Balanced-budget redistribution as the outcome of political competition

This paper models balanced-budget redistribution between socio-economic groups as the outcome of electoral competition between two political parties. Equilibrium is unique in the present model, and a sufficient condition for existence is given, requiring that there be enough ‘stochastic heterogeneity’ with respect to party preferences in the electorate. The validity of Hotelling's ‘principle of minimum differentiation’, and of ‘Director's Law’, are examined under alternative hypotheses concerning administrative costs of redistributions, and voter's possibilities both of abstaining from voting and of becoming campaign activists for one of the parties. The policy strategy of expected-plurality maximization is contrasted with the strategy of maximizing the probability of gaining a plurality. Incomes are fixed and known, so lump-sum taxation is feasible. However, constraints on tax/transfer differentiation between individuals are permitted in the analysis.     

Immigration and income redistribution: A political economy analysis

This paper examines the effect of immigration on the extent of income redistribution via majority voting on the income tax. The tax outcome depends on the size of the native majority and the initial amount of redistribution in the economy, which in turn determines the skill composition of immigrants. As a main result, we derive conditions for multiple tax equilibria: if the native majority of either skilled or unskilled is not too strong and immigrants are allowed to vote, both a high-tax and a low-tax outcome is possible. In a referendum, natives will then vote against immigrant voting. At best, natives are indifferent towards immigrant voting.     

Multi-party competition with exit: A comment on Duverger's Law

Contrary to Duverger's Law, there exist multi-party systems in conjunction with simple majority single-ballot systems. At least three exceptions exist to this law. Rae (1971) and Riker (1976; 1982) offer explanations for two of the most prominent exceptions, i.e. Canada and India. I also discuss another exception, Great Britain. In this paper, I use a simple one-dimensional spatial model to show that a multi-party system can be supported under a simple majority single-ballot system. This explanation depends on the way political parties exit the system. If parties decide sequentially whether or not to exit, a multi-party system can not be maintained. If political parties make this decision simultaneously, a multi-party system may be able to sustain itself.I am grateful to Evelyn Fink, Ken Shepsle, and Gordon Tullock for their very helpful comments. I would especially like to thank John Kautsky who introduced me to Duverger's Law.     

A note on seniority and political competition

Seniority conveys political power to legislators despite the fact that all legislators have equally valuable voting power. What prevents a coalition of junior members from exercising their political power to form a coalition and claim an equal share of the power by eliminating the benefits of seniority? Several models explain how valuable services are supplied by senior members, so the returns to seniority may be looked at as compensation for their services. This still does not explain why the providers of those services should be chosen based on seniority rather than on some other criterion.Seniority is used because it provides benefits to every member of the legislature. Legislators want to be reelected, and regardless of the seniority level of an individual in the legislature, the incumbent will always have more seniority when running for reelection than the challenger. Since voters benefit from being represented by more senior representatives, the seniority system enhances the reelection chances of even the most junior representative.     

A political economic analysis of labor migration and income redistribution

We present a two-country political economic model of income redistribution with internationally mobile labor. Migration can be exogenous and/or endogenous (i.e., determined by labor income differentials). Political influence is determined by the size and homogeneity of the groups, where the latter can be affected by immigration. We show that immigration can increase the transfers to, and the income of, the mobile group. We also investigate the possibility of migration regulation, tax-transfer policy competition and coordination and, finally, coordination of regulation policies. It is shown that the selection of any of those regimes will depend on the particular distribution of political influence among the relevant social groups in the two countries.

     

Barriers to competition and the effect on political shirking: 1953–1992

Economists and political scientists have offered a variety of explanations for why legislators might rationally choose to ignore the preferences of their constituents, political parties, and presidents. The broad conclusion of this literature is that there is an element of “shirking” in congressional voting. The objective of this paper is to suggest that the effects of shirking in congressional voting may have increased over time, largely in response to the raising of barriers to competition in congressional elections, thereby enabling legislators to vote their own preferences without fear of losing reelection. We use a quasi-experimental design that controls for the effects of party, region, electoral safety, presidential control of the White House, and constituency factors, in isolating the causal effects of barriers to entry on a continuous series of roll-calls regarding the raising of the debt limit between 1953 and 1992. We find that “shirking” in legislative voting on debt limit legislation is a post-1970s phenomenon.     

