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Free in name only

The “free market” has nothing to do with keeping prices down through competition as our Liberal politicians would have us believe.  It has nothing to do with Friedman’s idealistic vision of benefit for all.

It is about maximising profit for businesses.  Maximise income, minimise costs, and avoid taxation.

If there was limitless supply then perhaps competition would keep prices lower for consumers – but in this world of finite resources, things go to those who are willing to pay the most.

Richard Denniss wrote an excellent article about the gas industry in Australia and its deliberate strategy to drive up domestic prices.  There is plenty of gas for the highest bidder.

We have also been locked into contracts which see the bizarre position of our gas being sold cheaper overseas than here while we endure a shortage.  We sign contracts guaranteeing profit for private energy providers who make incorrect assumptions about demand. We deliberately sabotage new investment to prop up old industries.

If the record profits of businesses were shared with their employees, and with the wider community through taxation, then perhaps we could see benefit in the free market.  But they aren’t.

Wages have flat-lined as profits have soared.  Instead of better working conditions, those we already fought for are being stripped away – penalty rates, paid parental leave, superannuation guarantee increases, permanency and hence holiday and sick leave.

Unions have been undermined and the skilled migration visa exploited.  Contract and casual work strips employees of leave entitlements and a sense of security.  Entry level jobs have been automated or outsourced to countries where the cost of living, and therefore wages, are much lower than here.

Private debt has reached dangerously high levels in Australia.  When combined with a precarious employment situation, the workforce becomes compliant, too scared to demand a fair share of the profits their skills and labour provide for the owners of the capital.

Conservative governments seek to strip away regulations that curtail predatory business practices.  Time and again we have seen the big players collude to manipulate the market, driving out smaller competitors, dampening or inflating prices as suits them, creating artificial shortages or gluts, all with the aim of market control.

The idea that a free market is self-regulating, that it will reach a fair equilibrium, is ludicrous.

Instead, the free market has made corporations the most powerful organisations on the planet. Free markets have handed control to entities who have no morals, no ethics, no responsibility other than to make money. Free markets have delivered great wealth and power to a minuscule few as the divide between them and the rest of the world becomes a gaping chasm that cannot be bridged.

They have infiltrated the governments of democratic nations to such a degree that politicians have become their paid-for mouthpieces and woe betide anyone who seeks to put the best interests of the people first.

Privatisation has been, for the most part, an expensive failure that has seen services deteriorate, jobs lost, and prices increase.

I applaud Jay Weatherill for taking back some control but, until we recognise that it is us that own the resources and make rules that ensure we benefit from our wealth and our labour, we will still be held to ransom by a market that is free in name only.

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23 comments

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  1. Michelle Petrat

    Yes Kaye, well said.

    However, as we all know, resources are finite and we need to come to strategies which don’t rape the planet and jeopardize humanities future.

    This talk of growth is unhelpful. What we need is a secure, peaceful environment, where we can all live in. I know that sounds like Marx/Engels, but this is the only way, this planet will survive and with it us.

    I hear the exploration industry screaming to free up valuable land for further mining destruction such as fracking. Turnbull/Frydenberg are calling for it.

    The only way forward is renewables and I also like the look of what Weatherill suggested, also regard GAS as very short lived. Furthermore, he won’t be able to stand up a new, more efficient Gas plant within 3 years.

    But he took charge, he has what Turnbull is missing so badly, BALLS.

  2. Kaye Lee

    We don’t need new gas fields. We need to reserve some of the gas that is currently being produced for domestic use as an interim measure while we shift to renewables and improve storage techniques.

    If the government really wanted to cut electricity prices they could make power an essential item and cut the GST but what we really need is to change our behaviour. More reusing and recycling. Less waste. Make polluters pay for the damage they cause.

    When we had a carbon price, companies were investing in sustainable practice to cut costs. Not anymore.

  3. Zathras

    Imagine a competition played on a level field where both sides win.
    Now that would be an interesting sport – but who would be watching?

