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From Adelaide to Global Power: Young Rupert Murdoch w/ Walter Marsh – EP210

Journalist Walter Marsh talks about his new book “Young Rupert: The Making of the Murdoch Empire.” Walter and show host Gene Tunny discuss Rupert Murdoch’s early years in Adelaide, South Australia and how they shaped his later career. From challenging established systems to becoming a globally influential media mogul, Murdoch’s career has been highly controversial. 
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About this episode’s guest: Walter Marsh

Walter Marsh is a journalist based in Tarntanya/Adelaide with a background in history and culture. A former editor and staff writer at The Adelaide Review and Rip It Up, his writing has appeared in The Guardian, The Monthly, The Saturday Paper, and InDaily.

What’s covered in EP210

  • Rupert Murdoch’s career and the making of the Murdoch empire. (0:00)
  • Rupert Murdoch’s life and career. (3:09)
  • The origins of Rupert Murdoch’s media empire in Adelaide. (8:16)
  • Newspaper circulation wars in Adelaide. (14:01)
  • The business strategies of a successful entrepreneur. (20:28)
  • A controversial murder case and its aftermath in Australia. (23:35)
  • A historical libel trial involving Rupert Murdoch and his newspaper. (28:09)
  • Media, power, and ethics in the Rupert Murdoch era. (33:20)
  • Rupert Murdoch’s legacy. (38:15)

Links relevant to the conversation

You can purchase Young Rupert via Amazon:

https://www.amazon.com.au/Young-Rupert-making-Murdoch-empire/dp/1761380044

Author’s website:

https://waltermarsh.com.au/

Transcript: From Adelaide to Global Power: Young Rupert Murdoch w/ Walter Marsh – EP210

N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.

Walter Marsh  00:00

I found it very telling that in this period where he is kind of the good guy challenging systems that were overdue for a challenge and these elite establishments that were kind of begging to be shaken up and undermined. You know, the variables were so different when he started but this kind of dynamic have always been the inside or outside of sticking it to these establishments kind of set the groundwork for everything that came afterwards.

Gene Tunny  00:32

Welcome to the Economics Explored podcast, a frank and fearless exploration of important economic issues. I’m your host Gene Tunny. I’m a professional economist and former Australian Treasury official. The aim of this show is to help you better understand the big economic issues affecting all our lives. We do this by considering the theory evidence and by hearing a wide range of views. I’m delighted that you can join me for this episode, please check out the show notes for relevant information. Now on to the show. Hello, thanks for tuning into the show. Last month in September 2023, it was announced that Rupert Murdoch would be stepping down as chairman of the Fox News corporations in November with the possible exception of William Knox, Darcy Murdoch’s been the Australian businessman who’s had the greatest impact on world affairs. He’s had an extraordinary and of course highly controversial career. And believe it or not at all began Adelaide, the city of churches in South Australia. Adelaide journalist Walter Marsh has written a great book about Murdoch’s defining years in Adelaide in the 1950s. The book is called Young Rupert, the making of the Murdoch empire. And I’m delighted to have been able to interview Walter for the show. You’ll learn about how the fear satellite newspaper circulation will set Murdoch on a path to domestic and then global expansion. And you’ll learn about how Murdoch figured out he needed to get close to the politically powerful if he was to succeed. Young Rupert’s a great book, so please consider buying it and supporting a really talented journalist. Details are in the shownotes Okay, let’s get into the episode. I hope you enjoy my conversation with Walter Marsh on young Rupert Walter Marsh, thanks for joining me on the programme.

Walter Marsh  02:18

Thanks for having me, Gene.

Gene Tunny  02:20

It’s a pleasure, Walter. I’ve really enjoyed reading your new book, young Rupert, the making of the Murdoch empire. So came out earlier this year, it’s become even more topical with with Rupert Murdoch stepping down as the head of News Corp the other week. So this is really good timing. So it’s good to have you on the show.

Walter Marsh  02:44

It’s been a pretty crazy to the books been out for two months, and it all the way through writing it. I you know, you’ve conscious when you’re writing a book about a 92 year old that there are certain inevitable deadlines, I guess that you’re on the playing in the back of your mind. But the fact that’s come out that this this resignation happened after the book came out, works pretty well. So I’ve been keeping very busy. So thanks for having me on.

Gene Tunny  03:09

Pleasure. Yeah, so just thinking he’s got good genes, I think because his mother lived until over 100 or nearly 200, if I remember correctly.

Walter Marsh  03:17

Yeah. And there’s a recurring thing in the book as well as people have observed and I didn’t want to, you know, body shame a young Rupert Murdoch. But a few people observed that he were on quite a bit of weight in his 20s. But then I was finding when I was researching the last chapter, which sort of takes the story full circle in the 80s. That these reports on these takeover attempts of the Hilda weekly times when he came back to to Australia in the 80s. And they often started with the sort of doorstop interviews that he was taking whilst going for his morning jog, in his, you know, running short shorts. And so clearly, either one of his co workers or one of his wives whispered in his ear, Hey, your dad died of a heart attack in his 60s and had many health problems got to really become a thing. Other people did describe him as a fitness freak later in life. So he got the memo.

Gene Tunny  04:12

Yes, yes. And his father, of course, was Keith Murdoch, the famous newspaperman. So we might talk about him a bit a bit later, before we get into it. Walter, would you be able to tell me a bit about your, your work as a journalist? Are you a freelancer or your independent journalist at the moment?

Walter Marsh  04:29

Yeah, I’m a bit of freelance for the past three years. Before that I was. I worked as the digital editor of the Adelaide review, which was a long running sort of arts culture magazine, here in Adelaide, that shut down in 2020, sort of as a result of the pandemic. So that kind of was the big push that it took to get cracking on this book project that I’ve been thinking about for a few years. So I’ve kind of come from that culture and arts reporting background, but also In history as well, I’ve been working in the history space and studied at uni. And there was at uni when maybe 10 years ago now that I first started looking into this area as my honours thesis, right. So I did that kind of saw a lot of the sources, a lot of the the narratives that later inform the book, but then happily put on a shelf for the best part of 10 years and tried to work as a journalist. But you know, the way the industry was going, it led me inevitably to go back and think about writing this book. Yeah.

Gene Tunny  05:30

And where was your Where did you do your thesis? Which university? The University of Adelaide? Good one. Okay. All right. And that’s on. Is that on North Terrace? Yeah. And is that near? I mean, Adelaide. So it’s quite compact, isn’t it? So you’d be close to where a lot of the events in you would have been close to where a lot of the events in this book took place, wouldn’t you?

Walter Marsh  05:51

Well, we so much of the events of this book, the Adelaide stuff at least happened? Yeah, on North Terrace. It’s a long street, but they really crafted cram a lot in there.

Gene Tunny  05:58

Yeah. And lots of old, you know, the famous buildings, the parliament, the railway station, if I remember correctly, grand old colonial buildings. So yes, yes. Very good. And can I ask have you ever worked for the Murdoch? Corporation for News Corp?

Walter Marsh  06:18

Yeah, it’s a great question. I did. And I kind of touched upon it in the book, just at the end. But I, when my first big job in the media, editing this sort of street press music, magazine website called rip it up that close down. And one of the things I’ve found about being made redundant in the media and the publication closing down is it’s a very public way of saying I’m unemployed and solid, please hire me. So someone reached out and I did probably the things a month that most in 2016 of, of copyediting work as a freelancer for a food guide that the advertiser were publishing. So that was my little experience inside Keith Murdoch house, which was the launch of that magazine after I’d finished working there. That is the informs the opening scene of the book, and this rooftop party. So that was my experience. Really. Yeah. And that was an interesting time as well, because it was 2016. And even though I was in this very kind of inoffensive corner of the Murdoch for the Empire, it was you know, Trump was in the background debating Hillary and the 2016 blackout happened while I was in the office. So it was an interesting time.

Gene Tunny  07:30

Yes, yeah. Remember that now? Now you mentioned it. And that’s the that’s quite a striking building out in Adelaide. Is that the Keith Murdock house, if I remember correctly? Yeah. So

Walter Marsh  07:39

yeah, way mastery. It’s this big, big glass building that they built less than 20 years ago, and before that, they had this big 1960s building, which really got opened just at the end of the events that are focused on in the book as well. But yeah, it’s definitely looms large over over Adelaide, even though in the last couple of years, because, you know, News Corp has shed a lot of workers lately that I think, as of when I published the book, multiple floors were actually rented out to SA Health, the government health department, so that an E News Corp doesn’t even fill it up anymore.

Gene Tunny  08:14

Right? Oh, yeah, exactly. Given what’s happened with with media. We can chat about that a bit later. So, Walter, I’d like to begin by reading from your summary. I think this is terrific. How you’ve, you’ve summarised this so this is one of your this is a note from the author. For as long as I can remember, my hometown Adelaide, has been a one paper town, a capital city, whose sole daily newspapers been owned by Rupert Murdoch’s use limited for the past 30 years. As I grew up, I realised the company behind this press monopoly extended far beyond my city, was a vast and controversial media empire with global reach. From the cartoons. I watched to the tabloids and cable news networks raising the temperature of Western democracies. And Adelaide wasn’t just a piece of that story. It was ground zero. Although, can you explain how Adelaide was ground zero for the Murdoch empire, please?

Walter Marsh  09:09

Yeah, I mean, it’s the sort of the starting point really, of the book. But in terms of the greater Murdoch story, it really, when piecing together the narrative, you can see that it could have gone a number of different ways. So it really the story starts. And the book starts with Rupert’s father, Sir Keith Murdock, who had spent his whole life his whole career building his name in journalism. He had started off as a freelancer as a reporter and sort of worked his way up over decades, to be the chairman of the Herald and weekly times and he really built that into a nation wide press Empire really. But he was sort of a manager really didn’t actually own that company. So the last few years of his life was spent really carefully trying to build stitch together this sort of separate Separate empire that he could hand over to his son Rupert. And sometimes that involves some, you know, some almost underhanded tactics of convincing the board of the Herald to sell off things like News Limited to him in a private capacity and used, I think it was there’s a, the British Parliament had a Royal Commission into monopoly. And he kind of used that as a as impetus to offload some of their Adelaide holdings. So they didn’t get accused of a press monopoly, but that played into a kid’s hands. So he had the Adelaide interests. He also had a magazine publisher Southdown press in Melbourne, which published new idea, this women’s magazine still going, I think, and there was also the Courier Mail and Queensland press, in Queensland, in Brisbane. And that was the kind of the crux of what Rupert was in line to inherit. But then, because the family itself, you know, Keith had been this a newspaper executive for his whole life. But he wasn’t necessarily a very rich, or at least a liquid sort of rich man himself. So it stretched himself very thin to build up this inheritance for Rupert took on a lot of debt. But when he died, quite suddenly, really, he had staged a border and coup at the Herald only, like 24 hours before he died. So he wasn’t expecting to die quite as suddenly as he did. But he left a lot of things hanging in the air with this inheritance. So Rupert, and his mother or Rupert’s Mother, you know, was very intent on not leaving the family in debt. So sold off a lot of the really key pieces of the furniture, the particularly the Brisbane papers, which left Rupert to basically go from Oxford, to Adelaide to sort of start start over again, you know, this wasn’t a small company, by any means. It had this afternoon newspaper. He also had the Sunday mail, which was the biggest circulation paper in Adelaide. So it was it was nothing to sneeze at. But it was, you know, if Keith had lived a little bit longer, and had managed to pull off what he was trying to work towards, maybe would have started off in Brisbane, maybe if Rupert had convinced his mother to hold on to Brisbane and get rid of News Limited, he would have started off in a different place. But it just so happened that in the circumstances, and this sort of economic pressures that were facing the family that he had to kind of bite the bullet and come to Adelaide, and I do think the circumstances in which he came to Adelaide and the environment he was working in, did have quite an impact in the kind of company that later became.

Gene Tunny  12:31

Yeah, absolutely. So Keith Murdoch had a really, I mean, even though he died in his 60s, I mean, he had a huge life, didn’t he? And he, he was a war correspondent. I think he was famous for highlighting just the some, you know, just the, you know, what was going on at Gallipoli and the Dardanelles campaign, just what a shambles. That was. I think he was famous for that, wasn’t he? If I remember correctly, yeah. Yeah. And so Murdoch, Rupert, Rupert Murdoch comes back to Adelaide. He’s from Oxford. And he was renowned as a Marxist at Oxford, wasn’t he? And he comes back, is he 22 years old, and he turns up in Adelaide is at 1953.

Walter Marsh  13:11

Yeah, 19, September 1953, is when he really touches down. So I’d been under a year after his father’s, his father died, he finished his studies at Oxford, you know, corresponded with his mother furiously, trying to convince her not to sell, unable to convince her at the end, but then eventually says, Yes, I’ll come to Adelaide and sort of start off, you know, take the reins of the company there. And the board in Adelaide of us limited were all much older men, and they were kind of content to let him have a go at it. And he had this very the title we have as publisher, which isn’t very common in Australian newspapers in the sort of hastily defined enough that he could get away with doing whatever he wanted, and poke his nose into a bit of everything and the money side, the editorial side and kind of ease himself into the company.

Gene Tunny  14:01

Yeah. And so what was the paper in Adelaide that he inherited? And its its rival was the advertiser is that right? That’s the famous paper in Adelaide. Is it? What’s that? Yeah, so

Walter Marsh  14:11

So the, the advertiser is the morning paper, and that was the biggest daily newspaper in the city. And it still is today, it’s the only one. But then it’s afternoon competitor in the time of afternoon newspapers when they still exist. It was the news, which was owned by this company News Limited, and actually the advertiser and these limited head since 1930, early 1930s. Keith Murdoch had actually come into Adelaide on behalf of the Herald and weekly times and sort of invaded and taken over both of these papers. So up for you know, the best part of 20 years the Herald weekly times had run Adelaide as a virtual press monopoly of their own it was only a few years before Keith’s death that he carved out the News Limited and the news as this sort of our sort of rival to the Herald and weekly times owned advertiser that was run by the chairman of the weekly time. So there’s a lot of conflicting interests. And then when Rupert comes into town, sort of the gloves are off and it’s just open competition between the two papers.

Gene Tunny  15:16

Okay, right. Oh, so he’s he’s got a newspaper and obviously it gives up any any ideas of socialism or Marxism. That interesting little aspect of Murdoch. Yeah. So I like how you describe this. So I might read this other passage out because I’ve got a question about this. So in the synopsis for the book, it says led by Rupert’s friend Ally and editor in chief Rowan rivet, the fledgling Murdoch press began a seven year campaign of circulation, wars, expansion and courtroom battles that divided the city and would lay the foundations for a global empire if Rupert and Rowan didn’t end up in custody first. So okay, well, you’ve got to tell me more about that. What? How nasty did this circulation wall get? What were the courtroom battles about? And were they really at risk of doing in doing jail time?

