2. Political economy of dictatorship (G. De Luca)
1. Introduction: explaining dictatorship
In this lecture, we look at the political/economic functioning of dictatorships more in detail.
Very partial (not empirical) analysis: 2 papers focusing on one specific puzzle. The 2 theoretical models are
complex so we only need to know the logic of the model as in this lecture (intuition and different components
to get the result)!!
How dictators can stay power for so long? Why do dictators implement so much inefficient redistribution?
They tend to have highly inefficient taxation system with extraction of resources.
2. Kleptocracy
It is important to look at this because there are a number of developing countries is run under a “kleptocratic”
regime: political systems in which the power is controlled by a single individual. The state is controlled and run
for the benefit of 1 single individual and his family (or a small group of individuals)!! It is a non-democratic
regime!!
The right to rule is ascribed to a person rather than to an office (it is above the law: there are no rules that
limits him).
Officials occupy bureaucratic positions to acquire personal wealth and status rather than to perform public
service to the citizens. If there is a lot of corruption, this would also be the case, so it’s not only in kleptocracy.
If a ruler is restrained, it is by the limits of their personal authority and power and the power of supporters and
rivals (not by law or constitution). So the ruler can do whatever he wants!
Examples of kleptocratic regimes:
- Zaire under Mobutu: see this lecture.
- Dominical Republic under Trujillo.
- Haiti under the Duvaliers.
- Nicaragua under the Somozas.
- Uganda under Idi Amin.
- Philippines under Ferdinand Marcos.
These are unconstraint rulers!
, Paper 1: Acemogly, Robinson, and Verdier (JEEA 2004)
It proposes a mechanism in a mathematical model that allows the ruler to stay in power and implements very
inefficient policies without the citizens to rebel!
This regime emerges ONLY in weakly institutionalized polities. There are no formal institutions that can restrict
the actions of the politicians. They can’t also make them accountable to citizens.
So:
- When institutions are strong (mature democratic institutions), citizens punish politicians for bad
performance by voting them out of power. So the citizens discipline politicians!
- When institutions are weak (weak democracy, kleptocracy), politicians punish citizens who fail to
support them. It’s politicians that have the power and they can punish citizens!
The policies pursued by a kleptocrat are disastrous for the country’s economy!
But why do they stay in power for so long?
- Mobutu’s regime lasted for 32 years.
- Trujillo’s – for 31 years.
- The Somozas’ – for 42 years.
So how can a regime that apparently benefits nobody outside the clique survive for so long? Why do not
heavily taxed producers and abused citizens replace the kleptocrat?
Even without fair elections, theoretically there are constraints on dictators’ behavior (e.g.: revolution, or
competition from other strongmen) and numerically it would work!! But this is only if they manage to
coordinate the rebellion!
However the groups that want to remove the ruler have to resolve the collective action problem. They are the
majority, but only if they act together (taking coordinated action)! Revolution looks like a public good:
everybody would like to have it but everybody prefers the others to have the costs for it. So if 1 person only
goes on the street and do a revolution, then he is going to end up really badly. But if everybody does a
revolution, that would work. So if everybody thinks that “the others will do a revolution so they don’t need me
so I stay home”, then nobody shows up. So there is an absence of an active strategy.
So the answer lies in the weakness of institutions. Weak institutions allow the kleptocrats to employ
strategies which exacerbate the collective action problem, and effectively defuse any opposition.
The strategy that is imposed in this paper:
The divide-and-rule-strategy: the weak institutions environment allows the kleptocrat to target both the taxes
(subtracting resources) and the benefits (giving resources). So any individual or group in society that becomes
politically mobilized against the ruler is punished, while individuals (groups) that remain loyal are rewarded.
Example: There are very inefficient policies in Ghana. The cocoa producers are heavily taxed but subsidies for
their inputs of seeds and fertilizers. Why would you do that?: Subsidies can be more easily allocated selectively
(e.g., geographic targeting). You reward the groups who tacitly support the policies of the ruler! By doing this,
the ruling elites were able to preserve the status quo and got support from parts of the population (to
guarantee your power). That’s why they lasted long and had inefficient policies!
