John E. Roemer

Why the poor do not expropriate the rich: an old argument in new garb

We consider a political economy with two partisan parties; each party represents a given constituency of voters. If one party (Labour) represents poor voters and the other (Christian Democrats) rich voters, if a redistributive tax policy is the only issue, and if there are no incentive considerations, then in equilibrium the party representing the poor will propose a tax rate of unity. If, however, there are two issues - tax policy and religion, for instance - then this is not generally the case. The analysis shows that, if a simple condition on the distribution of voter preferences holds, then, as the salience of the non-economic issue increases, the tax rate proposed by Labour in equilibrium will fall - possibly even to zero - even though a majority of the population may have an ideal tax rate of unity.

To what extent do fiscal regimes equalize opportunities for income acquisition among citizens

This project employs the theory of equality of opportunity, described in Roemers book (Equality of Opportunity, Harvard University Press, 1998), to compute the extent to which tax-and-transfer regimes in ten countries equalize opportunities among citizens for income acquisition. Roughly speaking, equality of opportunity for incomes has been achieved in a country when it is the case that the distributions of post-fisc income are the same for different types of citizen, where a citizens type is defined by the socioeconomic status of his parents. Intuitively, a country will have equalized opportunity if the chances of earning high (or low) income are equal for citizens from all family backgrounds. Of course, pre-fisc income distributions, by type, will not be identical, as long as the educational system does not entirely make up for the disadvantage that children, who come from poor families face, but the tax-and-transfer system can play a role in rectifying that inequality. We include, in our computation, two numbers that summarize the extent to which each countrys current fiscal regime achieves equalization of opportunities for income, and the deadweight loss that would be incurred by moving to the regime that does.

Free to Lose

This story isn’t hypothetical. Country A is the United States, where stocks are up, G.D.P. is rising, but the terrible employment situation just keeps getting worse. Country B is Germany, which took a hit to its G.D.P. when world trade collapsed, but has been remarkably successful at avoiding mass job losses. Germany’s jobs miracle hasn’t received much attention in this country — but it’s real, it’s striking, and it raises serious questions about whether the U.S. government is doing the right things to fight unemployment.

Equality of Talent

If one is an egalitarian, what should one want to equalize? Opportunities or outcomes? Resources or welfare? These positions are usually conceived to be very different. I argue in this paper that the distinction is misconceived: the only coherent conception of resource equality implies welfare equality, in an appropriately abstract description of the problem. In this section, I motivate the program which the rest of the paper carries out.

Market Socialism: The Current Debate

With the decline of command economies in Eastern Europe, China and elsewhere, the systemic issue of the feasability of combining the market mechanism with some form of public or collective ownership or control over the distribution of surplus has assumed topical importance. The essays in this book aim at advancing the old debate on this issue to a new analytical stage: questions of incentive compatability, agency problems, depoliticization of economic decisions and those of justice and worker autonomy are at the heart of the discussion. The defenders as well as critics of market-socialist proposals in this book are particularly sensitive to the centrality of these questions.

An Equal-Opportunity Approach to the Allocation of International Aid

How should international aid be distributed? The most common view is according to some utilitarian formula: in order to maximize the average growth rate of aid recipients or the growth rate of income of the class of recipient countries. Recently, the World Bank [7] has published a study demonstrating the importance of good economic management, within a recipient country, in transforming aid into economic growth. We identify good economic management with effort, and ask, how should aid be distributed to equalize opportunities [among recipient countries] for achieving growth, according to Roemers [5] theory of equal opportunity. In addition, we calculate how aid should be distributed according to a utilitarian view. Both the equal-opportunity and utilitarian recommendations are less compensatory than actual aid policy (they would give less to many African countries than present policy does). We discuss the results.

Income Distribution, Redistributive Politics, and Economic Growth

This article studies the political economy of inequality and growth by combining the political economy approach with an imperfect capital market assumption. In the present model, there emerges a class of individuals whose members do not invest privately beyond the state-financed schooling, due to their initial wealth constraint. We show that inequality affects private investment not only through the political effect, which relates inequality to private investment negatively, but also through what we call the threshold effect, which associates inequality to private investment positively. In general, private investment and inequality do not show a monotone negative relationship.

Axiomatic bargaining theory on economic environments

Abstract Axiomatic bargaining theory is reexamined by focusing upon the economic exhange environment instead of the traditional utility possibility set. It is argued that the axioms of the traditional theory impose stronger restrictions than can be supported by their motivating economic intuitions. Weaker alternative axioms, making explicit use of economic information, are used to characterize the standard bargaining solutions. A key idea is to impose consistency of the solution with respect to changes in the dimension of the commodity space. Even these weaker economic axioms, however, may be unrealistic restrictions to impose on the bargaining solution in the context of many economic bargaining problems.

New Directions in the Marxian Theory of Exploitation and Class

a certain share of the workers’ labor is &dquo;unpaid,&dquo; and workers are thereby exploited; non-Marxists point out that everyone gains from the trade of labor, and therefore workers are not exploited. The link between these problems is the failure of Marxian economics to state precisely what are the causes of exploitation under capitalism; from that might follow an understanding of which of those causes remain under socialism.

A theory of policy differentiation in single issue electoral politics

Voter preferences are characterized by a parameter s (say, income) distributed on a set S according to a probability measure F. There is a single issue (say, a tax rate) whose level, b, is to be politically decided. There are two parties, each of which is a perfect agent of some constituency of voters, voters with a given value of s. An equilibrium of the electoral game is a pair of policies, b1 and b2, proposed by the two parties, such that bi maximizes the expected utility of the voters whom party i represents, given the policy proposed by the opposition. Under reasonable assumptions, the unique electoral equilibrium consists in both parties proposing the favorite policy of the median voter. What theory can explain why, historically, we observe electoral equilibria where the ‘right’ and ‘left’ parties propose different policies? Uncertainty concerning the distribution of voters is introduced. Let {F(t)}t ε T be a class of probability measures on S; all voters and parties share a common prior that the distribution of t is described by a probability measure H on T. If H has finite support, there is in general no electoral equilibrium. However, if H is continuous, then electoral equilibrium generally exists, and in equilibrium the parties propose different policies. Convergence of equilibrium to median voter politics is proved as uncertainty about the distribution of voter traits becomes small.