Walter Marsh  16:12

Well, the circulation matters really start from even before Rupert touches down in Adelaide. So in an in amongst the the sort of aftermath of case death, there’s this guy sort of trying to convey in the book, there’s a scramble for control of these assets that he’d been building up. And all of his former colleagues at the Herald, his rivals, as well. They’re all sort of competing to sort of carve up Rupert’s inheritance. And they’re all telling each other vastly different stories. And they’re all saying, you know, Keith told me he wants to do this. Keith told me he wanted to do that. Keith is always playing people off against each other. So no one really knew what he what his true plans were. And in amongst that, once it became clear that that Rupert would have to come to Adelaide, to start over, the chairman of the advertisers to Lloyd dumar, who had been installed by Keith Murdoch, you know, 20 years earlier, when they came into Adelaide. He made this overtures to Rupert’s mother, Elizabeth, and kind of said, look, the News Limited sort of financial security depends on having this Sunday paper, which is the only Sunday paper it has this huge circulation, there’s no competition in that kind of market. It’s got its own little monopoly. We’re going to come in and we’re going to launch a Sunday paper, and we’re going to really put up a huge fight, you guys have limited resources. And, you know, there’s every is every likelihood that we’re going to just completely crush, crush this fledgling Murdoch press as it was at the time. But the alternative, the ultimatum he gave her was that you can sell the mail, and he’s limited all back to the health and weekly times and sort of restoring sort of a reset to what the status quo was three years earlier, before, you know, three or four years early before Keith had started carving it away for Rupert’s inheritance. And when Rupert found about about this, he was outraged. He was absolutely incensed. There were some really colourful letters that I was very pleased to find in the National Library of Australia. And so as soon as he’s made the decision, and he makes it very quickly that they’re not going to sell out he does want to have a go at making his life in newspapers. They said about the news news and his team, Ron Rivera, they all start secretly making plans about sort of battening down the hatches and preparing for the competition that’s about to happen when they launched, the advertiser launches this Sunday advertiser. And meanwhile, across town, the Sunday advertisers, you know, they’re they’re all doing these big research trips and criss crossing the world to find out the most modern advances in in sort of circulation building and newspapers and building up audiences. And so in, I think it’s August or September, the advertising the Sunday advertiser launches, and it’s immediately it’s a big threat to use them to them Rupert’s inheritance, and it’s not long after Rupert touches down that the mail, the news, limited paper, fires back and puts on the front page, accuses the advertiser of making a bid for press monopoly, and makes public this story of this kind of overtures to his mother, you know, the newly recently widowed recently bereaved wife of Sir Keith and kind of trying to strong arm, the Murdochs into selling them out, and they fret and it was framed in these terms where it wasn’t just a story of a family business, or, you know, the inheritance of a 22 year old, but it was this big, you know, this was a question of freedom press freedom in South Australia. And, you know, the the male and US Limited was going to stand up against this attempt to have, I guess, what was the quote something along the lines of all the states press in the communities press in the hands of one click, or group or group of businessmen, which is, of course deeply ironic now because the advertiser is the only paper in town and it’s been owned by Murdoch since the 80s. But that was really the start where the You know, the gloves were off, and they were really launching into this fight. And they thought they both papers threw everything at it for about two years until they eventually reached a kind of stalemate, they were kind of both speaking to the same audience both using all the same techniques, and haemorrhaging money in an unsustainable way. And so eventually, they, the advertiser kind of Rupert viewed as a capitulation, where they said, Actually, let’s merge the papers and publish one Sunday paper that’s co owned by the two companies. So it was kind of a draw, I guess. But for Rupert, when he’s coming up against this much better resourced paper and company that has ties to the Herald and weekly times, but also internationally as well. Now to have survived to your Onslaught was a pretty huge achievement, but also drove home to him that to really compete and to beat them, I guess that he had to expand it and match them in terms of the resources. So that kind of led to this treadmill of never ending expansion, I think that we see intake all around the world. And because, as Keith was, you know, he didn’t have a lot of capital, the family’s own capital to draw from the way he funded that was by taking out loans, he didn’t want to dilute the family’s control of the company by bringing in extra investors or shareholders. So a lot of borrowed money from banks. But that led him to this sort of cycle where the expansion is funded by borrowed money, he has to pay off the borrowed money. So in every town that he acquires something, in order to expand, he has to make that as profitable as possible as quickly as possible, as quickly as possible. So I think that goes a long way to explaining how, in a structural way, those early competitions kind of set him on this path of this sort of fight back siege mentality, which set him on the on this path of never ending expansion. And in every place, he went to, kind of pushing, pushing the bar, and maybe lowering the tone and pursuit of profit in every place that he went all around the world. And when you do that on a kind of industrial scale, it has, I think, a cumulative effect. I don’t think anyone would deny that.

Gene Tunny  22:10

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Gene Tunny  22:45

Now back to the show. I was gonna ask you about that I was going to ask you about how his time in Adelaide set him up for later expansion. And I was wondering whether it was because he, it was super profitable. And then that gave them the capital, but it sounds like no, actually. I mean, it did provide some earnings, obviously. But they went and expanded. They needed, they needed to borrow the money. And then that set them on that on that growth path. And they just because

Walter Marsh  23:14

he and because he’s a real opportunist as well, like he worked, he didn’t have so much money and resources that he could pick and choose. He’d always just buy whatever was available, whatever got his foot in the door of the market, whatever he could convince someone to sell to him who whoever underestimated him enough to sell something to him. He took it and then turn it into something profitable, which you saw repeated. But to go back to your question about the whether they were going to end up in jail along the way. Alongside this, this sort of economic competitions, there was this political aspect as well where South Australia in the 1950s. And the decade before it had been run by this sort of conservative establishment, the liberal country league party had been in power for over two decades. And they were kept in power by a gerrymander where country voters had twice the electoral power of those in the city. And so even though they were losing the popular vote, this party kept getting returned to power and that party and that establishment was backed in hard by the advertiser. So So Rupert, and this comes back to the sort of left wing aspect of Rupert and rounder of it. They were both quite left wing at the start politically, their personal politics, but they also saw that there was, you know, if more than the the majority of voting for labour, but they’re not getting in. Clearly, that is a huge potential readership, if they made a concerted attempt to speak to this disenfranchised market that isn’t being spoken to by the advertiser, then they know they’ve got a lot of ground to gain and a lot of money to make. And I think that ties into this challenging of the establishment through legal challenges to the report. chewing through, you know, matters of good taste and things like that, that leads to them kind of raising the temperature in Adelaide and sort of pushing the boundaries of acceptability and challenging these systems in a way that over the seven year period, it gets to the point where when they get tied up in this case of ribbit, Max Stuart, and this royal commission, which is formed the crux of this book, and when they’re the libel trial, where the paper and Roland ribbit, the editor will on trial, that’s really the culmination of a lot of tensions that have been simmering and getting more tense over over a seven year period where it all comes, comes to bear.

Gene Tunny  25:38

Could you tell us a bit about that? Walter, what was the libel? What was the libel that it was about?

Walter Marsh  25:44

Yeah, so in in 19, December 1958. in Sedona, which is a town on the far west coast of South Australia, it’s a coastal town, a nine year old white girl, called Mary all of Hatton disappeared, she was later found murdered. And within a couple of days, the police arrested 2627 year old Aaron demand called Rupert next to it. Within a few hours of them arresting him, they emerged with this time confession in the early hours of the morning. And he was convicted of murder and sentenced to death. And the judge at the first trial basically said the all this other evidence they’ve got doesn’t really amount to much. It’s basically this confession or nothing. At the trial. Stuart and his lawyer said that the police choked him and beat the confession out of him. He was illiterate, didn’t speak particularly good English as well. He was signed, he signed the confession, which was typed by the police. But those to his name was the only thing he knew how to read or write really. And so there were appeals and appeals, nothing really worked. There was this growing community campaign, there were academics who became convinced that he was, you know, if not innocent, had certainly been wrongly convicted. Eventually, a Catholic priest called Tom Dixon goes to sort of attend to Stuart, in his cell, because he, you know, he’s facing death. And he, he speaks errand this priest does, because he’s worked in remote communities. And he becomes convinced that Stuart not only doesn’t really know anything about the day of the crime or the events, but doesn’t speak English in the way he doesn’t speak English competently enough that he would have been able to dictate this confession, which is very precise language, lays out how the crime, how he committed it, how he did so in a way that matched all the evidence that the police had put together. And so that kind of lit a fire under the campaign again, and people became convinced that he physically couldn’t have done this, given this confession, which the police at trial had sworn was verbatim. Anyway, so Dixon is introduced to Ron ribbit, this, the editor of the news, and he agrees to get behind the campaign and pay for Dixon to fly to Queensland to try and track down an alibi. But Stuart he does successfully. And then it just becomes this huge press campaign. Virtually, it’s reported all around the world and the Playford government facing this extraordinary pressure that they hadn’t in 20 years because they’ve enjoyed such a unchallenged power, eventually decided to hold a Royal Commission. And then it’s at the Royal Commission where this lawyer who’s come in to represent Stuart, he is questioning the police officer who first identified Stuart as a potential suspect. And he gets interrupted by one of the Royal commissioners who also happens to be the Chief Justice of the Supreme Court in South Australia, who had previously heard one of Stewart’s appeals. So there was a lot of in a very, very Adelaide, sort of incestuous With tensions right away. And this idea of he wasn’t getting a fair go. So the lawyer, he walked out, essentially, and flew back to Sydney. And it was the news. The news is reportage of this event. It was perfectly time for the afternoon papers. And they basically said they sort of paraphrased quoted him on the front page and of these news posters saying, you won’t give Stuart a fair go these commissioners can’t do the job. And it was this coverage that incensed the state government because they weren’t just criticising the commissioners, but this was the chief justice as well, because Playford the premier has installed the chief justice as the Commissioner. So it’s a real challenge to the legitimacy of the entire judicial system in South Australia and the plaque the premier Tom Playford stood up in Parliament and waved these headlines and said it was the gravest libel ever levelled judge in South Australia. And so the Royal Commission eventually wraps up the verdict is upheld, but he his life sentence is commuted his death sentence sorry is committed to life so the campaign has managed to save Stewart’s liked one way or another. But then a few months after that at the start of 1960, some police officers and this is where I start the book off with the scene, some police officers walk into US Women’s headquarters to interview round rivet and later Rupert sort of interrogate them about these these headlines. And then within a couple of months, the report is basically the whole of these limited in the organisation they run is put on the witness stand and really forensic ly pulled apart by Crown lawyers as they face these charges of libel, including seditious libel, which is sort of the headline charge, which is basically just bringing the state of South Australia into kind of disrepute, I suppose. And that was the really finding that that case, the Stuart case has been talked about a lot. There are three books that go into it in quite a lot of detail. There’s a movie made about it, but it was this libel trial afterwards, and what the libel trial tells us about how Rupert ran his company, at that point, the relationships and his role in this coverage that’s very kind of not sensationalist. But it definitely was provocative. They got them in a lot of trouble. That was, that was the kind of the climax of what I thought hadn’t really been looked at in the book before. And sort of in this, you know, writing it today, with the backdrop of, you know, the libel cases against crikey and dominion, and all this stuff, and the Sedition is a big word with January 6, and all that it just felt like a much different set of stakes, a totally different era, but felt like it resonated a lot with the era that we’re living through now at the end of Rupert’s, if not life, sort of his tenure in the news. So, yeah, I really dig into that a lot.

Gene Tunny  31:50

Yeah, that’s fascinating. And so Murdoch, he successfully defended himself against that libel, is that correct?

Walter Marsh  31:58

Yeah. So it was it was the company News Limited. And Ron Roman, the editor that were on trial, so not Rupert himself. But the as the trial progresses, it basically becomes clear that Rupert had written at least two, I think of the headlines that had gotten them in hot water. And in addition to that, there was an editorial that was published a week or so afterwards, when it became clear that, you know, the play for government was absolutely outraged by the coverage. And it was kind of trying to, I guess, calm the farm a little bit and set the record straight. But that this editorial was held up by the by the prosecution as admission of guilt, essentially, by the newspaper, by admitting that those headlines were not quite accurate and shouldn’t have been printed. And it’s revealed that Rupert wrote that headline himself. So it shows a lot about the kind of proprietor he is and how he’s, you know, never too far away from the action, but it’s particularly in relation to the more modern day cases that are happening where he’s kind of recognised that they, you know, pushed the Fox News, sort of Trumpian base a bit too far, is a sign that even Rupert sometimes recognised as when the company has gone a little bit too far and and flying too close to the sun.

Gene Tunny  33:20

Yes, exactly. Well, he had to sack Tucker Carlson, the noted commentator over there, which is one example of

Walter Marsh  33:28

an event and revenge gets sacked shortly after the final charges are dropped. So it’s, everything kind of comes to a head. And that’s a good way to bookend the book and wrong.

Gene Tunny  33:41

Yeah, it’s fascinating, because it sounds like he was probably on the right side in that on that issue. And yeah, years later, I mean, Murdoch would obviously come under intense criticism. And there have been some massive scandals that we don’t need to go into here. But what happened with News, News of the World and the UK and the phone hacking, just absolutely appalling stuff.

Walter Marsh  34:02

I mean, it’s all kind of sorry, it’s all it’s all very speculative when I’m just looking at this early period. But I do think that I found it very telling that in this period, where he is kind of the good guy challenging systems that were overdue for a challenge and these elite establishments that were kind of begging to be shaken up and undermined. And that’s kind of siege mentality. And, you know, he’s not the little guy by any means, because he’s still the inheritor of a newspaper company and the son of the press Baron that set up this whole empire, but it kind of shows what I’ve been discovered. This is sort of foundational contradictions that we see, you know, his his resignation letter, the other week, you know, he still tried to rail against the elite and collaborate and eliteserien co cahoots with the media whose you know, sacrifice truth for political agendas. I think it was in thing and it’s just that the cognitive dissonance on display when he talks about that kind of thing as the billionaire head of a hugely influential Empire that’s had a huge influence on politics. You know, how do you make sense of that, and then seeing it in the context of what he’s been fighting and fighting since day one. And when, you know, the variables were so different when he started, but this kind of dynamic have always been the inside or outside of sticking it to these establishments, kind of set the groundwork for everything that came afterwards.

Gene Tunny  35:27

Yeah, well, he’s no longer on the News Corp is no longer in its ascendancy, if that’s the right word. Because it’s been really battered by the internet and all social media, YouTube, etc. So it’s, it is struggling with Sky News, Australia seems to do it seems to do okay on YouTube. And I mean, there still is a, there’s a dedicated audience of some people out there for sky, but I know elsewhere around the world and the papers here, I mean, the Courier Mail in Queensland’s lead off a lot of people over the years, and they’re just not the force that they once were.

Walter Marsh  36:00

Well, even things like YouTube, like how Yes, Sky has found this huge, sort of secondary, you know, in Australia, it’s on pay TV, or it’s being beamed into airports or country TV free to air. But on YouTube, they found this quite lucrative secondary market where they put some insane videos, some rant on YouTube, and there’s gets 1000s and 1000s of views from America within minutes. And it just made me think that a lot of the things that I explored in this book in the 1950s, the media landscape today, and the one that I’ve navigated in my professional life, is in so many ways unrecognisable from the one Rupert inherited, you know, in, in Rupert’s days, you know, as a building, full of hundreds and hundreds of men and women and just hours and hours of labour. And it was a huge physical process to put together the news each day that everyone read, you know, on trains all at once in two distinct waves, completely. And today, it’s completely different in so many ways. But then at the same time, I kept being reminded that a lot of these arguments and questions that are being explored in that period, things like Monopoly, and ownership and the truth and sensationalism. They’re the same questions, the medium is completely different, the society looks a lot different, but they’re still the same questions. And to bring it back to what I was talking about with YouTube, and how that these algorithms, these online algorithms kind of favour content that provokes a strong reaction that kind of fuels conflict, and instead of moderation and sort of nuance, it’s in a lot of ways, it’s very similar to after the newspapers, because, you know, they had to, had to sell to sell papers, they had to put together headlines and stories that caught the eye and sort of captured the emotional feeling of just random communities passing by, that could be held out by newsboys on the corner, if they weren’t doing that they weren’t selling papers, and the company fell over. So is that these mediums, the mediums are totally different. But there again, and again, we see that they’re kind of structurally predisposed to things like sensationalism, which Yeah, is kind of defies the time period.

