My blog is on holiday today in the nation’s capital. It was safe to be here because all the politicians and their advisors have gone back home! Last night I saw the fabulous Demons outsmart the Giants (who seem to think punching behind play is the way forward). It was great to see the old…
Somewhat of a Marxist
The Northern Territory government is proposing to split the state monopoly Power and Water utility, which provides electricity and water services to the Territory, into three separate entities: power generation; power distribution (retail); and water provision. The power generator would sell electricity to the retail division but also would sell to any private retailers who wished to enter the system on a competitive basis. While the politics of the matter do not interest me, the main claims are the usual ones that are wheeled out by proponents of privatisation – better deal for consumers because efficiency rises. The rival view is that the split up is the precursor to privatisation, which has demonstrably been shown by 30 years of evidence to not improve service delivery, employment, or result in lower prices. As an economist who has done work in this area since the mid-1980s, I was asked by the NT News (a daily newspaper) to comment on the proposal. The story appears in that newspaper on Tuesday, February 17, 2014. What followed was an attack (under privilege) on me from the NT Treasurer, who mislead the NT Parliament by making things up about me. This blog briefly clarifies what the truth is.
When the journalist approached me last week (I get calls every day from journalists from all over Australia across the diversity of media) I indicated I was not interested in buying into the local politics as I only comment on economic matters, and, only then, if I have done work in the area and have knowledge of the evidence.
The article that eventually appeared in the NT News carried the headline Doubts over split move and the sub-heading “Economist: Power plan is politically driven”.
The text said that “Professor of Economics … Bill Mitchell said the idea was driven by political cycles rather than economic wisdom”. So note that my exact statement was about the timing of cycles where decisions made by governments span longer cycles than the electoral cycle, which has been shown in many studies to bias decisions away from long-term thinking and concentrate the government’s focus on the implications within its current term of office.
The article then directly quoted me:
The case has not been made that it’s better for consumers … Normally when governments around the world have been setting up to privatise, they go through a de-bundling stage so they segment units into bits they think they can politically privatise and which can be attractive … The retail side is split off, then forced to compete.
In fact, the interview I gave to the journalist explained the process of typical privatisations and the way commercially-profitable units (ignoring social dimensions) are set up for sale because they are more attractive to private investors than the units that do not make a commercial profit but might deliver massive social benefits.
The NT News article then noted that I “pointed to Victoria where several private retailers are in operation”. I was then quoted directly:
Anyone who knows anything about the Victorian retail market knows it’s become an absolute mess. What they’re saying is that the force of the competition will reduce the prices and provide better service … But in Victoria prices aren’t lower and it’s a confused system.
I won’t go into the detail of the Victorian power industry (generation and retail) here but if you are interested I wrote a blog about it a while ago which documents the situation.
Please read my blog – Welcome to the world of privatised electricity and canned music – for more discussion on this point.
There are countless other examples of privatised and de-bundled public organisations that fail to deliver on the ideological claims that are made by the neo-liberals.
The response of the NT government to this article was swift. The NT Treasurer decided to attack me personally under the privilege of Parliament – that is, he cannot be sued for besmirching a person with lies because he made the comments within the Assembly.
The relevant section of the NT Assembly Hansard for Tuesday, February 18, 2014 is as follows:
Madam Speaker, forget the carping, whining and the whinging from the Opposition Leader who sees nothing but doom and gloom and will throw out any red herring possible to divert people from feeling excited about our future. She is making an art form of it when you look at the things she constantly throws out there, figures which are made up, it is quite amazing.
She had a fellow contact the NT News, a bloke called Bill Mitchell, an economist who got himself a bit of a gig in the paper. These are the sorts of people, I think, the Opposition Leader identifies with. Bill Mitchell, as I said, is an economist. I did a bit of checking up on Bill Mitchell, I did a search of him on the internet and it came up with a Wikipedia site. There is quite a bit on Mr Mitchell, he is somewhat of a Marxist. This is a quote from the website:
“Mr Mitchell is active in public opposition of neo-Liberal economic theories and practices and disputes the revisionism of history.”
I wonder what neo-Liberal economic theories he is opposed to.
I went a little bit further and read:
“Mitchell opposes economic liberalisations, free trade and open markets. He opposes privatisation deregulation and enhancing the role of the private sector.”
He would say those things about the structural separation of Power and Water would he not. This is the type of person the Opposition Leader identifies with, the sort of person who does not want to see a free markets working in the Northern Territory, and does not want to see enterprises establishing in the Northern Territory. He would be one of those people who subscribes to the big park policy of the former Labor government.
It is an exciting time; we will not be deterred by the negative carping from those opposite. I think the rest of the Territory knows we are on a mission, we have real vision and the future of the Northern Territory looks great and prosperous.