On the theory of political competition: Comparative statics from a general allocative perspective

It is a widely held belief that interest groups respond competitively to political challenges from other groups. This view is found not only in the traditional theory of interest groups, but also in the literature on policy typologies. Though it is not necessarily supposed that groups form in response to opposition, it is believed that when groups exist, they compete. If an interest group is thought of as a multipurpose organization, whose leaders might spend organizational funds on nonpolitical programs which directly serve the members, the supposition of competition can be subjected to rigorous examination. Political competition causes the cost of political success to rise. Since group leaders must allocate scarce revenue among projects, it seems that nonpolitical projects might become more attractive when the political environment becomes competitive. Political scientists have usually been disposed to take the opposite view, believing that demand for political activity rises as the cost of political success increases. The nature of political action as an organizational investment is discussed from the allocative perspective in this essay. It is shown that competition cannot be safely assumed unless other strong hypotheses are invoked. A Slutsky-type theorem is deduced for political reaction.     

On the political and fiscal determinants of income redistribution under federalism and democracy: evidence from Germany

Several recent studies suggest that transfers from central to regional governments are motivated by political considerations. In this paper we examine if this is also the case for transfers from regional to central governments in the context of the German fiscal equalization system. We examine the factors that contribute to differences in tax revenues across German states. The evidence indicates that both fiscal incentives and political factors can explain these differences, although in Germany the former are more important. Moreover, accounting for fiscal institutions has important consequences for the empirical assessment of political influences on taxation. Overall we find that the political affiliation of the state governor is an important factor in explaining differences in state tax revenues. Thus, the right-wing party (CDU/CSU) is effective in relaxing the tax burden at the state level. In contrast, partisan alignment between the state government and the federal government loses its importance once fiscal conditions enter the empirical model.     

The political market for real income redistribution through choice of the weights in COLAs

This paper studies alternative cost-of-living indexes derived from the generalized Fechner-Thurstone (GFT) utility form, their use in contracts for cost-of-living adjustments (COLAs), and the resulting effect of choice of index on the distribution of real income. The indexes and their distributional effects are compared to the officially reported Consumer Price Index (CPI) and a CPI computed from the same data set used to compute the GFT indexes. It is found that the choice of index used in adjustment clauses in contracts has an impact on the distribution of real income of the group. As an example, the U.S. federal government schedule of wages and salaries is adjusted from 1981 through 1984 by all of the indexes reported here. Use of alternative indexes illuminates the normative assumptions regarding the relative importance of different income strata (among other things) implicit in any public practice of pegging COLAs to a single form of price index.We wish to thank Mason Gerety and Kathy Hayes for helpful criticisms of the first drafts of this paper.     

Military professionals as political governors: A case study of contemporary Greece

In this article we attempt to measure the performance of the Greek military with regard to social change. Using Eckstein and Gurr's model of regime performance—consisting of four variables we hypothesised that military professionalism did not provide the military governors with the necessary political skills to become effective agents of social change. Our analysis, based on interview data supplemented with socio‐economic indicators of the years of military rule (1966–74), led us to the conclusion that aspects of military professionalism, at least in the case of Greece, prevented the military regime from performing well and thus hampered its ability to generate social change.     

Nation states vs. united empire: Effects of political competition on economic growth

Is political fragmentation, i.e., nation states, more favorable to economic growth than political unification, i.e., a united empire? This study develops an endogenous-growth model to analyze the growth effects of fragmentation versus unification. Under unification, the economy is vulnerable to excessive Leviathan taxation and possibly subject to the costs of unifying heterogeneous populations. Under fragmentation, the competing rulers are constrained in taxation but spend excessively on military defense. If capital mobility is above (below) a threshold, then fragmentation (unification) would favor growth, and this threshold is increasing in the degree of defense competition and decreasing in the costs of heterogeneity.