31 thoughts on “Monday message board

  1. The ALP is making noises about wanting to reduce the top two personal income tax rates. Which is a quite a radical departure from the rhetoric at the time of the last budget when they opposed tax cuts at the top end.

    Meanwhile Minchin and Costello are crying poor. They can’t seem to work out how to pay for tax cuts. It seems that a budget surplus has become some type or religious doctrine for the Liberals. And all that middle class welfare is obviously sacred as well.

    In one article Minchin said “The biggest costs – welfare, health, defence and education – were increasing by 7 per cent a year”.

    Part of the answer lies in putting a stop to the automatic increases in expenditure. The expenditure side of the budget has grown massively since Howard came to office. It has not quite doubled but if they had held the line on spending over the last decade we could have abolished income tax by now.

    Another part of the equation has got to be the expanded private sector that tax cuts achieve. They reduce the demand on the public purse and increase the size of the tax base.

    If the Liberals want to play fiscal conservatives and the ALP want to give us tax cuts then the ALP will win my support. If the ALP decide to defend our civil liberties then they will really have me on side. For the moment I will wait and see what the next budget brings.

  2. Brendan Nelson’s demand for public ranking of school students’ performance, and moral panicking about the bottom quartile, is in the news again. See:


    One wonders what the Victorian Racing Club will be in for when Nelson discovers that six of the 24 horses in the Melbourne Cup have finished 19th, 20th, 21st, 22nd, 23rd and 24th.

  3. At least the owners of those racehorses will know that they came 19th, 20th, 21st, 22nd, 23rd and 24th. Its a pity that racehorse owners know more about their horses than parents know about their kids.

    Brendan Nelson is measuring outcomes. Which is a better management approach than the usual political game of bragging about inputs. Its nice to know when they throw a few more million at education, but far more relevant to know how many kids learn to read at school. I wish we could ban press conferences where politicians talk about spending increases for problem XYZ and get them to focus instead on how they will improve the results.

    The teachers union will complain about kids being labled as failures. However we all know that there are no bad students, just inadequate teachers. I suspect that is what they are scared of having exposed. And if your kid is in the bottom 25% for maths you either need to help them move up the scale or else accept that they won’t be doing a degree in quantum physics any time soon.

  4. “Its a pity that racehorse owners know more about their horses than parents know about their kids.”

    I don’t know if you’re talking about yourself here, Terje, but any parent who doesn’t have a pretty good idea of how their kid is faring vis-a-vis their peers isn’t sufficiently involved in their kids’ education.

  5. In the course of looking (unsuccessfully) for long-term tax collection data for Australia to respond to some comments by Terje abotu Australian tax rates, I came across the following:


    US Federal Government revenue as a percentage of GDP:

    1962 – 17.6%
    2004 – 16.3%

    Highest year – 2000 – 20.9%

    US Federal government spending as a percentage of GDP:

    1962 – 18.8%
    2004 – 19.8%

    Highest Year – 1983 -23.5%

    So US tax receipts are lower now than they were 40 years ago in relation to GDP and even at their peak had increased by only around 10%.

    Government spending as a percentage of GDP has been declining ever since the heyday of that champion of small government Ronald Reagan.

    It’s also instructive to compare spending in 2001, the last budget of Bill “tax and spend” Clinton (18.4%) with 2004 the most recent year of George Bush Jr.s administration (19.8%).

    This isn’t a complete picture, of course, it excludes state taxes (anecodatally, state taxes have been frozen or cut in many states) and government impositions such as the requirement for most employers to purchase medical insurance for their employees.

    But it seems clear that, at the very least, the popular conservatice caricature of a bloated US government run amok is, at best, extremely simplified and at worst simply wrong.

  6. Ian,

    If you are interested in the US situation then the following has some data that includes all layers of government:-


    Table 1 suggests that the total tax burden in the USA in 1900 was 5.9% compared with 29.1% today. It cites the relevant sources.

    However my earlier comments were not in regards to the USA.


  7. Terje,

    Is your name pronounced TER-YAY, TER-JAY, TER-HEY, or TERG? Where is this name from? Does it have a meaning?

