in the wake of the Global Financial Crisis, the idea of leaving everything to the financial sector looks less appealing.

More seriously, the public has never been given any serious opportunity to debate the free-market case for privatisation, presumably because politicians realised it was unsaleable. Although the statements of former ministers make it clear that the Bligh Labor government was fully convinced of the free-market case, nothing of the kind was presented to voters.

Instead, we got a spurious case based on the idea that we could sell income-generating public assets and use the proceeds to fund investments in schools and hospitals. The question of how the income flow from the privatised assets would be replaced was never addressed. The Bligh government’s case was so misleading that more than 20 leading economists, including advocates of the free-market argument for privatisation, signed a statement condemning it.

Treasurer Tim Nicholls has gone one better. In his presentation, embodied in the ‘Strong Choices’ website and echoed in the Courier-Mail editorial, we can not only use the proceeds of asset sales to build infrastructure, we can simultaneously use the same money to pay down debt and then spend the interest savings on schools and hospitals.

The Courier-Mail suggests that critics of privatisation are telling us we can have our cake and eat it. But the pro-privatisation case is even worse. It is a magic pudding that we can it seems, slice and eat, however many times we want.

The sad truth, admitted even by the government’s own Audit Commission, and recognised by the public response to the Strong Choices website is that there are no magic puddings.

Successive governments have sold us the myth that Queensland can be a low tax state while still enjoying public services of the same quality as high-tax southern states. While the mining boom lasted, this might have been true. But now we face a clear choice: either pay the same taxes as other states, or accept overcrowded schools and second-rate health services. This choice, and not the financial chicanery of ‘Non–Share Equity Interests’ is what we should be debating at the next election.

{ 20 comments }

1

Adam Roberts 08.24.14 at 9:12 am

Good Guardian piece, and splendid to see that one ancient Press tradition is still being upheld: the Guardian misprint. “Rudyar Kipling” indeed. The mere expansion into digital media hasn’t put a stop to that, I see.

2

Andrew C 08.24.14 at 9:51 am

Just last week Campbell Newman announced $440M worth of road congestion alleviation on the Sunshine Coast – but only on the condition he gets to sell whatever Queensland government assets he desires to.

Still the assumption is that the people are too stupid to understand the benefits that are so clear to the leaders, and still they try and try for just the right combination of lies, threats and bribes necessary to get agreement. Agreement that they will only need to get once.

3

peter 08.24.14 at 1:59 pm

What seems overlooked by many economists in this debate is that privatization replaces a public service imperative with a marketing one internally. Technicians in the former PMG (what is now Telstra) dealt with all customers equally, on a first-come, first-served basis. Once corporatized and then privatized, Telstra technicians dealt with customers according to their relative value to Telstra, in revenue terms.

This prioritization in terms of monetary value is rational from a profit-maximizing perspective. It is also deeply unfair. Many would argue that providers of monopoly or essential services should first be fair, even at the expense of some profit.

4

Ed 08.24.14 at 3:03 pm

Both the letter and the article are both well worth reading, and thanks for reprinting one and linking to the other.

5

MPAVictoria 08.24.14 at 3:04 pm

@4
Agreed. Thank you John.

6

Bloix 08.24.14 at 3:31 pm

Good article in the Guardian, but your statement that MSNBC is the liberal equivalent of FOX reveals a lack of familiarity with US cable TV.

MSNBC broadcasts a block of more-or-less liberal programs every evening, set off by three hours of the conservative “Morning Joe” (Joe Scarborough) during the all-important morning time slot. As the website Mediate has observed, “Morning Joe is the most influential show on cable news because of who watches it; namely, every member of the Washington, DC political ecosystem.”

http://www.mediaite.com/tv/msnbcs-most-influential-show-is-still-run-by-a-staunch-conservative/

In spite of Rachel Maddow and Chris Hayes, the main role that MSNBC plays in our political discourse is as the purveyor of the latest conservative conventional wisdom to political elites. FOX, by contrast, doesn’t have a single show hosted by a liberal.

