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We study how rich shareholders use their political influence to deregulate firms that they own, thus skewing the income distribution towards themselves. Individuals differ in productivity and choose how much labor to supply. High productivity individuals also own shares in the productive sector and thus earn capital income. All individuals vote over a linear tax rate on (labor and capital) income whose proceeds are redistributed lump sum. Shareholders also lobby in order to ease the price cap imposed on the private firm. We first solve analytically for the Kantian equilibrium of this lobbying game together with the majority voting equilibrium over the tax rate. We then proceed to a comparative statics analysis of the model with the help of numerical simulations. We obtain that, as the capital income distribution becomes more concentrated among the top productivity individuals, increased lobbying effort generates efficiency as well as equity costs, with lower labor supply and lower average utility levels in society.
The formal theory of equality of opportunity emerged as a response – a friendly amendment – to Ronald Dworkin's (1981) characterization of resource egalitarianism, as defined by the allocation that would emerge from insurance contracts arrived at behind a thin veil of ignorance. This article compares several of the prominent versions of this response, put forth in the period 1993–2008. I argue that a generalization of Roemer's (1998) proposal is the most satisfactory approach. Inherent in that generalization is an indeterminism, which reflects a philosophical problem: that we do not know what comprise the ethically correct rewards to effort. The indeterminism should be resolved, I propose, by an ancillary theory which limits the degree of inequality which is acceptable.
As earlier, the main activity of the Commission was performed by the Central Bureau for Astronomical Telegrams (CBAT), effectively directed by Dan Green. These three years were a difficult period for the Bureau and thus for the Commission because the Bureau unexpectedly had to move from the Smithsonian Astrophysical Observatory, its home since 1965, to the Harvard University's Department of Earth and Planetary Sciences. This move caused many serious administrative and logistical problems, effectively solved by the CBAT Director, Dan Green, and CBAT Director Emeritus, Brian Marsden. A great shock, not only for our commission but for the whole astronomical community, was Brian's death on November 18, 2010.
The President verbally reported that the only scientific matter that he dealt with during the triennium as an appeal over the withholding of a supernova designation from an object observed only in the infra-red with no supporting spectrum.
How can a political party whose economic policies are in the interests of only a small fraction of the richest citizens maintain a sizable vote share in a democracy with full enfranchisement? The prime example of this puzzle today occurs in the United States. My aim in this chapter is to outline the possible answers to the question and then to present in some detail a study of one of the possibilities. I cannot claim, however, to know the answer.
One might, first of all, challenge my presumption that the economic policies advanced by the US Republican Party are indeed only in the interests of a small fraction of citizens at the top of the wealth distribution. Indeed, by the standards of one hundred years ago, the US has a progressive economic policy. About 31 percent of the national product is collected in taxes (at the federal, state, and local levels), and these taxes are used predominantly for transfer payments and expenditure on public goods. There is universal public education through age seventeen, and many states provide publicly financed tertiary education with modest private co-payments. Although the United States remains unique in the degree of private financing of its health services, nevertheless approximately 50 percent of health expenditures are public. There is a universal publicly financed pension system which is redistributive.
From Director Dan Green's report, following this report, it is obvious that the Central Bureau for Astronomical Telegrams (CBAT) continues its excellent work. The Electronic Telegrams (CBETs), established in the previous triennium, have become the regular means for fast communication, with the Circulars providing the official and archival record of discoveries and designations. It is regretted that subscriptions to the printed Circulars continue to decline, but inevitable in this age of electronic communication.
The veil of ignorance has been used often as a tool for recommending what justice requires with respect to the distribution of wealth. We complete Harsanyi's model of the veil of ignorance by appending information permitting objective comparisons among persons. In order to do so, we introduce the concept of objective empathy. We show that the veil-of-ignorance conception of John Harsanyi, so completed, and Ronald Dworkin's, when modelled formally, recommend wealth allocations in conflict with the prominently espoused view that priority should be given to the less able in wealth allocation. We finally argue that the veil of ignorance should be rejected as a tool for discovering what justice requires.