  8. David,

    My family and friends pronounces it TAY-A. It is Norweigen (like my mother). In Norway it is pronounced more like TARRRR-YA with the “R” rolled around a few times in the back of the throat.

    I don’t know if it has a meaning. Most people think it means “Aussie guy with weird name”.

    Terje (say TAY-A)

  9. In the “Chutzpah” discussion I feel that I may have offended John Quiggin. If so I apologise. I may passionately disagree with many of his views but I have nothing but respect for the man.

  10. Oh come on Terje, you made a very valid point far more politley than did I: Jesus’ teachings are not just for the poor, contrary to what JQ or Pell might have us believe.

  11. Dogz,

    I have no desire to offend people. John wants the discussion halted. Its his web site. Thats the end of it as far as I am concerned.


  12. Terje, if you want to apologize for a perceived slight that’s fine by me. But I personally see no need to apologize: JQ chose to terminate the discussion rather than address a substantive point raised against his negative assessment of Hillsong. If he is offended he only has himself to blame.

  13. OMFG PROFESSOR JOHN. I AM SO COOL. i used you in an english essay.. although now i can’t remember what idea i linked it to (something naomi klein had said) or if you had indeed said it (because it could have been professor quiggin junior).
    now if i pass 3-unit english, i’m crediting you with the victory.

  14. I don’t take offence that easily guys, but I thought the discussion was clearly going in a direction where people would start getting offended and reacting accordingly. So I cut it off.

  15. I am amazed to discover this evening that Federal Parliamentary Labor Party under the leadership of Kim Beazley is even contemplating supporting Howard’s grab for police state powers. At the very least, they should be insisting on full parliamentary deliberation, based on the preview released by John Stanhope.

    “Don’t think of an elephant”, indeed. Howard’s wedging and agenda setting seems to have the big man wallowing.

  16. I am very worried about the direction Howard (and the ALP) are taking us with these secretive police powers. We desperately need a third force in Australian politics that actually believes in liberal values.

  17. Terje,
    There is a ‘third force’ – it is buried within the Liberal Party. The conservatives are currently in the ascendant, but the true liberals are still there. Like the Labor Party, where those who do not believe in the machine politics of the current leadership are being drowned out and pushed to the back because fewer and fewer people are actually willing to get involved.

    As usual, most of the people out there are more interested in talking about changing things than getting in there and trying to change them. If you truly believe you can make a difference, join one of the parties and try to do it. Get enough of the people to agree with you and away you go.

    Latham’s prescription of staying out of politics is for the weak and terrified windbags who prefer to talk rather than do and then blame others when they fail.

  18. Terje,

    I haven’t got tiem to read that article at the moment but here are some comments:

    1. Based on an empirical look at living standards, growth and employment aroudn the developed world, I’d argue that the optimal level of public spending in a developed state is around 20-25% of GDP not around 15% as the authors suggest. The US and Japan spend a little under 20%, their growth rates and unemplyment seem to be little better than for the countries spending around 20-25% and their living standards are surprisingly poor given their per capita incomes (e.g. low US life expectancy).

    2. Correlation doesn’t prove causality. Low economic growth leads to higher unemployment which leads to higher welfare costs. I’d be interested to see how they accounted for these built-in stabilizers in the paper.

    3. What sample did they look at? Developing countries typically have low levels of government spending – including the ones with lower or negative rates of economic growth. Inlcude Singapore and South Korea in your sample (without balancing them with, say, Burma and Laos) and you’re a long way towards “proving” your hypothesis.

  19. Terje – that third force you talk about on the “liberal’ side of politics was…………The Democrats. Those dills progressively (no pun intended) blew themselves up on a range of policy issues too long to list, and have sacrificed territority to the eco-terrorists (the Greens).

  20. Terje and AR – people like me have tried to get policy options explored within the Liberal Party, only to get stonewalled. Frankly, right now I’d like to see some of these explored by minor parties just to get the big ones to steal them back again. Mark you, this happened even when I only tried to get these areas studied, far short of getting them put on policy. Try lookinh here to see how it stagnated.

    But the system is arranged full of barriers to entry for people and policies, so it’s like struggling in cotton wool and nothing can ever get through from the grass roots. That’s “democracy” for you.