Gene Tunny  38:15

Yeah, yeah. Yeah, absolutely. Okay. And I think that’s a that’s a good point. I mean, he learned, I mean, Murdoch. I mean, he obviously cut his teeth in Adelaide, he, he learned a lot about what works in media, and then he managed to scale that up globally. So I think that’s and the other point about Adelaide, which I liked that you made in the book, is that in Adelaide, did he learn the importance of political influence, he learned that the, the people at the advertiser, they were politically connected, if I’m remembering this correctly, and he just learned how important that was. And then he called, he learned to cultivate politicians. And we saw that, you know, famously over the years, and he for a while he was making and breaking government’s Gough Whitlam in, in Australia. He backed him then he didn’t back in and then that was played some role. It wasn’t obviously the decisive factor, but it did play a role. So yeah, incredible. I just found I found that really interesting. I can see how his experience in Adelaide taught him that lesson.

Walter Marsh  39:15

Because he was kind of, even though he had this privileged upbringing in you know, I was raised, lived and breathed newspapers growing up the son of his father who was understood the power of influence in politics. But when he stopped when Rupert started out, he had Yeah, this six or seven year period when he was an outsider, and even though he was doing a lot to challenge the establishment, he also was finding really experiencing the limits of what you could achieve by just throwing rocks from the outside and I think yeah, by 1960 when we kind of leave Rupert it’s very clear that he you know, when he’s been hauled to court and you know, as editors sent him into custody and threatened with jail time is discovered the upper limits have that kind of approach and takes a different path?

Gene Tunny  40:04

Yeah, indeed. Okay, so just two quick questions for the just at the end. Because when you mentioned those a movie about the Stuart case, I wanted to know what that movie was. And then second, if your book is optioned, which it may well be given, it tells a it’s a riveting rollicking tale as Jenny hocking has described it, who do you think could play young Rupert in a Netflix series or a movie? You thought about that?

Walter Marsh  40:37

I haven’t know. But it’s a good question. I haven’t I should say I haven’t thought of anyone off the top of my head. It’s kind of a bit of a backhanded compliment. I think for any very young actors. We I think you could perfectly embody young Rupert Murdoch. But the movie is called black and white. It was made in I think, 2001 I think it’s on Netflix. It kind of comes in and out of the streaming services, but the young Rupert plays a small role in that story, and he’s actually played by a young Ben Mendelsohn. So maybe they can get Ben Ben back to play. Stick Keith Murdock.

Gene Tunny  41:17

Yeah, absolutely. I’m gonna have to watch that. That sounds fascinating. Okay, Walter Mosh well done and well done on the book. I hope it sells well. And I’m sure you’ll be getting lots of media in the future on Rupert Murdoch, his legacy. I mean, he’s still alive. He’s still chairman emeritus of News Corp. And I expect they will. Lachlan Murdoch. I mean, you’ll have a tough time, but I expect they’ll still be important in the media landscape for at least the next decade or so. If you have any final thoughts on that on the legacy where they’re going? Please let me know. Otherwise, you’re happier to wrap up.

Walter Marsh  41:57

Yeah, I mean, the one thing that, that reading that letter, and I mentioned this in a column I did for the guardian. But reading Rupert’s resignation letter did make me think of another resignation letter I’ve found in my research from his father, Keith Murdoch from 1949, where he was having some health issues. And he’d been sort of compelled in late 1949, to announce that he was handing over the day to day running of the Herald weekly times as managing director to his successor, Jack Willett, John Jack Williams, and Keith Hill to remain chairman. But clearly, this was intended as a kind of changing of the guard, you know, getting into semi retirement. Within the next three years, I was going through all these letters were keep spend all that time, you know, coming into the office whenever he could, just white anting Williams eroding his influence, asking all these questions at meetings. And then finally, the last six months, he’s incredible letters where, you know, he’s back and forth with executives that are on his side, about this disintegration across the company. And finally, 24 hours before Keith dies, he launches this, I guess, boardroom purge, where he gets gets Williams turfed out of the company and sort of reassert his control over the company in this really defined way. And then dies within 24 hours, which, you know, in the context of Rupert and whether or not he can really, you know, sit the out of office and go and relax while Lachlan takes over. I feel like the whole 70 year arc has been about control and the whole company being built around his decision making. So I think that that will you know, that would be a tough one to relinquish. But then interestingly, and this is just a little fun tidbit for you. But I was it was fascinating to read about in the aftermath of Keith’s death when they when the call came in, obviously, Williams went straight back into the office and got someone to drill open, keep safe, and they found all these papers which kind of expose his sort of all these tactics he had to build up Rupert’s inheritance. So by the time kids funeral had come around, on Thursday of that week before Robert had even gotten back to the country, the minutes had been the decision to get rid of Williams had been scrubbed from the minutes. He’d been reinstated, and he ended up one of the pallbearers for Keith, just a few less than a week after keep that down, tipped him out of the company. So it’s hard to relinquish control when you’re a Murdoch is my take home.

Gene Tunny  44:26

Yeah, yeah, absolutely. Okay. Well, Tomas, thanks so much for your time. I really enjoyed the conversation.

Walter Marsh  44:32

Thank you. Thanks for having me.

Gene Tunny  44:35

rato thanks for listening to this episode of Economics Explored. If you have any questions, comments or suggestions, please get in touch. I’d love to hear from you. You can send me an email via contact@economicsexplored.com Or a voicemail via SpeakPipe. You can find the link in the show notes. If you’ve enjoyed the show, I’d be grateful if you could tell anyone you think would be interested about it. Word of mouth is one of the main ways that people learn about The Show. Finally, if your podcasting outlets you then please write a review and leave a rating. Thanks for listening. I hope you can join me again next week

45:22

thank you for listening. We hope you enjoyed the episode. For more content like this where to begin your own podcasting journey head on over to obsidian-productions.com

Credits

Thanks to Obsidian Productions for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au. Full transcripts are available a few days after the episode is first published at www.economicsexplored.com. Economics Explored is available via Apple PodcastsGoogle Podcast, and other podcasting platforms.

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Podcast episode

Private vs public sector jobs, consulting scandals & economics as an ‘imperialist discipline’ w/ UQPPES – EP209

Show host Gene Tunny speaks with students from the University of Queensland Politics, Philosophy and Economics Society. They discuss topics such as private versus public sector jobs, the future of consulting, and the risks of outsourcing for government officials. Gene takes an historical perspective and goes back to the time of convict transportation to Australia. He also talks about, among other things, his time working in Treasury during the Rudd Government, and how psychology is relevant to economics. The students express concerns about the consulting sector in light of a recent scandal involving PwC partners misusing confidential government information.

Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored

You can listen to the episode via the embedded player below or via podcasting apps including Google PodcastsApple Podcasts and Spotify.

What’s covered in EP209

  • Economics career paths and differences between public service and consulting. (3:04)
  • Consulting industry challenges and scandals. (15:39)
  • Outsourcing in government and potential mitigation of risks. (17:50)
  • Greedflation. (28:30)
  • Limits of economics as a discipline. (33:59)
  • Public vs private sector work experiences. (38:22)
  • Government consulting and ethics. (43:48)

Links relevant to the conversation

About UQPPES:

https://uqppes.com.au/about-us/

On how badly designed outsourcing of convict transportation created the ‘death fleet’, see:

https://www.themandarin.com.au/73989-contracts-and-convicts-how-perverse-incentives-created-the-death-fleet/

Transcript: Private vs public sector jobs, consulting scandals & economics as an ‘imperialist discipline’ w/ UQPPES – EP209

N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.

Gene Tunny  00:03

I mean, I think economics is an incredibly powerful tool where it gets difficult is trying to predict behaviour and, and in in cases where people don’t act fully rationally, and that’s what you need to bring the psychology in. Right. So, I think any idea that economics is the imperialist discipline and we’ve got all the answers, I think that was destroyed by the financial crisis. Welcome to the economics explored podcast, a frank and fearless exploration of important economic issues. I’m your host, Gene Tunny. I’m a professional economist and former Australian Treasury official. The aim of this show is to help you better understand the big economic issues affecting all our lives. We do this by considering the theory evidence and by hearing a wide range of views. I’m delighted that you can join me for this episode, please check out the show notes for relevant information. Now on to the show. Hello, thanks for tuning into the show. If you’ve listened to my recent episode on degrowth, you would have heard a little bit of the recent event that I spoke at. The event was hosted by the University of Queensland PPE society where PPE stands for politics, philosophy and economics. This episode features the rest of the conversation that I had with the students. We talked about private versus public sector jobs, the future of consulting and the risks that government officials need to watch out for and outsourcing. In the conversation I picked up there many of the students appear especially concerned about the future of the consulting sector, which is a major employer of graduates. The context is that we’ve had this big scandal in Australia over some PwC partners allegedly misusing confidential information they received from the government. They allegedly used it for private gain. As you’ll hear the students were super interested in the differences between working in the private and public sector, and which was the better option for economics students, I gave the best advice that I could on this question among many others. As with many questions, there’s no easy answer. It says good things and bad things about private and public sector jobs. And a lot will depend on people’s individual preferences and personalities. As you’ll hear, I think that the public sector provides a better training ground for young economists. The work environment and training opportunities are generally much better. But there are challenges in the public sector. As the higher up you get, the more you get exposed to the political side of government, which brings new challenges. That said, there are some people who thrive on that. So it depends on just what you’re looking for. If you have your own thoughts on working in the private versus the public sector, or any of the other issues that we talked about this episode, then please reach out and share your thoughts. My contact details are in the show notes. Okay, let’s get into the episode. I hope you enjoy it.

Joe  03:04

Welcome, everybody. Thank you very much for coming. My name is Joseph. I’ll be your emcee for this evening. And I’d like to say a very, very warm welcome to esteemed economist gene Tunny. He is here with us tonight. He’s the Director of Adult economics, and a 1997 CIS liberty and society alumnus. He is a former Australian Treasury official, and has worked on a range of domestic and international consulting projects. So we’re very lucky to have someone with such expertise. Joining us tonight to answer some of our questions about economics. So I guess to start off with Jean, could you maybe tell us a little bit more about yourself about the work you’ve done and how you maybe came to work in consulting?

Gene Tunny  03:50

Yeah, so I’m an economist, done a broad range of things are taught at this university in the past. So in this very room, subjects such as cost benefit analysis, there’s probably macroeconomic policy that I taught in 2015 in this room here. So I’ve got a background in macro policy budget policy when I was in the Treasury in Canberra, so worked on a lot of issues there, industry policy issues to do with the car industry, the budget debt, so we had to borrow a lot of money again, during the financial crisis. So I was heavily involved in that. And yeah, around probably around 2009, I started thinking I’d be good to for a bit of a change. And a friend of mine, Tony, Hans, was heading Mars and Jacob up here, the consulting office, and he was doing a lot of good stuff, cost benefit studies of all the new water infrastructure we needed because we’re in a drought. And I thought I’d be great to come back to Queensland I think it might have been a wedding that was up at nursery or went up to a wedding, a friend’s wedding. And you know how magical nurseries and the reception was at sales and a probably had a couple of glasses of champagne and thought, what on earth? Why would I want to go back to Canberra when you’re on the beach here and beautiful? That was partly why I wanted to come, I came back. So I worked here at uni, I worked in state government, as a public servant do different analytical roles, workers compensation, industrial relations, then treasury. And since 2009, I’ve been doing consulting since 2014, my own firm and yeah, work for a huge different range of clients, agribusiness companies, some government agencies, industry bodies, major corporations, ANZ Bank, for example, say all sorts of clients,

Joe  05:39

you know, you said in, you know, you were thinking of wanting for a bit of a change up coming back up here and working in consulting what, because for us, consulting and public service are too so the main employment pathways, could you maybe give us some sort of insights into the differences between the two, the, you know, the positive sides of both, and perhaps some, some negative sides or things you didn’t like, as much from either?

Gene Tunny  06:06

Yeah, so the public service is a good training grounds, and there are a lot of a lot of opportunities. They look up to you. So I think if you’re beginning in particular, you’re studying PPE, places like treasury, productivity commission, Reserve Bank, de fat, foreign affairs, and trade, I think they’re excellent places to go to learn about the issues and potentially get training opportunities or international postings that they can be really great opportunities. And public sector. Yeah, it’s different. I mean, the different The obvious difference is that, in one, there’s a mission that set by the government of the day and there’s a, you know, there’s a bureaucratic national, you’ve got to achieve some tasks. So that could be improving the health of the population, running the health system, or the education system, educating people, or could be Treasury where it’s this broad concept of well being, and you’re overseeing a whole range of agencies, you got to make sure that the budget is in good shape. So that’s, that’s a bit more of a, like, every agency has got a different mission. And that’s, that’s what determines that. In the private sector. It’s about profit. So profit. I mean, that’s, that’s what Yep, you need to make money to be able to keep the operation going. So there’s a clear goal, and that ends up driving a lot of things and forcing efficiency. So when I think one of the challenges in the public sector is because you don’t have that, there’s not that focus on profit, things can become a little bit inefficient. Yeah, there’s not the same sort of laser focus on, on doing things efficiently. And going after profitable opportunities. Your mission is set by politicians. And that can be problematic, because sometimes they can change their mind. Sometimes the politicians, I mean, maybe some of the things that they that they’re aiming for aren’t necessarily sensible. But yeah, as a public servant, you do have to try and achieve the objectives of the government of the day. To me, those would be the major differences. But if you want to explore that any more feel free either. Because because I’m not sure about answer that question very well. But that’s just what occurred to me. And with the private sector, I mean, you’ve got like, I work for a whole range of clients. And it can be a different project, like one day, it can be looking at lb farms. So there’s a client of mine, who’s built a big lb farm out at Dundee windy, and he’s trying to extract Omega three rich oil from the the algae. So now he can make some money out of that. And so I’ve helped him get a grant from the state government to do the r&d. And that’s fascinating. But then another day, I might be looking at parcels and issues to do with freight transport. So there are a whole range of things that you study, whereas if you’re in a public service agency, one of the risks is you could what you want to avoid is staying in the one spot and just doing the day to day because there is a lot of day to day responding to emails or letters from the public and writing Minister replies writing speeches, writing question time briefs, you want to get into an area where you you’re not. You’re not doing that day to day public service stuff, but there are a lot of good places like treasuries, terrific. Reserve Bank, doing rigorous analysis trying to inform the monetary policy decision that that’d be a great place. Yeah.

Joe  09:32

Super interesting. Yeah. I mean, I would never have even sort of imagined that consulting firm would be working out in Gander windy.

Gene Tunny  09:40

Oh, well, I mean, I mean, in Queensland, Australia is huge in agriculture, okay. And you’d be blown away if you if you go out there and just see how advanced a lot of these operations are. Here. There’s a lot of work for consultants. I mean, economists are probably I mean, we would have only a very small part of the work I mean, this has worked for Engineers is work for agronomist experts in agriculture. Yeah, there’s all sorts of all sorts of work and in a lot of things are automated. Yeah, they’re increasingly used. I think they’re even using AI now to work out, you know, optimal irrigation and optimal spraying of pesticides and things like that. Yeah, right. Yeah.

