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Toddler politics

I accidently came in contact with the Toronto Star today and read a hilarious story on a child care company in Australia. It's funny for the obvious reasons (Corporations! For profit! Children! Aaauugh!), but is funny in another way as well -- but I'll get to that in a bit.

First the by-the-number corporate terror story. They profile Eddy Groves, a 38 year-old Canadian who made big money in Australia building ABC Learning Centres, which manages almost a thousand daycare centres Down Under. The writer of the story, Laurie Monsebraaten, interviews him and lets him tell his side of the story. She allows that he has pleased parents who "who flock to his meticulously maintained centres full of dedicated, well-trained staff." But get this: He drives a Ferrari! His private fortune is reportedly worth $175 million! Something is obviously wrong here.

Time to cue the usual suspects -- the union leaders and academics:

Australian academics who study child care are troubled by the large profits being made on kids.

"I don't think anybody would have imagined that in Australia such massive fortunes would be made in child care," said University of Sydney business professor Deborah Brennan, who has written a political history of Australian child care. "I would really urge Canada to be very, very careful about opening up your system to such profit-making."

And get this, the corporate centres are concerned about costs:
A financial analysis of the child-care industry by Australian business research giant IBISWorld noted that stiff competition was causing child-care centres to keep prices down by reducing operating costs.

"There are concerns that large for-profit operators will be more likely to cut costs to an absolute minimum by, among other things, operating at minimum staff-child ratios," the 2003 report said.

Meanwhile, the corporate child-care sector is a strong political lobby that has opposed increased staff wages, stiffer regulations and higher child-staff ratios.

In an investigation of corporate child care last fall, Melbourne's Sunday Age newspaper reported that several independent centres bought by corporate chains saw their food budgets slashed and cleaning staff let go. Child-care workers had to assume cleaning jobs during the hours they were supposed to be looking after the children.

But as far as I could tell, the children were not kept in large pens and identified only with numbers. And it seems that both the customers (the parents) and the workers were not forced into dealing with the company. Child care can always be better and it can always be worse. The real source of outrage for the critics quoted in the article is the methods used to provide the service. Silly, but nevertheless the tone of the article is -- don't let this happen here!

And I totally agree. But not for these paranoid socialist reasons. The other funny thing about the article is that the author is completely oblivious on how to avoid corporate child-care. Don't set up a national child care program!

Eddy Groves got rich because the Australian government setup a national child care strategy. They now spend over $1.7 billion dollars a year subsidizing day care. There's a reason there are no large corporate daycare centres in Canada -- it doesn't pay! The required fee per child/day to be profitable is too high to create sufficient demand. People find other ways of handling their child care needs. But with the government paying part of the freight, demand goes up and *poof* -- profitability! A look at the most basic supply-demand graph explains this.

But this solution to avoiding their worst nightmare is unacceptable. To the author and similarly minded people, if socialized daycare created through subsidies has unintended consequences, the solution is simple -- more socialism. If you thought the federal government's incompetence setting up a firearms registry database was infuriating, just wait until they attempt to set up a system of national 'non-profit' child care centres.

UPDATE: The Smug Canadian has caught me indulging in a bit of baseless speculation. I realized when I was writing it that I was wandering into areas I knew little about, but since my two responsibilities were stirring, I raced to conclude the post without doing the proper research. There no doubt are some corporate child care centres in Canada, but I don't think there is the same 'big-box' domination of the business as in Australia. I don't think the demand is there for the prices you'd have to pay.

The point I was trying to make was that Eddy Groves is not an 'entrepreneur' in the sense that he developed a useful product or service, he just saw that the government was prepared to firehose money in a certain direction and he positioned himself to get a good soaking. He's a corporate welfare beneficiary. Ken Dryden is talking about blowing $5 billion in start-up costs for this boondoggle, and no matter how many restrictions they make on how this money is spent, some well connected people are going to get very rich. But these people aren't 'capitalists', they're parasites.

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Comments

Yep, understood your point but still not sure I fully agree. It's true the "entrepreneur" in question may be an opportunist, but this is still a vastly preferable situation to the government doing everything themselves. I guess the big concern is if the government money breaks the competitiveness of the market then, yeah, it might as well be government and the Australian approach is no better than the total disaster we are sure to experience here.

Oh, I've got nothing against the people who take the government's money. (True, the term 'parasite' might have sounded kinda negative.) It's only natural. And I agree if you're going to use taxpayers money to create child care, directly subsidizing private 'for-profit' providers is the way to go. But it's far better to not have the government enter into this field at all.

Bruce wrote, "...socialized daycare created through subsidies has unintended consequences..."

The "Daycares Don't Care" anti-daycare website claims that any daycare has unintended consequences!

The URL is:
http://www.daycaresdontcare.org

eddy groves what was your insperation

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