Unhealthy central planning

My new CIS paper (pdf) on mismatches in the graduate labour market is getting off to a rather slow media start (only the Courier-Mail so far, though a couple of other papers requested opinion pieces as well). The Australian and The Age are however running different stories on foreign doctor recruitment – and there is no better illustration than these of the problem I am talking about.

In fact, doctors provide a double tale in what goes wrong when governments intervene. This story starts in 1984, when the then Hawke government introduced the Medicare system, and in so doing ensured that the government picked up most of the tab for visits to the doctor. This in turn led to concern about escalating costs, on the (plausible) theory that if you charge people nothing or very little to go to doctor they will be more likely to do so.

In the early 1990s, the government formed the view that an over-supply of doctors was part of the problem. According to one report (no. 12 in the link)

doctors in an oversupplied market may be more inclined to comply with patient expectations of referrals, prescriptions, and other health services, in order to reduce the likelihood of patients going to another practitioner.

They also thought that doctors were encouraging repeat visits rather than longer consultations, in order to maximise their bulk billing income. Note that few of these problems would have developed except for the fact that there were no price signals, except in lost time, for patients.

Because the federal government also controlled the supply of new doctors, ie the universities, they decided to cut medical school intakes (see figure 11 in this report). From 1330 commencing students in 1992, it went down to 1304 in 1993, 1217 in 1994, 860 in 1995, before starting to recover again. It’s only in the last few years – after it was realised what a huge mistake had been made – that comencing numbers have been above 1992 levels.

All this was going on while other arms of government were aware of demographic trends toward an ageing population and reacting to them, such as the major extension of superannuation in 1992. You don’t need a medical degree to work out that an ageing population will increase demand for medical services.

The consequence of this failure to provide enough local doctors is a reliance on doctors from overseas. As this report (pdf) on skilled migration shows, our net importation of medical practitioners has averaged nearly 1,000 a year since the mid-1990s.

While doctors from overseas are keenly welcomed, thousands of Australians who want to be doctors are every year rejected by medical schools (see figure 5 in my paper). This includes many with good school results (see table 7 in my paper).

Though the Australian higher education system is centrally controlled, it is generally not centrally planned. For the most part, history guides the allocation of places. But the medical workforce has been centrally planned, and this produced far worse results than the benign neglect applied to other professions. It’s been good luck in being able to recruitment so many medical professionals from overseas, rather than good management by government, that has avoided a shortage of doctors that would have had disastrous consequences for the health of many Australians.

75 Responses to “Unhealthy central planning

  • 1
    conrad
    March 23rd, 2007 12:23

    I think the problem is very much more complicated than just the policies you mention — there is a doctor shortage worldwide — so such shortages can occur under many different policies. I wonder if a lot could be gained by looking at countries without these shortages and then seeing what they do that makes them different.

    On a different note, one of your typical arguments against a variety of things is that many graduates don’t work in areas where they graduated from (including ones that would like too). No doubt some of that is certainly due to oversupply (like law), but it would be nice if some time you could provide some baseline numbers as to what percentage of graduates you expect could work in their chosen fields based on a degree alone. What I mean by this is that given the limited time (and funding) universities can have with each student, I can’t see how they can be expected to be able to diffentiate those who are good enough to go on into the job market (and hence learn additional skills successfully) and those that can’t with a strong degree of certainty. I just see them as helping people go through the chain of events that get them to the profession of their choice — and they are not neccesarily the final link for many professions.

  • 2
    Andrew Norton
    March 23rd, 2007 13:20

    Conrad – I don’t know much about the experience in other countries, though given the general prestige of medicine I imagine that the problem is rarely finding willing students.

    But in Australia’s case there is no doubt that government actions made the problem very much worse than it needed to be. It was something we see all too often – a policy creating undesired outcomes is fixed not by removing the original cause but by creating another rule restricting medical student numbers, which in turn sets off another set of problems in staff shortages, which in turn leads to the claims of incompetent foreign doctors, and so on.

    Last year’s census should give us a chance to answer your second point. 90% of registered medical practitioners and 80% of registered or nurses are in the medical workforce, but presumably there are others who have let their registration lapse. There are certainly many claims that large numbers of nurses have left the profession.

    I agree, it is not the job of universities to assess anything other than knowledge and other relevant competencies. I can’t see how this affects the argument. It does, however, support the view that in professions with credential as barriers to entry we need to produce many more graduates than forecast demand for workers.

  • 3
    Andrew Norton
    March 23rd, 2007 13:32

    I forgot to note that there are in fact shortages of some types of lawyers, though this is a problem of attrition from the legal workforce, and not too few graduates.

  • 4
    derrida derider
    March 23rd, 2007 14:18

    “Note that few of these [overservicing] problems would have developed except for the fact that there were no price signals”

    I can’t agree with that – supplier-created demand is a well established phenomenon in the health industries even without any government subsidy (in fact any industry where the suppliers know far more about the costs and benefits of consumption than the consumer will tend towards it). It’s well established in the US, for instance – the amount of surgery in a county correlates most closely with the number of surgeons rather than the prevalence of common conditions needing surgery. This is a quite different problem from the excess overall demand created by insurance (whether private or public).

    And while I don’t disagree that this sort of blundering in what used to be called ‘manpower planning’ is inevitable and a powerful reason governments should be cautious in doing it, I reckon that any occupation with a decade-long lead time for training will tend towards big hog cycles. Richard Freeman wrote a nice paper some years ago about how the free market for engineers in the US has oscillated between over- and under- supply for many decades because of this.

  • 5
    Andrew Norton
    March 23rd, 2007 14:42

    DD – Are you really saying that price signals have no effect on demand for medical services? Then why do we have bulk billing?