The sections in the transcript marked “” were actually in italics in the original (but they do not show in the blockquote format here) and were clearly purporting to be direct quotes from my Wikipedia page – which I would also say I didn’t set up and rarely monitor. I have edited it once or twice to correct errors of fact (about where I was born or something like that).
The NT Treasurer said “She had a fellow contact the NT News”.
I did not contact the journalist in question. They rang me and I agreed under certain conditions (about what was on record and what was not) to provide them with a professional viewpoint.
I very rarely contact journalists and only when I would like some coverage of some output that our research group has completed, which I think would be of interest to the general public.
The first quote in the transcript (in “”) does come from my Wikipedia page but is incomplete in the specific context.
The actual sentence is:
Mitchell is active in the public opposition of neo-liberal economic theories and practices and disputes the “revisionism” of History ostensibly perpetrated by mainstream or conservative economists, especially in relation to the policies of the New Deal.
So the revisionism I oppose is related mostly to the Great Depression.
Further, as a matter of clarification – for the edification of the NT Treasurer who wonders “what neo-Liberal economic theories he is opposed to” – the answer Dave, is all of them!
But the lie relates to the second quote. The NT Treasurer gives the impression that he is taking the NT Parliament through my Wikipedia page to disclose further information about me and my views.
He says that he “went a little but further and read”:
Mitchell opposes economic liberalisations, free trade and open markets. He opposes privatisation deregulation and enhancing the role of the private sector.
That is a fabrication (a lie). He didn’t read that at all. He made that up.
First, that statement is not on my Wikipedia page – neither in exact form or attributable via paraphrasing.
Second, you cannot even find that quote attributable to me using Google. It is a fabrication.
Third, I have never written nor said that I oppose enhancing the role of the private sector.
Misleading inference #1
The NT Treasurer claimed after reading my Wikipedia page that “he is somewhat of a Marxist”.
That cannot be gleaned from that page nor from any of my extensive suite of published material since my first publication (1982).
The Wikipedia page (in footnote 1) quotes a previous blog – The Political Aspects of Full Employment – I wrote on Michal Kalecki on August 12, 2010. It was not a blog about Marxism but about the way in which politics gets in the way of full employment.
The quote was:
I have often indicated that my economic roots come from Marx through Kalecki. Kalecki was a Marxist economist. Marx was the first to really get to grips with the idea of effective demand – that is, spending backed by cash. Kalecki understood this intrinsically.
But that doesn’t lead to an inference that I am “somewhat of a Marxist”. It was in the context of a discussion about macroeconomics and the “economic roots” related to Marx’s development (pre-Keynes) of the idea of effective demand (in Theories of Surplus Value), which Kalecki followed up (as did Keynes).
There was nothing about historical materialism, labour theory of value, etc in that blog or any of my other writings.
I should add that when a friend read the Treasurer’s comments the response was “if only he knew!” I laughed.
When politicians start attacking professors under the cover of Parliamentary privilege and twist the truth in the process you know that the underlying veracity of the policy is questionable. Better to create a smokescreen than addressing the issues I raised.
It is also clear that NT Treasurer would not care to repeat those comments on the steps of the Assembly where his privilege would no longer be available.
Back to my Europe book – and Part 32 will be available later.
This Post Has 11 Comments
You’re criticism of the privatization and debundling of these services was spot on. In Ontario, Canada in the nineties, we had a conservative government dubbing itself “the common sense revolution”, led by a former grade school teacher named Mike Harris (now, I believe a fellow of right wing economic “think tank” the Fraser Institute). They did something very similar to what seems to be happening in the NT, ie separated power generation from distribution and marketing, privatizing what had formerly been a publicly owned monopoly (water remains a municipal responsibility).
As a consumer, I can say that I now pay more for the distribution (all inefficiencies included), debt retirement charges (the premise for the need to privatize), “regulatory charges” and taxes than the price of the product (electricity). I am now seriously considering moving to home combined heat and power generation to avoid the now outrageous and ever escalating cost of electricity.
The debts were the result of earlier dalliances by the former public monopoly into nuclear power generation when all the chickens came home to roost as the generators aged enough to require major overhauls. The situation is a classic example of decisions made in the powerlessness of a government not in control of money creation, and lack of cooperation between federal (which does create dollars) and provincial governments (which do not create dollars) were the common good is concerned.
It does seem that holding the opinion that the purpose of government is to promote the common good is Marxist, Communist or Socialist at the moment. But what other purpose could government have?
“It does seem that holding the opinion that the purpose of government is to promote the common good is Marxist, Communist or Socialist at the moment. But what other purpose could government have?”
The MMT proposals are best described as Realism. For some reason dealing with reality frightens politicians. They prefer ideological flights of fantasy.
