The economic logic of autocracy

Tuesday, January 12th, 2010

Bruce Bueno de Mesquita explains the economic logic of autocracy:

Just as we naturally consider successful those leaders who foster economic growth and prosperity for their citizens, we expect that leaders who produce famine, poverty and misery will earn a rapid retirement. But the data show that leaders who produce poverty and misery through the systematic corruption that is characteristic of autocracy keep their jobs much longer than do those who enrich their countries. Indeed, the eight countries consistently rated the most corrupt in the world — Congo, Iraq, Myanmar, Sudan, Indonesia, Syria, Pakistan and Burundi — are those in which political leadership has been most secure, measured by the longevity of its tenure. (Only countries that have experienced a complete breakdown in social order can rival an entrenched autocracy in generating extreme levels of corruption.)

With rare exception, only autocrats — leaders who are unresponsive to the popular will and who exercise power unchecked either by law or other institutions — hold on to power for a long time. Over the past century, the only leaders who have remained in office for forty years or more have been autocrats. By contrast, nearly half of all democratic leaders — leaders who hold power at the pleasure of the voters or an elected legislature — are out of office within about one year of coming to power. Such a short tenure is true of only about one-third of autocrats, a remarkable difference in survivability. Virtually no democrats — but one-quarter of autocrats — stay in office for more than eight years, even though few democratic leaders are subject to term limits.

The reverse is true for those who rule at the pleasure of a small, exclusive group. Exclusive leaders who rely on black-market corruption have a better chance of staying in power than those who engender high rates of growth, staying in office, on average, 25 percent longer. Indeed, at all periods during their tenure in office, these leaders do much better at retaining their jobs if they promote black marketeering, corruption and cronyism — distorting the economy — than if they promote economic policies that lead to growth and prosperity.

Why does this perverse outcome occur? As suggested above, leaders who would keep their jobs must produce what their supporters want; when those supporters are unrepresentative of the country, autocrats will not pursue policies that encourage the creation of healthy, educated, prosperous citizens.

Autocrats not only retain power by maintaining the loyalty of a relatively small group of supporters–which usually include those who control the military, the civil service, the communications and information infrastructure, as well as key economic levers — but they also have an interest in keeping that core group as small as possible. In a poor country, an autocrat faces personal political risks if he implements policies that dissipate resources away from the few upon whom he relies to those who have little say in ensuring his political survival. It is therefore politically irrational to implement transparent economic policies aimed at protecting and promoting property rights, rule of law, a broadly educated population, low taxes and free trade, if they enable challenges to the incumbent. It is not in an autocrat’s interest that people have ways to enrich themselves that he does not control.

This is why autocrats face their highest risk of being deposed in their first year in office; they have not yet identified their most loyal backers and have not yet fully secured their ability to transfer benefits to them. With time and experience, they get better at identifying those on whose support they really rely. They discover that excluding “the many” from sharing in the wealth of the country is the best way to reward a small clique of supporters.

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