Mannkal Economic Education Foundation

Paul’s Perspective

Drain the Billabong

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4 January 2017

What’s the difference between Donald Trump and most economists?

Mr Trump can sell an idea.

For example, Public Choice Theory describes how a tiny minority of insiders can get favourable laws that enrich them but spread the costs lightly over the rest of the population – so lightly that, if we even realise it’s happening, it’s not worth us standing up to react. From taxi monopolies to industry subsidies and more, Public Choice Theory explains why lobbyists beat a path to the nation’s capital, both in Canberra and Washington, asking for special treatment. For years, Public Choice economists have muttered about “concentrated benefits and diffused costs” or “rent-seeking” but few in the public stirred until Mr Trump promised to “Drain the Swamp”. The phrase immediately resonated with tens of millions of Americans. I hope the new President drains the many swamps in the US, but in Australia we have more than enough billabongs to dry out.

I was recently fortunate to have a tour of Curtin University’s new medical school – an impressive complex boasting latest technology and imaginative design features with a focus on collaborative “learning by doing”. Late last year I also watched dozens of Notre Dame University medical students graduate, proud and eager to start their careers serving patients.

With a growing and ageing population and long waiting lists for specialists, you’d think more doctors would be a good thing – but not according to the doctors’ union, the AMA, which called it “the worst decision in decades”. In the AMA’s view, more doctors means competition for AMA members. It’s hard to demand your own cosy fiefdom while the rest of us have to compete in a tough economy, so the AMA claimed there weren’t enough post-graduate training positions available – despite the government setting aside funds for that very training – and stated concerns for “patient welfare”, the equivalent of CFMEU members spuriously downing tools for “health and safety concerns”.

Similarly, calls have been revived to investigate alleged cartel behaviour among the specialist medical colleges. The medical colleges decide who is allowed to practice specialties in Australia yet are controlled by the existing specialists; the conflict of interest, risking price gouging and poor care, is clear. It may resonate with those of us who have wondered why it can take weeks or even months to get an appointment with a medical specialist but not an architect, accountant or solicitor, professions in which the members can’t control the supply of new competitors. Surgeons from overseas or with greater or different skills have allegedly been ostracised or even pushed out for not “joining the club”. It’s particularly disturbing that two former heads of the Australian Consumer and Competition Commission condemn politicians for being too scared to take on protectionism in the medical industry, with Graeme Samuel stating that “health ministers told us to back off.”

Today, The Australian newspaper nominated surgeon Dr Charlie Teo in its Australian of the Year campaign. Dr Teo is a surgeon of high international regard who gained the ire of some colleagues for operating on patients other surgeons refuse to treat. Allegations have surfaced of a cartel approach from surgeons, which Dr Teo discusses with Anh Do from 8:40 in this video – “every day (another surgeon) lies to patients so he doesn’t anger his colleagues and give second opinions that are different to someone else’s.” His 2015 TedX Sydney speech with examples of the same can be viewed here.

There are many billabongs to drain in Australia – from teachers’ unions promoting politics in the classroom to trade union-backed “industry” superannuation funds having special treatment as default funds, to renewable energy subsidy rorting and many more. With our federal AAA credit rating at risk and demographic change overwhelming our welfare and health systems, it’s time to be fearless in taking on entrenched interests that rip off Australians. If our politicians don’t know how, they could do worse than look to Mr Trump.

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