Jonathan Pincus

Did Australian Living Standards Stagnate between 1890 and 1940

Among the developed countries, Australia in the period 1890–1940 experienced the fastest growth in population but the slowest in per capita income. When adjusted to incorporate the direct deflation of consumption expenditure, however, the growth of real GDP is raised by one-third, albeit to the still modest level of 0.8 percent annually. Inspection of a number of historical social indicators, not all caught in GDP, gives no support to the hypothesis of stagnant living standards. Finally, increases in life expectancy, a shorter working week, and earlier retirement also suggest substantial improvements in dimensions of standards of living not directly reflected in measured GDP. Conservatively, we estimate that living standards may have doubled over the half-century.

Grattan Institute's Case for Sugar Tax Is Not Proven: Grattan Institute's Case for Sugar Tax Is Not Proven

Duckett, Swerissen and Wiltshire ([Duckett, S., 2016]) advocated a 40‐cent tax per 100g of sugar in sugar‐sweetened beverages (SSB), because the tax would reduce the cost burden on the non‐obese. Duckett, Swerissen and Wiltshire took these ‘third‐party’ costs as indices of market failure. However, their distributional analysis is not an appropriate framework for the assessment of economic efficiency. Moreover, they did not quantify the causal mechanisms through which a small weight loss would appreciably lower health costs and increase employment of the obese. There may be an economic case for such a tax, but Duckett, Swerissen and Wiltshire have not made it.

Public Choice Theory had Negligible Effect on Australian Microeconomic Policy, 1970s to 2000s

Since The Calculus of Consent (1962), Public Choice has had little influence on the course of public policy in Australia and, in particular, virtually none on the seismic shift from a policy regime antagonistic to competition, to one that gives conditional approval. Competition, of the attenuated Arrow-Debreu type, led ineluctably to efficiency, if and only if ‘market failures’ and ‘government failures’ were corrected. The dismantling of tariff protection illustrates how Computable General Equilibrium modelling reflected the Arrow-Debreu program. Paradoxically, Public Choice antipathy towards interest groups helped create a vast space for public regulation by (presumptively) benevolent and disinterested public servants.

Land assemblage: efficiency and equity in public-private projects

One of the great successes of the law and economics movement has been the use of economic models to explain the structure and function of broad areas of law. The original contributions to this volume epitomize that tradition, offering state-of-the-art research on the many facets of economic modeling in law.

Revisiting Proposals for a State Income Tax

The Australian central government makes grants to the states and territories, three-quarters as general revenue subventions. The grants fund over 40 percent of the general government spending of the state, territory and local governments. Specific-purpose grants to selected states do the most damage to political responsibility. It would improve political accountability if the states and territories were responsible for funding their own spending. This would require a massive increase in revenue-raising by the states and territories, and for the federal government to share the income tax base. Less drastic would be for the states and territories to be responsible for their funding on the margin, which could be achieved if grants were made equal per capita.

Mining Taxation: Some Economic Issues

We argue five main propositions. Firstly, the choice between royalties and profit-based taxation involves an efficiency trade-off, between diminished incentives to produce output on one hand, and diminished incentives to minimize costs on the other (as in Laffont and Tirole 1993). So the Brown tax is indeed a tax, and one that reduces the incentive to mine. Next, the ex post Resource Super Profits Tax (RSPT) falls on quasi-rents as well as on rents, and therefore involves some expropriation. Third, there may be a case in favour of a retrospective RSPT or the like, but it has yet to be made persuasively. Fourth, the successor to the RSPT – the Minerals Resource Rent Tax (MRRT) – has many of the inefficiencies of the RSPT but adds some further serious inefficiencies of it is own. Last, the value of revenues from taxes such as the RSPT and the MRRT is usually over-stated, as those revenues are highly risky. The failure to take account of the risky character of those income streams amounts to fiscal illusion and makes it more likely that unwise spending commitments will be made.

Reflection on Microeconomic Policy Frameworks in Australia, and a Suggestion about Fairness

For economists, the main test of a microeconomic policy change is its effect on efficiency: gains minus losses, equally weighted. However, it is standard economics that individuals value losses more than gains. Moreover, imposing large, uncompensated and uninsurable policy-induced losses would be widely regarded as unfair, when they are merely collateral damage from policy action. The article argues the case for adjusting the calculation of efficiency to take account of this ‘unfairness’ and discusses how it could be done. The context is the relatively recent acceptance in Australia of competition, if planned and regulated, as being generally socially beneficial.

International Trade and Political Conflict: Commerce, Coalitions, and Mobility. By Michael J Hiscox. Princeton, NJ, and Oxford: Princeton University Press, 2002. Pp xiv, 209.

This short book has a novel thesis, which is that the degree of factor mobility at the national level influenced the politics of foreign-trade policies. When factor mobility was high, tariff legislation was class legislation. When mobility was low, tariffs were decided by interest-group competition. Michael Hiscox brings data on mobility to bear on the history of foreign trade policies of the six countries—the United States, Britain, France, Sweden, Canada, and Australia—over the last one or two hundred years or so, devoting a chapter to each. He then tests his ideas quantitatively on U.S. congressional voting between 1924 and 1994, finding that, when the indicators of factor mobility were low, an “interest group theory†better explains U.S. tariff politics than does a “class legislation theory†(and the reverse when mobility was high).

49.50, cloth;

Commonwealth general revenue grants to the States are substitutes for State taxes, and should be spent by the States. If preferences vary, then differences in State spending are not evidence of flypaper effects.