1. Introduction: explaining dictatorship
In this lecture, we look at the political/economic functioning of dictatorships more in detail.
Very partial (not empirical) analysis: 2 papers focusing on one specific puzzle. The 2 theoretical models are
complex so we only need to know the logic of the model as in this lecture (intuition and different components
to get the result)!!
How dictators can stay power for so long? Why do dictators implement so much inefficient redistribution?
They tend to have highly inefficient taxation system with extraction of resources.
2. Kleptocracy
It is important to look at this because there are a number of developing countries is run under a “kleptocratic”
regime: political systems in which the power is controlled by a single individual. The state is controlled and run
for the benefit of 1 single individual and his family (or a small group of individuals)!! It is a non-democratic
regime!!
The right to rule is ascribed to a person rather than to an office (it is above the law: there are no rules that
limits him).
Officials occupy bureaucratic positions to acquire personal wealth and status rather than to perform public
service to the citizens. If there is a lot of corruption, this would also be the case, so it’s not only in kleptocracy.
If a ruler is restrained, it is by the limits of their personal authority and power and the power of supporters and
rivals (not by law or constitution). So the ruler can do whatever he wants!
Examples of kleptocratic regimes:
- Zaire under Mobutu: see this lecture.
- Dominical Republic under Trujillo.
- Haiti under the Duvaliers.
- Nicaragua under the Somozas.
- Uganda under Idi Amin.
- Philippines under Ferdinand Marcos.
These are unconstraint rulers!
, Paper 1: Acemogly, Robinson, and Verdier (JEEA 2004)
It proposes a mechanism in a mathematical model that allows the ruler to stay in power and implements very
inefficient policies without the citizens to rebel!
This regime emerges ONLY in weakly institutionalized polities. There are no formal institutions that can restrict
the actions of the politicians. They can’t also make them accountable to citizens.
So:
- When institutions are strong (mature democratic institutions), citizens punish politicians for bad
performance by voting them out of power. So the citizens discipline politicians!
- When institutions are weak (weak democracy, kleptocracy), politicians punish citizens who fail to
support them. It’s politicians that have the power and they can punish citizens!
The policies pursued by a kleptocrat are disastrous for the country’s economy!
But why do they stay in power for so long?
- Mobutu’s regime lasted for 32 years.
- Trujillo’s – for 31 years.
- The Somozas’ – for 42 years.
So how can a regime that apparently benefits nobody outside the clique survive for so long? Why do not
heavily taxed producers and abused citizens replace the kleptocrat?
Even without fair elections, theoretically there are constraints on dictators’ behavior (e.g.: revolution, or
competition from other strongmen) and numerically it would work!! But this is only if they manage to
coordinate the rebellion!
However the groups that want to remove the ruler have to resolve the collective action problem. They are the
majority, but only if they act together (taking coordinated action)! Revolution looks like a public good:
everybody would like to have it but everybody prefers the others to have the costs for it. So if 1 person only
goes on the street and do a revolution, then he is going to end up really badly. But if everybody does a
revolution, that would work. So if everybody thinks that “the others will do a revolution so they don’t need me
so I stay home”, then nobody shows up. So there is an absence of an active strategy.
So the answer lies in the weakness of institutions. Weak institutions allow the kleptocrats to employ
strategies which exacerbate the collective action problem, and effectively defuse any opposition.
The strategy that is imposed in this paper:
The divide-and-rule-strategy: the weak institutions environment allows the kleptocrat to target both the taxes
(subtracting resources) and the benefits (giving resources). So any individual or group in society that becomes
politically mobilized against the ruler is punished, while individuals (groups) that remain loyal are rewarded.
Example: There are very inefficient policies in Ghana. The cocoa producers are heavily taxed but subsidies for
their inputs of seeds and fertilizers. Why would you do that?: Subsidies can be more easily allocated selectively
(e.g., geographic targeting). You reward the groups who tacitly support the policies of the ruler! By doing this,
the ruling elites were able to preserve the status quo and got support from parts of the population (to
guarantee your power). That’s why they lasted long and had inefficient policies!
