The limits of the free market, energy and health compared

Meter showing electricity

This blog posting is not about teaching or technology, but sometimes you just need to write about what makes you angry.

When general elections come round, UK politicians start agonising about the public’s lack of engagement with the democratic process and then they begin to blame each other for this mysterious disjunct which has formed between the House of Westminster and the ordinary person in the street.

Well maybe if they weren’t such ideologically-driven, greedy, narrow-minded idiots this wouldn’t happen.  Today Chris Huhne the Energy Secretary, and David Cameron (the Prime Minister) have been making a great play of an energy summit where they have called to account the 6 major energy firms in a bid to save the “hardworking families” of the UK from major increases in fuel prices (http://bit.ly/rel4qc). It seems that these companies have been spectacularly successful of late, managing to ratchet up their profits by 733% per customer. You would think in an economy whose recovery, so the Con-Dems say, is going to be built upon private enterprise, that this would be cause for celebration. Surely Huhne and Cameron were meeting them to see what the secret of their success was and how they could share this excellent business knowledge with other sectors of the economy.  But alas it is not the case. Apparently the British consumer does not like being ripped off with high energy prices, particularly when the cartel of the big 6 who supply around 95% of the gas and electricity we use put up prices at the meter when the wholesale price goes up, but never reduce them if they fluctuate downwards. It is a licence to print money; well when I say ‘print money’ I mean this in the old figurative sense of the term, meaning make a pile of cash for doing sod-all. Not the new literal: ‘licence to print money’ meaning, which is where the UK taxpayer prints money and then gives it to the banks so they can rebuild their balances which they blew on greedy speculation in casino style banking games.  But the banks have had a hard time of it lately, and it’s only right that in a free market economy that the tax payer steps in to prevent private entities going out of business.  After all, they were and are, too big to fail.

But back to the energy companies and government’s laughable attempts to try and appear tough on the price rises and on the side of the consumer. To be honest I have an image of Huhne and Cameron feebly tapping on a pensioner’s kitchen window as inside he is bent over the kitchen table (we are back to figurative language here you understand) whilst the energy firms queue up to give the poor old boy a long hard lesson in free market economics.  From outside the window the hapless politicians watch on and cough feebly to draw attention to themselves ‘I say, do you mind taking it a bit easy on that chap, we’ll need him again in 4 years time as a voter; and when we have to bail out RBS again in a few weeks time, I’m afraid he’ll be in for more of the same then too’.

So it appears that even a conservative politician has to admit that free markets are not perfect and companies do not always deliver in the best interests of the consumer, they can put profits before service (SHOCK HORROR). And even a Liberal Democrat who authored a chapter in ‘The Orange Book‘ a liberal paean to the forces of choice, competition and neo-liberal abandon has to follow suit and appear to give the companies some tough words as if the magical self-correcting mechanisms of the free market had somehow been knocked out of kilter when it comes to piping electricity and gas into people’s houses.

In something of an anti-climax, after the summit Huhne urged us all to: switch providers more often, shop around as we would do for a a toaster, pay by direct debit, and to insulate our homes. (Thanks Chris, I never thought of those steps, you are certainly worth every penny of your £134K of tax payer’s money, well done!).  So the responsibility for the energy price debacle mysteriously rebounds upon the consumer who appears, in Huhne’s construction, to be a rather feckless kind of fellow, careless with his money, with leaky roof and windows, and not able to shop around for the best deal.  Well if Chris Huhne can make sense even of my energy bills, let alone the bewildering number of tariffs on the market then he truly is a better man than me. I have switched 5 times in the last 5 years, and never really knew if I got a better deal. What I do know is that the process is time consuming, opaque and the companies appear to conspire to make it as hard as possible for the consumer.  If this is true consumer choice at work, then I’ll bend myself over the kitchen table and take what’s coming to me!

So back to this concept of private companies, competition and the free market. The big idea behind the NHS reforms, so big that it was absent mindedly left out of the Conservative Manifesto is to have private companies provide services for the NHS.  The increased choice and competition, it is argued, will drive up standards and provide better value for money. This is the point at which the person in the street loses it with the politicians. Are these besuited benighted politicians too stupid (or greedy) to see that they are simply creating a similar situation in health that they created in energy (and transport for that matter), and that companies will enter the market looking to make money, solely, entirely, exclusively to make money? Because the lesson of the shitpile excuse for an energy market which are saddled with is that companies do, exactly that, they look to make money to the detriment of any other possible activity. And there will be no doubt be a limited number of providers who will soon build a cartel of pricing and service and hold the NHS to ransom. This is the very opposite of the free-market rhetoric which the politicians use, this is just an excuse to let some people get very rich by cherry picking services which should be in the public sector.  Switching between providers for the GPs who are supposed to ‘commission’ healthcare will be a tough business I imagine (the companies will have better lawyers and wilier contracts than the GPs); and whilst the medical professionals spend their time agonising over these decisions, the patients will be piling up in the waiting rooms wondering when they are going to get seen.

What will the politicians do when a cartel of companies corner the market in cost effective terminal cancer care and their profits soar by 733% per dead patient? Will David Cameron and Andrew Lansley (the vacuous robot in charge of Health) look annoyed and call a summit and gesture idly at some toothless watchdog which they believe will bring these companies in order? Will they take the Huhne approach bouncing responsibility off government, off the company and simply advise the customer to eat his greens, exercise and jolly well not to get cancer in the first place? Probably.

What they should do, the honest thing, the neo-liberal thing,  the thing which will never happen, is visit the company and laud its commercial acumen and make a speech congratulating the highly paid CEO and board of directors (which they will probably be joining in an non-exec capacity in the future) upon how efficiently his company has turned illness and misery into a money-making enterprise.

It’s a good job there is a kitchen table in nearly every household in the UK; we are going to need them.

Image is creative commons, from Flickr, courtesy of JohnWilson1969. Available: http://bit.ly/qfLI03. Image adapted by author.

3 thoughts on “The limits of the free market, energy and health compared

  1. yes, they are promoting Patient Choice by invoking some sort of cosy Dr Finlay (Doc Martn for the younger readers) image but in reality, large companies are forming to cherry pick the front line business. PCT’s have started refusing to pay for minor procedures referring sufferers instead to private medical clinics (some percentage presumably going to the referrer?). Transport failed and now costs the state more than ever, energy is going the same way so now the greedy ones are after all the lovely money spent by the NHSs. Grrr. Not unrelated to #ows issues., the most alarming thin is that the populations seem to swallow hook,line and sinker the greed is good mantra.

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