Joe  10:21

Very cool. That’s a good point. I think that you said that, you know, economist consultants would be doing a small part of it. And I guess, for your firm, or just for consultants, in general, as you say that the jump between lots of very different projects from different clients? How do you sort of go about preparing for a new client or, you know, perhaps in an area that is not necessarily somebody that you’ve worked before, but still have to deliver services or help your your client in some way? Well, you’ve

Gene Tunny  10:54

got to be a quick study, you have to get across the issues as best you can. And it’s like, if you’re doing an assignment at uni, you want to start early, you want to get all the resources, do the reading, learn as much as you can ask questions. So I mean, when you’re doing consulting projects, the the client is they’re motivated to help you to assist and to provide all the information they can see, it’s about being a detective or a journalist, and asking questions, to get all the information you need. But you do have to be a quick study. Ultimately, the, the Principles of Economics are the same. And I guess you learn a process of gathering the information, you sort of get an idea of what they might have on hand, what you might, sometimes you might need someone else to help out, you might need an engineer to come in and, and help work out how to solve a particular problem like in, in on their farm or in their factory, and they might have an estimate of what that will cost. You might need an architect or a quantity surveyor to do lifecycle cost estimates for a building that you’re doing a cost benefit analysis on. So there are the experts that you might have to bring in. But yeah, you need to have a, you need to plan you need to think think with the end in mind, begin with the end in mind, which is one of the seven habits that Stephen Covey talks about, it’s so true, you got to think about what’s the ultimate thing I need? And where am I now? What needs to happen to get there, you got to figure out the most efficient route to get there. So a lot of problem solving.

Joe  12:26

Yeah. And that’s, I think, a really big, exciting thing about economics and about, like studying policy and things like that is that a lot of it is problem solving? Would you have any advice for any students studying economics, or PPE, or any sort of related discipline in sort of getting into the consulting world, post

Gene Tunny  12:46

graduation, I mean, I wouldn’t get into consulting unless you are super passionate about it. Or, I mean, there are some good places that are working to death. I mean, if you get a, if you get a really good GPA, I don’t know what you need to get now that if you can get into some or like McKinsey, or BCG or aubaine, they’re really good training grounds for getting into C suite or, or getting into a, you know, really top job. So I think if you if you could get into one of those coming out as a grad, that’d be great. Other places where signing, you’re probably better off going, you want somewhere that will give you I mean, it sounds silly. It sounds terrible. What’s the word I’m trying to think of the word, but you want something that looks good on your CV, right. And so you want something that is recognisable, and that’s why Treasury or productivity commission or RBA works so well. So I’d be applying for somewhere like that and get good training and, and learn how to and what’s good about those biases is that they have high standards, and they teach you how to write well and communicate. And I think that’s very important. And they can also give you international opportunities. So one of the things that I that blew me away when I went into treasury was just all the international opportunities there. You work on issues with OECD or G 20, or IMF, World Bank, and Treasury people get postings all over the place. Beijing, Tokyo, London, Jakarta, Washington, DC. So that’s, yeah, that’s, that’s a good way to get a national experience and D fat too, of course. But that’s what I’d be doing. I’d be trying to get into, you know, as you probably all know, this, you got to work hard, study hard, try and do extracurricular things that will impress people have a reasonably good interview performance. And yeah, that’s, that’s all I can recommend is just work hard. You’re probably doing all that already.

Joe  14:39

Some of us maybe not awesome. Thanks for the advice. Like it’s really helpful, especially from someone who’s working in the industry. Yeah.

Gene Tunny  14:49

I mean, why I’d say that I mean, I mean, I enjoy consulting but I always see it as something that I’ve sort of fallen into. I mean, it’s good for me because it allows me to do a lot of interesting things and work with different people. And you know, potentially develop a business and grow the business. So what you ultimately want to do is specialise create products. So that’s the path I’m on now. So you probably don’t want to be doing lots of different things. I mean, I’ve been opportunistic, I’ve been trying to, you know, get the contracts in. And to do that I need to work on a lot of different things. Because partly, it’s because I’ve got a wide range of experience. So I’ve dabbled in different areas, and I can do those for a wide range of things. But ultimately, I’d like to sort of niche down and develop products that, that provide that recurrent revenue, that’s what you ultimately want, I think. And I think consulting can be difficult when you’re at the beginning, I wouldn’t say the bottom. But you know, the Finder mind their grinder model? Have you heard of that? But they talk about it, like Deloitte and PwC. The big four? Well, the finders, the partners, they’re the ones who have the connections, they’ll have, they’ll know the CEOs, they’ll go cycling with him, or they’ll play golf with them. And the CEO will ring them up, and can you do this analysis for us? Can you crunch the numbers for us on this project, and then there’ll be no partner or go, Okay, that’s great. Well brought that in the Finder, they don’t want to do the work, they just want to go to the, you know, the soirees, they just want to do the networking, and bringing the projects ever mind who’s a senior person, and not necessarily that senior, just there a few years or five, five or 10 years, they’re the managers. And so they’ll manage the projects being done. And the people who are doing the projects are the grinders. And today, the analysts, and that’s where the grades come in. And they could just work ridiculous hours. And partly because it’s a tournament because everyone wants to get up to the next level and prove themselves. And to get into one of those firms, you have to be really good generally. And so you’ve got young, ambitious people, they’re all competing against each other. But it can be very difficult that people work ridiculous hours. So that’s why I wouldn’t necessarily recommend consulting to start off with you better coming in later on when you’ve got some experience. So you can come in as a manager, or you could come in or you can do freelance on your own or set up your own business. I think it’s much more enjoyable then.

Joe  17:16

And then you get to work on your golf skills as well.

Gene Tunny  17:20

Yeah, although cycling, I know, golf used to be the big thing. I think it’s more cycling now. Yeah, yeah.

Joe  17:27

Awesome. Well, I guess speaking about the Big Four, as someone who’s working in the consultancy industry at the moment, what’s your take on the ongoing scandals that have been happening involving PWC and other consulting firms at the moment? Do you think this may be raises questions or concerns about the efficacy of outsourcing public policy?

Gene Tunny  17:50

Oh, look, I think there’s always been concerns about the efficacy of outsourcing. And if you look at the history of contracting out, I forget which fleet it was, but was it the Third Fleet, there was one of some of the convicts ships are all put out to tender right by the by HM Treasury, or the Admiralty in in the UK, and the Admiralty or the the Treasury they want, they want the most people to get out, they want people to come to Australia, they don’t want to people to die on the ship. Right? They actually want people to survive the voyage. But the ship owners, the ones who are who when the contract, they want to fulfil the contract to just to the letter so they can get the payment from the Treasury. But they don’t really care much about the people who were the people survive unless you make that explicit in the contract. So and there was a scandal with one of the convict ships, if I remember correctly, I can look it up, and we can put it in the show notes. So yeah, there’s always been issues with government contracting, there’s always been concerns. And so I’m a great believer in outsourcing, because I think it does save money. But you’ve got to do it for specific things for specific jobs that you can keep a close eye on and where you trust the people to deliver those jobs. So I think the problem with PwC is you have too much trust was placed in people that they shouldn’t replace that trustee and given the incentives on their end their ability to make money out of it. Right. And so the, arguably the people in the government should have seen that as a risk and pay closer attention to it. At the same time, what the partners in PwC did, what they allegedly did for the lawyers appears unethical. And you know, just just terrible. I mean, I’d like to think that if I was in the same situation, I wouldn’t do the same thing because I’ve been on the I’ve been on the other side of that in the treasury, in government. And I know just, yeah, there are opportunities all the time to profit off information that the government has, and I don’t know if you’re aware There’s an insider trading scandal with the lad who was working in ABS and he had a maid in Melbourne, and he was leaking the inflation data to him. So yeah, you’ve guessed that’s the problem in the public sector, you’ve got to there’s what I’m trying to say is there’s information in the public sector has is valuable. If you’re giving outsiders access to that, you’re going to make sure that there’s controls on it, you keep an eye on it, at the same time, what the PwC partners allegedly did was unethical, really bad form. Will it stop outsourcing? No, because there’s a lot of benefits to it. There’s a lot of expertise out there, that people who can help government from time to time they’ll take on things that are really big, and they need the outside advice and the outside labour outside assistance. So I think we’ll still need it. But there are lessons. And but that’s outside, as I was saying those lessons, we’ve been learning them for 200 years, and we keep forgetting them.

Joe  20:56

Do you think I remember reading a few months ago, there was quite a bit of talk about this new in house consulting section of the Department of Premier Prime Minister and Cabinet that they were bringing in? Do you think that that might be sort of a potential solution to that sort of issue, or

Gene Tunny  21:14

I think it will, it’s worth trying, I just don’t know how well it will perform partly because of the role of the profit motive in motivating consultants. So consultants to get jobs done, because they know that if they don’t get the job done, the client won’t pay the money. And then that looks bad for them. And if they’re, if they’re the actual proprietor or if their partner, then their compensation is gonna directly depend on that. And even if they’re, they’re an employee, then that can affect their progression, or they could even get the sack if they really stuffed something up super badly. There’s a lot of incentive to get the job done and get it done efficiently work weekends work long hours. I mean, there are some times I’ve stayed up till God, yeah, I’ve done at least one or two all nighters. Some people will do multiple all nighters to get jobs done, but you will really push yourself. Is there the same incentive? And in that government body? I don’t know. And, and I don’t know to what extent they’re going to be constrained by the the APS pay structure, and to what extent bonuses can be paid. So I think that’ll be the test of that. Look, it’s worth trying out. Yeah, I’m a bit sceptical about whether it’ll work or not. Yeah, that you got to make sure you get the best people in there. And if I was in government, I’m not sure I’d want to go to that team. I’d probably rather be in PMC or Treasury if I was federal, yeah, yeah. Yeah. So the idea that it was in PMS? Yes. I think it’s supposed to be a subsection of, of the PMC, portfolio or whatever. But yeah, you’d want to, I’d be concerned, if I was in the public service, I’d want to be in one of the core areas where I was working on the really juicy policy issues. And yeah, where you got the potential to advise the ministers, often directly, some will sometimes directly up at Parliament House, that’s that they’re the really interesting things to do. Okay, we’ll take a short break here for a word from our sponsor.

Female speaker  23:16

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Gene Tunny  23:46

Now back to the show.

Joe  23:51

I guess another sort of perspective that I was thinking about is having independent public institutions like the Productivity Commission, for example, or the RBA, that you mentioned before, that are not necessarily beholden to a particular department, but still part of the public service. How do you see the role for those sorts of institutions evolving?

Gene Tunny  24:15

Yeah, I think they’re terrific. I think that’s, that’s a good idea. I think the PC has done a lot of good stuff. But we’ll have to see how it goes under the new commission head. So Danielle wood, who’s an old friend of mine, we’ll see how it goes. And I think she should be she should be great. She might have a different focus, she might be more focused on social policy issues than than some of the previous Productivity Commission heads. But yeah, I think Productivity Commission is a great idea a lot depends on the terms of reference. It’s given by the government though. So it can be it can be effective if the government uses it right. But a lot depends on what the government gets us to do. Yeah. The other one that’s interesting is the parliamentary Budget Office, which is really good. So I’m not too familiar with that. So that’s That’s in, that’s based in the parliament itself on the hill, rather than in a public service agency. And what it is, is it’s an independent costing agency, and it estimates the cost of policies. So if you’re from the opposition or the grains, or your tail, you can go to the parliamentary budget office and say, Hey, I’ve got this policy idea. Can you produce a costing for us and tell us, you know, what, what do you think this would cost? And so that, that provides a service to the whole parliament. And it provides a service to the public, because we’re not just relying upon the Treasury, which works for the government of the day. And potentially, I mean, I’d like to think they wouldn’t be influenced by the government the day but there’s that perception that maybe they’re not independent? Well, they’d certainly not independent, but maybe they’re not. Yeah, there’s a perception that they could be influenced to extent by the government. So therefore, it is good to have something like parliamentary budget office. And it’s really, it’d be a really good place to work. They’ve got an amazing data set, they’ve got a 20% extract of the ATO is taxation data, right. So all data on all the taxpayers out there, the the PBO has got a 20% extract of that, and that helps them work out, you know, the impacts of policies is pretty impressive.

Joe  26:25

Yeah, very interesting. I’m surprised that it doesn’t come up more as sort of a, an option.

Gene Tunny  26:30

Yeah, it’s either that I think it’s a textbook tax, the tax database, or the census that’s linked to the tax database, I’ll have to, might look that up as well. But it’s impressive data set that they’ve got. And that enables them to do really detailed, precise estimates of the cost of policies, because there’s policy at the Commonwealth level is so complex, because of all of the rules around social security payments, superannuation and taxation. It’s everything so complicated. And so therefore, you need really fine, detailed data to be able to cause some of these policies.

Joe  27:06

Yes. super interesting. And I guess really, like sort of a dream for an economist or quantitative economist to have access to all that data? Yeah, yeah. Well, I

Gene Tunny  27:15

guess I mean, that’s one of the things that’s really changed. And just the the amount of data that is available now. All these big longitudinal or panel data sets, blade, the business longitudinal data set Hildur, household incomes, Labour dynamics, Australia. And you can do all really neat statistical methods with them lots of good econometrics. So if you’re into econometrics, and yet see if you can get somewhere like PbO, or there are some think tanks that are really good like Grattan Institute, or II 61, you would have heard of those places. So yeah, I’d, I’d highly recommend either of those. II 61, the research director, there is an old UK boy, Dan Andrews, who worked at Treasury OECD, he’s good value,

Joe  28:00

no relation to the Victorian

Gene Tunny  28:06

though he’s not a dictator, that’s a good guy. Wasn’t a political COVID.

Joe  28:20

Also, thank you for that sort of tour of the landscape of policy and consulting that was super interesting and hopefully informative for all of us going out there into the world. Moving sort of to another topic, I guess, there’s been obviously over the last year or so inflation has been one of the main policy points or issues, pretty much any sort of discussion about the economy is related to inflation. And a lot of there’s been a lot of media coverage talking about wage growth, particularly over the last six months and and how that might be contributing to inflation or might potentially contribute to inflation. So we have a question here asking, is it misleading for the media to highlight wage growth as a contributor to inflation? Given that, in Australia, we are experiencing negative real wage growth at the moment?

Gene Tunny  29:18

I don’t know to what extent the media has been blaming wages, I mean, that what we’ve seen is that the central banks that reserve bank is concerned about this concept of a wage price spiral that if wages take off, then that’ll feed into prices, and that’ll force up wages again. Now, we haven’t really seen that yet. Okay, so look, some of those concerns may be misplaced. There’s a bit of a debate about that. At the moment. The Australia Institute’s got a lot of press, arguing that it’s all because of greedy corporations. This greed inflation. I’m a bit sceptical of that I’m not sure whether to what extent corporations are any more greedy than they were previously and whether the markets more concentrated than it has been in the past. So I’m sceptical about about that story too. But essentially, we had, it’s the classic story of too much money chasing too few goods, right? We had this big COVID stimulus, additional hundreds of billions of dollars more in bank accounts, and, therefore, extra money, not enough supply prices a bit up the whole wage price spiral thing that central banks have been worried about. Yeah, that that actually hasn’t happened. So maybe you could say it’s misleading, but I’m not sure that’s been I think that’s been what some of the economists and central bank governors have been talking about. I don’t know, to what extent the media have been blaming them or talking about that. I think, if anything, it’s that great inflation story that that’s been dominant. Yeah, I think there’s problems with that, too. I mean, essentially, it’s just prices have been rising, because there’s been a lot more money, and there’s been the shortages and your businesses have, yeah, they’ve put up their prices. And that’s helped them, you know, that’s encouraged them to expand, supply where they can. Yeah,

Joe  31:08

I agree that it definitely has sort of picked up pace in the media over the last few months, this idea of, and often you see it linked to earnings calls or record profit margins. Oh, yeah. Do you think that profit margins should sort of receive more scrutiny from economists as a sort of concept, especially when we’re thinking about inflation?

