The state—the machinery and power of the state—is a potential resource or threat to every industry in the society. With its power to prohibit or compel, to take or give money, the state can and does selectively help or hurt a vast number of industries. Regulation may be actively sought by an industry, or it may be thrust upon it. A central thesis of this paper is that, as a rule, regulation is acquired by the industry and is designed and operated primarily for its benefit. The state has one basic resource which in pure principle is not shared with even the mightiest of its citizens: the power to coerce. The state can seize money by the only method which is permitted by the laws of a civilized society, by taxation. The state can ordain the physical movements of resources and the economic decisions of households and firms without their consent.

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The Theory of Economic Regulation

This study tests whether firms that would benefit from import relief (eg, tariff increases and quota reductions) attempt to decrease earnings through earnings management during import relief investigations by the United States International Trade Commission (ITC) The import relief determination made by the ITC is based on several factors that are specified in the federal trade acts, including the profitability of the industry Explicit use of accounting numbers in import relief regulation provides incentives for managers to manage earnings in order to increase the likelihood of obtaining import relief and/or increase the amount of relief granted While studies of earnings management typically examine situations in which all contracting parties have incentives to "perfectly" monitor (adjust) accounting numbers for such manipulation, import relief investigations provide a specific motive for earnings management that is not

http://course.sdu.edu.cn/G2S/eWebEditor/uploadfile/20130217205533187.pdf

Earnings Management During Import Relief Investigations

The assumption that government bonds are perceived as net wealth by the private sector is crucial in demonstrating real effects of shifts in the stock of public debt. In particular, the standard effects of "expansionary" fiscal policy on aggregate demand hinge on this assumption. Government bonds will be perceived as net wealth only if their value exceeds the capitalized value of the implied stream of future tax liabilities. This paper considers the effects on bond values and tax capitalization of finite lives, imperfect private capital markets, a government monopoly in the production of bond "liquidity services," and uncertainty about future tax obligations. It is shown within the context of an overlapping-generations model that finite lives will not be relevant to the capitalization of future tax liabilities so long as current generations are connected to future generations by a chain of operative intergenerational transfers (either in the direction from old to young or in the direction from young to old). Applications of this result to social security and to other types of imposed intergenerational transfer schemes are also noted. In the presence of imperfect private capital markets, government debt issue will increase net wealth if the government is more efficient, at the margin, than the private market in carrying out the loan process. Similarly, if the government has monopoly power in the production of bond "liquidity services," then public debt issue will raise net wealth. Finally, the existence of uncertainty with respect to individual future tax liabilities implies that public debt issue may increase the overall risk contained in household balance sheets and thereby effectively reduce household wealth.(This abstract was borrowed from another version of this item.)

/pdf/are-government-bonds-net-wealth-3n21dugw99.pdf

Are Government Bonds Net Wealth

In a general equilibrium model of a labor economy, the size of government, measured by the share of income redistributed, is determined by majority rule. Voters rationally anticipate the disincentive effects of taxation on the labor-leisure choices of their fellow citizens and take the effect into account when voting. The share of earned income redistributed depends on the voting rule and on the distribution of productivity in the economy. Under majority rule, the equilibrium tax share balances the budget and pays for the voters' choices. The principal reasons for increased size of government implied by the model are extensions of the franchise that change the position of the decisive voter in the income distribution and changes in relative productivity. An increase in mean income relative to the income of the decisive voter increases the size of government.

A Rational Theory of the Size of Government

This paper presents a theory of competition among pressure groups for political influence. Political equilibrium depends on the efficiency of each group in producing pressure, the effect of additional pressure on their influence, the number of persons in different groups, and the deadweight cost of taxes and subsidies. An increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers. This analysis unifies the view that governments correct market failures with the view that they favor the politically powerful: both are produced by the competition for political favors.

A Theory of Competition Among Pressure Groups for Political Influence

My previous research showed that two important changes in the political environment of public schools--growing teacher unionization and a shift of funding responsibility to state governments--adversely affected the performance of college-bound students. Here I show similar impacts for public school students who do not go to college. These effects are found in analyses of 1971-91 changes in a school performance measure derived from individual scores on the Armed Forces Qualifying Test. Comparative analysis of performance trends in different areas of the same state suggests that the adverse performance effects of teacher unionization and spending centralization stem from their impact on state educational policy rather than on the direct operation of schools. These adverse effects are also found for students in the lower tail of achievement and for black students. They are not plausibly related to broader political and social changes.

Political Economy of Public Education: Non-College-Bound Students

IT is a commonplace of life in the developed world that consumers are required to secure the advice and permission of a physician before they may consume certain drugs. It was not always so, and it is not so today in many parts of the world. Others, notably Peter Temin,1 have investigated the origin of the U.S. prescription requirement and some of its costs. I will focus on the benefits-specifically, the health benefits-of this requirement. I begin with a brief summary of the relevant American history and a description of current regulatory practice in other countries. Then I outline how the regulation might be expected to affect drug-consumption decisions and, through these, the health of consumers. The bulk of the paper is devoted to an empirical investigation of health effects of prescription requirements. The investigation uses both U.S. and international data. The investigation reveals, with some twists, that there is little effect of these requirements on health. Specifically, the life-saving benefits of modern drugs do not seem to be enhanced by the prescription requirements, and the life-threatening risks from improper use of these drugs are not reduced and may even be increased by this requirement.

The Health Effects of Mandatory Prescriptions

The essays in this collection are central to the modern canon in political economy. These ten articles and an introduction respond to two broad questions: How does government work? How do voters and their elected representatives make decisions? Sam Peltzman responds to the media's negative portrayal of the cynical political atmosphere in America, suggesting the electorate really does make well-informed decisions and elected officials actually do tend to vote according to their constituents' interests. These conclusions bear the stamp of the Chicago approach to political economy (which applies microeconomic principles to political phenomena), an approach that has had considerable success explaining why certain government policies have not achieved their intended effects.

Political participation and government regulation

The effect of requiring consumers to obtain prescriptions for pharmaceuticals on mortality is examined for a sample of middle-income countries In countries enforcing the requirement, infectious disease mortality is no lower and poisoning mortality is higher than in those not enforcing the requirement A broader measure of government intervention—public expenditures on health relative to GDP—is shown to have moderately adverse effects on overall life expectancy

Regulation and health: The case of mandatory prescriptions and an extension

Robert Bork thought that antitrust restrictions on horizontal mergers should be confined to already highly concentrated markets. Actual policy, which had been much more restrictive, adopted Bork’s recommendation in the early 1980s. This paper examines the connection between this policy shift and concentration in the manufacturing sector. I find that concentration, which had been unchanged on average for all of the 20th century, began rising at the same time that merger policy changed. Concentration has increased steadily over the entire post-Bork period. The increase has been especially pronounced in consumer goods industries, which were already becoming more concentrated in the pre-Bork era. I find little difference in the underlying trends between already highly concentrated industries and the rest of manufacturing. Neither slowing growth in domestic manufacturing nor growing imports seem sufficient to explain the increased concentration.

https://www.jstor.org/stable/10.1086/675719

Sam Peltzman

Papers

Political Economy of Public Education: Non-College-Bound Students

The Health Effects of Mandatory Prescriptions

Political participation and government regulation

Regulation and health: The case of mandatory prescriptions and an extension

Industrial Concentration under the Rule of Reason