Winner of the New Statesman SPERI Prize in Political Economy 2016

Thursday, 8 February 2018

Decreasing the size of the state is very unpopular


I last talked about this question from the British Social Attitudes survey in 2014. Here is the latest version of this longstanding survey question (source and exact question here).

A point I made in the last post was that the percentage of people wanting lower taxes and less spending has always been less than 10%. If you believe the survey, and I see no reason not to, there has since 1983 been no public appetite for reducing government spending in order to cut taxes.

All the action over time is between those who want things to stay as they are, and those who want higher spending and taxes. As public spending has been cut in recent years, so the number of people wanting more spending and higher taxes has increased. However that proportion is still not up to the level it was in the 1990s.

Does this survey suggest that half the population want a larger state, and hardly anyone wants a smaller state? That depends on what you mean by the state. The question actually asks about spending on “health, education and social benefits”, so it seems reasonable that this is what people are responding to. They are taking as given that the government in the UK provides these things, and are simply expressing their view about whether they want more of these goods and are prepared to pay for them. The question does not ask about whether these goods should be produced by the state or by private contractors working for the state.

When the public are asked about who should own and run various activities, there is clear support for more rather than less public involvement. (Chart source.)


These numbers are from last year, so the collapse of Carillion and the problems with the East Coast rail line are likely to push public opinion even further away from the privatisation ideal. Note that only about 10% want privatisation of the NHS, which has continued rapidly under this government. A government that reduces government spending and taxes, and pushes privatisation of the NHS, seems like a government of the few and not the many.

I remember being told how nervous the last Labour government was when they decided to raise NIC rates to fund an increase in NHS spending. They had committed to not raising the basic rate of income tax in order (they thought) to be able to win elections. Given the data above, you might wonder why. But then I remembered how the Labour PLP had decided that they had lost the 2015 election by being too left wing, again without any real evidence. Perhaps the lesson of these two poll results is that the gap between what people actually want and the received wisdom of the Westminster bubble is very large.


16 comments:

  1. I think you'll find that most people who favour increasing taxes and spending will want to capture the benefits of the spending themselves and want someone else to pay the increase in taxation.

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    1. I grew up in a country with a 33% basic rate of income tax and publicly-owned and -run education (including HE), health and social care, electricity, telecomms, gas, coal, oil and steel (among other things); the first time I saw a beggar was when I was 18 and made a trip to Spain. I'd happily pay a higher rate of tax in return for better and more reliably universal services. I don't think I'm unusual.

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    2. I'm not sure that I believe this. How many people, as opposed to press barons, would be that outraged by a 2p hike in the basic rate, at the same time as schools and health funding were increased?

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  2. 'I think you'll find that most people who favour lower taxes and spending will want the lower taxes themselves and someone else to feel the impact of lower spending'. In physics this is called 'symmetry breaking'.

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    1. Yes. But in politics it actually happens for real. When people go to vote they see a potential tax increase as much more real than potential better NHS, or whatever.

      One way to get round it might be to keep banging on about these polls though. (Which you're doing!)

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  3. This result does not surprise me at all. If you look at the popular voting record for many years the support for right wing parties - and by implication right wing policies- is well under 50%; the majority have (not would have)have voted for left wing parties.

    However, it seems to me that right wing thinking has permeated to some extent in that, to me, water (certainly) and energy (probably) are natural monopolies and should certainly be run by the state with no equivocation.

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  4. I think this comes back to the "don't people deserve their wealth?" thing. Inevitably people will say that people who earn enormous sums have worked hard to earn their wealth, but this ignores a few things.

    Firstly it seems perverse to suggest that a nurse (average pay 23,000 or so) is only working 2% as hard as someone who earns, say, a million pounds a year. Nursing is a very difficult job, and enormously stressful. Cleaning is also very hard; working as a sales assistant is often very stressful. The massive gulf between effort and reward surely demands some redistribution to be remotely just.

    The second is that many of these people claim that they don't use much of the state, so why pay in? They're healthy (and presumably unconcerned with their old age), they drive, they don't have children. They started their own business, even. These people ignore that public spending has created the rest of society; it's created their workers, their young people with luxury spending, their infrastructure that gets their food and TVs to them. It's created the social contract that says any of this is worth bothering with. And, forget being just, that is outright necessary.

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  5. In the 2017 general election the only age cohort that did not move towards the Labour Party was the over 70s.

    The Tories picked up 69% of this age bracket and it is a fair guess that they are the dominant group voting for Brexit, and those buying physical copies of 'newspapers'.

    There is something grossly wrong with the majority of those who became teenagers in the 1950s and saw their politics become cementitious in the 1970s.

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  6. In physics, dark energy violates the assumed conservation laws that allow economists to ignore the "spend more, tax less" option.

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  7. The problems with the East Coast Mainline is much to do with Network Rail messing up big time, and giving VTEC a chance to get out of its rash bid.

    Why on earth should this be a reason to support more nationalization?

    Labour are lying their socks off about "bailouts" etc. I expect you to be more accurate.

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  8. Gaming the system is a better term then symmetry breaking.

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  9. I think you'll find that most people who favour reducing the number of robberies want their earned income for themselves and someone else to feel the impact of not being able to leech on others. In real life this called freedom and justice.

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  10. I recall that in Australia we poor citizens were actually in favour of additional tax provided it was dedicated to worthwhile activities (mainly medical and pensions) and not just dumped into consolidated revenue to be 'wasted' by politicians (though Google seems extraordinarily reluctant to find an actual example of such polling for me).

    But I guess any 'hypothecated' tax - eg America's payroll tax, England's National Insurance tax and even Australia's pitiful Medicare Levy - are examples of that.

    So really, aren't most Anglo democracies ambivalent about tax ? Don't increase taxes dumped into consolidated revenue, but do form, and if need be increase, "worthwhile" hypothecated taxes.

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  11. Surely popularity in politics is a redundant 20th century concept. A panel of self-appointed economists should decide on the correct size of the state and that should be the end of it.

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  12. I agree that wanting more (or the same) and not having to pay for it is a typical human behavior. I am also frequently struck by the (usually false) belief that waste and fraud are rampant, and if eliminated, would somehow make the numbers work. In a perfect world, eliminating all fraud and waste (assuming we agree on what constituted "waste") could make a difference I suppose, but absent some magic, it is not going to happen. Worse yet, conditioning efforts to better control costs until fraud and waste have been eliminated is simply a recipe for continuing to do nothing. While it may be true that there is no free lunch, our political leaders have managed to make it appear so by ever increasing debt.

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    1. I read a BIS paper recently on why the violation of covered interest parity does not indicate free lunches abound. The reason they stated: banks are not taking advantage of riskless arbitrage in currency swap markets because the Fed is paying them interest on reserves. But the Fed's money is a free lunch, because no taxpayer money was needed to expand the Fed' balance sheet by a factor of four or five after 2008.

      Prices are arbitrary; free lunches are everywhere in the private sector. Finance relaxes constraints economists dream up and impose on governments ...

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