    If people are paying for it themselves, there is no public policy problem unless there is some element of fraud going on, and no reason to restrict the supply of doctors.

    And my paper does have a lot of material on why it is impossible to plan precisely.

  • 6
    conrad
    March 23rd, 2007 15:15

    I don’t disagree that bad policies are part of the problem — but it might be worthwhile trying to work out what good policies might look like too — I very much doubt that just increasing the supply and getting rid of some of the wacky legislation is going to fix the problem (even if someone was willing to pay for it). For example, I’ll just assume that any university that can meet the required standards can train doctors in the US — but they still have a doctor shortage. On the flipside, France doesn’t have a major doctor shortage, even though their doctors are paid much less. Unfortunately, I’m not sure why (in either case), but the answer would be handy to know, since you might be able to suggest fixes for the problem (i.e., best policy), rather than just point out that bad policy makes the problem worse (which I doubt too many people disagree with).

    “I agree, it is not the job of universities to assess anything other than knowledge and other relevant competencies. I can’t see how this affects the argument”

    It affects the argument since it gives you some indication of neccesary oversupply in graduates universities need to create. For instance, lets just assume that in a given field, the best a university can do is ready 1 out of 2 graduates for work in a given field. This suggests that universities need to produce twice as many graduates as jobs potentially for them, and, furthermore, that 50% of people won’t use their degrees. On your account, this is an oversupply of people doing a degree and wasteful (and thats what it would look like to a lot of people) — but it isn’t an oversupply at all — its the minimum number of graduates that are needed to fill the available jobs.

  • 7
    David Rubie
    March 23rd, 2007 15:20

    Andrew Norton wrote:
    on the (plausible) theory that if you charge people nothing or very little to go to doctor they will be more likely to do so.

    For what purpose? Is it the lollipops?

    Perhaps the equally plausible explanation of early intervention in potentially serious (and long term expensive) problems might also have been canvassed. A stitch in time etc. Surely the massive dental health problems that have been developing since these services were steadily dropped from the public purse might be an indicator that the market is not a good mechanism for health provision. I find the idea that people willingly visit a doctor for kicks to be ludicrous.

  • 8
    David Rubie
    March 23rd, 2007 15:23

    Oh – and escalating costs? Try the drug companies for that one. Anti-competitive to a man – they don’t like market forces much either and strive for monopoly at the expense of everybody else. When somebody makes an attempt to stop the re-patenting of slightly changed medicines for no good reason, we might see some health costs start to come down.

  • 9
    Andrew Norton
    March 23rd, 2007 15:32

    David – It might seem silly to you, but if you know a GP socially ask him/her about it. A lot of people go to doctors over very minor matters that will go away quickly or can be dealt with through over-the-counter medications, or for a chat. The logic of some co-payment is that the people most likely to do this, those whose time has little value (welfare recipients, pensioners), will think twice but if the price is not too high still go if there is something that seems sufficiently serious.

    Also, doctors are more likely to think twice about ordering tests if the patient has to pay something, eg do you test for every possible cause of a symptom or only the most likely causes?

  • 10
    Rajat Sood
    March 23rd, 2007 15:52

    Conrad, what’s your evidence that the US has a doctor shortage but France does not? Talk of shortage or surplus only makes sense when seen in the context of the prevailing price. If the price is zero, as I suspect it is in France and I know it is in the UK, supply is rationed through queues. This is a separate question to whether the price is too high or too low to begin with. The price of medical care is probably too high in the US for various reasons, but too low in australia and elsewhere. My mum is a GP and probably only half of her patients actually need to see her.

  • 11
    conrad
    March 23rd, 2007 17:40

    Rajat:

    First of all I disagree that talking about shortage can only be done in terms of price in terms of medical services. If there are not enough medical professionals in a certain area, then there is a shortage, and this may have nothing to do with price. If all doctors died tommorow, there would be a shortage, no matter how much money everyone else has. Africa is also good example of this. A realistic example from rich countries is no-where land in Australia and the US. Its also worthwhile noting that this can’t just be done in terms of the individual, because if I happen to get TB, avian flu, … and spread it to you and your family because I can’t see a doctor (as was the case with SARS in China), then you are going to wonder why there are not enough doctors. I guess it depends what level of service you think poor people should be able to get for free (or almost free) from the government.

    You are also correct that the price in France is almost zero — however, you don’t have queues because I believe the governments budget for health is basically unlimited (althouth you can certainly buy private services which are better than the governments — and people do, and these things also get into work contracts), so poor people don’t complain they can’t get services (as far as I’m aware). Its worthwhile noting here that you also don’t have queues because the government trains enough doctors.

    As for why there is a shortage — some of is just based on unscientific observation (i.e., people complaining), but a better measure is the number of doctors per head of population where France is higher than the US (I can’t find a reputable link for this right now). I’d also guess that the French population is also healthier than the American one (obesity etc.) so I’ll also presume that the need for medical services is also less.

  • 12
    Andrew Norton
    March 23rd, 2007 18:19

    The World Health Organisation is the place to go for data. Physicians per 1,000 people for countries mentioned: Australia 2.47, US 2.56, France 3.37.

  • 13
    derrida derider
    March 23rd, 2007 18:27

    Andrew of course demand curves slope downwards. But the question is “how much”. David’s right – the demand for health services is probably quite inelastic. You don’t quibble over the price when your doctor tells you that you need open heart surgery and it’s things like open heart surgery that drive the big medical costs, not talking to the GP about your common cold.

    I’m just saying that there is a quite separate mechanism to the price faced by the consumer that also drives demand (in fact, of course, there is more than one). And that this mechanism due to asymmetric information is known to be a powerful one even in the absence of subsidies – indeed, will be greater in the absence of a single payer to provide countervailing pressure.

