It opens up the potential for schools, hospitals, social care systems and nurseries to fold without the government stepping in to prop them up. Labour called it an \”appalling revelation\”.
But that\’s the damn point!
\”This problem is mitigated if the system allows for provider exit as well as entry – and indeed the evidence suggests it is exit which drives efficiency … There is also evidence from the private sector that a significant share of productivity growth is due to entry and exit processes.\”
Yes, this is one of the major differences between market and non-market systems. Market systems punish the shite very strongly: shite suppliers go bust, for which we should all say Hurrah!
We do want shite suppliers to be driven from the health and education sectors, don\’t we?
\”But exit of providers (eg school closure) may be controversial and unpopular and an appropriate failure regime must be designed,\” it warns.
Very much so. The basics of the structure already exist in the various forms of administration and bankruptcy we have. Administration might be the most appropriate: we\’re not likely to say that a bust hosptial should be razed to the ground. Rather that the management, that shite part, should be replaced and the investors should lose all their money. So that other investors can have another go with different management.
This is known as an incentive to investors and management not to be shite.
Concludes there is a benefit in choice and competition in driving up standards, but that it works best where there are fixed prices in health for operations, or in education per pupil, otherwise there is a risk that companies will simply compete by undercutting each other.
This is indeed part of recent research. I\’m unconvinced that it holds true over the long term but in the medium it does seem to. (The difference being that in the long term we can have technological change which leads to competition on price between the new and old technologies: in health care, say, the ideas of that Indian heart surgeon who does it on a production line basis.)
Highlights the potential for \”market failures\” in the public sector, saying some areas may not be appropriate. \”In particular, it is worth noting that if the service is complex; time-critical; and used infrequently, (for instance accident and emergency services), it may be difficult for users to make an informed choice.\”
Sure, no one is saying all markets all the time markets is the solution to anything: only that more markets than we currently use might be a good idea.
Tessa Jowell, the shadow cabinet office minister, said that the potential for allowing schools and hospitals to collapse was \”an appalling revelation\”.
She said: \”The education of children and the treatment of the sick should not be treated as a commodity to be traded, as if healthcare and educations were chocolate bars or washing powder.\”
Do fuck off you ghastly old cow.
We already have evidence that competition, as above, improves quality. What is it? You don\’t want to improve quality or something?
Nobody, but nobody, is suggesting that you select your treatment after a car smash (yes, this is an important and significant part of the health care system: around 0.5% of all deaths are from this cause) from a shelf like you do your washing powder.
Rather, we want those who are shite at providing care after car accidents to lose their money and their jobs: so that they work hard to become less shite at doing so.
Labour complaining that a market will mean that suppliers are allowed to fail is simply their own gross stupidity shining through. This is the whole point: we want the shite to fail.