What Works

John Quiggin writes:

Following a long series of unsuccessful attempts at developing a workable lightbulb, Thomas Edison is supposed to have said, “I’ve not failed. I’ve just found 10,000 ways that won’t work.”

This quote comes irresistibly to mind when thinking about Tony Blair’s famous commitment to “what works”, as opposed to ideology, in public policy.

In retrospect, it seems that Blair, and like-minded reformers throughout the English-speaking world, have delivered an Edison in reverse.

Edison experimented with many things that didn’t work, but ended up with a light bulb.

Market-oriented reforms, particularly in the provision of human services like health, education and public safety, have begun with a working system and replaced it with a string of failed experiments.

Here are a few examples from recent news stories around the English-speaking world:

• The emergency closure of 17 Scottish schools due to safety concerns. These schools were built under the Private Finance Initiative, begun under Thatcher but greatly expanded by Blair and Gordon Brown.
• Crippling costs incurred by hospitals throughout the UK, again as a result of PFI, threatening insolvency for many hospital trusts.
• Private prisons operator Serco forced to repay bonuses in New Zealand. 
• For-profit educator ITT closed down without notice, right at the beginning of a new semester, after being cut off from Pell grant funding due to allegations of misleading students. This is one of many such collapses.
• Following a damning report, the US Department of Justice announced it will no longer use private prisons.
• Charter schools (some openly for-profit, many others run as businesses) have been failing at a starting rate.
• The disastrous shift to for-profit vocational education in training, most notably in Victoria and more recently in NSW, where the number of students has halved in three years. The cost to the budget from unrepayable loans for bogus courses has been estimated at $1.2bn for 2015 alone.

These examples could be multiplied endlessly, and not as the result of a selective choice of reports.

A Google search on terms like “PFI hospital” or “private vocational training” will produce dozens more reports, nearly all describing financial and human disasters. 

Yet despite this string of disasters, the push for market-oriented reform goes on.

In the US, the Obama administration continues to promote the failed idea of charter schools, and Obama allies like Rahm Emanuel have carried on the war against teacher unions.

The conservatives in Britain have backed away from the worst failures of the PFI. 

However, they are still enamoured of other Blair ideas like converting local authority schools into “academies” despite the absence of any evidence of improved performance. 

Even by comparison with these examples, the Baird government in NSW stands out. 

It is pushing ahead with the privatisation agenda in Tafe, despite the obviously disastrous nature of the results. 

It has outsourced teaching in prisons to companies whose staff lack teaching degrees. 

Not content with that, the Baird government is outsourcing the provision of public housing. 

The likely winner, despite its failures here and abroad, is Serco, a firm prominent as both a beneficiary of, and advocate for, outsourcing of human services. 

The Australian policy elite seem immune to evidence on the failures of markets in human services. 

The recent Harper review of competition policy in Australia suggested that, “Consumer choice should be placed at the heart of government service delivery, through policies to encourage diverse and competitive markets populated with innovative and responsive providers.” 

But it is precisely the firms lauded as “innovative” and “responsive”, from the University of Phoenix to the shonky builders of PFI schools and hospitals, that have done most to hurt government service programs. ooner or later the advocates of reform will have to answer the Edison-Blair question: “What works?” 

And what works is traditional public provision. 

Through all of these failed experiments, the public sector, much-maligned and chronically underfunded, has carried on with the hard work of educating young people, treating the sick and providing the vast range of services needed in a modern society, on a the basis of an ethic of service to the entire community, and not merely those who can pay for premium service. 

The only other model with comparable success is not-for-profit provision by organisations with a charitable or service mission. 

Church-run schools and hospitals, and activist-run services like women’s shelters and services for the unemployed and homeless, have complemented the public sector, meeting needs that have been unrecognised or underserved.

The issue is not, in the end, one of public versus private. 

Rather it is the fact that market competition and the profit motive inevitably associated with it is antithetical to the professional and service orientation that is central to human services of all kinds.

No matter how cleverly market reformers design incentive schemes, competition for profits will always find a way to subvert them. 

It is time we as a society recognised this, and returned to what actually works.