    To blithely assume that it’s the subsidisation that drives the ever-increasing costs flies in the face of the empiric evidence.

  • 14
    Sacha
    March 23rd, 2007 19:01

    I havn’t read all the comments – I just want to recall Graeme Richardson’s proposed co-payment of $2.50 per visit to the GP, which seemed (from memory) to be a way to create the idea that visiting a bulk-billing GP wouldn’t be completely free to decrease any over-use of GP, but that the $2.50 was such a small amount that it wouldn’t effectively stop anyone being able to go. Perhaps it would have been a tiny psychological speedbump to unnecessarily going to the GP?

  • 15
    Sinclair Davidson
    March 23rd, 2007 20:06

    DD – I hear what you’re saying. But asymetric information isn’t unique to health care. Subsidisation is a huge problem and the government’s intervention was a stuff up (to be blunt people should have been sacked, at least, or investigated for malfeasence – public policy towards the supply of doctors was so incompetent as to verge of criminal).

    Another idea I have that I’m throwing out for discussion/refutation is that, as a society, we spend too much on health. To the extent that everyone dies anyway, it doesn’t pay to expend too much (especially when it’s not your money) on prolonging life.

  • 16
    Sacha
    March 23rd, 2007 20:29

    It’s interesting Sinclair to observe that it seems as if so much money is spent on helping people live a little bit longer than they otherwise would.

  • 17
    Sacha
    March 23rd, 2007 20:29

    “To the extent that everyone dies anyway…” Are you being a little facetious, Sinclair? :-)

  • 18
    Rajat Sood
    March 23rd, 2007 21:50

    Well, in the long run, we’re all dead! Asymmetric information is ubiquitous.if you have to pay, then you have an incentive to moderate your consumption and find out what you don’t know. If you don’t have to pay, you have no incentive to do anything other than what you’ve been told to do.

  • 19
    Russell
    March 23rd, 2007 22:19

    I know it’s a paper you’ve written, not a book, but comparisons with other systems in other countries would be helpful in deciding whether it’s planning that’s the problem – maybe it’s more successful elsewhere. To discredit planning, and advocate a free market, you almost need to show that the market gets it right more often, over time, in a range of subjects and in various circumstances, than planning. I don’t think the example with overseas students is enough. The example of the 1980s decision about doctors is a clear example of a fault, but I’m not convinced you proved that the market would be better.

    I know loads of people (yes, anecdotes) who have university degrees that have chosen to work in jobs that don’t need them. Mostly it’s because they didn’t like the stress and lifestyle, or the job was in reality much different to what they had anticipated, but in one case it’s because she only wants to work part-time and can make more working the weekends in Myers. One of my nephews, a social worker, has just applied to become a train-driver: more money, and, he hopes, fewer hassles. You need more data on why those people in your Table 4 aren’t working in professional positions before you can use them in your argument.

    Finally, and I know this is whimsical, but are universities only there to meet the market for jobs? Are there not things worth teaching even though they don’t lead to a career? There are people who want to study fine arts, and music and classical languages and all sorts of things, though they may only aspire to run a small bookshop, prepare themselves for a trip overseas, or have the pleasure of learning about something that interests them. They’re probably turning up in your Table 4 as well.

  • 20
    David Rubie
    March 23rd, 2007 22:39

    Andrew Norton wrote:
    David – It might seem silly to you, but if you know a GP socially ask him/her about it.

    My wife works in Aboriginal health – I’ll tell you (a) anecdotes count for nothing and (b) you are talking to the wrong doctors.

    There are studies floating around about how much procrastination occurs before consulting a doctor (especially with males – think prostate checks). We in Australia manage to concoct better outcomes cheaper than the U.S. with our nasty socialised medicine largely due to affordable preventative health. It’s a good system,

    If you really want to take a crack at fixing waiting lists, how about breaking the medical cartel so that trained, non-doctor specialists can bulk bill? It
    s far cheaper and more efficient, and leaves doctors to concentrate on the difficult cases their skills can be used effectively for. It’s working for lawyers (slowly – but conveyancing is a good example of a formerly expensive service now priced realistically after being removed from greedy lawyers).

    School age screening for hearing, eyesight and dental problems can have profound impact on the outcomes for people, but it isn’t widely available on the scale required in the wider community. Got any thoughts on that or is early intervention too much of a socialist idea too?

  • 21
    Leopold
    March 24th, 2007 00:12

    Sacha – much as I am loath to defend Richo, Brian Howe was actually the Health Minister responsible for the co-payment.

  • 22
    Sacha
    March 24th, 2007 00:39

    Ah – my memory told me it was Richo, but I’ll stand corrected if that’s how it was! According to Wikipedia, Richo was Scial Security Ministery 04/90 – 12/91 – that might have had something to do with it? I don’t know.

  • 23
    Andrew Norton
    March 24th, 2007 02:06

    Russell – I think it is plausible that at least some people don’t want jobs that fit their qualifications, which is why I was fairly cautious on that point in the paper, only saying that it was evidence against the need for any more places in general. As with the medical workforce, if people want to pay for something – talking with somebody about their runny nose or learning ancient Greek – they are entitled to do so, but it is not so clear that public subsidy is warranted.

    David – I am quite happy to break the medical cartel, and indeed this is already happening to some extent with nurse practitioners. I did not point it out in the paper, but all occupations with shortages are also occupations with regulated entry, which in some cases may be part of the problem where the bar has been set too high, or there are particular tasks that could be opened to less qualified persons.

  • 24
    conrad
    March 24th, 2007 07:14

    “If you really want to take a crack at fixing waiting lists, how about breaking the medical cartel so that trained, non-doctor specialists can bulk bill?”…”already happening to some extent with nurse practitioners. ” DR & AN.

