Recent opinion polls have shown overwhelming majorities in favour of devoting any additional resources to improvements in public services, particularly health and education, rather than to tax cuts. Discussing these results, Andrew Norton notes that some people may be “giving the socially acceptable answer, rather than what they really want” (see also here. I think he’s probably right, and I certainly hope so.
The reason I think Norton is probably right is that the majorities are so overwhelming (75-22 in this Nielsen poll and even more in others) that a fair number of people in the majority (people on above-average incomes with below-average needs for services) would almost certainly be worse off in a narrow personal sense. While some of these may be consistently altruistic, others may want to appear altruistic in a poll but might actually prefer the cash. Taking account of these responses would produce a less lopsided majority for services, but still a majority, as is shown by Labor’s electoral dominance at the state level.
The reason I hope he’s right is that it means that social democracy has won the public debate, at least for the moment. After all, if everyone believed that tax cuts would benefit, not merely a subset of high-income earners but the entire community, then the socially acceptable answer would be to support tax cuts. That certainly seemed to be the way things worked during the tax revolt of the 1970s and 1980s. At that time, opposing tax cuts was socially unacceptable. Well into the 1990s, I was regarded as wildly heretical for advocating higher taxes. Obviously, this has changed, though the political parties have been slower to catch up than the commentariat.
There are some other issues to do with “status quo bias”. People are more willing to express preferences for change in relation to the allocation of “extra” money than to support a change in the status quo, such as an increase in taxes to fund new services, or a reduction in services to fund tax cuts. But in the terminology of Kahneman and Tversky, this is essentially a quesiton of “framing”.
John Quiggin 
There is another possible explanation – that even those who might, on a narrow analysis, personally gain from a tax cut at the expense of services are realizing that their overall welfare would be impaired. This implies that feelings of security, of being part of a functioning society, of sustainability, of “belonging” are being valued.
It is of course possible that even a narrow, short-term analysis indicates that the cost of services no longer supported by the State would be prohibitive. Try estimating the cost of hiring your own police force to guard your fortress while you go to see the doctor you wholly support at the hospital you wholly pay for, then dropping by to collect your kids from the school you also wholly pay for!
Not to mention the anxiety about possibly arriving home only to find that your private cop has been paid more by somebody else and assisted in robbing you blind while you were out.
With bracket creep, we’ve been having constant tax rises every year. It’s astonishing how people seem to be willing to accept the pilfering of their income.
I certainly believe that tax cuts would benefit the entire community, and I’m not afraid to say so. The onus is actually on tax advocates to demonstrate how these taxes would benefit people. Given the sums that are already spent on public services, I’m not at all convinced that merely throwing more money at them can improve them.
And, Gordon, imagine the cost of getting your shoes from that shoe factory you built. Thank goodness the State provides that otherwise prohibitively expensive good.
JQ,
This is not meant to be facetious, but isn’t “social democracy” a very woolly term, when you think about it? To be literal, it’s actually redundant: when was the last time you came across an anti-social democracy?
Wouldn’t it be more correct to use socialist/ socialism, as we are talking about redistribution of wealth?
On the subject itself, I’m also a little sceptical on the polling, particularly as the question is unknown, and we don’t know what the alternatives were: “would you prefer a $10/week tax cut, or more spending on health and education?”
Personally, I’d rather a tax cut and less pork from the budget.
Another possibility: respondents may not be distinguishing carefully between government spending and tax expenditures or between public spending and public provision. Respondents might have in mind increased “spending” on private health insurance rebates, for example, or spending on non-government schools. Support for government spending on services is not necessarily the same thing as support for public versus private provision, unless this distinction is made clear.
Stephen, I entirely agree with this point, but you should note that the converse is also true.
People who favour increased public support for private schools, health services etc are implicitly supporting higher taxes. Only those who want services paid for on an ‘out-of-pocket’ basis can reasonably advocate tax cuts.
