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

Once we learn to think along these three dimensions, we can begin to unravel some of politics’ most enduring puzzles. Our starting point is the realization that any leader worth her salt wants as much power as she can get, and to keep it for as long as possible. Managing the interchangeables, influentials, and essentials to that end is the act, art, and science of governing.

Rules Ruling Rulers

Money, it is said, is the root of all evil. That can be true, but in some cases, money can serve as the root of all that is good about governance. It depends on what leaders do with the money they generate. They may use it to benefit everyone, as is largely true for expenditures directed toward protecting the personal well-being of all citizens and their property. Much public policy can be thought of as an effort to invest in the welfare of the people. But government revenue can also be spent on buying the loyalty of a few key cronies at the expense of general welfare. It can also be used to promote corruption, black marketeering, and a host of even less pleasant policies.

The first step in understanding how politics really works is to ask what kinds of policies leaders spend money on. Do they spend it on public goods that benefit everyone? Or do they spend mostly on private goods that benefit only a few? The answer, for any savvy politician, depends on how many people the leader needs to keep loyal—that is, the number of essentials in the coalition.

In a democracy, or any other system where a leader’s critical coalition is excessively large, it becomes too costly to buy loyalty through private rewards. The money has to be spread too thinly. So more democratic types of governments, dependent as they are on large coalitions, tend to emphasize spending to create effective public policies that improve general welfare pretty much as suggested by James Madison.

By contrast, dictators, monarchs, military junta leaders, and most CEOs all rely on a smaller set of essentials. As intimated by Machiavelli, it is more efficient for them to govern by spending a chunk of revenue to buy the loyalty of their coalition through private benefits, even though these benefits come at the expense of the larger taxpaying public or millions of small shareholders. Thus small coalitions encourage stable, corrupt, private-goods-oriented regimes. The choice between enhancing social welfare or enriching a privileged few is not a question of how benevolent a leader is. Honorable motives might seem important, but they are overwhelmed by the need to keep supporters happy, and the means of keeping them happy depends on how many need rewarding.

Taxing

To keep backers happy a leader needs money. Anyone aspiring to rule must first ask how much can he extract from his constituents—whether they are citizens of a nation or shareholders in a corporation. This extraction can take many forms—personal income taxes, property taxes, duties on imports, licenses, and government fees—but we will refer to it generically as taxation to keep the discussion from wandering too far afield. As we’ve already seen, those who rule based on a large coalition cannot efficiently sustain themselves in power by focusing on private benefits. Their bloc of essential supporters is too large for that. Since they must sustain themselves by emphasizing public goods more than private rewards, they must also keep tax rates low, relatively speaking. People prefer to keep their money for themselves, except when that money can be pooled to provide something they value that they cannot afford to buy on their own.

For example, we all want to be sure that a reliable fire department will put out a fire that threatens our home. We could conceivably hire a personal firefighter to protect our house alone. However, not only is that expensive, we would also have to worry about whether our neighbor’s house is itself well enough protected that it won’t catch fire and threaten our home. Furthermore, our neighbor, realizing that we won’t want his house to burn if in doing so it threatens ours, may attempt to free ride on the fact that we hired a personal firefighter who will have to step in to protect the neighbor’s house as well. In no time we are in the position of paying for neighborhoodwide fire protection single-handedly, a very costly proposition. The easiest way to get neighbors to share the burden of fire protection is to let government leaders take the responsibility for fire protection. To provide such protection we happily pay taxes.

Though we may willingly pay taxes for programs that provide tangible benefits to us, for instance protection from fire, felons, and foreign foes, we would not be so willing to see our tax money used to pay a tremendous salary to our president or prime minister—or, in the case of Bell, California, to our local government officials. As a result, heads of governments reliant on a large coalition tend not to be among the world’s best paid executives.

Because the acceptable uses of taxation in a regime that depends on a large coalition are few—just those expenditures thought to buy more welfare than people can buy on their own—taxes tend to be low when coalitions are large. But when the coalition of essential backers is small and private goods are an efficient way to stay in power, then the well-being of the broader population falls by the wayside, contrary to the view expressed by Hobbes. In this setting leaders want to tax heavily, redistributing wealth by taking as much as they can from the poor interchangeables and the disenfranchised, giving that wealth in turn to the members of the winning coalition, making them fat, rich, and loyal. For example, a married couple in the United States pays no income tax on the first $17,000 they earn. At that same income, a Chinese couple’s marginal tax rate is 45 percent. That is well above the highest personal income tax rate in the United States and so no one, no matter how high their income, pays that much to the US federal government. And then there are small coalition regimes like Bell, California. Chief Administrative Officer Rizzo’s small number of supporters did not complain about the excessively high level of property taxes. They had to pay these taxes, but then so did thousands of others. And unlike others they received the rewards financed by those same taxes. The private gains the few crucial cronies got from their city government more than repaid the high taxes everyone had to pay.

Obviously, self-interest plays a large role in these equations. We must wonder, therefore, why incumbents don’t take all the revenue they’ve raised and sock it away in their personal bank accounts. This question is especially pertinent for corporate executives. Once investors have entrusted money in the hands of a CEO or chairman of the board, what can the investors do to assure themselves that the money will be invested wisely to produce benefits for them? Investors want increased value. They want share prices to rise, their portion of ownership to go up, and dividend payments to be large and predictably regular. To be sure, focusing on self-interest tells us that rulers and business leaders, and in fact, all of us, would love to take other people’s money and keep it for ourselves. This means that the next step in explaining the calculus of politics is to figure out how much a leader can keep and how much must be spent on the coalition and on the public if the incumbent is to stay in power.

Shuffling the Essential Deck

Staying in power, as we now know, requires the support of others. This support is only forthcoming if a leader provides his essentials with more benefits than they might expect to receive under alternative leadership or government. When essential followers expect to be better off under the wing of some political challenger, they desert.