    Actually, this has happened a lot already, they’re called optometrists, speech pathologists and very recently, psychologists (and so on). One problem with this is that some of them are now in short supply also, even without such odd rules as doctors have. I know from at least the last one of these on the list is that changing them to bulk-billable is also a hazard to training in itself. This is because (a) they are expensive to train; (b) staff to train them are expensive to hire, because they can earn more in private practice; and (c) its hard to find places to train them, because once people can go to a qualified person for free, you can’t find people to train new professionals on for free (why go to someone in training vs. the real thing?). I can imagine the same would be true of dentistry if it become bulk-billable — it will make it basically impossible to train new professionals.

  • 25
    Andrew Norton
    March 24th, 2007 09:40

    The clinical component of health training (or ‘education’, as they will usually insist) is already a major issue, and a crisis in physiotherapy. There is more reluctance among practising health professionals to do it for free or to effectively cross-subsidise it, but not enough money in the universities to buy in the necessary services.

    However so long as there are top-up fees I am not sure that the problem Conrad points to cannot be overcome; after all by going to a public hospital for free you are also consenting to care by relatively inexperienced people. As I can attest from personal experience, it doesn’t exactly calm you when the person about to insert a tube in your chest turns to the instructor behind her to confirm where she needs to make the incision.

  • 26
    derrida derider
    March 24th, 2007 13:58

    My memory squares with Sacha’s – it was Richo, not Howe. Howe would never have got such an unpopular measure through the Hawke cabinet – Richo was a great minister from a Department’s POV because if you persuaded him of something the you could count on the measure getting through Cabinet.

  • 27
    David Rubie
    March 24th, 2007 14:18

    conrad wrote:
    Actually, this has happened a lot already, they’re called optometrists, speech pathologists and very recently, psychologists (and so on). One problem with this is that some of them are now in short supply also,

    Those professions aren’t exactly what I meant. Usually you need a referral from a GP to end up at (say) a physiotherapist. I’m keen on the idea of community nursing where the front line is not GP’s but community health professionals. They can be trained to refer real problems to GP’s. Audiologists (for example) do a lot of specialist pre-screening for tumours and other issues that your local GP wouldn’t have a hope of picking up unless he was specifically looking for it.

  • 28
    Bring Back CL's blog
    March 24th, 2007 14:19

    bad memories here.
    It was Howe and it was passed BUT when KEating became PM he got rid of it.

  • 29
    Russell
    March 24th, 2007 21:14

    “if people want to pay for something …. they are entitled to do so, but it is not so clear that public subsidy is warranted” – so your argument about central planning is also resting on an assumption that universities should really only respond to demand from students who are after career specific qualifications? Any others constituting too small a number to be worth catering for.

    What if you want universities to do something that the jobs market won’t sustain? Say you wanted a more ‘Asia-literate’ community (because you thought it would be A Good Thing). In recent years (if I remember correctly) there has been quite a contraction in Asian Studies/Languages. If those university departments close because there is only a small demand from students who don’t see a direct career benefit, then the option is closed for everyone. You’ll end up with the present unsatisfactory situation – a downward spiral towards complete ignorance of our neighbours.

    I’d prefer to plan and fund Asian Studies courses, even if they only attract few students, because then we will least have some asia literate people in the community – no matter what jobs they end up in.

  • 30
    Russell
    March 24th, 2007 21:19

    And I should have added that the academic staff in those publicly funded university departments would at least be there to be consulted by government and business. An inportant resource that is now disappearing.

  • 31
    parkos
    March 24th, 2007 21:43

    Possibly, the shortage of doctors has led to Australians having some of the longest life expectancy stats in the world.
    Iatrogenesis is widespread globally and is no joke.
    Allopathic medicine whereby the symptom is treated rather than cause needs to give way further to natural medicine and prevention.
    Including naturopathy, ayurveda, indigenous techniques, massage, Chinese Medicine etc in medicare and legally registering graduates in these fields is part of genuine multiculturalism and would increase the health of the nation whilst disrupting the rent seeking monopoly which is in place currently.

    The Brits have 6000 medical graduates without jobs this year, after protests in London and Glasgow more than a few of them talked about and made plans for the antipodes. The unseen hand of imperialism overshadows your stats and predictions.

  • 32
    David Rubie
    March 24th, 2007 22:42

    parkos wrote:
    ncluding naturopathy, ayurveda, indigenous techniques, massage, Chinese Medicine etc in medicare and legally registering graduates in these fields is part of genuine multiculturalism and would increase the health of the nation whilst disrupting the rent seeking monopoly which is in place currently.

    We spend 400 years trying to ditch the yoke of superstition and you want to bring it back? Doctors are mystifying enough without asking them to consult chicken entrails or the whirling stars.

  • 33
    parkos
    March 25th, 2007 01:38

    Those 6000 UK medical graduates with no medical job and an unemployment rate more than double the national average (not to mention the other 8000 doctors in the article linked who will lose their job) have average debts of more than 100,000 Australian dollars, much of which is in interest bearing loans which require immediate repayment (unlike HECS). In some cases, bank overdrafts accumulate interest at 12% a month or more when study ceases.

    There is also a shortage of doctors in the UK as far as patients are concerned concurrent with these job losses and lack of graduate uptake. People are dying as a result.

    These loans and students fees emerged from the adoption of Australian educational policy by the UK government in charging for higher education and doing away with grants and allowances.

    Norton, your main ouvre is charging for higher education and working in think tanks which recommend it on the basis that it is good for all. You should wake up and realise that it is bureaucratic mismanagement in the extreme. People are angry and I would not like to be a member of the CIS, Fabians or similar requiring medical treatment in the former commonwealth in the future. The medical faculty have memories like elephants and they stick together.

