Ideas@TheCentre
Counting the costs of the GFC and the revenge of the political economy nerds
From the outset, the social democrats said they would not waste the financial crisis. The Prime Minister has always wanted to be Australia’s (and the world’s?) bureaucrat-in-chief, and the GFC created a pretext to throw out the so-called ‘neo-liberal’ handbook in favour of the political economy tomes that were outdated in the 1970s.
Under the rubric of stimulus and economic security, the role of government has been significantly expanded across a range of sectors, including education, banking and finance. This new era of regulation and micromanagement threatens to crowd out private enterprise and civil society for a generation.
It is therefore timely to ponder Australia’s last great leap backwards towards socialism in 1984, right at the start of the long period of economic reform of the ’80s, ’90s, and the 2000s.
This year marks the 25th anniversary of the establishment of Medicare. This year, the CIS has published a trilogy of papers cataloguing the damage Medicare has done to the Australian hospital system.
The short version of the story is that the era of ‘free’ public hospital care has led to the misallocation of huge amounts of taxpayer’s money to pay for massive and unnecessary growth in the size and cost of the health bureaucracy. The massive government expansion into the health sector has resulted in fewer and fewer health dollars out of ever-increasing hospital budgets reaching the frontline to pay for the health care the community wants and needs.
The decline of public hospitals into their present state of waste and inefficiency is proof, if further proof is needed, of what happens when dynamic and independent parts of our society become subject to the dead hand of statist domination and bureaucratic command-and-control.
We should remember the anniversary of Medicare when we calculate the cost of the GFC. The impact on the national bottom-line won’t only appear on the balance sheets for 2008–09. I fear we will be paying the price for the revenge of the political economy nerds for many years to come.
In 2009, the CIS published Radical Surgery by Professor Wolfgang Kasper (February); Why Public Hospitals are Overcrowded by Dr Jeremy Sammut (August); and The Past is the Future for Public Hospitals by Dr John Graham (October).
