The "size of government" paradox (with polling data!)

[Arwon]

That's true, but bear in mind that Australia and Canada are, along with the US itself, two of the classic examples of liberal capitalist economies (in commiespeak, cut-throat neoliberalism ).

And yet we have, in contrast to the USA:

-very effective universal public health coverage
-unemployment benefits which never time-out
-a specific welfare payment for students
-an almost entirely public tertiary education system (I think we have two crappy private universities) including heavily subsidised university places with zero-interest loans repaid through the tax system
-a minimum wage at least double that of the United States and approaching 50% of the average wage
-regulated industrial relations with protected rights regarding unfair dismissal, enterprise bargaining, strike action, etc

Believe me, most people who are aware of poilitics in this country find the US' approach to welfare, employment and health baffling and kind of scary. Don't assume just because Australia is a successful economy that it has to be some paragon of classical liberalism or whatever.

 

[Thorgalaeg]

-very effective universal public health coverage
We have this also, but right now it is under heavy attack

-unemployment benefits which never time-out
Wow. Here it last according to how much time you worked in the last six years. In any case unemployment benefits last 2 years at most.

-a specific welfare payment for students
Nope.

-an almost entirely public tertiary education system (I think we have two crappy private universities) including heavily subsidised university places with zero-interest loans repaid through the tax system
Yes. However public university is not free nor cheap. And they want to make it more expensive. Current governmet would like to make all education private though.

-a minimum wage at least double that of the United States and approaching 50% of the average wage
More about 1/3 of the average wage here (which is not very high either btw)

-regulated industrial relations with protected rights regarding unfair dismissal, enterprise bargaining, strike action, etc
We used to have this. Now It is under attack too (in fact it has been already destroyed with a new funny law)

Time to emigrate to Australia it seems. Do you need more personal for rabbit hunting or something?

 

[luiz]

And yet we have, in contrast to the USA:

-very effective universal public health coverage
-unemployment benefits which never time-out
-a specific welfare payment for students
-an almost entirely public tertiary education system (I think we have two crappy private universities) including heavily subsidised university places with zero-interest loans repaid through the tax system
-a minimum wage at least double that of the United States and approaching 50% of the average wage
-regulated industrial relations with protected rights regarding unfair dismissal, enterprise bargaining, strike action, etc

Believe me, most people who are aware of poilitics in this country find the US' approach to welfare, employment and health baffling and kind of scary. Don't assume just because Australia is a successful economy that it has to be some paragon of classical liberalism or whatever.

The US also has numerous welfare programs, and in fact American public social spending as a percentage of GDP is higher than that of Australia or Canada.

I don't doubt that in many ways Australia has a stronger welfare state, I was just pointing out that, broadly speaking and compared to the rest of the developed world, the US, Australia and Canada are in fact examples of fairly liberal economies with small government and little taxation.

For reference, here are some countries and their public social spending as a percentage of GDP in 2012 (OECD projection):

Australia: 16,1%
Belgium: 28,6%
Canada: 19,3%
Denmark: 29,5%
Finland: 28%
France: 29,9%
Germany: 25,8%
Italy: 26,4%
Spain: 25,3%
Sweden: 26,5%
UK: 22,9%
USA: 19,5%

As you can see, Australia belongs with the US and Canada, not with the European social-democracies.

 

[Mise]

Though interesting, I don't think the statistics in the OP are really paradoxical. For example, let's say there are only 3 people in a country: Tony, Angela, and Mitt. They all share a common belief that the government is two big and needs to be trimmed, but they have different ideas on what should be trimmed. Tony thinks that Defense and Health spending is fine, but Welfare needs to be cut. Angela thinks that Health and Welfare are fine, but Defense needs to be cut. Mitt thinks that Defense and Welfare is fine, but Health needs to be cut.

When the poll asks them if government spending needs to be cut, they all answer "yes". So 100% of poll respondents say that government spending should be cut. So a casual reader would interpret that as meaning that there is "broad consensus that the size of the government needs to shrink", or something.

But when the poll asks them which things, specifically, should be cut, there is disagreement:
Defense: 67% say no, 33% say yes
Health: 67% say no, 33% say yes
Welfare: 67% say no, 33% say yes.

A casual observer would remark that there is "broad consensus that all individual items are worth keeping". But that's not really true, is it? It just means that there is no consensus on what, specifically, should be cut. It doesn't mean that the population thinks they're all worth keeping, just that they disagree on what should be cut.

Note that it gets even more extreme the more people you add. If there are 5 groups of people, each with their own ideas on what should get the axe, you end up with 100% agreement on cuts, but 80% agreement that each individual item should not be cut. I'm not at all surprised that so few people agree on what should be axed.


EDIT: It all reminds me of this clip from Dave Gorman's "Genius" series:

Spoiler :

Link to video.

 

[Cutlass]

The US also has numerous welfare programs, and in fact American public social spending as a percentage of GDP is higher than that of Australia or Canada.

I don't doubt that in many ways Australia has a stronger welfare state, I was just pointing out that, broadly speaking and compared to the rest of the developed world, the US, Australia and Canada are in fact examples of fairly liberal economies with small government and little taxation.