  • 34
    Boris
    March 25th, 2007 03:04

    parkos we know that NHS has extreme shortage of doctors and has been importing them from all places possible (chiefly Africa). Don’t bullshit us about unemployment. Don’t believe everything you read.

  • 35
    Andrew Norton
    March 25th, 2007 07:59

    Russell – I can’t see that having Asia-literate people who are never called on to interact with or advise on Asia is a public benefit. However, as my paper points out there is scope for government to still subsidise higher education; it is only price control and quotas that I believe should be abolished.

    Though I think the case for some higher education subsidies is intellectually weak I have not emphasised this is in my policy advocacy, because the most pressing need is micro reform and not saving a few hundred million dollars. Given the loss aversion in human psychology, and the extremely conservative nature of universities when their own interests are at stake, if I proposed this it would dominate the debate, despite being a minor issue overall.

  • 36
    parkos
    March 25th, 2007 11:14

    The situation in the UK is actually worse vis medical grad unemployment than the leftist BBC bias presents.
    On the upside Boris, it means all those mining communities and defense bases in rural Western Australia will have another round of drinks with pasty nurses.
    You think that doctors don’t manipulate lives and politics if you upset them? Just check the various former state premiers.

    For the record, I think that allopathic doctors have too much power and should be downscaled in reference to other medical systems and population health. Unemployment is too good for them.
    I have been reading my cache of Tet Far Jason Soon undergrad essays from 10 years ago, and as an extropian who did not commit suicide like Chislenko did, I am pretty sure he would agree.

    From the Times:
    http://www.timesonline.co.uk/tol/comment/debate/letters/article1458927.ece

    It was estimated last summer that, in preparation for August 2007, the MMC would contain 9,500 training jobs for perhaps 21,000 junior doctors from the UK — a 55 per cent incidence of unemployment. When this was anxiously seized on by the medical profession last year, former Health Minister Lord Warner stated: “It’s absolute rubbish to say there will be thousands of junior doctors without jobs”. It wasn’t rubbish at all.

    DR TONY LOMBARDO

    Nearly 80% of new UK graduates in nursing face unemployment

    http://www.workpermit.com/news/2006-06-30/uk/unemployed_nurses.htm

  • 37
    Leopold
    March 25th, 2007 11:14

    DD & Sacha

    I’ll quote then Senator Peter Walsh:

    ‘the Medicare co-payment… was the brainchild of the party’s social justice strategist, Brian Howe… [due to] Howe’s desire for savings to offset his “Better Cities” program’

    Then Social Security minister Richardson remarked gleefully in his autobiography that:

    ‘Brian Howe was a big contributor to… the Keating campaign… [due to] the Howe proposal in the 1991 budget for a Medicare co-payment’

    I can’t imagine why these two would both be lying about the originator of the scheme. Both are agreed that the scheme would have been killed off immediately but for the Left’s (read: Howe’s) role in propping up Hawke’s leadership.

    Richo was not a nice man, but there’s no need to blame him for things he didn’t do.

  • 38
    parkos
    March 25th, 2007 11:28

    Your new blog swallows comments without regurgitating them.. Particularly ones that take a while to write, so make a copy before you submit.
    Unless of course I am in some faulty or complex form of moderation for a being moderate.

  • 39
    parkos
    March 25th, 2007 11:30

    The situation in the UK is actually worse vis medical grad unemployment than the leftist BBC bias presents.
    On the upside Boris, it means all those mining communities and defense bases in rural Western Australia will have another round of drinks with pasty nurses.
    You think that doctors don’t manipulate lives and politics if you upset them? Just check the various former state premiers.

    For the record, I think that allopathic doctors have too much power and should be downscaled in reference to other medical systems and population health. Unemployment is too good for them.
    I have been reading my cache of Tet Far Jason Soon undergrad essays from 10 years ago, and as an extropian who did not commit suicide like Chislenko did, I am pretty sure he would agree.

    From the Times:

    It was estimated last summer that, in preparation for August 2007, the MMC would contain 9,500 training jobs for perhaps 21,000 junior doctors from the UK — a 55 per cent incidence of unemployment. When this was anxiously seized on by the medical profession last year, former Health Minister Lord Warner stated: “It’s absolute rubbish to say there will be thousands of junior doctors without jobs”. It wasn’t rubbish at all.

    DR TONY LOMBARDO

    Nearly 80% of new UK graduates in nursing face unemployment

  • 40
    parkos
    March 25th, 2007 11:31

    When I took the long URLs out of that last comment wordpress was able to process it.

  • 41
    Andrew Norton
    March 25th, 2007 12:44

    I have changed the moderation rule to allow a maximum of 2 links before it has to be approved by me – however if we start getting spam that way I will change it back again.

  • 42
    Sinclair Davidson
    March 25th, 2007 14:59

    Tylet Cowen has a post on the French medical system.

  • 43
    derrida derider
    March 25th, 2007 17:03

    Leopold, you’re right. Sacha & I were confusing it with the later PBS co-payment – Richo was my Min at that time.

    Richo did some good things as social security minister BTW – and not always the popular thing. I well remember a meeting where one of his advisers stated that a measure to help sole parents would not win any votes and might lose some amongst Tory workingmen, he replied “just cos half the f*****g voters are miserable f*****g c**ts doesn’t mean we shouldn’t do the right f*****g thing when we can”.

    But he certainly wasn’t a man you should cross.

  • 44
    conrad
    March 25th, 2007 19:59

    “I can’t see that having Asia-literate people who are never called on to interact with or advise on Asia is a public benefit.”

    That’s undoubtebly true Andrew. However, the flip-side of this is that we definitely need some. This means you either need to (a) train some that go on to be successful, which might involve training some that don’t, since we don’t have any good a-priori predictive method of telling who will or won’t be successful; or (b) importing people that do. This was my point above — sorry to be repetitive.