  21. Ted Lapkin, Director of Policy Analysis at the Australia/Israel and Jewish Affairs Council, asserts that Australia’s civil libertarians are panic merchants.


    Lapkin wonders why civil libertarians are complaining, when during WWII “Australia enacted emergency regulations that were far more restrictive than anything contemplated now. From arbitrary mass detention to absolute censorship of the press.” He reminds everyone that “Anglospheric democracy has proved remarkably resilient and resistant to the pressures and temptations of rule by executive fiat. The histories of Australia, Britain and america all demonstrate that, as danger receded emergency decrees were consigned to the dustbin of history.”

    Should we agree with Lapkin?

    Let’s look at Lapkin’s frame of reference. In an outright breach of Godwin’s law, Lapkin argues from analogy between the Nazi menace and the threat posed by Jihadis today. Several books could be written indicating just how unrelated those two threats are to each other. In fact, one struggles to find any significant areas of overlap between totalitarian, militarised Nazi expansionism which killed millions, and a ragtag bunch of killers and martyrs who kill sporadically and randomly. For Lapkin’s information, more recently than WWII, democracies like Australia saw off an even more potent threat of Third International Communism without resort to swingeing attacks on civil liberties. Why should Australia adopt the WWII model and not the Cold War model? Time to think outside the Nazi Square Ted.

    Here are some matters to consider.

    1. The WWII National Security Act was enacted in the context of declared wars against sovereign enemies. Its term of enactment was for the duration of those wars. Howard’s counter-terrorism bill recognises no state of war. George W. Bush, however, has warned us he conceives of an emergency that could persist for several generations.

    2, In Bush’s worst-case scenario, Australian citizens may be required to steer clear of any unfavourable comment about the progress or lack of progress about this undefined and phantom conflict during our lives, the lives of our children, and the lives of their children. That’s a very long time.

    3. Let’s look at the temptations offered by this legislation to governments trapped in a conflict seemingly without end. I think most people would agree that the present clutch of Coalition of the Willing leaders have presided over a deterioration of this hypothetical war. Whether this is correct or not, that is the opinion of most Americans as expressed in polls. I imagine Australians would have quite similar opinions to Americans. How much worse does the situation have to get before the very act of conducting a poll about the progress of the GWOT is seen by governments as seditious? This may seem unlikely, but go looking for Gallup Polls on the progress of WWII conducted before victory seemed assured.

    4. If you find that doomsday scenario unlikely, then let’s look at the temptations offered by this legislation to dissidents. You can be sure that artists, writers, film makers and other creative people will succeed in making governments look ridiculous by provoking them into prosecutions for works that test the boundaries of seditious expression. Look at the history of the banning of Alan Seymour’s “One Day of the Year” for a model of this story of provocation, which can only serve to discredit government. The absurdities of DIMIA may serve as a model for the behaviour of governments driven to distraction. Governments should therefore be protected from themselves by a vow of self-denial when it comes to prosecuting mere words.

    Lapkin’s specious arguments should be rejected because he misunderstands the nature of the enemy, he misunderstands the nature of the conflict we are embarked upon, and he misunderstands the unfortunate effects of the collision between a culture of freedom and governments tempted to hang onto power by repressing criticism out of existence.

  22. Ian,

    I did not expect you to read the article. Just to look at the table.

    My point is simply that the size of government in Australia has grown by several multiples over the last 100 years.

    Some may see this as good and some like myself may see it as negative. However I think there should be little doubt that it has happened.


  23. Terje,

    I looked at the table. My immediate reaction was “How the heck can they compare 1960 figures with those for the later years?” In 1962, the US government shifted to a new system of national accounts, the changes were sufficiently major to make direct comparison with previous figures unreliable – that’s why the US Treasury’s own figures start in 1962.

  24. Ian,

    Just start at 1970 then. According to the table, total Australian govt outlays went from 25% of GDP in 1970 to 37% of GDP in 1996. That’s a 50% increase.