Gene Tunny  31:32

Well, I guess, what you’re seeing is you’re seeing a correlation, right? Because we’ve had, we did have a very, very strong rebound, after the pandemic, okay, when we came out of lockdown. And so you’re going to expect high profits, okay, because the economy was really performing strong, it’s slowing down. Now, as we all know, and we’ve got this per capita recession that they’re talking about. So yeah, it was natural that profits would increase, because we had such strong economic conditions, that’s just the business cycle. And at the same time, we had inflation because we had all of this extra money chasing only so many goods that could be produced profits, I mean, we do want companies to be profitable, I think you should be looking at what’s causing the profits, if there is market power, or if there is concentration, if they’re abusing it, then we should be looking at that. And that’s what the a triple sees. Therefore, now you could argue that may be the a triple C isn’t as effective as it should be the a triple C’s, it’s looked at groceries in the past, it’s looked at all sorts of sectors in the past, and now we’ve got a competition policy review. And I think it’s looking at the airlines, that’s where we should get. So maybe there is a case for there’s possibly some restriction of competition, or in the airline sector, maybe weak that could be more competitive, it’s a lot better than it used to be when it was super regulated back in the 80s. And it was really expensive to fly around. But no one be jetting around to different cities, it was a certain it was very expensive. It’s because we deregulated it back in the 80s. And we allowed in a lot more competition. Now, this is why this whole issue of the Qatar decision not letting them in on those international routes. That’s why that’s become so politically difficult for this government, because that was something that could have helped reduce the cost of flights, particularly to Europe. And so so you could argue cornices was getting some protection from the government. And so we shouldn’t be thinking about what are their barriers? Are there? Is there a problem with an issue with the market structure? Is there too much oligopoly or monopolistic power? And are there levers that the government can can use to stop that? In cases where it’s where they’re clearly doing something anti competitive? Can we prosecute them under the age of the consumer and competition policy? I can remember the exact name off the top of my head. But yeah, we should. It’s definitely something we should be concerned about. And it is something that, that economists do study. Yeah.

Joe  33:59

Awesome. Thank you for that. Yeah. I mean, as a personal anecdote, I remember I wanted to catch a flight to Europe a little while ago, and I had to go fly with cuantas to first before I could even get a Qatar flight and it was so much better, that I’m going from Perth, Qatar Airways. I will. I think they’re really good. So yeah, it was an interesting decision. We’ve got another question here. Again, sort of taking another step. Russ Roberts, who is the host of econ talk a podcast. He refers to economics as an imperialistic discipline. This idea that, you know, being like, you know, economists often try to apply economics and economic thinking too broadly, to domains where the assumptions may no longer hold and its utility is questionable. I guess, someone that might come to mind is someone like Gary Becker, you know, bringing the idea of economics and supply and demand to the family and areas that typically it hadn’t been applied to before. And for you personally, what do you think the limits are of economics as a discipline? And are there things that economics can’t explain? And we might need other sort of perspectives to understand?

Gene Tunny  35:15

I think certainly, I mean, even economics requires other perspectives. So I think economics is an incredibly powerful tool. And, you know, it’s a science of the economy and studying the economy there. There’s some core economics, you need to know, where it gets difficult is trying to predict behaviour and, and in in cases where people don’t act fully rationally. And that’s what you need to bring the psychology and right. So I think any idea that a court economics is the imperialist discipline, and we’ve got all the answers, I think, that was destroyed by the financial crisis. I mean, maybe up until 2008, people could have believed that. But after 2008, I think there was a recognition that, okay, we haven’t really solved the business cycle, we thought we’ve solved the business cycle as this Great Moderation. markets aren’t always rational, you can’t, there are periods of irrationality in economics is not going to help you there. That’s where you need psychology to bring psychology. And that’s why behavioural economics is trying to bring in psychology with economics. So yeah, I think there are clearly limits to economics. And one of the one of the important limits or considerations, is that economics to the extent Well, if it’s, you could say it’s a science or it’s a study a field of study, it can answer questions of fact, or we can make predictions. Or we could argue, analyse what might be the most efficient course of action from a the perspective of consumers consumer welfare, from economic welfare, broadly construed. What we can’t necessarily answer is what’s the best thing to do for society? Because then you’ve got ethical issues, value judgments, how do we look if something is affecting the environment, for example, and that affects future generations? How do we, how do we analyse that, that those can be difficult issues? Or how do we make choices regarding health policy measures? So it’s not always they’re not always issues where economic considerations are the final determinant, you may need to bring in value judgments? Yeah, the whole distinction that thing was David Hume between isn’t board? Yeah, yeah. Yeah. Yeah. Could

Joe  37:34

all Hume who I guess himself was sort of an economist when he talked about Yeah, money and things like that? Yeah. Well,

Gene Tunny  37:42

anyway, he wrote a famous essay on the gold standard on price, the seaflo mechanism? I think it was, yeah, yeah. I

Joe  37:50

think the argument was that, yeah, it doesn’t matter if you if you have the money supply, and prices have as well, like, every, the welfare of everyone is the same, essentially, I think I only remember that because Polanyi then talked about it. Yeah. He was a pride our economist. Yeah, for sure. Yeah. So that’s all the pre prepared questions that we’ve got. I’m gonna go over to the lectern mic, and then we’ll be handing the handheld around to the members of the audience, if they want to ask gene any questions.

38:21

Just going back, I guess, to your discussion about public and private. And I guess, us as university students entering into the workforce, I just wrote a question down. So as university students, we are involved in Dubai, developing a variety of skills that, I guess were not explicitly taught in university, but that we hope to apply when we get into the workforce, from your experience, or what schools have surprised you from the recent generation of you know, incoming university graduates, and what do you think, you know, is missing from you know, they’re the skills that they’ve developed that they might not have been taught explicitly? Throughout University?

Gene Tunny  39:00

Okay. What’s most surprised me is just how savvy or how brilliant uni students are at producing PowerPoints, like slide deck, Oculus nowadays, we’re all competing in these case study competitions. I’ve been blown away. So yeah, that’s really impressive. Otherwise, yeah, just, I guess maybe I’ve been lucky. But yeah, I found the slide decks. The students type employed generally have good presentation skills, very good at research, good at getting across data and information. I think the skills you need to learn, like everyone needs to learn them, it’s it’s about writing as clearly as you can. Being proactive. It’s hard once you get out of uni because uni, you’ve got the targets to hit, you know, when the you’ve got to lodge your, your papers or when the exam is on, you got to turn up to it. It’s more structured work can be a bit unstructured at times. And so you got to, you’ve got to learn how to manage yourself, manage others get others to help you out a lot of those interpersonal skills, it’s just about building those up, you’ve probably been developed in developing them here at UNI. Anyway, that’s what I, I’d say, the I’ve been really impressed with UQ students in particular.

40:18

G’day, Gene, thanks for the talk. And for your time, I just want to go back to, again, back when you were talking about the distinctions between working in public and private sectors you mentioned as a downside, or a potential downside of working in the public sector was perhaps changing ministries disagreement with, I guess, the government of the day and, you know, a general sense of inefficiency about projects that you’re doing as a possibility. Did you find that your experience in the private sector was a bit more alleviated of those concerns? Or did you also have times where you disagreed with the direction of your projects,

Gene Tunny  40:54

I guess, you’ve got choices in the private sector. So you could actually refuse to do a job. But then you want to try and do a job if you can, if the client is going to pay you, that you have so many clients, you can move on and you can you can sack clients in a way and go okay, I’m not working with you again, if there if, if you didn’t enjoy it, or if it was just hard work. So that’s, that’s what I was getting out there. Whereas with, with government, if the government’s in for several years, and like, I think you’ve got to work for the government of the day, this isn’t a matter of politics. I’ve worked for both labour and coalition governments. And, and I don’t think the quality of the work, I actually think it’s more related to the people in charge at top, I think it relates a lot to their personal characteristics rather than their politics. So I don’t think there’s any correlation between the political strife of government and how good it is to work for, but yeah, you’ve got to be you’ve got to be flexible and realise, I mean, some people enjoy it. I can be challenging. Yes, Minister might be too old. But there was a show for two years, you know, yes, Minister, from the 70s and 80s with Nigel Hawthorne, and, and Jim Hakka. Do you remember he played Chewbacca, too? Anyway, it was a great show. But there’s a line in it where Bernard who was the principal Private Secretary to the Minister was talking to Humphrey says, I don’t understand why the minister wants to do this. How do we how do you cope with all of these changes in in policy direction and sound free says look, if I actually cared about what the policy direction the government was, I’d be stark raving mad because one minute, I’d be pro nationalism, nationalising steel, I’d be then Pro D nationalising steel, and then I’d be pro renationalising steel, because those things change. You’ve got to be flexible in government, that maybe that’s not for everyone. And politicians, I think can be difficult too. Because, you know, working for the government is can be challenging, because there’s a lot of media, there’s a lot of light on the government, and there are a lot of crises. And you can be called in at odd hours, particularly, like, the craziest time in Australian politics in the last 20 years was the Rudd Government. And I mean, it was just completely different from the previous government. But you know, a lot to his credit. I mean, Kevin Rudd wanted to do things, he he saw urgency, he had a great sense of urgency, he was an incredible hard worker himself. But that meant that there were requests coming in at odd hours, he’d he’d be flying back from a meeting a DC, he’d be there for the first time g 20. Meeting, and then he is playing with land in Hawaii. And then we get a call that the wants a paper on. So it’s such it’s such an issue by the time he lands in, in Canberra. And so this is might be on a Sunday or something. So it can be a bit crazy. But that’s what you get, if you want to be in that sort of environment, because there’s that political aspect to working in government. Some people really enjoy that they thrive on it. Others find that find it difficult. So yeah, that’s just Yeah, who knows? I mean, my experience could be a bit idiosyncratic. So that’s one thing to bear in mind to

44:09

sort of on that with the PwC scandal, they ended up selling all of their public sector work company, do you there’s been talk about whether all the big four companies are gonna end up having to do that. Do you think that that will happen and also just sort of see that as a good path forward

Gene Tunny  44:27

in terms of preventing corruption or in front of the think? Yeah, I think I mean, PwC has been forced to do it. The other firms, I think, would rather not do it. I’m trying to remember if v y looked at it and try remember where EY was trying to split its audit from its the rest of its business. And I don’t think it went ahead. I’ll have to look at the details of that. There are probably other ways to stop that, that conflict. I don’t know if that’s going to happen with the other firms, or not close enough to the people in those firms too. Uh, to make that judgement, but yeah, I don’t know to what extent it would look, if you got a job at one of those big four firms, then, you know, that’s, that’s going to be good, it’ll be good experience, even still at PwC is probably still good experience, despite the scandal, they’ll bounce back, they’ve got so many connections, they had a good reputation for a while, I’m sure they’ll be able to turn around eventually. Now, I’d have to wonder, like, as if you want to do consulting work, I’m not sure whether you’d want to go to a company just focused on public sector work. Because then why not just go into the public sector itself, if you like, if public sector is your thing, I’d go into government itself, because one of the things with consulting, I enjoy it, because I actually get to do a wide variety of things. I found personally, I found government difficult because I’m reasonably opinionated. And like, I wasn’t the Sir Humphrey cat character who could been just changed, not not care about the political, you know, the actual policy direction or, yeah, I thought I’d find that very difficult to do. So I actually quite enjoy being on my own or having freedom to, to write to comment. Whereas you can’t do that in government, you can’t say anything critical of the government. It’s difficult. There are advantages, because you can then get involved in, you know, in the policymaking and the decision making. You can work with the minister’s office, even the ministers. But if that’s what you want to do, you’re more likely to get that to do that in the public service, than if you did a public sector, in a public sector consulting organisation that consults to the to the government just depends on what you’re after.

46:43

This is kind of flowing on from that question a bit. Do you see any other consequences coming out of the PwC? Scandal? And I guess now, the KPMG scandal with defence contracts, I think, that kind of flow onto other consulting firms outside of the big fall? Or do you think that I guess, kind of trust in interpersonal relationships that might already exist? Kind of, I guess, being more important than that? Maybe?

Gene Tunny  47:09

Yeah, I think government public servants will be more conscious of the risks. And it may be harder as a consultant to work for, to work for government clients, because they may not automatically trust you. It may be harder to get access to information, you may have to sign more documents. It can be difficult, it’s difficult already working for the government agency. So projects I’ve done, Nicholas grown and I and another colleague did a job for services in Australia recently, looking at my gov and looking at the the investment in that and the benefits of of improving the Margao functionality. And I mean, we had to sign all’s we had to sign those documents that said we wouldn’t share this information. Of course, we wouldn’t. And you know, then PwC, they I think they probably their person who allegedly breached the trust signed documents to and they should have, they should have taken it seriously. And it looks like they didn’t. But what Services Australia did was they wouldn’t let us take documents away. We could only see some documents physically, in a Services Australia offers, because they’re highly confidential information relevant to the budget process. So they had the right controls in place. I think you’ll see more of that there. There’ll be less trusting. I think they’ll still be consulting opportunities. I think I think that they need the expertise from outside so much. They’re not going to cut back on that. But it’ll be more difficult. There’ll be more constraints in terms of access to information, they won’t automatically trust you. But I think they’ll still be, they’ll still be jobs that consolidate if you want to do that. Yeah.

Joe  48:44

Awesome. Well, if there’s no more questions, we just want to say thank you so much gene for coming along. And we’d like to offer you this gift. This is the statecraft which is our PPE society, student magazine. So lots of different articles from all sorts of students. Yeah, so thank you so much for coming and sharing your knowledge with us. It’s been really great and really appreciate you and hope to see you again in the future.

Gene Tunny  49:15

Righto, thanks for listening to this episode of Economics Explored. If you have any questions, comments or suggestions, please get in touch. I’d love to hear from you. You can send me an email via contact@economicsexplored.com Or a voicemail via SpeakPipe. You can find the link in the show notes. If you’ve enjoyed the show, I’d be grateful if you could tell anyone you think would be interested about it. Word of mouth is one of the main ways that people learn about the show. Finally, if your podcasting app lets you then please write a review and leave a rating. Thanks for listening. I hope you can join me again next week.

50:02

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Credits

Thanks to Obsidian Productions for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au. Full transcripts are available a few days after the episode is first published at www.economicsexplored.com. Economics Explored is available via Apple PodcastsGoogle Podcast, and other podcasting platforms.

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Podcast episode

White Elephant Stampede w/ Scott Prasser – EP161

Various projects worldwide have been labeled White Elephants. These projects include the Gold Coast desalination plant and the Berlin Brandenburg Airport, among many others. What exactly is a White Elephant? How can we identify them and how can we stop them from happening in the future? In this episode, Scott Prasser joins show host Gene Tunny to talk about White Elephants. Scott is a former academic and ministerial adviser, and is one of the editors of the new book from Connor Court titled White Elephant Stampede: Case Studies in Policy and Project Management Failures. 

Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored

You can listen to the episode via the embedded player below or via podcasting apps including Google PodcastsApple PodcastsSpotify, and Stitcher.

About this episode’s guest: Scott Prasser

Scott has worked in senior policy and advisory roles in Australian state and federal government public service. From 2013 to 2019 he was Senior Adviser to three federal cabinet ministers covering portfolios of education and training, and regional health, sport and decentralisation. In addition, Scott has held academic positions at five universities across four states and territories, the last at professorial level. Scott gained his undergraduate and master’s degrees from University of Queensland, and his doctorate from Griffith University. Scott’s most recent publication with Helen Tracey was Royal Commissions and Public Inquiries: Practice and Potential (2014); and Audit Commissions: Reviewing the Reviewers (2013). 

Substack newsletter: Policy Insights by Scott Prasser

Links relevant to the conversation

The new book from Connor Court White Elephant Stampede: Case Studies in Policy and Project Management Failures

Criteria for identifying White Elephant projects.pdf

Regarding the cost of the Gold Coast desalination plant, see Brisbane Times article:

The Brisbane Times article reports:

“The controversial $1.2 billion Tugun plant was closed in 2009 after a string of complaints including rusting pipelines  and mothballed from fulltime water production in 2010.

Normally it provides only three megalitres per day to Southeast Queensland’s water grid and costs between $12 million and $15 million a year to operate.”

Time Out article on fixing up the acoustics in the concert hall of the Sydney Opera House

Transcript: White Elephant Stampede w/ Scott Prasser – EP161

N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.

Gene Tunny  00:01

Coming up on Economics Explored,

Scott Prasser  00:04

The whole thing was driven by politics. Right, rather than by policy. Yeah, that’s the problem.

Gene Tunny  00:12

Welcome to the Economics Explored podcast, a frank and fearless exploration of important economic issues. I’m your host Gene Tunny. I’m a professional economist based in Brisbane, Australia and I’m a former Australian Treasury official. This is episode 161. On white elephant projects. My guest is Scott Prasser, who is a well known commentator on public policy issues here in Australia. Scott is one of the editors of the new book, White Elephant Stampede, published by Connor Court, please check out the show notes relevant links, including a link to the Connor court website so you can get a copy of the book if you’d like to learn more about white elephants. The show notes also include a clarification that I need to make regarding the cost of operating a white elephant not far from me, a Gold Coast desalination plant. I couldn’t remember the actual cost while chatting with Scott. And I overestimated it. That said, it’s still a costly facility and arguably fits the white elephant definition. Finally, the shownotes contain details of how you can get in touch. Please let me know what you think about what either Scott or I have to say in this episode. I’d love to hear from you. Right now for my conversation with Scott Prasser on white elephants. Thanks to my audio engineer Josh Crotts for his assistance in producing this episode. I hope you enjoy it. Scott Prasser, welcome to the programme.

Scott Prasser  01:34

Thank you very much.

Gene Tunny  01:35

It’s good to have you here. Scott, keen to chat with you about white elephants. So you’ve recently been one of the editors of a new book that’s coming out from Connor Court on white elephants, White Elephant Stampede case studies in policy and project management failures. So yes, looking forward to speaking with you about that. To kick off. Could you tell us a bit about your background in public policy, please, you’ve got an extensive background. And I think it’d be good to sort of let people know about that. I think it’s, it’s, it’s a really extensive, interesting experience. So if you could tell us a bit about that, please, that’d be great.

Scott Prasser  02:12

Sure. I’ve worked in federal and state governments, in state governments. I worked in state government, Department of Welfare Services, State Development and Premier and Cabinet in Queensland, under the Bjelke-Petersen government , and also under the Beattie government. Okay. So I’ve worked in those roles. I was basically running different policy units inside government. I also got seconded to minister offices in state government, and also in federal government. So immigration Minister’s office, I was Chief of Staff way back in the Fraser government days. And more recently, after serving, running a Public Policy Institute at the Australian Catholic University in Canberra. I work for three different federal cabinet ministers, Christopher Pyne, Simon Birmingham, and Bridget McKenzie, across education in regional services. And so, I’ve been in and out of the public service Minister offices and academia over the last 30 years or so, and writing on all sorts of things about Australian politics, public policy, Royal commissions, inquiries, and those sort of bodies. And I did teach project management at one university, which is how I got interested in white elephant projects because you run across a quite a wide a lot of white elephant projects when you’re teaching project management.

Gene Tunny  03:32

This was it was at University of the Sunshine Coast. Right. Okay.

Scott Prasser  03:36

So I’ve worked at RMIT, University of Sunshine Coast, University of Southern Queensland, Australian Catholic University, and also taught at QUT and University of Queensland. So as a sort of tutor, person, so I’ve done all those sort of things. So I’m interested in really what’s happening in the real world, okay, and how we can, how we can learn from mistakes and not so they don’t happen again.

Gene Tunny  04:01

Absolutely. Okay. So, Scott, can you say about this idea of this concept of a white elephant? Where does this why is it called a white elephant? What’s the story behind that?

Scott Prasser  04:13

Well really, the story really comes from Thailand or Siamese, it used to be called that if you were caught by the king, with your hands in the till, or committing fraud, instead of having your head cut off, or your hands cut off, which is one way of punishing people. The idea in Thailand is a very interesting place, which I like a lot. The king would give you a white elephant and a white elephant is sacred. And it means you’ve got to look after it. You can’t. In Thailand, elephants are work animals, you know, they live logs and things like that. You’re not allowed to make a sacred animal work. So this becomes a very expensive issue for you to have to look after. This gift from the king. You can’t sell the gift. You can’t kill the gift and you gotta maintain it and look after it. So basically bankrupts the person you give the gift to, that’s where the whole term comes from really, white elephant.

Gene Tunny  05:08

Right. And so when we’re talking about government projects, or I suppose any sort of project, we’re talking about a project, which is you can draw an analogy, or you can, it’s similar to this white elephant that the King of Siam would would give to you because it it’s not a good thing to invest in, it costs you money on an ongoing basis is that the idea?

Scott Prasser  05:34

Thats right, the white elephant project, or white elephant policy is something that doesn’t work properly, that something that’s too expensive to maintain, that something that often Looks good, looks good, but doesn’t, can’t, can’t do can’t perform. And it becomes very expensive maintain and therefore gives no return back to the owner or to the originator of it. That’s for a white elephant project, is it a very expensive thing, it costs more to maintain, and it doesn’t serve any utility, any particular function to do that, for the amount of investment you got to put in to keep this thing going.

Gene Tunny  06:10

Okay. And we’re typically talking about public sector projects, are we?

Scott Prasser  06:14

That’s right. We’re talking about public sector projects, there are no doubt in the private sector, white elephant projects and things that go astray. But the shareholder puts up the bill for that. And I don’t really care too much about the shareholders in the sense that I do care about the waste of public money. Since public money is finite, like everything. And I am concerned, in these days of sustainability, how we waste money on projects, and we repeatedly waste money on projects, that self Evon were going to become white elephant projects or are white elephant projects.

Gene Tunny  06:49

Okay, so what types of projects are good examples of white elephants? Scott, you’ve you’re looking at some in this new book, you’re editing the case studies in policy and project management failures, the white elephant stampede, what are some of the examples in that book?

Scott Prasser  07:03

Okay, well one of the examples close to home is the Queensland desalination plant. Okay. So this is rusting way down the Gold Coast there, it cost billions of dollars to do. And it was an overreaction to the drought we had a number of years ago right now. Now, from my point of view, all droughts come to an end, basically, as we are seeing right now. So we built a billion dollar desalination plant, but we haven’t built any dams in Queensland for a long time. And this basically, it was really a bad idea from the beginning. But it’s an example of what governments do when they got to be seen to be doing something. So that’s one example. The other one is close to my heart is the hospital payroll system we had in Queensland, which was going to cost you know, a couple of million dollars and ended up costing a billion dollars, we end up having to have a Royal Commission into this. It was such a monumental mess that should have been avoided. Olympic Games also tend to be white elephant projects, they always run at a loss there is one or two haven’t. They build infrastructure that serves only a short term timeframe. And since we’re in the Olympic game, game at the moment in Queensland, we’re suggesting and we’re seeing the issues about the GABA and the immense costs that this is a this will be a white elephant that’s going to grow before our eyes. So it’s we can grow up with it in the next 10 years.

Gene Tunny  08:36

Yeah, because Brisbane is the Olympic city and 2032 and the GABA at the cricket ground, the Woolloongabba at the GABA, which we abbreviate as the GABA here in Brisbane, they’re talking about just increasing the capacity by what, five or 10,000 people, but it’s going to cost $2 billion or something ridiculous, so they have to revisit that just on the desal plant. I think that’s a really good example and it illustrates how these things can be an ongoing burden because if they’re not using it, they can’t mothball it, you have to keep it in this Hot Standby mode or something. There’s some specific term they have for it you have to keep you have to turn it on every now and then. So the membranes keep fresh or something so they don’t dry out.

Scott Prasser  09:24

You can’t just let it sort of rot away. Yeah. So there’s the issue of a white elephant project that even after it become doesn’t serve its original purpose was not working. You they got to maintain them. That’s the problem. It’s a bit like having a Jaguar Car, its good when its going but not when its in the garage.

Gene Tunny  09:43

You have to get a good mechanic.

Scott Prasser  09:45

So it’s no use having these sort of things. You got to keep maintaining them. Yeah, that’s the problem about these things.

Gene Tunny  09:53

Yeah, exactly. And I remember I went to a presentation maybe five or six or seven years ago with our explaining this Hot Standby mode for the desal plant, I mean, it’s hardly making any contribution to our water reliability or water security. But yet, it’s costing, I don’t know, 50 to 100 million a year, I can’t remember the exact figure. But it’s a significant amount of money and for something that we isn’t really adding to our water security, it rained again. But this goes back to that time when in the 2000s, there was a view that, well, it would have, it didn’t we’d never have the rain we had in the past because of climate change. Tim Flannery was saying that and the government here was panicking about water supply and all of that. So that’s where it came from. It came in a time of crisis. So that’s one way we could get projects that aren’t really sensible. What are some other ways, Scott, that what why do we end up with these projects that are, that are white elephants?

Scott Prasser  10:52

I think there’s a number of reasons. One, I think that government is involved in too many areas. Okay, the government tries to do too much. Yeah. And the government is seen as the saviour of so many things. So if government could not be involved in so many things, and it’s focused on on the core business, where it should be, you know, good infrastructure, good roads, and that sort of thing so, government is often called upon to be doing things now politicians reaction to that, is, something’s got to be done. This is something we can do. Right. Okay. And they have no concept of our financial limitations. So governments, often we saw that during the COVID thing, where governments were running around doing all sorts of things, which were completely against the evidence this remember, in Queensland, we were formed by the Chief Health Officer we, and was mandated, we should wear a mask in our car. Think about this, and we should wear a mask walking around a park. Let’s think about this. Now, I didn’t do that, I refuse to follow the law. So that’s an example where governments are going to ratchet up activities to do things. Also, governments love to love to announce iconic projects, you know, I hear the word iconic, I run a mile, okay. This is Danger, danger, or this is going to be a landmark, or they want to have a vision. I don’t want governments to have visions. Thank you very much, especially the wrong ones. And so it’s this thing of meeting the electoral demands to be doing something instead of saying nothing can be done. Okay, that in some cases, is not government’s responsibility to do it. And if we do anything, it doesn’t, doesn’t have any effect. So, you know, it’s like, you know, why does the Commonwealth government spend $5 million on men’s work sheds? I mean, what has that got to do with the Commonwealth Government? There’s like a little mini, a mini white elephant, because they want to be seen to be giving out money for some minority group cause or something. So it’s politics in politics. The other factor is that all the organisational things inside organisations, groupthink happens. Yeah, okay. Now, if you’ve worked in the public bureaucracy like me, it’s sometimes very hard if you if you want to be the lone person who says I think that’s a dumb idea. Yes, right. Yeah, it doesn’t go well with the rest of the team and the hierarchy, which CERN you got to have in the bureaucracy, someone willing to say, No, right. Now, our public services have become politicised, that is people are on short term contracts. They give the government what they want, not what they need. So this sort of Once Upon a Time treasuries would have said, and that’s why under Joh, we had permanent public servants. Okay, Joh Bjelke-Petersen, Premier, they were permanent public servants. Queensland didn’t have a zoo. Queensland didn’t own a bank. Okay, Queensland didn’t do all the crazy things that Joh wanted to do because the treasurer, Leo Hilscher and crowd will say, no, Joh, you’re not going to have it right. Now, I don’t think that happens anymore. Because all the senior public servants are on five year contracts. They want to get their contract renewed, they will give into the political will all the time. So that’s one of the issues that helps help throughout why we’re getting more of these things. And why frank and fearless advice is no longer being given. I don’t want to sound too precious, but it is very hard in the bureaucracy, if you’re in the hierarchy, and you want to get a promotion in the future, and you’d write a memo to the premier. This is a really dumb idea. And I have done this myself and I have saved the taxpayer money. I can tell you right here. And that’s because I had a very good director general in the Premier’s department, but it’s hard all those organisational factors, the political factors and government in all the interest group pressures now interest group pressures on wanting to get something from government. Australia has always looked more to government than other countries. You know, we’ve always We founded by government Australia was founded by, you know, sending out convicts here. It was a government thing in America, America was founded by people trying to get away from government, they want to religious freedom. Okay, so there’s a difference. Yeah, sort of context. So all those factors have driving that. Plus, I think, economic theory, modern, modern monetary theory. So it says, oh, spend as much as you want, it doesn’t matter. It All right, you know, there’s no, there’s no limitation on what government can spend. So the idea of balanced budgets being careful, and frugal has sort of gone by the by, if you’d like. So all those factors are contributing to this sort of galloping syndrome.

Gene Tunny  15:45

Well if it was a good infrastructure project, or a good if it was delivering public benefits into the in the long term, then you could make an argument that it may make sense to borrow money to invest in it, it could be good debt. But the problem is, these are such bad projects. They’re, they’re not delivering that return. And they, they’ve got this ongoing cost, for hardly any benefit. And I think this is a point you make, and this criteria for selecting white elephant projects for identifying white elephant projects, which I think is really good. And I’ll put it in the show notes if that’s okay. I think it’s excellent, I think this was something you did for your public policy course at Sunshine Coast, etc. And one of the points you make is that, so while white elephant projects might produce some marginal benefits, the issue is they never cover the project’s real costs, and more often end up costing more, okay, so we’re not saying that these things are completely worth worthless that they don’t deliver some benefits, it’s just that they’re not enough to justify the large costs.

Scott Prasser  16:45

I think you see it in, you know, stadiums or things like that, or opera houses and so on, which you know, do serve a certain public purpose. And there’s a there’s a place for them, but they, they never really will cover their costs. So they’ve got to be subsidised. And the first indication that seems wrong, after things been developed, we need more funding, or we need more to keep it going, right. I’m in the Sydney Opera House, many of you are together as a white elephant, by the way, because A, it was a design that no one knew how to build. Yeah. The technology wasn’t there. It cost phenomenally more than I think 2,000% more than the original costs. Yeah, it costs 150 million bucks a year to keep, to keep going, right cleaning and all that sort of stuff. And acoustically, I’m told, not that I go to opera, everything like that. I’m told that it’s not that all great, you know, the there are better opera houses or sound places around the world and build a lot less cost than the Sydney Opera House. It looks fantastic. No one No one can deny that. It is a landmark. But there’s an example where it still serves some purpose. But okay, it, you’ve got to keep it. You’ve got to keep it up to the mark and only the public taxpayer can keep it up to the mark. No one’s going to buy the Sydney Opera House.