    For example, ignoring (b), which wouldn’t be practical for ASIO style positions in any case (i.e., we need some Australians), lets just assume 50% of people never go on to do anything with their degrees. This might be the best we can achieve (perhaps most of the successful ones learn a langauge as well and have good social skills also), hence the only way we can get enough specialists is to train twice as many as available positions. Simply because the half don’t is just a hazard of getting enough that can. This is why you need to distinguish between base-line rates of people who will be able to use their degrees given a population and simply training too many people.

  • 45
    Leopold
    March 25th, 2007 22:53

    No stress DD. Just being pedantic. ;)

  • 46
    Russell
    March 26th, 2007 00:54

    ““I can’t see that having Asia-literate people who are never called on to interact with or advise on Asia is a public benefit.”
    That’s undoubtebly true Andrew.”

    I’m asking myself – why would people say such a thing? Isn’t it self-evident (got that from John Heard) that a more educated populace is better than a less educated one? I guess the key phrase is “public benefit”. Which in this context is sort of a variation on ‘there’s no such thing as society’. But if you believe there is such a thing as society, and that you live in it, you might think that it’s a benefit to everyone to be part of an informed society. Although you might not believe it conversation does go on outside of academia, thinktanks and blogs. Educating people in universities is a bit like paying for ABC Classic FM – it injects knowledge of a higher standard into the community.

    “I think it is plausible that at least some people don’t want jobs that fit their qualifications, which is why I was fairly cautious on that point in the paper” – not that cautious since you wrote: “the self-reports in table 4 give us no reason to believe that figure 1 over-states the extent of over-education.”

  • 47
    Andrew Norton
    March 26th, 2007 07:06

    Russell – I like well-informed people, but the truth is most people live perfectly happily knowing very very little that would be taught at university (including, in my experience, people who managed to acquire a degree without it having any effect on their long-term interests). Having housewives and office workers who know more about Asia is of no or trivial public benefit.

    On the caution point, the quotation does not contradict what I said. I am confident that roughly 20% of the graduates who are in the workforce are not in jobs that make use of their qualifications. What I am cautious about is how big a problem this is – to what extent this is transitional (as it clearly is for some people in their 20s), voluntary, or inevitable (some graduates lack other attributes necessary for graduate jobs, have skills that are not currently in demand etc).

  • 48
    conrad
    March 26th, 2007 07:27

    “I’m asking myself – why would people say such a thing?”

    I say that because I think that people that get degrees but learn very little from them and never use them are wasting public money (and there are lots of them out there in my experience unfortunately), so even if they gain some small amount of benefit (usually which they could have gained elsewhere much more easily), there is no overall benefit. This is one of the problems of univerisities these days — its possible to get a degree without doing very much at all nor being much good at anything (which is why a lot of the “real” stuff happens at a masters level now). This differs from the other two categories, one which Andrew is talking about (people who know their area and can’t get a job even though they are capable), and one that I am talking about (people who are simply collateral in job areas that are hard to do — probably like Asia studies). I think there is secondary benefit to these other two (people with an interest in Asia studies for instance, are probably great benefit, even in other job areas where a degree wouldn’t be considered neccesary by people like Andrew, e.g., tourism). I’ll also admit they are also of some public good in terms of more difficult to quantify social discussion.

  • 49
    Russell
    March 26th, 2007 11:50

    “Having housewives and office workers who know more about Asia is of no or trivial public benefit” Wrong, I think. That way you end up with a President and a population that has no idea what goes on in the world resulting in tragic fiascos like the war in Iraq. Having an “over-educated” population is the least of our worries.
    As for we all having to pay for it … perhaps there’s some sort of balance between public and private decision making that I would like to see altered in favour of more publicly made decisions. Look at the extraordinary amount of money being spent on ridiculously large houses and obscenely expensive cars, gadgets etc – all sucking up ever more energy. Better to put more of the money in the public purse for more and better education. Just because you can’t exactly measure it doesn’t mean there isn’t a benefit. Just because graduates don’t exactly slot into matching careers doesn’t mean there’s a problem.

  • 50
    Andrew Norton
    March 26th, 2007 12:50

    Russell – But GWB has precisely the kind of education you advocate, an arts education at Yale (plus later business education at Harvard). Almost all the American elites will have done a liberal arts course, rather than going straight to a vocational degree as here.

    But your last para highlights the differences between our perspectives – you want to impose your preferences on others, I am happy to let people make up their own minds.

  • 51
    Club Troppo » Missing Link
    March 26th, 2007 13:19

    [...] provides specialist economic advice as part of his dayjob. Still on policy-wonkery, Andrew Norton digs up some interesting factoids on the (artificially created) shortage of medical practitioners in Australia. He generously [...]

  • 52
    Russell
    March 26th, 2007 13:44

    “But GWB has precisely the kind of education you advocate, an arts education at Yale (plus later business education at Harvard).” – a good example of what goes wrong when money can buy a degree.

    “you want to impose your preferences on others, I am happy to let people make up their own minds.” – nothing wrong with improving those minds first ……
    Could it be that when we decide collectively we make better decisions, in some areas, than when we just decide for ourselves?

  • 53
    conrad
    March 26th, 2007 14:07

    “Just because graduates don’t exactly slot into matching careers doesn’t mean there’s a problem”

    Russell: Now I can ask you also what you think the baseline levels are for (a) useless people getting bits of paper; (b) people wasting their degrees through no fault of their own; and (c) people working in areas where therr degree is useful but you don’t neccesarily need a degree as entry. Just the numbers for your initial suggestion of Asia studies would be worthwhile.

  • 54
    Russell
    March 26th, 2007 14:16

    a. As many as might otherwise be getting into mischief?
    b. Wasted?
    c. Over their whole lives – in and out of work?