And this is how the network as always been. In the run-up to the invasion of Iraq, MSNBC fired its most popular host, Phil Donahue, because he opposed the war, and promoted its second-place host, Chris Matthews, who a big war booster and a fan of GW Bush. (Matthews has opportunistically returned to his roots s a liberal and still has a daily show on MSNBC. Donahue is retired.)

Unlike FOX, which is primarily a propaganda vehicle, MSNBC is run as a for-profit operation. BMSNBC broadcasts to the liberal market, but it’s not the network’s reason for being. And unlike FOX, it doesn’t provide sinecures for prominent politicians waiting for their next campaigns; it doesn’t coordinate talking points with other ideologically aligned media and PR groups; it doesn’t provide a safe forum for shaky interviewees like Sarah Palin; it doesn’t serve as a urinal (to borrow EP Thompson’s metaphor) for government leakers.

So please, no more “both sides” equivalence in comparing FOX and MSNBC.

But otherwise, it was a great article. Thanks for writing it and for linking it here.

7

Murc 08.24.14 at 3:44 pm

I’ve never really understood the whole “privatize public utilities thing” even from people who are making the argument in good faith.

Privatizing an essential public service only makes sense if you’re willing to allow the privatized company to crash and burn, or if you’re willing to allow significant portions of the populace to go without if economic circumstances price the service outside their reach.

And that’s just demonstrably untrue in the case of many of these things, isn’t it?

8

a different chris 08.24.14 at 4:46 pm

>Public opposition to privatisation isn’t the result of fear of the unknown or misunderstanding of the arguments. Rather, it’s the product of decades of experience.

This could, and maybe should, have been the entire LTE.

Adam @1 – I suspect the tradition isn’t just being carried on, but actually enhanced via the ubiquitous AutoCheck.

9

BruceJ 08.24.14 at 6:28 pm

The idea that governments should get out of the infrastructure business, leaving the funding of new investments to the financial sector came into vogue during the economic crisis of the 1970s. For a while, it seemed to be working well, as financial markets boomed in the 1990s.

Yes, as financial markets boomed, picking up the easy stuff, and the suddenly loose credit enabling the majority to ignore the stagnation of income and assume gargantuan amounts of debt during a tech-driven bubble while the infrastructure built in the “bad” old days still worked.

Now however, they’ve mined out the easy pickings, the expensive stuff is breaking, like water mains and bridges, and an electrical grid that’s as inefficient as it is archaic., and the soluton is *still* sell it all off to the highest bidder most connected crony.

10

Piquoiseau 08.24.14 at 9:27 pm

What I find strange about the pro-privatization argument is its failure to acknowledge that the case for public ownership (or regulation) of “natural monopolies” dovetails with the classical case for competition, going back to Mill and Smith. Going on the classical analysis, you wouldn’t expect Comcast to perform better than a public cable utility, or for the British rail system to perform better under private ownership (rather the opposite). Since experience seems to bear this out, the argument for privatization looks like pure ideology, mistaking public ownership of “natural monopolies” for wholescale Marxist expropriation of the means of production.

11

bad Jim 08.25.14 at 7:34 am

It’s amusing, but not surprising, that the same people who think that the market necessarily delivers optimal results also claim that private ownership will work the same magic in the absence of a market.

12

Oxbird 08.25.14 at 3:22 pm

You state: “Far from producing lean, innovative and customer focused organizations, privatisation and corporatisation have given us bloated and overpaid management, higher prices, and customer service that ranges from limited to appalling.” Agreed, at least in a very high percentage of cases. What I find extraordinary about the debate, at least as it plays out here in the U.S., is the ready acceptance of the myth that the government cannot do anything right and the implication that corporations (the private sector) always get it right. As both types of entities are run by the same species there are often failings of competence, perspective and integrity. But one cannot pick up a good newspaper on virtually any day without reading of the failings of corporate culture, the harms they accomplish (in some instances inadvertently and at times intentionally) that are as significant as anything government does (putting aside the ability to engage in warfare). The number Fortune 100 financial institutions, pharma companies, or the like that have plead guilty to crimes or settled cases where the allegations would justify criminal action against officers is depressingly small.