On the SBS Insight program in which I was a participant, John Stone made a complete hash of this, but I wasn’t given the call to respond.
The polls could also be picking-up support for a re-prioritisation of government spending in favour of particular services, rather than support for higher taxes.
The problem with the systems that have been put in place over recent years in contracting out work and measuring outcomes is a public service system which requires ever larger numbers of public servants to ensure that what has been contracted out is delivered. This is on top of poor service delivery as all that is focussed on is the outcomes which result in payment.
The services which used to be delivered as intangibles are no longer given by a public service which is intimidated and cowed by the tactics of the government.
More money is not the answer. Reviewing the bureaucratic system is a prime need.
The government focusses on the overpayments suffered by families. There are at least as many others who are totally irritated by the amount of paperwork required to obtain benefits to help their families and receive no benefit at all.
The rules, impediments and lack of responsibility as it is ” not my role to fix this” mean that for many of the announcements in the budget delivery will be so complex that it is easier to give up.
We will never have small government whilst we have in place a system which is designed to transfer wealth from the public to the private sector.
Public servants will continue to do their job but the concept of public service will be lucky to survive. This will cost taxpayers far more in intangible ways which aren’t considered important as they are not measured.
Actually – and this is an area I have commented on before – it is right to have lower taxes but wrong just to lower taxes. With lower taxes and everything in place that lower taxes would let people have, there would be far more personal independence – both means and knowledge of how to fend for oneself, without the inefficiencies of churning resources through the state. This would work for practically any current area of government activity, dominated as those are by health, education and welfare; only a very few government activities nowadays match Gibbon’s description of “the three principal objects of a regular police – safety, plenty, and cleanliness” (“police” meant “polity” in those days). There are few areas where governments really belong, in those activities where governments do so much these days.
No, the catch with cutting taxes is the vicious spiral that caught us in tax funded government dependency in the first place. If you fund new services, for a while most people are winners, since either they get the services or they still have their personal advantages from earlier approaches. The reverse – tax cuts pure and simple – does the reverse before its gains come through, maybe years later. If you cut services it will be a fair while before people learn to arrange education (say) for themselves, and maybe longer for them to have enough personal funds to pay for it. This includes where those come together, since people have to learn to budget for self provision, rather than treating tax cuts as a windfall and falling back on the state in the end anyway.
That last is what happens when retirees spend their savings and fall into the pension range. I gave an example of what to do about it at http://users.netlink.com.au/~peterl/publicns.html#NWKART4. This is also an example of my preferred approach – don’t just cut taxes, find a way for people to phase in looking out for themselves instead. People who want taxes to fund social services are actually making matters less sustainable, but there’s no reason for lifeboat ethics in undoing the dependency problem that taxes helped build.
In some ways it’s like the way sensible countries got rid of slavery. Britain gave slaves a period of tutelage where they were kept at work but paid and had rights, so they learned to grow out of dependency. Brazil used “freeing in the womb”, a sort of grandfathering, so that slavery could be unwound gradually. But the USA not only resorted to violence, it turned all the slaves loose to fend for themselves – an atrocity for those who couldn’t, that nearly every country’s slave laws prevented by forbidding owners to free slaves against their will. Without forty acres and a mule, the very young and the old suffered from instant freedom, and the long term gains did not justify an unnecessary approach to emancipation.
Modern tax cutters are like the idiot US abolitionists, but the fact that their methods are idiotic does not justify the eroding state dependency that has social democrats unaware that they are stealing their own souls with every good intention. We need to unwind state dependency, not just drop everything – but we certainly shouldn’t stay with state dependency any longer than it takes us to find a way out of the mess. Social democracy fed this fire, and it is not part of the solution.
Taxing times?
I’ve believed for some time that Australian governments need to spend more on health and education. That conviction flows not from a social democratic orientation but from a classical liberal democratic belief in maximising equality of opportunity (not…