  • 55
    Russell
    March 26th, 2007 14:19

    Oh and for Asian Studies – heaps. Because if every child at school is to be taught Indonesian, CHinese or Japanese (I’m open to suggestions here: Hindi ?) we’ll need to train an awful lot of teachers.

  • 56
    James Simpson
    March 27th, 2007 01:09

    Andrew, when did your blog get overrun by Lefties?

  • 57
    Boris
    March 27th, 2007 02:43

    “Could it be that when we decide collectively we make better decisions, in some areas, than when we just decide for ourselves?”

    Any evidence of that? Who decides WHAT is better?

    I grew up in a society where this idea was indeed dominant. All decisions were made collectively. Which means by people in power (Politburo) on behalf of and for the good of all of us. The result was there for everyone to see.

    Another error in your argument is that people most people who attended university have acquired some useful knowledge, even if it is not used in their jobs. You talk about GWB as a bad example where money can buy a degree without much study effort. But in this country you can now do a degree without either much money or indeed effort. In fact the knowledge acquired by many people at university simply cannot be useful because it is quite close to zero (or is reduced to zero a few years after graduation).

    I teach a degree which at the moment viirtually gurantees a job with a high salary. Even though, when I ask a question in year 3 which everyoe is supposed to know, not one knows the answer. When I ask “didn’t you study this in math unit in year 2?” they say, “Oh, but this was last year…”. Conrad can tell you similar stories from Arts degree.

  • 58
    conrad
    March 27th, 2007 07:21

    I completely agree with you Boris on all your points except for GWB. I recommend that all these people longing for great government control of everything should go and visit a few countries where that has happened. They should also (a) try working there and (b) think about whether it really is better (or just look at emmigration/immigration rates for that matter). Pointing out a single example of even relatively invasive government control that works for some amout of time (e.g., Singapore, Sweden) is not a good argument, because I can point out 100 that don’t (e.g., France, most of Eastern Europe) amd indeed some that become better the less the government does (e.g., China). As for GWB, I personally can’t stand high taxing social conservatives but simply because the guy doesn’t have exceptionally high verbal fluency and I don’t happen to like the guy doesn’t make him a fool. I’m sure he’s exceptionally smart, its just he’s so dislikable to many people that don’t want to admit that.

  • 59
    Leon
    March 27th, 2007 09:03

    I think you’re spot on Andrew. As a medical student, it seems that there are complaints from hospitals fearing saturation with the inexperienced while the government spends money bribing people to work in the country after they graduate; and the constant demand for doctors is still unfulfilled.

    The system needs to be liberalized. We have the absurd situation at present where, at Melbourne University, full fee places are dished out to (certainly able) people with TERs of 96 whereas a CSP requires around 99.75. There is a shameful waste of talent and motivation in the face of huge amounts of need. Perhaps it’s that doctors don’t want to face wages more like those of real people.

  • 60
    Jacques Chester
    March 27th, 2007 09:10

    Andrew, when did your blog get overrun by Lefties?

    I’ll pretend it was my fault, putting up the nice new theme.

  • 61
    Andrew Norton
    March 27th, 2007 09:27

    Leon – Until the last few years, the government wouldn’t even allow Australian full-fee medical students, though they were permitted in other health professions.

  • 62
    Russell
    March 27th, 2007 09:56

    Well I didn’t say that all decisions should be made by the government – you should be able to choose a tie by yourself for example.
    Wasn’t there a discussion here about how people like the government forcing them to save by compulsory superannuation. Isn’t it better that the government sets limits to the amount of pollution cars can spew out, even if the cars then cost more, and given the choice people many people would buy cheaper, dirtier vehicles? Some decisions are best made in the public interest, not by individuals in their own perceived best interest.
    Conrad in the paper yesterday it was reported that : “France had more babies in 2006 than in any year in the last quarter-century, capping a decade of rising fertility that has bucked Europe’s graying trend.” – they must be doing something right ?
    As for this blog being over-run by lefties, well the right-wingers all left when it slowed right down. Patience is a virtue (of the left) I suppose.

  • 63
    conrad
    March 27th, 2007 10:09

    Russell, I think France has done lots of things right, including the government — they have the best train system in the world (thanks to the government), they didn’t invest in stupid roads like the UK (thanks to the government) and Electricite de France is a great company too — they are leaders in uranium recycling (thanks to the government). Alternatively, many of their more recent policies have lead to high unemployment (its almost impossible to imagine hiring people you don’t know due to crazily restrictive laws), lazy young people whose main ambition is to (not) work for the government (like the lazy old people), and tax rates so high that it is hardly worth working in any case. Their univesities are also falling to bits which doesn’t really matter, because you couldn’t imagine a less ambitious younger generation. These are all things that cause you to go broke in the future, no matter how many babies you have, and no matter how many smart policies you thought of in the past (you can look up the date which S&P predicts that their government bonds will turn into junk status).

  • 64
    Rajat Sood
    March 27th, 2007 11:16

    Leon, it’s great to hear from a real live medical student! I’m a bit unclear as to how you think ‘liberalisation’ will change the situation where full fee places have lower cut-offs than CSPs. I think what should happen is that the government offers a uniform subsidy to each medical student based on an assessment of the positive externalities flowing from having an additional doctor in the community. Currently, the highest TER students are over-subsidised and the full-fee students are under-subsidised. Universities could then create as many medical places as they wished and charge whatever fees they wished (with all students receiving the same subsidy). If this led to high prices and profits in the provision of medical training, new medical training institutions would receive a signal to enter the market. Incidentally, I don’t see why saturated hospitals shouldn’t be able to charge their own fees for training more young doctors. After doctors were trained, specific incentives could also be given to doctors to work in remote areas if this was considered a worthy social objective.