“It does seem that holding the opinion that the purpose of government is to promote the common good is Marxist, Communist or Socialist at the moment.”
Maybe that view is correct. Maybe only Marxists, Communists and Socialists believe that the role of the government is to promote the common good.
“But what other purpose could government have?”
Well, perhaps those anti-Communist, anti-Socialist, anti-Marxist people believe the opposite: namely, that government are not there to promote the common good.
I don’t want to put words in their mouths, but perhaps they believe that governments exist to promote their sectoral interests, even if it conflicts with the interests of the majority.
Great News! You are being noticed and getting up their noses!
Bear in mind that for every person taken in by the half-baked treasurer, another will be against him and a few of those may research you further. ‘all publicity is good publicity’ may not be true but for something as obscure as MMT this doesnt hurt IMO.
My (immature, probably ill thought out) advice.. ESCALATE! go to the paper and offer yourself this time, for a longer piece; with the caveat that the opening remarks give the background and that the first question is a jovial reference to this being your first foray into ASKING for an interview, contrary to the treasurers whoreish views on you. use the opportunity?
“First they ignore you, then they ridicule you, then they fight you, and then you win.”
The program of the Anglophone neoliberals to dismantle Keynesianism, unions, public utilities and the welfare state has been and continues to be a brilliant success… from their point of view. They have completely routed the left and carried the field. We see the “success” today in the USA (plutocrat owned and more inequitable than ever), the EU (periphery looted to prop up the centre), Russia (ruled by an unholy alliance of Chekists, Oligarchs and Orthodox Patriarchs) and China (one party crony capitalism and pollution gone mad).
So, late stage capitalism has triumphed globally as predicted. Guess who made that precition? Guess what happens next? The trend to ever greater inequity has an end point, (or should I call it a flashpoint?) when the masses have not enough to live on. The attempt to grow endlessly on a finite earth also has an endpoint. All these endpoints approach us more or less simultaneously. The one certainty is that it can’t go on like this.
As Treasurer claimes economics knowledge over yours, hit him where it hurts by you claiming political knowledge and say that he is taking sides of wealthy constituents over the larger constituence.
If you want to stay in economic field against a politician then mention Economy of size theory which is against spliting a company that is synergizing production and delivery where cooperation and coordination is neccesery.
Another is the central planing that corporations use as the only planing possible to achieve coordination necessery for succes and that is what makes Economy of size an efficient theory in practice.
As Hugh of the North noticed; they noticed you and are worried about what you write. Keep doing it, do not apologize, embrace their attacks and disregard the lies. Trying to debunk lies with more then “it is a lie” gets into straw argumentations while points of the issue gets sidetracked. Escalate, do not fear of being falsely or rightly accused as being Marxist. That does not matter.
Go against their assumption that natural monopoly can be made competitive. Maybe, but the effort could take so much energy to make the goal unreachable.
Talk about Economy of size and central planning of all corporations. Things that they hate and believe can be used to work against policy. Neoliberals hate central planning but love economy of size theory so use them in opposing conotations to prove they are wrong.
Feel strong since knowledge and logic is on your side.
Actually the breaking up of natural utilities has a purpose.
Employment via the reduction of industrial productivity.
Its a MMT like employment programme is it not ?
3 people must do the job that 1 person could do before.
They now have cashflow and therefore access to bank credit / goodies.
Of course its much better to keep the utility as it stands and give people a fiat income and therefore a share of the capital stake rather then engaging in pointless Avon girl like switch salesperson jobs.
The scarcity system however much prefers to see physical capital be destroyed on the daily commute.
Bill, good on you for letting people know that those “reforms” tend to make bills go up.
I wonder whether the wider aim though is to intentionally create a mechanism for rent extraction. Perhaps having such a “money making business opportunity” entices credit expansion and inward capital flows and so helps sustain a trade deficit? You get real goods and services in return for foreigners getting utility shares and foreigners getting mortgage backed securities as you remortgage in order to pay the sky high utility bills? I guess the Thatcher privatizations here in the UK sort of worked like that.
If the wish really was to have private electricity provision at low cost, then perhaps having retail customers paying the direct auction cost might be an option?http://directeconomicdemocracy.wordpress.com/2013/10/24/how-to-sort-out-the-uk-energy-market/
Despite that there is now facts refuting the common good these type of so called privatizations (give away) they continue supported by accomplice media. Ultimate it will end up controlled by oligarchic finance.
Usually it’s cheered by the wannabe capitalists in small and medium sized business, the ones that will be on the short end and get higher and volatile prices on basic fixed costs as electricity. And their customers have little less buying power with higher energy bills.
The grid and structure is often paid (by the owners the people) now it has to be paid once more on the electric bill.
I like David Tollner. He’s a quality bloke as this Age article from 2004 clearly demonstrates.