Public First Program


Shane Elson


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+61-4-1349 7828

March 2007 # 1

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Back to Editorials 2007

The Free Market on a Lazy Sunday

The echoes of Adam Smith reverberate today. In 1776 he coined the classic phrase that has become the guiding mantra for neoconservative economists. In his book, “The Wealth of Nations” he wrote, “It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own self-interest... [Every individual] intends only his own security, only his own gain. And he is in this led by an invisible hand to promote an end which was no part of his intention. By pursuing his own interest, he frequently promotes that of society more effectually than when he really intends to promote it”. 

This is great theory. However, in practice, the free marketeers, who boast about how well they are doing and how much of their wealth is “trickling down” to the rest of us, are always the first to put their hands out when a risky business proposition is considered. 

Take for example the idea of hosting a “lazy Sunday” in the park by my local council. The idea is to have a relaxing afternoon in the open air being entertained by some of Australia’s top second rung performers. The idea has been around for some time and has its own attractiveness. A local park will be the venue, local purveyors of fine foods and drink will be on site and the acoustic music will ensure no raucous behaviour for the good folk of the region. 

However, this public event is being organised and promoted by a private company based in the capital city. In effect they are taking over our public space. They will cordon it off to the general public, hire security guards to ensure no non-ticket holders can gain access and will, with any luck on their side, walk away with a pocket full of cash.  

The local council has jumped on the bandwagon of this private venture and are not only prepared to collaborate with the appropriation of public land (although for only a day or two) but also to dig into the pockets of we rate payers and subsidise the event to the tune of $30,000. Our state government is also digging into our pockets to match the amount. So not only are we, the private citizens of the Latrobe Valley, subsidising a private venture, we are also expected to give up access to public spaces while the cash from our pockets is repatriated out of the region. 

This, we are told, is the “invisible hand” of the market at work. The local council’s apologist for this exercise, Grantley Switzer, says that the funding is being provided to “give the promoter some confidence this will work”. He then goes on to note that staging the event will cost in excess of $200,000. In order to lessen this risk, the council is prepared to spend our money. So much for market forces determining the outcome. 

This scenario is played out in various ways, on multiple events and spectacles all over the country. For instance, over the last eleven years the Victorian state government has used tax payer money to subsidise the Melbourne Grand Prix. In that eleven years the race has never made a profit yet the owners of the rights to it are richer than they were eleven years ago. At the same time the number of people who need food relief and emergency funds to meet urgent bills has continued to rise. 

Here in the Latrobe Valley a community resource centre, the “Latrobe Information and Support Centre” has struggled to keep its doors open so it could do its good work for the less fortunate and unfortunate in the area. They will close this year because the $30,000 they need to keep the doors open will not be forthcoming from our local council. As is to be expected, the poorest and less fortunate within our community are going to benefit less because our council has used exactly the same amount that is required to keep a vital social service open to subsidise a private profiteer in their quest to ensure their profit margin is maintained. Can you see how the “invisible hand” has moved money around to make the market work? 

I note with interest that Mr. Switzer, the council’s unelected apologist for this spectacle, says that the concert is a “good investment”. He obviously believes that it is not worthwhile investing in the well being of those who, for whatever reason, need a hand up from time to time. Obviously the local, elected councillors also support Mr. Switzer’s perspective. After all, they are the ones who sign off on council budgets. 

We have here a wonderful example of how Adam Smith’s axiom has been distorted and used to justify the movement of the ‘common wealth’ to private bank accounts. We, the citizens of the Latrobe Valley, paid for the development of the park that will be taken over to make money. We, the people of the Latrobe Valley, are the ones who must live with the social dislocation and dysfunction that is a result rising unemployment. We, the people of the Latrobe Valley, at least those of us who are on the down side of good luck are, obviously, not worth investing in. 

I agree with Smith’s proposition that if we work for our own self interest, unintended results are a likely outcome. I believe the spirit in which Smith was writing was one, not of greed and private accumulation to the exclusion of the rest of our community, but one in which self interest would promote a sense of adventure and cooperation. In this way, “the butcher, the brewer or the baker … frequently promotes” the general good of the whole society. 

I find it interesting that those entrusted with the administration of the welfare of our community think it is more beneficial to spend the funds entrusted to them by us on bolstering the profitability of this private venture than supporting the welfare of those less fortunate than themselves. By shifting money around and depriving those who need its benefits most, the elected and unelected officials who govern us, demonstrate their neoconservative agenda. 

Mr. Switzer says the private company promoting the concert needs “seed” funding to get the venture off the ground. What this “seed” funding really does, is underwrite the event and in the case that not enough tickets are sold to cover the costs, the promoters can cancel the show and walk away without losing a cent. In short, any costs associated with the event will be covered by we the people, and any profits made will be carried away by the profiteers.

Smith’s “invisible hand” should really be renamed ‘the very visible hand of wealth transfer’. I’m sure Adam Smith is spinning in his grave as he sees how his wise words have been twisted to suit the agenda’s of the wealth accumulators and their willing accomplices in the bureaucracies and halls of power. Self interest is not selfishness or self serving interest. The actions of our council in cooperating with the profiteers demonstrates that their interests lie, not with those they were elected to serve, but with those who are cunning enough to steal our ‘common wealth’ from them.

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