13

J Thomas 08.25.14 at 6:44 pm

What I find extraordinary about the debate, at least as it plays out here in the U.S., is the ready acceptance of the myth that the government cannot do anything right and the implication that corporations (the private sector) always get it right. ….

The number Fortune 100 financial institutions, pharma companies, or the like that have plead guilty to crimes or settled cases where the allegations would justify criminal action against officers is depressingly small.

Maybe this is because when the government ought to prosecute them, the government can’t do anything right and they can’t do anything wrong while evading their guilt?

14

Oxbird 08.26.14 at 2:05 am

@13: Maybe. Maybe not.

15

Limericky Dicky 08.26.14 at 7:12 am

The case is cast-iron and airtight.
It’s boringly obviously right.
But we must repeat it,
Repeat it, repeat it,
Repeat it all day and all night.

16

Brett Bellmore 08.26.14 at 10:17 am

“FOX, by contrast, doesn’t have a single show hosted by a liberal.”

Bob Beckel is a conservative?

17

Andrew F. 08.26.14 at 11:49 am

Instead, we got a spurious case based on the idea that we could sell income-generating public assets and use the proceeds to fund investments in schools and hospitals. The question of how the income flow from the privatised assets would be replaced was never addressed.

I know little about the specifics of the matter, but this is a very sharp critique if true. Oddly I’ve found myself in agreement with a surprising number of JQ’s posts these days.

I am a little curious about your diagnosis of why the public opposes privatization. Is the reason (is there only one?) really as rational as you believe? (honest question btw – and not saying that I doubt that public opinion may be correct in this case – I simply have a natural suspicion of mass opinion).

And given the number of publications in which your essays appear, freelancing seems to agree with you.

18

anon 08.26.14 at 4:54 pm

to #6

Don’t bother mentioning CBS, NBC, ABC and NPR.

The propagandists at Fox are outnumbered 5 to 1. Including a network,
paid for in the most part, by American taxpayers. Who – at least if polls
are correct – are 50-50 liberal vs. conservative.

OTOH, American RADIO broadcasting is almost entirely right-of-center to
extremely right-of-center.

19

Main Street Muse 08.26.14 at 5:31 pm

WRT privatization of public services and entities, the city of Chicago can provide a number of case studies on the ills that come of this horrible practice (Thank you Richard M. Daley!) The state of NC shows how a private, for-profit monopoly can run the state (Duke Energy, #123 on the Fortune 500 list, former Duke employer is now governor, sold off his Duke stocks well after Duke was involved in a huge environmental issue) – and how when it pollutes a vital river, there is more concern from elected officials for the state of Duke Energy than there is for the state of the drinking water in that area.

WRT to the “free press” – when was it ever really free? Since the penny press provided cheap access to print news, the delivery of mass-produced news has always been tied to advertising. That’s the issue today – the collapse of the business model of journalism. The business side has always influenced the news that was reported. (Clooney’s homage to Murrow, Goodnight and Good Luck, shows this tension.)

News has always had some element of bias – Chicago once had four to five newspapers, each catering to a different demographic. A couple years ago, the two remaining Chicago papers – the Tribune & Sun-Times, were in bankruptcy – this in the third largest market in the country. Just this month, the Chicago Tribune Company spun off its print holdings into the Tribune Publishing Co (http://trib.in/1mNIo3y). We’ll see how this print news media company will do on its own, without radio/TV/Cubs to bring in dollars.

Print media has its own burden of responsibility to bear in the collapse of respect for their offerings. During the run up to the 2nd Iraq war, Judith Miller essentially wrote up White House news releases, published without much debate by the NY Times. If the grey lady sings so tunelessly, what hope is there for those of us eager for a responsible news corps that provides facts and real news, instead of fluff and propaganda?

20

GiT 08.27.14 at 12:08 am

“Bob Beckel is a conservative?”

Bob Beckel is a token clown for clueless rubes like Brett to think of as liberals.

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