Another Fin article is up on the site Voters favour better services from 22 May. Here’san excerpt.
If tax scales were indexed, the community would face a clear choice between private consumption and public services financed by taxation. As the opinion polls following the budget show, responses to such choices depend on the way in which they are framed, as well as the way in which they are reported
Newspoll found that 15 per cent of voters thought the budget would make them better off 38 per cent thought it would make no difference, and 32 per cent though it would make them worse off. This mildly negative result (fairly typical of responses over the 15 years Newspoll has asked this question) was spun by The Australian into a ringing endorsement ’53 per cent of voters thought the Budget would make them better off or no worse off (emphasis added)’.The AC Nielsen Poll asked a clearer question and got a clearer answer. Asked whether they would prefer the tax cuts announced in the budget or improvements in health and education, 20 per cent opted for the tax cuts and 77 per cent for improvements in services.
John Quiggin 
Come on, even the AC Nielsen question is weighted, though more subtly. The subtext is “Do you want to improve the services of the nation or are you a greedy selfish bastard?” People may tell the pollsters they’d prefer more money on health and education, but I’ll bet less than half of that 77% will put their money where their mouths are.
If you disagree, run for office on a platform of higher personal taxes and see how far you get.
“If you disagree, run for office on a platform of higher personal taxes and see how far you get.”
Howard ignored your advice in 1998 (in the sense that he introduced a new personal tax, while cutting others) and won. Beazley followed it in 2001 and got crushed. Lots of state governments have raised taxes and won re-election, notably Carr and Egan in NSW. Conversely, Kennett cut taxes and services and lost.
Even an absolutely impartial question is still unfair in this sense: people rationally “choose” the wrong thing when there is an externality around, out of simple prisoner’s dilemma/tragedy of the commons logic. And government benefits paid for from spread tax burdens have a way of setting up just that. So people will always choose too much education, too much health care, etc. just so long as they get individual benefits and the costs get spread – even if they get told the plain facts.
Ironically the only areas they don’t get those individual benefits are the ones that are naurally suited to being supplied by governments, like defence – and with no constituency, they get under-resourced. There are traditionally no votes in defence.
I don’t follow your argument at all, PM. It would work if people in each electorate voted on the provision of schools and hospitals for that electorate, with the costs being borne by the community as a whole, but this is not the case.
The election of 2001 was fought on cultural, not economic issues. And Beazley offered “tax cuts” in his inspirational platform to reduce tampon, nappy and book prices, and caravan park fees. What a visionary.
Howard’s antics in 2001 were disgraceful in terms of fiscal profligacy. He had a golden opportunity to really hack away at the income tax scales (something for the Costello cheer squad) and then introduce tax credits (which Abbott would love). He evaded further tax reform, and did stupid things like abolishing petrol indexation.
Let’s hack away some more at that government.
In many cases of pork barrelling, the thing JQ says “is not the case” actually is the case. But the general argument doesn’t even need pork barrelling. All it takes is for health spending or education spending etc. to offer real individual benefits to someone, while costs get spread (which they are).
Consider education, for instance. Individuals receiving it get benefits compared to other individuals even when there are only tragedy of the commons scenarios, i.e. no increase in all up jobs from getting a better education. It’s more complex, since education actually does deliver real gains – it’s not zero sum. But the competing for a limited pool does occur to some extent. So building new schools or hiring new teachers increases that individual benefit with disproportionately little aggregate improvement – the key point being “disproportionately”.
However there is another thing going on too: creating a constituency of direct beneficiaries (teachers, etc.). So we do have another lot of individual benefits going on.
But my point was that the component that is tragedy of the commons -ish really does exist, just from costs being spread while direct benefits exist. That pushes the solution a bit further over from optimal even when there is a general argument in favour of SOME level of government services. Further, it is of the nature of services provided out of unhypothecated revenue to tend to create that sort of thing whenever there is a component of individual benefit.
Which is what I wanted to draw attention to. The amount of the effect, that is unknown so far. I just wanted to point out that the question was open and that that had ramifications.
Ah… was JQ comfortable with the idea that direct beneficiaries can make a difference in direct transactions but supposing that the electoral process aggregated their individual choices enough that the effect didn’t come through? It does a little, but as voting blocs matter (teachers, say), our electoral process doesn’t blur them out enough for that. If it did, marginal electorates wouldn’t exist in any useful sense – targetting them would lose you as much on the swings as you gained on the roundabouts.