Алистер Смит - The Dictator's Handbook - Why Bad Behavior is Almost Always Good Politics

Your fresh-fair virgins and your flowering infants....

What say you? will you yield, and this avoid,

Or, guilty in defence, be thus destroy’d? 2

Fortunately for Harfleur, on hearing Henry’s words, the governor surrendered.

The most powerful leaders in history, people like Genghis Khan, Henry V, or Russia’s Catherine the Great, tend to be autocrats beholden to only a small coalition. Those who are most successful, especially in the modern world, also enjoy a secure means of extracting vast revenues, such as mineral wealth. Provided they remain healthy, such leaders are practically unassailable. That is to say, they are as close to being absolute leaders as one can get.

What, then, is an autocrat to do once in power? They should tax excessively—Genghis Khan is said to have levied a tax of 100 percent following a conquest. Being a nomad, he didn’t need those he defeated to produce for the next year, since by then he and his horde would be elsewhere. They should enthusiastically suppress the people—Joseph Stalin worked out that killing many to catch but a few “enemies of the people” was worth the expense and loss of innocent lives. He therefore made clear to his commissars that an exorbitant error rate in executing potential enemies of the people was perfectly acceptable. They should hand out lavish rewards to essential supporters—Catherine the Great made sure that even her ex-lovers remained loyal by giving them control over vast tracts of land, thousands of serfs, and the income that came with them. And finally, they should sock money away for their personal use, giving them a rainy-day fund to bail themselves out of trouble or assuring a soft landing when their luck runs out and they are overthrown—Haiti’s Jean-Claude “Baby Doc” Duvalier did just that, living lavishly in exile in France until he lost most of his fortune to his ex-wife in a nasty divorce.3

How should nearly absolute leaders behave? In short: Be corrupt.

As surely as money makes the world go round, so too does it make the coalition go round. The key to a loyal coalition truly is money. If a leader wants to oppress, suppress, repress, and even kill his enemies, he needs people who will do the dirty work for him. Such brutality can be expensive. That’s why successful rulers pay more than anyone else for just such purposes and, needless to say, not a penny more than that.

Leaders, essentials, and influentials of autocratic states can flaunt a dauntingly extravagant degree of wealth, especially when you consider that their populations are otherwise destitute, starving, and often dying. Nevertheless, their monopoly on power and force keeps the people down, and it’s the money that keeps the select few happy to enforce the regime’s will and to protect the leader’s power.

Lest anyone jump to the conclusion that this is an apt description only of dictators, private goods in the democrat’s domain are indeed worthy of examination. Needing the help of so many, they don’t pay as much as autocrats, but still, even backers of democrats must have their rewards.

Private Goods in Democracies

Our version of political logic tells us that private rewards capture a larger percentage of government spending when there are fewer essentials. That is surely one reason why we are so much more conscious of gross corruption in dictatorships than in democracies and rightfully so. Transparency International, which rates government corruption every year, shows that our intuition about dictatorships and autocracies is generally right. Of the twenty-five most corrupt regimes, according to Transparency International’s 2010 corruption index, not even one is a mature democracy. Only a very few—Russia and Venezuela, for instance—might be described by some as quasi democratic, at least in the sense that they appear to have multiparty elections. We say “appear” because it is also clear in both cases that the opposition parties are severely restricted in their access to the media or in their ability even to hold public rallies. So, to be sure, the highest levels of corruption do belong to illiberal, small-coalition regimes. But that does not mean that dependence on a big coalition exempts a government from corruption. It doesn’t even mean that large-coalition regimes spend absolutely less on corruption than their more autocratic counterparts.

Because democratic settings foster lower taxes and more spending on productivity-enhancing public goods than small-coalition regimes, dependence on lots of essentials tends to correlate with a successful economy. Consequently, it is likely to promote a bigger revenue pie than small-coalition settings, as we discussed earlier. Less of the total income pie is taken by big-coalition governments, but they are taking a smaller share of a bigger pie, so they could have more revenue at their disposal. Even though the private/public goods mix favors more private benefits in small-coalition regimes, the total amount of private rewards can be greater in a large-coalition environment.

Iran and Turkey are two predominantly Muslim countries (one Shia and the other Sunni), both situated in the Middle East. Iran has vast oil reserves that should lighten the people’s tax load, or so one might think. Turkey does not have oil or other substantial natural resource wealth and so needs tax revenue to sustain the government. Both Iran and Turkey have histories of autocratic rule, but with Turkey now a maturing (though still transitional) democratic country while Iran, despite some trappings of democracy, remains authoritarian. In Iran, the votes of the people and the laws of parliament can all be overturned by the will of the Supreme Leader. In Turkey, the president has limited legislative veto power, as in the United States, so basically it takes unlawful action, like a military coup, to overturn the will of the people.

Iran’s population is 73 million, Turkey’s 75 million, meaning that the two nations are of comparable size. Iran’s corruption ranking in 2010 was the thirty-second worst (that is, it ranked 146 out of 178 countries in honest business dealings), making it one of the more corrupt regimes in the world. Turkey’s ranking was fifty-sixth, placing it in the top third of the world in terms of avoiding corruption. That is, 122 countries were rated as more corrupt than Turkey. Not stellar, but a good performance for a transitional democracy. Per capita income in Turkey is about $13,730; in Iran only $4,530.4 Thus, despite its vast oil wealth, Iranians, on average, earn only about one third what Turks earn. Tax rates are higher in Iran than in Turkey so, despite the oil wealth, Iran extracts more income tax than does Turkey. Both countries have progressive income taxes although a small group in Iran, known as the Bonyads, is exempt from taxation and even exempt from accusations of corruption. They manage the money of the senior ayatollahs and some key military leaders. The Bonyads are reputed to control 20 to 25 percent of Iran’s annual income—not bad as private benefits go.

To properly compare the countries, it’s useful to look at how much tax an Iranian and a Turk must pay. On $4,530, an Iranian pays $762 and a Turk pays only $680 (based on exchange rates as of December 2, 2010, for the Turkish lira and the Iranian rial to the US dollar) in income tax.5 At the Turkish per capita income of $13,730, a Turk pays $2,450 and an Iranian $2,809. So, as expected, Iran’s government takes a bigger part of a smaller gross national product pie. In fact, the World Bank reports that Turkey’s government’s revenue came to 22.5 percent of GDP in 2008 (the latest year reported); Iran’s in the same year was 32 percent. At Turkey’s GDP, government revenue in 2009 (the latest year reported) was $138.8 billion. Iran’s government revenue given its 2009 GDP was $105.9 billion. Despite the higher taxes in Iran, Turkey’s government’s revenue pie is larger than Iran’s.