  4. Kaye Lee

    Or imagine it is a collaborative exercise to build something together rather than a competition with winners and losers. It is possible for both sides to benefit.

  5. Wayne Turner

    So true.Yeap the “free market” really means “free for big business to screw over the rest of us”.

  6. Kevin Arnold

    Now you will see what the ISDS in the ” Free Trade Agreements” are meant for. I wish Jay Wetherill lots of luck.

  7. stephengb2014

    Zathras March 15, 2017 at 1:30 pm
    Imagine a competition played on a level field where both sides win.
    Now that would be an interesting sport – but who would be watching?

    Two things,

    1. When both sides win or loose competitive sport becomes a real sport instead of a means to gamble, bully, exercise thuggary, or merely belittle.

    2. I watch sport to marvel at the skill and bravery and the participants not to witness someone being defeated.

    Sorry mate you have it all wrong

    S

  8. James Cook

    I endured [for a short time] Turnbull at a press grab this morning vigorously explaining how he’s about to confront the energy bosses and ask them [not “tell”] to please think about maybe sending some gas back to Oz so the little Aussie battlers can see how fantastic Mal is and vote him back in sometime in the future. That’s not what he said but, jeez, he sounded resolute and tough and I’m surprised he didn’t turn around to show us the outline of a backbone through his shirt. I couldn’t watch for too long as I feared for the safety of my flat-screen. I also fear that the MSM and the punters will just lap it up!

  9. Roswell

    James, was he armed with his lettuce leaf? You know, the one he hits people with.

  10. James Cook

    What comes to mind is Ronnie Corbett’s sketch about his old school where you could have a “reign of terror with a balloon on a stick”.

  11. lawrencewinder

    Now tell me again that story of what excellent economic managers the ruling rabble are.

    And what Fictions Frydenberg said in code at his “presser” was ,”We are shitting ourselves because this unilateral action by Weatherill only makes clear to the public the policy vacuum we exist in.”

  12. jim

    Remember when the Libs spent millions on a taxpayer-funded ad campaign for WorkChoices? They’re at it again.

    Yesterday, Turnbull ministers suggested an ad campaign on the “benefits” of penalty rate cuts. An ad just for the LNP and their puppets and also a Turnbull FIGJAM campaign.

    Maybe it’s because he never had to rely on these services that Malcolm Turnbull would make a choice to cut $80 billion out of health and education……. Privatise Medicare. Introduce $100k uni degrees. Malcolm Turnbull is just seriously out of touch.
    The WA,libs/nats are now thinking if only we worked a little bit harder if only……. if only your party did something nice you know the Australian way, instead of doing something nice your government has caused our suicide rate to rise and some people are giving up on life, because of you the LNP. because you punish the “poor” and give their money to the rich at a time when the New World Order is pushing with it’s agenda to make the “rich” even richer.
    If you can’t see this i’d say “if only the LNP pulled it’s head out of it’s ……..”.

    https://www.newscientist.com/article/dn2817-right-wing-governments-increase-suicide-rates/

  13. Jillian Carroll

    The problem is that Milton Freidman had no objections to monopoly capitalism. In his opinion, it demonstrated that those who rose to the top of the ladder proved the efficacy of free market forces. In fact his theories were just another form of Darwinism as America, the country in which he refined his ideas, has always revered the robber barons of industry. How descendants of slaves in America in the 1950s, for example, who could not even sit in the front of a bus in the south, had equal opportunity to compete in the free market culture, in which the role of the state was to support the market, has always puzzled me. It is worth going back to Milton Freidman’s output while at The Chicago School of Economics in the 1950s to appreciate how his manifesto has influenced the main propagandists of neoliberalism like Reagan and Thatcher and subsequently most economists in the west. In fact Dr Timothy Thornton did a PhD on how neoliberal economics has become the dominant discourse in the Economics departments in our universities. In fact because students can graduate without studying comparitive frameworks, like I did in the 60s, you get politicians who don’t know or can’t imagine there are alternative frameworks. They have been fully conditioned into the dominant neoliberal discourse. In a recently completed PhD on how neoliberalism has dominated management thinking in higher education; my research likewise indicates that some younger academics have been conditioned to accept performance based management as a given . This is despite even the performance indicators used to assess teaching, for example, are more suited to measuring performance in a call centre.