Harsanyi (1953) proposed a veil-of-ignorance argument for concluding that a rational soul, behind the veil of ignorance, would behave like a utilitarian – more precisely, that it would maximize a weighted sum of von Neumann–Morgenstern utilities of individuals. The argument is justly famous, as the first attempt to formalize the idea of the veil of ignorance, using the then recently developed tool of von Neumann–Morgenstern utility, that is, of decision theory under uncertainty. Indeed, Harsanyi used the terminology of the impartial observer (IO), rather than the veil of ignorance, but I shall assume these two metaphors are attempts at capturing the same, ethically correct stance. Weymark (1991) calls the argument Harsanyi's impartial observer theorem. I shall argue that Harsanyi's conclusion is incorrect: It does not follow from his argument that the IO is a utilitarian. The essential point is that utilitarianism requires, for its coherence, a conception of interpersonal comparability of welfare, and no such conception adheres to the concept of von Neumann–Morgenstern utility that Harsanyi invokes.
Let X be the set of social alternatives, or states of the world, and let H be the set of types. Think of X, for instance, as a set of possible income distributions among persons. Define the set of extended prospects as Y = H × X, whose generic member is (h, x). Behind Harsanyi's veil of ignorance, the IO faces the set of extended prospects, where (h, x) is interpreted as meaning “I shall become a type h person in state of the world x.”
The president proposed the following for the coming triennium: Alan C. Gilmore president, and Nikolai N. Samus vice-president. Members: Brian G. Marsden, Daniel W. E. Green, Syuichi Nakano, Elizabeth Roemer, Jana Tichá, Hitoshi Yamaoka, Kaare Aksnes. Supernova group representative: Hitoshi Yamaoka was invited on to the OC to provide a link with supernova observers.
For millenia, different interest groups in society - primarily, according to one prominent view, different economic classes - have fought each other for control of the economic surplus. Democracy is one institution that organizes that struggle, and it has, according to Adam Przeworski , one principal virtue: it minimizes bloodshed, for an aspect of democracy is the peaceful transition from one regime to its elected successor; as well with universal suffrage, it gives every citizen a voice in the action. Of course, both of these virtues are imperfectly implemented in actual democracies, but, to a first-order approximation, democracy dominates other forms of rule with respect to these two criteria.
In the modern period, since 1789, the democratic struggle has been organized primarily through political parties. There are exceptions: some Swiss cantons practiced direct democracy until quite recently, in which decisions are made by committees of the whole polity. The party form has, however, been almost ubiquitous. Parties historically have represented different interest groups in the polity. Sometimes parties are identified by the name of their interest group, such as the Labor Party or the Farmers' Party. Often, however, they are identified by an ideology, such as the Socialist or Christian Democratic Party.
We will model a society that reproduces itself over many generations. At the initial date, there are households led by adults (parents) who are characterized by a distribution of human capital, that is, capacities to produce income. (As I wrote earlier, human capital has other values for a person.) Each parent has one child. The human capital the child will have, when he or she becomes an adult, is a monotone increasing function of his or her parent's level of human capital and the amount that is invested in his or her education. This relationship is deterministic, and describes the educational production function for all children. Thus, more investment is needed to bring a child from a poor (low human capital) family up to a given level of human capital than a child from a wealthier family. All parents have the same utility function: a parent cares about his or her household's consumption (which will be his or her after-tax income), and the human capital his or her child will come to have as an adult. We will, for simplicity, assume that adults do not value leisure. Thus, income will be earned inelastically with respect to taxation.
Many believe that equality of opportunity will be achieved when the prospects of children no longer depend upon the wealth and education of their parents. The institution through which the link between child and parental prospects may be weakened is public education. Many also believe that democracy is the political institution that will bring about justice. This study, first published in 2006, asks whether democracy, modeled as competition between political parties that represent different interests in the polity, will result in educational funding policies that will, at least eventually, produce citizens who have equal capacities (human capital), thus breaking the link between family background and child prospects. In other words, will democracy engender, through the educational finance policies it produces, a state of equal opportunity in the long run?