For reference, here are some countries and their public social spending as a percentage of GDP in 2012 (OECD projection):

Australia: 16,1%
Belgium: 28,6%
Canada: 19,3%
Denmark: 29,5%
Finland: 28%
France: 29,9%
Germany: 25,8%
Italy: 26,4%
Spain: 25,3%
Sweden: 26,5%
UK: 22,9%
USA: 19,5%

As you can see, Australia belongs with the US and Canada, not with the European social-democracies.

Is that US number a long term trend or just recent years? Welfare spending is way up now from normal because of the exceptional unemployment.

 

[luiz]

Is that US number a long term trend or just recent years? Welfare spending is way up now from normal because of the exceptional unemployment.

There was indeed a noticeable increase in the US's social expenditure since 2008, but there's also a long term increasing trend. If we look at the last 10 years average, the percentage is 17.6%, still in line with Australia and Canada.

 

[Arwon]

The US also has numerous welfare programs, and in fact American public social spending as a percentage of GDP is higher than that of Australia or Canada.

I don't doubt that in many ways Australia has a stronger welfare state, I was just pointing out that, broadly speaking and compared to the rest of the developed world, the US, Australia and Canada are in fact examples of fairly liberal economies with small government and little taxation.

For reference, here are some countries and their public social spending as a percentage of GDP in 2012 (OECD projection):

Australia: 16,1%
Belgium: 28,6%
Canada: 19,3%
Denmark: 29,5%
Finland: 28%
France: 29,9%
Germany: 25,8%
Italy: 26,4%
Spain: 25,3%
Sweden: 26,5%
UK: 22,9%
USA: 19,5%

As you can see, Australia belongs with the US and Canada, not with the European social-democracies.

I think you actually have to remember a couple of other things to get a fair comparison.

One is that most of the gap is old age support. Comparing public spending Australia's around 4% compared to some European countries being around 10%. To compare this properly we must include the old age private spending component (at least another 3% by the OECD statistics), because Australia has compulsory superannuation in preference to pensions for everybody (and pensions are means-tested). Additionally, 20% of Germans are aged over 65 compared to 13% of Australians, so we're automatically going to spend a third less even with the same policies.

The other factor, of course, is that over the last 20 years Australia has had continous and often quite high growth and low unemployment (sub-5% mostly). If you look at the OECD breakdown of unemployment spending and active labour market programs such as job training, those two things account for a good 2% of the gap with many European countries. Raise the unemployment rate and we'll be spending more on u/e benefits and the training and jobseeker programs that go with it.

Most of the other areas we look pretty mainstream with Western Europe. Less generous with housing, more generous with family payments and incapacity payments, pretty much around the average on health when you remember the less aged population.

 

[luiz]

Fair enough. Still, much lower taxes and government spending than mainstream Western Europe, and a fairly more liberal business environment as well.

 

[Arwon]

Oh certainly. But wait til demographics and economic downturn crunch a bit and we'll probably see tax and spending go up.

 

[Monsterzuma]

There is no such thing as “public opinion” (examples #233 and #234)

I occasionally post on how intellectuals tend to misuse public opinion surveys, often to argue that the public agrees with their policy preferences. I do think there are a few questions the public is capable of responding to in a semi-coherent fashion, such as “should the death penalty be abolished.” But when you get into the area of complex economic policy, then public opinion is just gibberish—it completely depends on how you frame the question. This was triggered by a recent Ezra Klein post:

Policy hasn’t tracked public preferences very closely. In polls, Americans have clearly supported higher taxes on the rich and a much more punitive approach to banker compensation.

That’s one way of asking the question—should the filthy rich and evil bankers pay more? But what if you ask the public what they consider to be the appropriate top income tax rate?

Three-quarters of likely voters believe the nation’s top earners should pay lower, not higher, tax rates, according to a new poll for The Hill.

The big majority opted for a lower tax bill when asked to choose specific rates; precisely 75 percent said the right level for top earners was 30 percent or below.

The current rate for top earners is 35 percent. Only 4 percent thought it was appropriate to take 40 percent, which is approximately the level that President Obama is seeking from January 2013 onward.

In another article I discovered:

Here’s how the numbers shake out:
— 21 percent of respondents recommend a rate below 20 percent;
— 17 percent recommend a rate of 20 percent;
— 23 percent recommend a 25 percent rate;
— 14 percent recommend a 30 percent rate;
— 13 percent recommend a 35 percent rate;
— 4 percent recommend a 40 percent rate;
— no one recommends a 45 percent rate.

No one!!! Obama’s new tax bill calls for a top federal income tax rate of 43.4% in 2013, meaning the rich will face 50% tax rates in NY and California. Krugman and Saez favor still higher rates. I guess they weren’t asked.

http://www.themoneyillusion.com/?p=15005

 

[Perfection]

Doing more is not the same as being bigger. I know a bunch of very big people who don't do much at all.