  14. paulwalter

    Too little; too late. Turnbull gets it now, with his back against a wall, but what about the last four years?

    Does he “get” Inpex http://www.abc.net.au/news/2017-03-15/inpex-gas-project-darwin-workers-stood-down-laing-orouke-jkc/8355386

    Or Adani http://www.abc.net.au/news/2017-03-14/adani-carmichael-coalmine-to-shift-millions-to-cayman-islands/8350704

    Let alone the Centrelink nonsenses and penalty rates?

    Roswell, he only hits the rich with a lettuce leaf, for the rest of us it’s a cane.

  15. paulwalter

    Excellent thread starter, btw.

    The whole of neoliberalism is based on, ultimately, an unprovable, capricious and self-serving assumptions and metaphysics.

  16. Zathras

    stephengb2014,

    What I was sarcastically trying to suggest was free market negotiations are NOT a sport on “a level playing field where both sides win”.
    While sporting teams can be tied, there are always winners and losers in trade and and sometimes both – you win on some things and lose on others. It’s never a level field.

    Somebody eventually pays and it’s usually the consumer via higher prices or decreased services.

    In the case of gas for example, local shareholders of resource companies did very well out of our 25 year North West Shelf deal with China but now the consumer ends up paying the cost and will continue to do so for years to come. Meanwhile the $25billion windfall has long been frittered away for political gain.

    Likewise, our beef farmers cannot claim our beef is better than US beef anymore (despite being free of Mad Cow Disease) – only “as good as” because of an agreement in our US Free Trade Deal.

    Even our blood supplies are now controlled by a private US company that’s been accused of tainted US supplies and investigated by their congress for criminal practices. That’s not what I would call a win.

    Canadians had to increase the cost of their parcel postage to allow US companies to undercut the locals and compete.

    The list goes on.

  17. Terry2

    Geoff Gallop, former premier of WA and now director of Sydney University’s Graduate School of Government, said this of privatisation :

    “Privatisation in and of itself is not an economic reform. It’s a change that may or may not create better productivity in the community. One thing we do know about it: we’ve had lots and lots of it in Australia over a long period of time; it hasn’t produced a public benefit sufficient to convince the people that it’s a good thing. We need economic reform, productivity is stagnant — we need to deal with that as a nation — but just to assume flogging things off is economic reform — that’s the mistake of too many Liberals in this country and it’s why they’re in a mess politically.”

    Hear, Hear !

  18. Maeve Carney

    “Privatisation has been, for the most part, an expensive failure that has seen services deteriorate, jobs lost, and prices increase.” But despite knowing that it is still being pushed as a good thing. In my opinion, public services and essential utilities should never be privatised but remain in government hands.

  19. Pete Petrass

    Bout sums it up really. Now watch Fizza and FriedBurgers do all they can to shut SA down and push for their clean coal to bring the free market back into order.

  20. oldfart

    the easiest way to see the “free” market in action is that, no matter where you go on this planet, it is always the same shops in malls or shopping precincts and they are predominantly American in origin. We are being robbed of choice. ” Cocacolanistation” is a fairly accurate term

  21. Kaye Lee

    The same thing is happening here with pharmacies. The government made it optional for pharmacies to discount prescriptions by $1. That would be a huge hit to small independent pharmacies. They are reimbursed by the government at the price you would pay if you bought drugs in huge bulk which the big chains do so they can afford to offer the discount. Once part of a chain, they dictate what lines you can carry at the pharmacy. The big discount pharmacies then employ untrained part-time workers who are really just cash register operators. All neatly designed to reduce choice, reduce wages, and force out the small players.

  22. Harquebus

    “Free” trade agreements are called such because it sounds better than regulated trade agreements which, is what they are.

    “When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.” — P.J. O’Rourke

    Cheers.

  23. Kaye Lee

    Great quote H.

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