  25. The Cold War was started over an ideological power struggle between atheistic communism and democratic capitalism and because when it started no actual fighting occurred, it became known as a “cold war”.
    “The Soviets and Americans would continue to fight many cold battles in Africa and Latin America in an effort to influence the politics of these regions. The cold war turned hot in the Koreas, Vietnam, and Cuba.�

    The difference with this First Terrorist War of the current Long War is that it has turned hot within the democratic capitalist states themselves, and Australia has no reason to believe that hostilities are not planned for or will not succeed within Australia. It is not a cold war.

    Not all see our arguments as we do. Maybe we won’t be quite so fixated on what is the end state of rights either if they succeed in hitting us here.

    “While neocons and liberals, or however one categorizes one at this stage, argue over wagging dogs and other fine assortments of beasts and monsters, and while the debate over the merits of real politick vs. salvation politics rages on, there are parts of the world that are going to hell in a hand-basket, reflecting the new cold war climate created by this internal debate. It looks as if America is having a nice cold civil war by proxy over its own identity and future.

    The ideological components of this war might be taking place in the halls of academia and the congress and through US and international media, but the physical aspect is taking place in Iraq, Syria, Lebanon, Egypt, etc. Each camp here is producing, wittingly and unwittingly, its own allies there, both ideological and tactical. And like in all proxy wars, these allies are quite capable of furthering their own particularistic agendas by stoking the debate here….

    But first, this new American civil war, no matter how cold it happens to be at this stage, has to come to an end. Otherwise the war on terror can never be won and Iraq will be followed by Syria, then Lebanon then Sudan, then Saudi Arabia, then… You get the point�


    From Wretchard, who goes on to say

    “The political “civil war” described by Amaraji is hardly unique to America. The same kind of hesitation over how to deal with terrorism afflicts nations in Europe, Asia and Africa — almost anywhere in the globe…â€?


    “It might even be possible to argue that what Amaraji calls the ‘New American Civil War’, instead of driving events in Syria and Lebanon, is itself being driven by the structural shifts of the new century. It would go a long way toward explaining why the political structures of the late 1990s have been so deranged by September 11. The United Nations, transAtlantic diplomacy, the doctrine of deterrence which underpinned Cold War strategy, the entire multicultural and globalizing agenda — all of it — has been called into question not by a small cabal of neo-conservatives — that would be ludicrous — but by the pent-up force of thousands of events in a world now striding to the center stage of historyâ€?
    It does feel sometimes that the debate in the west is about how many angels can dance on the head of a pin. However not to worry a clever chap has come up with a way to work it out.

    “What was once just a rhetorical illustration used to demonstrate the futility of out-of-touch theological debates is now a exciting science experiment you can conduct in your very own home!
    What you will need:
    · pencil and paper
    · one pin
    · a large number of angels
    Note: Seraphim and cherubim are most desirable, but almost any angels will do. The garden Anaheim variety of angel should be avoided.
    · One copy of “The Song That Doesn’t End (Extended Version)”
    Instructions: Insert the pin upright into a sturdy surface, such as a pin cushion or Styrofoam block. Begin playing “The Song That Doesn’t End (Extended Version)” and instruct the angels to step onto the pin and begin dancing. Count each angel, stopping only when no more angels can dance on the pin, and remembering to make sure all of the angels are dancing on the pin and not just hovering above it, so as to avoid a potential source of error. Repeat several times, removing all angels from the pin after each trial. From these trials, determine the average number of angels that can dance on the head of a pin. “

  26. Ian,

    Are your trying to assert that the size of government (measured by spending and/or taxation relative to GDP) has not increased significantly in the last 100 years?

    Or are you just saying that you can’t find idealic data on the topic?


  27. Terje,

    I think the size of government in most western democracies increased dramatically between roughly 1930 and 1950 and has been broadly stable in most of them since then.

    The figures in the article you cite call that into question – including specifically the Australian figures pointed out by Dogz.

    I’m currently down with the flu (hopefulyl the non-avian variety) but I will try and look for further information when I’m feeling better.

    I know there are a number of professional economists who read this blog and any help would be appreciated.

  28. My understanding is that in the 1950s and 1960s taxation at all levels of government amounted to about 20% of GDP compared with about 10% before WWII. Today it is in the vicinity of 30%.

    We live in the age of socialism.

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