Gene Tunny  18:06

Yeah. Yeah, exactly. Amazing building, though. It is. So I’m trying to remember the issues. Yep. There’s an issue with a concert hall. So I think there’s, there’s the different shells of the Opera House. And I think there’s a there’s the Opera Theatre in one shell. And the problem there is that depending on where you sit, your view can be limited. So if you’re sitting on Yeah, so in some seats, you don’t get to, it’s not a full view. And the problem with the concert hall part of it. Yeah, that’s definitely an acoustic issue. And they’ve tried various fixes over the years to improve that I might put a link in the show notes. Remember, I’m trying to remember they had some some donuts hanging from the ceiling? I’m trying to remember correctly.

Scott Prasser  18:50

That’s right, there’s a book that came out in the 70s called great planning disasters. The Sydney Opera House was listed. Yeah. You know, but no, and as an example, it is it is pretty fantastic when you’re on the ferry to look at and so on. But you have to think, what this is costing you, and there’s lots of things like that all around the place where governments and what happens is a project or something which is developed for purpose x, it doesn’t meet purpose x. So gradually the purpose changes to purpose y. Okay, yeah, it’s not really a great opera house, but it’s a fantastic tourist attraction and you see what I mean. So you sort of transfer the goal from what it was originally to be to as a fantastic tourism attraction. Now how you measure the impact of tourism is pretty hard, as you know, the best of times, so they happen a lot, gold is placement happens a lot with with white elephant projects.

Gene Tunny  19:50

Yeah it’s a hard one because it’s hard to think of Sydney Harbour nowadays without the Opera House, but we know that it is one of the the most magnificent harbours in the world. Also it’s still be, you would expected to still get tourists there regardless of what you put there. You could put something up cheaper. That’s an attraction instead of the opera.

Scott Prasser  20:09

Yeah, look years ago when I was in the premiere department, the Roma street Parkland issue. What should we do with the Roma street parkland, and I read the project team to look at that. And we talked about getting the Smithsonian to try and build something there. We went to America, Premiere Beattie winter America, and we had a committee of the great and famous people of Queensland, I can tell you the great and famous of Queensland. And the trouble was, I could never get them to focus on the purpose of the building of a building and want to build some sort of building, everyone focused on the design of the building. And it was quite exasperating with this committee of great and famous people. And I had to get the Director General to go and actually talk to them in the end, because I couldn’t control him because everyone just came with their pictures of iconic buildings from around the world, you know, Bilbao and all that sort of stuff.

Gene Tunny  21:03

Which is a white elephant. Guggenheim.

Scott Prasser  21:08

Yeah, they all went through the design, but what are we going to put in the building, which was, to me, the important issue, what are we going to use the building for? Is it going to be and to build a proper museum type thing is you’re talking about 300 million bucks. $300 million. Okay. Yeah. And what’s it going to do? And it was impossible to get the great and good committee to look at function as distinct from design of the building. Okay. And it was a very interesting experience. To try. We had museum people in and we had all sorts of people discussing this. But fortunately, it wasn’t, it wasn’t tempted and eventually got dropped.

Gene Tunny  21:45

I need to ask you more about this, because I walk through there practically every day or every second day. I live near the park lands it’s this amazing space. They’ve got this beautiful floral garden there, the spectacle garden, there’s a lake, there’s a Well, I mean, it is a rain forest is part of it. There’s not a lot of rain forests, but there’s a little bit there. And there’s this canopy walk, which is great. I think it’s an amazing attraction. I couldn’t imagine anything else been there. But what ended up happening? Did they just think, Oh, this is all to hard redevelop or?

Scott Prasser  22:15

Smithsonian doesn’t do things outside the United States. That is the crux of the issue. Smithsonian is an American only and the money for the Smithsonian came from an Englishman, by the way, called Smithson, whatever comes from he gave money to America in the 1840s. The American government didn’t know what to do, in gold in gold, by the way, they didn’t know what to do with it. And then the idea was to set up the sort of museums, museums were run by governments in the 19th century to largely be places where you brought back your booty from your colonies. Okay, the English Museum, German Berlin museums. And so the Americans decided to build this museum complex, which anyone been there is fantastic. Because it’s multiple museums in Washington, DC, it’s fantastic place. And that’s what they did. And we brought Smithsonian people out to Brisbane, and all sorts of things to try and see if we could get interesting. We develop some sort of agreement and we develop some sort of interchange of scholars and people, I left the Public Service and that probably didn’t happen. Right. 

Gene Tunny  23:29

Okay, that is very interesting. Now, I had to ask because it’s so close to home. So yeah. Okay, we’ll take a short break here for a word from our sponsor.

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Gene Tunny  24:11

Now back to the show. Okay, let’s go over some of these other criteria. Scott, I think this is a really great list. This was for your students, so they could come up with examples of white elephant projects. And this is when you’re teaching project management. And so first, they do not fully achieve their public stated objectives. So second, white elephant projects usually cost more than was promised or estimated and much, much more. So this whole thing about mega projects is this mega project risk. I think you refer that, the Oxford scholar who’s written a lot on mega projects. So you’re in that’s in your oval, overcoming the white elephant syndrome. Yeah, yeah. Good one. And fourth, they often so yeah, third, they might produce some marginal benefits, but they don’t cover their full real costs. Fourth, though, too often maintain past their use by dates. Okay and fifth, they were perceived as counterproductive in its own time, not merely by hindsight. So you’re talking about so your contention is that a lot of these projects, at the time were criticised as being potential white elephants and politicians went ahead anyway. Is that right?

Scott Prasser  25:27

Yeah. Politics like to say we’re doing it. Okay. Yeah, we’re gonna do it. Right. Peter Beattie was very big into we’re doing it sort of syndrome. And they don’t want to have a back down, because that’s a political embarrassment. Right. Okay. So I used to have a superior in the public service. And his slogan used to be let’s do it. And my slogan was, let’s think about it. This cause conflict, okay. I said, Why are we doing this crazy project sort of thing and that was also my view. And so I’ve and I’ve worked in ministerial offices in Canberra, why, Minister are we doing this project? You know, is this a good idea? And so, once this things gets going, it’s really, really hard despite all the contrary evidence that happens. Now, sometimes that evidence could be inaccurate and wrong. And that’s when judgement is required. We know and Prince Albert was building the Crystal Palace in England for the Great Exhibition, everyone said it was going to be a white elephant, and there’s going to be a disaster and people are gonna die. That Her Majesty Queen Victoria stuck by him and it got built in it was an exhibition was a financial success, you know, it built a whole stack of things afterwards, not for the money, the profit went. So, but you know, what is interesting is, is governments do not like to admit they’ve made a mistake. Yes, right. That’s now I think, it’s sometimes we can say sorry for lots of thing. But we don’t want to say sorry for the sort of mistakes. And we I mean, the other who want to see lots of mistakes is Defence projects, phenomenal amount. And helicopters that don’t fly. Tanks that are too heavy for our bridges, and so on, so forth, frigates that we don’t know where they’ve worked or not. Submarines, and we still don’t have, and so on and so forth. It just goes on and on.

Gene Tunny  27:19

So this submarine debacle or whatever you want to call it. This was intensely political, wasn’t it?

Scott Prasser  27:27

It was about saving Liberal Party seats in South Australia. Right. That’s the story. That’s really it. We, we could have bought, the German Germans have had pretty good experience of u-boat type things, okay. And we could have bought the German programme. And if we bought the German product, they were knocked down form, they would have cost $12 billion. The Germans would have come out and train people as they tend to do. Yeah. Okay. And they will now be operational. Right. We then went down, we then retrofitted nuclear French submarines, put diesel engine in because we can’t have nuclear power. Why we would want to build diesel submarine is beyond my comprehension. Yeah. And then to prop up the liberal seats in South Australia. Then we went down this track. And so here we are, in 2022. We still haven’t got a single submarine. And by the way, the Collins submarines have also been a bit of a disaster, too, in terms of their they’ve had to get refitted with lots of problems with them, and so on. So I don’t know it’s a real, it’s a real problem. And there’s an example where we really the whole thing was driven by politics. Right? Rather than by policy. Yeah, that’s the problem.

Gene Tunny  28:45

Yeah. So we were trying to get manufacturing jobs in South Australia for political reasons. So we were either we are, we were building submarines here, or what was it retrofitting French submarines. Yeah. And then we ended up having a change of course, a couple of years ago, because we signed this ORCAS agreement with the US and UK. Fair enough, but that’s upset the French.

Scott Prasser  29:10

Yeah, I think what we should have done is gone and bought a couple of nuclear submarines from America or, I’m sure had a couple lying around somewhere or and gone ahead with the debt. That’s what we could have done. So that’s an issue.

Gene Tunny  29:24

Yeah, yeah, absolutely. Okay, six, there were feasible alternative courses of action available. In short, the project chosen did not have to be adopted or take the particular form it did to tackle a perceived problem. Okay and certainly in that water crisis, when we went ahead and built that expensive desalination plant, a better option was possibly well, if we’d built dams in the past.

Scott Prasser  29:47

Just remember that the Goss government came in and canceled the Wolffdene dam. Dum dum, okay. against the advice of the coordinator General Affairs Department at the time. Um, so you know how during the drought, remember, there was all this incentive of buying, getting tanks in your backyard tanks, I didn’t buy a tank, because I have this very odd view that since I pay rates in water rates, I expect the government to supply me with water. Okay, it’s not my job to go and spend 10,000 bucks on a tank to be in my backyard. And so its the same with solar panels, we could use the same analogy. So the government’s don’t often sit down properly and say, how could we tackle this issue in a different way they jump to the obvious, most visible idea, right. The big project, the big deal, we’re doing this, we’re going to save everyone, if we go ahead of this big problem, when they’re often alternatives. And look, you know, this and I know this, most public policy problems are really caused by people’s behaviour. Okay. Okay. Why are there car accidents? Because a lot of people drink too much. Okay. Right. Okay. Why do people get sick lots? Because they have lousy diets and have bad lifestyle. Okay, hospitals pick up the residual. Now, we can’t change people’s behaviour, except by all sorts of incentives and so on things like that. But governments don’t really sit down. It’s like freeways. I mean, do we have to keep building freeways when maybe you have completely different urban development or you have different timescales for people to work and go home and all sorts of stuff. And you don’t have to go down the big spending alternative and sit down and think about, look, you’re hearing this in education at the moment. Ah, you know, we’ve got to we’ve been spending more money on education, by the way, by quite a large amount and our results are declining in Australia in a big way. Federal government more than the states, the federal government is actually now the biggest single spender on schools. Okay. Right. Okay. And where did that where did the money go? Largely goes in teacher salaries? Yeah. Because we got smaller classrooms. Okay. So is that really the appropriate thing to do? Or should we be thinking about? What are teachers? How are teachers properly trained? And things like that, you know, what’s, what’s the way to do it? Aboriginals have a poor education, but you talk to people, a lot of the problem is that they don’t attend school, right. The people don’t attend school, then there’s the problem. There it is. And they’re very hard things to tackle. But governments just jump to the obvious so often, and don’t end as in because of rushed decision making gotta be seen to be doing something. And the media, piling it on. What are you doing about this? What are you doing about this? This, like, when you see an accident, train accident or something? There’s some poor person, you know, dragging themselves to the train or the poor ambulance service dealing with people. What’s the government going to do about this. You know, give us a give us a bribe. And what I found is government rush too many things. rushed to meet the media agenda. Yes, yeah. Then yeah. The policy agenda.

Gene Tunny  33:30

Yeah. Right. So yeah, and this is where this is how we get white elephants. They want something iconic. I mean, you’re talking about. No, thankfully, that Smithsonian thing never went ahead. But they ended up with this idea of a there has always been this idea of a landmark or an iconic building in Brisbane, I think it probably will come up again with the Olympics. So we wanted something to sort of excite the world or make Brisbane distinctive. To an extent I think that GOMA, that Gallery of Modern Art that was they were trying, I think that one intention of that was that it could serve as a building that

Scott Prasser  34:07

Yeah, well, the art world is very big on that, mainly because so much art shown is so terrible. They’re got to have something good outside to look at.

Gene Tunny  34:15

Yeah, oh, yeah. Some of it’s difficult…

Scott Prasser  34:18

I’m obviously a Philistine. I don’t understand.

Gene Tunny  34:21

Some it is. It’s difficult to comprehend really, but but they’ve had some great exhibitions at GOMA. They had a great David Lynch exhibition many years ago.

Scott Prasser  34:31

I think Southbank which is basically developed by the National Party government, essentially, for the expo 88 is quite a successful sort of precinct in a sense. Yeah, without being too grand. The art gallery is a reasonable size, there’s the Queensland library we’re one of the few places that actually have a State Library, not everyone is very keen on those things. So there’s a lot of good things about the South Bank, I think it was developed and the government would push through and got that done. And there is a bit of style about it without it being over the top, over the top, not that it’s not a Guggenheim by any stretch of the imagination. So it’s, if you go over there, it’s pretty busy in this kid’s swimming and what sort of stuff. It’s got some things going for. But yeah, there’s one example where it’s at a scale that is confit in Brisbane, say where I mean, the, the iconic thing of, of Brisbane is the climate. That’s the iconic thing. And unfortunately, don’t build houses to suit the climate. We build houses of air conditioning systems, designed in Melbourne. Yeah, that’s another story.

Gene Tunny  35:41

Yeah. Yeah, coming back to the white elephant. So the last criterion that you specified, the decision to proceed with a policy or project should be that of a group, not an individual ruler. So all case study selected involves some form of collective decision making process in a democratic environment, not by tyrants, dictators or in authoritarian regimes. That’s because we just assume dictators will do crazy things.

Scott Prasser  36:13

Starling, yeah, you know, Hitler, and those sort of people. North Korea, you can look at lots of those sort of, yeah, sort of buildings, they can make it happen. Sometimes it’s, you know, it’s great. I mean, I suppose you could say Adolf gave us the German highways, which were brilliantly designed and, and still are pretty brilliant to drive on. They’re much better than American highways. But you know, that’s a big cost to pay. But I think all the things we’re talking about, were decided in this democratic system. That is there’s a so called independent public service, there was some sort of parliamentary approval, there’s some sort of accountability, there’s some sort of openness about them. They, I mean, Mr. Beattie, might have been a very powerful Premier, but he still had to get approval from his cabinet. One assumes for the things that went ahead, yeah, so we can’t just blame the premier, you know, the premier was part of a government. Yeah, therefore, we say, and we have a reasonable, you know, free press to comment on things. So that’s what we’re saying that you can’t just blame, you know, one person in our solar system. Our white elephants have been collective fair decisions, if you like, right, we’ve tried to point out.

Gene Tunny  37:29

So we’ve got to look out for them as, as citizens, or if we’re in government, then we should be looking out for these things. And because they’re not really, what’s your view on whether they’re actually politically sensible or not? Like if you’re if you’re just looking at completely politically? Do you think these things? Do politicians get a benefit from them, when they open? When they open the desal plant, or they open a new school that ends up running under capacity or a new hospital?

