Inequality and Fiscal Policy
The purpose of this paper is to extend the classical model of Meltzer and Richard (1981) in which the poor tend to vote for the higher labor taxes to develop a theoretical model with capital income as well as labor income, where it is the rich, usually the capital owners, who would like to tax labor income under majority rule. As a result, this division between capital and labor income could enrich the determinant of the labor income tax. Further, this paper also discusses the characteristics of capital income by which individuals choose to work or not and indicates the conditions under which those selections are determined by tax rate and government redistribution. It is inspired by Piketty’s recent study, Capital in the Twenty-First Century (2014), and has the potential to explain the very weak empirical evidence which has tended to support the original Meltzer and Richard (1981) proposition.
Cornel West and the Challenges of Social Justice
In this paper I will explore the themes of historicism, social inequality and ‘global relativism’, focusing on how Cornel West, a philosopher and political activist, analyses the problems of racial and economic inequality from a Marxist, neopragmatist perspective, arguing that historicism becomes indispensible in understanding and offering solutions to the problems of the western world. His solutions are radical: not only are our academic, legal, political and economic institutions predominantly white and middle-class, and not only are those things we hold to be true often hurtful to those around us, but our very notions of truth, rationality and reason themselves are oppressive and socially harmful. Structures of racism and inequality are not only to be found in our established institutions, they are to be found ingrained in our ways of thinking and determining right from wrong, and truth from falsity. To achieve true equality, West argues, we need to overturn our understandings of what it is that makes something true, what it is to know something, and what our norms of rationality must be. Yet his methods for arriving at these solutions – convincing though they are – lead to a ‘global relativism’: a form of relativism that can be applied to everything from ethics to epistemology, economics to law, and even grammar. I will discuss this global relativism and conclude that where adopted, it always yields propositions that are untrue. So West is caught between two stools: in the red corner, we can ignore the deep-rooted ills of society and continue to offer solutions that merely scratch the surface; while in the blue corner, we can grasp the bull by the horns and attempt to make profound changes to the ways we think about and operate within the world – but risk a collapse into nihilism.
Estimating the Level of Inequality Aversion and the Degree of Self-Interest
References to inequality aversion and other-regarding preferences are becoming ever more present in the field of economics. Stemming from experimental, behavioural and welfare economics, these notions question the integrity of purely individualistic utility functions. Models which often offer greater explanation of individual behaviour are being formulated, alongside the elicitation of societal preferences over distributional decisions. In this study, incentivised laboratory experiments will be used, to estimate parameter values for utility functions which incorporate these preferences. The models used assume that individual utility is not solely based upon the welfare of the individual, but also of the distribution of welfare amongst others. By using multiple experimental designs, alternative perspectives and different analytical methods; parameter values which incorporate inequality aversion and self-interest will be established and their robustness tested.