A good rule-of-thumb on deficits

Earlier in the year, there were signs that the general public had picked up the then orthodoxy that what we needed was a contractionary fiscal policy, to the point of not wanting their tax cuts in cash (there was support for diverting them to superannuation).

But it seems that the flipside orthodoxy – that we need deficits in the downside of the economic cycle – has not (or not yet) entrenched itself. A Newspoll published today found that 56% of voters would be concerned about the budget going into deficit next year.

As Club Troppo readers would have predicted, Fred Argy isn’t impressed.

Regardless of the purely economic arguments on this subject (few economists think that temporary deficits are of major concern), I think this is quite a good result. On the assumption that few voters will ever acquire sophisticated economic knowledge or understanding, and that they will use rules-of-thumb instead, an anti-deficit rule of thumb is the one to have.

In other countries with weaker anti-deficit cultures, borrowing is used to finance normal recurrent expenditures and avoid budgetary discipline. Australia is in a much better long-term position than most other countries for having taken its anti-deficit attitudes beyond what economic theory would recommend.

The confusing choice for Melbourne’s Chief Garbage Collector

By far the most useful and important thing the Melbourne City Council does is to take away garbage, but for some reason the position of Chief Garbage Collector, aka Lord Mayor of Melbourne, is being keenly contested.

There are eleven candidates, at least seven of whom are campaigning seriously if the contents of my letterbox and the Google ads when I typed in ‘Melbourne City Council’ are a guide.

I told Tim Wilson, who is running for Deputy Lord Mayor on the Peter McMullin ticket, that I would vote for him. But that was before I realised that McMullin was a member of the ALP, and I cannot vote for Tim without also voting for McMullin. Admittedly, McMullin is of the multi-millionaire former Deputy President of the Victorian Employers Chamber of Commerce and Industry kind of Labor, and his campaign literature has the crucial words ‘rate freeze’ in it, but I’m not sure that I can bring myself to put a ‘1’ next to the name of a member of the ALP.

Of the other campaign materials I have received, pollster Gary Morgan’s promise of 5% cut in rates certainly caught my eye. And I feel I owe Morgan something for providing survey results for free. On the other hand, Morgan has a famously abrasive personality. When he used his polling company to see who was the frontrunner for the Lord Mayor’s job, he published the results with this fine example of pollster neutrality in the comments:
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