 

[GhostWriter16]

TL;DR: In Australia at least, people say they support smaller government except in all the areas you ask them about specifically.

http://blogs.crikey.com.au/pollytics/2012/06/11/what-australians-believe/ (I'm posting some tables here, but merely referencing others. They're all at this URL. Also, there's a lot more here but it's mostly Australia-specific stuff about how Labor vs Liberal partisan issues play out in these polls)

In the abstract, Australians believe the government is "too large" and "tries to do too much":

Yet when you drill down into ANY specific policy area, that belief falls apart:

So that's services. What about government involvement in the economy?

Well. Major party voters want more industry support to keep car manufacturing here, a majority support more industry support in general. Most of us think privatising telecommunications and Qantas was a bad thing. A majority of us would support creating a government-owned bank.

Basically, while there's recognition of the good done by some key liberalising economic reforms (floating currency, free trade) we don't like privatisation of anything and we don't think the government is doing enough in basically every area of service provision. As seen in the table above, there's extremely high support for universal health coverage (medicare) and the compulsory superannuation (forced retirement savings) system, two of the biggest impositions on private income that there are.

Likewise in labour markets essentially everyone supports compulsory penalty rates and thinks labour market flexibility benefits bosses and corporations, not workers.

Same with regulation of finance and corporations, same with foreign investment in stuff.

Even in non-economic areas there is general support for basically every area of the nanny state you care to name:

All in all, the contrast between "government is too big" and what people actually believe in this country is quite spectacular, whether it's on service provision, government involvement in the economy, labour market regulation or "nanny state" type stuff. I'm actually struggling to think of an area not covered by these results where theoretically government "size" reductions could exist.

It's also striking just how removed from actual public beliefs the "mainstream" discourse and debate has become:



(Amusingly the Greens are probably closer to what polling tells us are mainstream views than either major party)

What do you make of this? Is this paradox an Australian quirk? What are opinion polls saying in your own country.

I pray that this doesn't happen to the US....

Seriously. They even support regulating shopping hours? Are you people kidding me?

This isn't the world I want to be in. I like my freedoms and rights.

 

[AlpsStranger]

I pray that this doesn't happen to the US....

Seriously. They even support regulating shopping hours? Are you people kidding me?

This isn't the world I want to be in. I like my freedoms and rights.

I'm pretty freaking far left by American standards. I'm so far left that some of the things I would support would probably horrify you. That said, my eyes were also drawn to the "Shopping Hours" item. WTH

I have an inalienable right to buy Tacos ad 3:00 AM, damnit!

 

[Angst]

I think the point is to provide better working hours for the working class, but I don't agree with it either.

I pray that this doesn't happen to the US....

Seriously. They even support regulating shopping hours? Are you people kidding me?

This isn't the world I want to be in. I like my freedoms and rights.

I pray that you will eventually wake up and realize "freedom" and "rights" mean squat when massive institutions more powerful than you utilize their "freedom" and "rights" to worsen your life quality for their profit.

Oh, right, it's already happening right now in the US.

Hopefully you will grow to learn to take responsibility of your next and attempt to safeguard that person with the most effecient institution possible. Which is government.

 

[dutchfire]

In the Netherlands, I think Christian parties are actually the main source of shopping hours regulations (especially sundays). Luckily the law has some loopholes.

 

[Leoreth]

I think the point is to provide better working hours for the working class, but I don't agree with it either.

It really depends. I don't think 24 hour supermarkets are really necessary. On the other hand, closed sundays are quite pointless, but it's mainly the Christian lobby behind that anyway.

But it's funny that after the soda limit nonsense GW's most appreciated rights and freedoms comes down to the ability to buy when and how he wants to.

 

[Arwon]

It really depends. I don't think 24 hour supermarkets are really necessary. On the other hand, closed sundays are quite pointless, but it's mainly the Christian lobby behind that anyway.

But it's funny that after the soda limit nonsense GW's most appreciated rights and freedoms comes down to the ability to buy when and how he wants to.

Yeah that's pretty amusing.

The shopping hours issue is a combination of union interests and tradition. We value our weekends pretty highly. The idea is if you have unregulated hours, you might kill the weekend for many people. Don't kill the weekend!

The solution, of course, has been to ensure businesses have to pay more to people who work on weekends. We call them penalty rates and they're part of the minimum legal employment standards.

 

[GhostWriter16]

I'm pretty freaking far left by American standards. I'm so far left that some of the things I would support would probably horrify you. That said, my eyes were also drawn to the "Shopping Hours" item. WTH

I have an inalienable right to buy Tacos ad 3:00 AM, damnit!

Thank you

Yeah that's pretty amusing.

Not necessarily "The most" so much as it shows how awful your society has become when they can even regulate things such as that.

 

[Angst]

Not necessarily "The most" so much as it shows how awful your society has become when they can even regulate things such as that.

You have an issue when the state can keep corporations in check and ensure us time off work?

 

[AlpsStranger]

This is the part where I stop getting kudos from GhostWriter16.

Strictly saying you can't shop on Sunday ( religious ) or you can't shop after 10:00 PM or on the weekend ( union ) is 100% wrong. Up to this point I'm on the same page as GhostWriter16.

OTOH, saying that you must give people a shift premium for odd hours is acceptable to me. That shouldn't surprise anyone who knows me, but it's worth repeating before Ghost completely misunderstands me