  • 65
    Boris
    March 27th, 2007 16:21

    Conrad, I agree entirely with your comments, including the one about GW Bush.

    Russell, hold on, I did not say that governments should make no decisons. They should act where there are issues that require decisions on the national (or state) level. For example individuals cannot decide to build a railway network (although there are market solutions to this). One of these areas is clean air where individual action can harm others, and it is only logical that goverment step in and legislate enviormental regulations.

    However I am against governement subsidy for things that should be subject to personal choice (eg, where no harm to others is involved). In particular I have difficulty with Classic FM, because it takes a few cents from all taxpayers and benefits a small minority (probably 1%), most of whom are middle class and can afford to pay subscrition rates. However since this is cheap, it is not a big problem for me. But all this support for arts where unelected people make their funding decisions based on personal preferences… I don’t know.

  • 66
    Russell
    March 27th, 2007 22:09

    Boris you’re such as disappointment as an example of Soviet education. I always imagined the comrades crowding into concert halls every night to hear the latest symphony, and here you are wanting to take the axe to Classic FM.

    The ‘nature of humankind’ (got that from F.Rottles) is that we are fallen and weak Boris, and that’s why bad tends to drive out good (the comrades are probably now watching pornographic DVDs on their plasma screens). So we have to keep making an effort to lift our standards – with Classic FM for example.

    Instead of restricting Classic FM to subscribers (how would I listen in the car?) we should have every school pupil listening to it – maybe 20 minutes in between their Japanese and Hindi classes.

    Boris think of the Sydney Opera House, and then of the Perth Concert Hall – the difference is what art does. Do people in Sydney regret having paid a fortune for their Opera House? Should we not have a National Gallery because most Australians will never see it? (what a genius Gough was to buy Blue Poles). No, you have to keep adding beauty and inspiration, not tear it away. You’re in Australia now Boris – breathe freely, expand your horizons, enjoy the finer things of life the community provides …. what’s a few dollars for the arts anyway.

  • 67
    Sacha
    March 27th, 2007 22:50

    You needn’t have public subsidies for Opera Houses or other artistic buildings/events. Isn’t there a public lottery in the UK which pays for some parts of the arts, amongst other things? (Or am I getting this confused with something else – I’m feeling very tired at the moment – still adjusting to the daylight saving change).

  • 68
    Russell
    March 27th, 2007 23:03

    Sacha – a slippery slope. How much of Victoria’s budget now comes from poker machines? We in WA have made a decision as a community to save ourselves from the perils of pokies. Maybe we should just decide to give 5% of all mining royalties to the arts and stop haggling over the amount each year.

  • 69
    Sacha
    March 27th, 2007 23:14

    Well, why not fund more govt activities using lotteries? That way, people don’t contribute unless they want to and they can win big if they do!!

  • 70
    Russell
    March 27th, 2007 23:27

    I just assumed they had already milked the legitimate lottery market for all it was worth. Where’s Yobbo with his gambling expertise?

  • 71
    conrad
    March 28th, 2007 06:52

    Russell,

    you really need to go to some of these countries. When I was working in Beijing some years ago now, you could go to a whole expensive museum showing paintings of great Chinese soldiers fighting the wicked enemy (you probably still can). There’s a lot of good things you could think of about Chinese culture, but this great waste of money isn’t one of them. I’m not saying we should have no funding for the Arts, but great thought needs to be given to it, and this doesn’t appear to occur too often. If you look at things like the money dished out to Australian film makers and what we get from it, for instance (another feel good movie about white hard luck man or other such culture stereotype from the same old club of dull directors), I’m not optimistic. In addition, if the money wasn’t dished out, one might imagine that we might actually get films people want to watch.
    Also the idea that we should pick languages children learn is crazy. When I went to high school, I learnt that very useful language German (in Year 10), and didn’t even learn anything useful with it like grammar (nein, nicht ein bissen). Oddly enough, I’m one of the comparitively small number of people in Australia that actually meaningfully uses a European language now and then (which I learnt from a teach yourself book), but I don’t see why we should have the government picking them for schools.

  • 72
    Russell
    March 28th, 2007 11:50

    Conrad, I have been to some of these countries, and many a pleasant afternoon I spent in the Canton “Cultural Park” developing a taste for Chinese Opera (you have to develop it from absolutely zero, gradually …. after 3 years I quite enjoyed it).

    Also I was an assiduous reader, in the 1960s, of a friendly Readers Digest format magazine called Sputnik which showed the delights offered by the ‘cultural palaces’ in the USSR (any other Sputnik readers out there ?). Maybe Boris was more into exercise than culture.

    What do you mean “pick the languages children learn” – are you suggesting the kids could pick any lanaguage and be offered some online course? Otherwise, if we’re going to train teachers we will have to decide what languages we want kids to learn. I think we’re at the very bottom of the OECD table as far as kids learning second languages.

  • 73
    johng
    April 1st, 2007 16:18

    Regarding the disastrous cut back in entry to medical schools by Wooldridge, this was the result of recommendations to Wooldridge from a committee dominated by doctors. The technical advice indicated clearly that such a decision was silly given the ageing of the population, and the feminisation of the GP workforce. One can only speculate that the doctors saw an advantage to their profession by cutting numbers so as to give themselves more market power and therefore power to raise prices and hence income. Which is what happened.

  • 74
    Andrew Norton
    April 1st, 2007 16:39

    JohnG – As you can see from the dates, the cutbacks actually happened 4 years before Wooldridge became Minister. The numbers started to climb again during his term.

  • 75
    trends in dentistry and dental education
    February 4th, 2008 02:46

    trends in dentistry and dental education…

    this article alone provides very clear answer to the most misunderstood part of the issue….