Scott Prasser  37:58

They think they do. Now, that’s politicians, I often have arguments in with politicians about grants and things, you know, why are we involved in giving out this grant of $5,000 to x project so the local member can hand over this check? Do which gets a tiny article in the local paper. Do you really, really, think, minister, that this is going to get votes for the government? Yes, Scott, you don’t understand politics. I do understand the politics. I’m saying it’s not very good politics.

Gene Tunny  38:33

Yeah. Okay. So as an advisor, you’ve got made a push back. Yeah. Okay.

Scott Prasser  38:40

I’m very proud that on a couple of things. There was one crazy idea going on in one office, about a moving government testing body to somewhere in the country. And the public servants said to me, Scott, this is going to cost $50 million to do . That is what it’s going to cost, what can we do? I said, we’re going to slow it down. And we slowed it down. And got so slow down, it didn’t get to cabinet, and it was too late for the election. Right. We didn’t do it. Okay. How are we all happy.

Gene Tunny  39:18

Right. Okay, so, going back to your book, just before we wrap up the white elephant stampede. We talked about the desal plant. You talking about the payroll system debacle here in Queensland, the state of Australia, we’re in other what other examples are there in this book? Are there international examples too?

Scott Prasser  39:42

Yes, there is one. Paul Hooper talks about airports. He’s basically, a what do you call him a transport economist? Yeah. And PhD has worked in, worked overseas. And he looks at how new airports often become phenomenal, disasters in one in Berlin became a disaster, one in Thailand. And he looks at how airports often develop with little thought about what it really gonna cost and how effective it will be. So, there’s when he looks at those sort of things, I think that’s a really good one to look at. So in his national one, if you like, the Olympic Games and looks in other Olympic Games, as we’ve talked about, so we’ve talked about those, the other one I like is the COVID Safe App, which people may remember in the Commonwealth Government, the COVID Safe App. Okay. And I had come in, I refused to join, join it, by the way, as I did on anything, I never tried to join and link up with government. And that’s been a complete waste of time and effort. Yeah. Right. And, again, the government rushing into it and sometimes technology makes government think, Oh, we can use this new technology for something. And again, that wasn’t wasn’t thought thought through. So there’s a very recent example, which is in the book being discussed by Professor Schwartz, who used to be Vice Chancellor of Macquarie University and so on and is an extremely bright person. There’s an example of that very, it didn’t cost a lot of money, but it still cost some money and took up a lot of time. And and expectations were just never met, it eventually just faded away.

Gene Tunny  41:35

That’s completely useless. So what was it it was an app on the phone at work through Bluetooth and if you passed, every time you pass someone who also had the app on and Bluetooth was enabled, there would be a communication that you you’d register that you were in close proximity one and a half metres within one and a half metres of this person. And therefore if they tested positive for COVID, you would then get notified or you are in close proximity of someone who had COVID and that was supposed to allow us to manage goes better.

Scott Prasser  42:07

Appalling, appalling authoritarian government scenario going on I mean, fact that it was it was a liberal so called Liberal government brought tortures up. Is even m ore repulsive. What’s the next bright idea coming from the powers that be in Canberra land?

Gene Tunny  42:25

Yeah, well.

Scott Prasser  42:26

I mean, Canberra is a white elephant by the way, the whole thing. That’s another story.

Gene Tunny  42:31

I know that it was in the top 10 policy mistakes public policy mistakes for Australia that the Institute of Public Affairs put out. I forget how many years.

Scott Prasser  42:43

Redfern post office or something was the other one where all the mail went through Redfern and Sydney exchange and got stuck if there was a strike. Means all the mail in Australia got stuck on something like that. I think it was Redfern, one of those sort of things. And see the other thing is government often put all their eggs in one basket. Yeah, another issue. And this is why a federal system of government is good because you can have different baskets going on. And if you over over capitalised, you turn over capitalise in your house, you have interpreters in your car, or government going over capitalising in spending money. Yeah, and they put all their eggs in this, this is the solution for the problem. And of course, you ought to have a couple of horses in the race rather than just one horse in the policy race. If you’re lying. There are many ways to policy heaven, I say. Yeah, so we all be careful about adopting just one thing as the magic solution.

Gene Tunny  43:46

I was just thinking, does anyone talk about is there a chapter on public transport projects in there?

Scott Prasser  43:51

No, not Not really. But that might be next book we what we’re wanting to do is, is have a series, another book coming out and have an annual White Elephant award. Yeah, that’s what we want to do. And we’re going to link up with project management institute and Master Builders Association, those sort of bodies, Master Builders, of course, I’ll build anything they sell me. They’ll build anything, downside, people pay, they’ll knock down as long as people pay. They don’t question the value of what they’re doing. If you give me money, we’ll build it. No matter how stupid and how bad the design will be. We’ll build it. That’s not our decision. Okay.

Gene Tunny  44:29

Yeah. Well, I was just thinking public transport because there’s a bit of a question about whether this new subway project we’re building here in Brisbane is economically viable, particularly now as the cost of it’s blowing out. It’s one of these mega projects Cross River Rail.

Scott Prasser  44:45

That’s right, blowing out. The Sydney light rail project is one that’s been very expensive and very disruptive and took longer and so on and so forth. And given that what we’ve learned from COVID. What have we learned about how lot of people can work from home. We don’t really need all these offices and buildings running around the place. And so Heaven has arrived, in a sense, you can work from home. And given that, you know, a lot of our people workforce works in white collar office type jobs, then that’s possible. When I was in the public service, it was very hard to work from home. Okay, it was very hard to let one of your staff work from home, there’s all sorts of forms that had to be filled out. And sometimes some staff could work more effectively at home, you’re not being interrupted by, you know, coffee halls, and I would let staff work from home sort of unofficially. And, okay, you got three days, I want, all I want to see is the paper at the end of the three days, and had that person stayed in the office, it probably would have taken two weeks, because of all the disruptions and meetings and, and rubbish that goes on. So now we can work more from home. So we need to think about, you know, when people travel, why they travel? And do we need a lot of the infrastructure, you know, coming into the city? For what purpose? And for how many?

Gene Tunny  46:13

Yeah, so I’m just thinking, what’s the how do we fix this? I mean, can we actually fix it? Or is it just a feature of our democratic system is, we’re always gonna have politicians being political. Could should our journalists be challenging the politicians to give us the to provide the cost benefit analysis before us bill? Should there should be rigorous scrutiny of that cost benefit analysis? Should we have competing cost benefit analyses? So you’re not just getting the view from Deloitte or the view from whoever that this is a great project and I mean, the government’s paid them a tonne of money tax, right.

Scott Prasser  46:48

That’s right, I certainly wouldn’t trust those people. Well, we’ve done this, haven’t we in other areas of government, I mean, the Productivity Commission. And it’s for run, the industries Assistance Commission, which which came out of the Whitlam government period, are examples where if you set up a process, and you have public reporting, and I’m not totally in favour of everything the Productivity Commission has recommended, but we know, don’t we, that if you want to keep x industry going, it is going to cost you $15,000 per employee to keep x industry going. You didn’t know that before. And now I’m, I’m all in favour of that information being in the public arena. But I’m also in favour of governments making democratic political decisions about keeping in industry costing $15,000. But I think the taxpayer ought to know what it’s costing in the trouble of so many of our projects, and especially state governments, which tend to be more secretive, is that we often are not told the truth about the cost of a project. It’s fuzzy, fuzzy figures. Don’t you worry about answers. Yeah. Okay. So in public policy, we often talk about speaking truth to power, that is, advisors, telling the leader, the King, the minister, the truth about what’s going on, highly admirable, if you don’t want to get shot or deported or whatever. The King of Prussia, Frederick the Great, he was a very hardworking king, he was absolute king. He worked from four in the morning till midnight, he had ministers, and they would have to report to him once a year of annual report. And but he did allow his ministers to tell him the truth, the one he put into jail for six months, he didn’t cut his head off. But he was telling him that the King’s idea was really a bad idea. And he released him because he said he was right. But I think the other problem we’ve gotten our democracy is that governments don’t talk truth to the people. We have so much political pallava going on. And we’re seeing it now, with the Albanese government over the defence projects, I’ll blame the previous government. Well, how about we have a real valuation of projects properly, rather than just jumping into the blame game sort of process all the time. How about telling us what the real alternatives that you came to government? You said that you could decrease energy costs that we need to spend more money on these things? Or how are we going to do it? How are we going to do it? And I think I would like some processes set up in Queensland, I’ve often recommended there should be a state priorities commission. And it should operate a bit like the Productivity Commission, we sort of have one. And anytime a government wants to do saying it should go to this body and it should release a Cost Assessment in the public arena. Yes, right. Yes. Yeah. It’s got to be independent, truly independent, not filled with political hacks or whatever, and then the government, then the government can make a decision, we’re still going to go ahead with the project because we think this is in the wider public interest. Yeah. So that’s what I think should happen. You’ve got to have processes. And you’ve got to insulate some of the advisory systems from the interference in the public. We’ve seen from Royal Commission, the Royal Commission to overseas doctors, in 2005, highlighted how the Premier’s department interfered in the release of quality reports about health. There was fixing of the hospital waiting list. Okay. This is all down to politics by the public. We had all we had all the body we had health Commission’s we had ombudsman, we had all sorts of rules that they weren’t insulated from political interference. I believe the biggest problem Australia’s got is not climate change is the politicisation of our public service, our judiciary, and our universities, where we people are appointed because of their political allegiances, not because of their competence. And because of that people are showing their allegiance to the governor of the day, and they’ll do what the government wants them to do.

Gene Tunny  51:20

Right. And that’s both sides of politics.

Scott Prasser  51:25

Newman missed a great opportunity in not fixing the problem. And his government was marked by just as many bad cases of cronies getting positions.

Gene Tunny  51:37

Right. Okay. Okay. Yep. There’s a lot of politicisation for sure. And that’s behind these white elephants. Absolutely. Okay. So any final points? Scott, what did you think? Were some of the highlights of this book? What are you most happy about with this, this edited volume?

Scott Prasser  51:58

Well, I think it was interesting how easily we got people to find examples. And then there was an as we could have been twice the size, okay. We didn’t think initially we would have a lot of interest. But a lot of people we’ve sent a flyer to, and we’re going to have a launch in November, in Brisbane and one in Canberra that there’s tremendous interest in this. And our job is to try and make people aware, what we want, we want we’re not against public funding. We want public funding spent more effectively. And if you’re talking about sustainability and the environment, surely we shouldn’t be wasting money on projects that are consuming resources and causing pollution in the construction or whatever it may be. When there are alternatives in the way, things could be done. That’s what we’re really on about. And we’re sort of surprised that the universities are letting us down on not being critical commentators on these sorts of things. There’s there’s very few people in universities writing about these sorts of matters.

Gene Tunny  53:12

Okay. Scott Prasser, thanks so much for your time chatting about white elephants has been terrific. Really enjoyed it. Okay, that’s the end of this episode of Economics Explored. I hope you enjoyed it. If so, please tell your family and friends and leave a comment or give us a rating on your podcast app. If you have any comments, questions, suggestions, you can feel free to send them to contact@economicsexplored.com and we’ll aim to address them in a future episode. Thanks for listening. Until next week, goodbye

Credits

Thanks to Josh Crotts for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au

Please consider signing up to receive our email updates and to access our e-book Top Ten Insights from Economics at www.economicsexplored.com. Also, please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored. Economics Explored is available via Apple PodcastsGoogle Podcast, and other podcasting platforms.

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Truth (or the lack of it) in politics and how to think critically with help from Descartes – EP123

Why politicians need to stop lying and cut the endless BS. Episode 123 of Economics Explored features a conversation with Philosophy Professor Deb Brown, Director of the Critical Thinking Project at the University of Queensland. Deb also chats with show host Gene Tunny and guest co-host Tim Hughes about what it means to think critically, drawing on her expertise in philosophy, including her study of Descartes. 

About this episode’s guest – Professor Deb Brown

Deborah Brown is Professor, School of Historical and Philosophical Inquiry at the University of Queensland, Australia. During her time in the Faculty of Humanities and Social Sciences, Deb has coordinated a wide range of projects focusing on critical thinking. She has been instrumental in establishing connections and partnerships within the school sector, including with the Queensland Department of Education, as well as building partnerships across UQ and with international education providers. 

As part of her role, Deb works to link the UQ Critical Thinking Project into relevant projects within the university to provide educators with an understanding of how to embed critical thinking in classroom practice and assessment and to maximise outcomes for students, particularly those from disadvantaged backgrounds. Deb has established a professional development program for educators, booster courses for school and university students and research collaborations with a diverse range of researchers from the broader UQ community. 

Deb has a Bachelor of Arts from the University of Queensland and a Master of Arts and PHD from the University of Toronto.

Abbreviations Deb uses:

  • NAPLAN: National Assessment Program – Literacy and Numeracy
  • SES: Socio-economic status

The Australian ABC News article Deb was quoted in:

Is telling the truth too much to ask of our politicians?

A book Deb highly recommends:

On Bullshit by Harry G. Frankfurt

Article on the AUKUS (Australia-UK-US) nuclear submarine agreement:

What is the AUKUS partnership?

NPR report on Trump-Trudeau argument about the US’s trade balance with Canada:

Trump Admits To Making Up Trade Deficit In Talks With Canadian Prime Minister

Note that the allegation made by President Trump was that the US was running a trade deficit with Canada, whereas the US typically has a trade surplus with Canada (i.e. typically US exports of goods and services to Canada exceed imports to the US from Canada). The White House argued that President Trump was referring to the trade balance relating to goods only and excluding services. 

Thanks to the show’s audio engineer Josh Crotts for his assistance in producing the episode. 

Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored. Economics Explored is available via Apple Podcasts, Google Podcast, and other podcasting platforms.

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EP98 – Political legitimacy with Prof. Phillip LeBel

In Risk and the State, Professor Phillip LeBel argues the political legitimacy of governments worldwide is “under trial from questions of borders and national identity, from rising economic inequality, from the way in which information is gathered, managed, and disseminated, and from varying perceptions of risk.”

In EP98 on political legitimacy, host Gene Tunny interviews  Prof. Phillip LeBel about his new book published earlier this year by Brown Walker Press: Risk and the State: How Economics and Neuroscience Shape Political Legitimacy to Address Geopolitical, Environmental, and Health Risks for Sustainable Governance.  

Phillip LeBel is Emeritus Professor of Economics at Montclair State University, NJ. With a career combining academic research and teaching with professional consulting, Professor LeBel has accumulated a record of economic expertise in a variety of domestic and international fields. Over the years, he has lived in and/or worked in 30 countries, including Africa, East Asia, Central America, and Latin America.

Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com. Economics Explored is available via Apple PodcastsGoogle Podcast, and other podcasting platforms.

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Podcast episode

EP93 – Public Choice theory with Dr Brendan Markey-Towler

What happens when economists assume politicians and bureaucrats are self-interested and pursue their own agendas? Economics Explored host Gene Tunny and returning guest Dr Brendan Markey-Towler discuss the theory of public choice, a field of economics which helps us predict how politicians and bureaucrats will behave. They consider what public choice theory means for the growth of government and the types of political institutions we should have.

Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com. Economics Explored is available via Apple PodcastsGoogle Podcast, and other podcasting platforms.

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