It’s a convenient fiction, but a fiction nonetheless.

our experience tends to confirm that on one end of the political spectrum we have autocrats and tyrants—horrible, selfish thugs who occasionally stray into psychopathology. On the other end, we have democrats—elected representatives, presidents, and prime ministers who are the benevolent guardians of freedom. Leaders from these two worlds, we assure ourselves, must be worlds apart!

don’t elevate the concerns of the people over your own and those of your supporters.

This is the essential lesson of politics: in the end ruling is the objective, not ruling well.

Even in modern times the principle of choosing close advisers who cannot rise to the top spot remains good advice. It is surely no coincidence that Saddam Hussein as president of Islamic Iraq had a Christian, Tariq Aziz, as his number two.

Democrats may have to put up with real and meaningful elections in order to stay in power, but it shouldn’t be shocking to see that whenever they can, they’ll happily take a page out of Lenin’s book. There’s no election better than a rigged one, so long as you’re the one rigging it.

Designated seats for underrepresented minorities is another means by which leaders reduce the number of people upon whom they are dependent. Such policies are advertised as empowering minorities, whether they are women, or members of a particular caste or religion. In reality they empower leaders.

bloc voting whether based on personal ties in Bihar, trade union membership among American teachers, tribal clans in Iraq, linguistic divisions in Belgium, or religion in Northern Ireland. Bloc leaders gain a lot, their members gain less, and the rest of society pays the price.

Bloc voting takes seemingly democratic institutions and makes them appear like publicly traded companies. Every voter or share has a nominal right to vote, but effectively all the power lies with a few key actors who can control the votes of large numbers of shares or deliver many votes from their village.

These institutional investors, like village elders, are influential enough that CEOs court their support. But it is much cheaper to buy the loyalty of the institutional investor by private goods, such as fees for board membership, than it is to reward all the little investors he represents with great stock performance.

Staying in power right after having come to power is tough, but a successful leader will seize power, then reshuffle the coalition that brought him there to redouble his strength. A smart leader sacks some early backers, replacing them with more reliable and cheaper supporters. But no matter how much he packs the coalition with his friends and supporters, they will not remain loyal unless he rewards them. And as we will see in the next chapter, rewards don’t come cheaply.

In autocracies, it is unwise to be rich unless it is the government that made you rich. And if this is the case, it is important to be loyal beyond all else.

The trend is clear. Nations flush with oil, copper, gold, diamond, or other minerals grow more slowly.

Nevertheless, natural resources are wonderful for leaders. Unlike getting their subjects to work, leaders don’t have to encourage natural resources to work. Admittedly the minerals need to be extracted, but by and large, autocrats can achieve this without the participation of the local population. In Nigeria, for instance, the oil is concentrated in the Niger Delta region. Foreign firms with foreign workers do most of the extraction. Few Nigerians participate. The oil companies run security firms, effectively small private armies, to keep the locals from obstructing the business or complaining about the environmental degradation that results. BP and other foreign firms are free to act with impunity, provided they deliver royalty checks to the government. This is not so much a failing of these companies as the way business must be conducted in countries whose leaders rely on a few cronies to back them up. A company that acts responsibly will necessarily have less money to deliver to the government and that will be enough for them to be replaced by another company that is willing to be more “cooperative.”

once the value of access to credit is worth less than the cost of servicing the debt then leaders should default. If they don’t then surely a challenger will come along who will offer to do so. This was one of the appeals of Adolf Hitler to the German people in the 1930s. Germany faced a huge debt, in part to pay reparations from World War I. Hitler defaulted on this debt. It was a popular policy with the German people since the cost of servicing the debt was so high.

Those in favor of forgiving the debt of highly indebted poor countries argue that the debt burden falls on the poor people of the nation who did not benefit in a consequential way from the borrowed funds. This is certainly true. As we have explained, the benefits go to the leader and the coalition while the debt obligation falls on everyone. But people who argue for debt forgiveness construct their arguments in terms of how they think the world should operate, rather than how it actually works.

can we create a desire by at least some autocrats to govern for the people as the best way to ensure their own political survival?

Taxation, resource extraction, and borrowing are the foremost ways of acquiring funds for enriching a coalition. Discussions that portray taxation differently are either window dressing to make the process seem more palatable or are making arguments based on how people would like the world to work.

Leaders tax because they need to spend on their coalition. Successful leaders raise as much revenue as they can. The limits of taxation are: (1) the willingness of people to work as they are taxed; (2) what the coalition is willing to bear; and (3) the cost of collecting taxes.
Having filled government coffers, leaders spend resources in three ways. First they provide public goods. That is, policies that benefit all. Second, they deliver private rewards to their coalition members. This mix of private and public benefits differs across political systems, and it’s worth noting that any resources left over after paying off the coalition are discretionary. Leaders therefore have a third choice to make about spending money. They could spend discretionary money promoting their pet projects. Alternatively, and all too commonly, as we shall see, they can hide them in a rainy-day fund.

The most reliable means to a good life for ordinary people remains the presence of institutional incentives in the form of dependence on a big coalition that compels power-seeking politicians to govern for the people. Democracy, especially with little or no organized bloc voting, aligns incentives such that politicians can best serve their own self-interest, especially their interest in staying in office, by promoting the welfare of a large proportion of the people. That, we believe, is why most democracies are prosperous, stable, and secure places to live.

during an economic crisis autocrats shop around for bailout money from others to save themselves in the name of relieving their country’s financial woes.

a common refrain among small-coalition rulers is that the very freedoms, like free speech, free press, and especially freedom of assembly, that promote welfare-improving government policies are luxuries to be doled out only after prosperity is achieved and not before. This seems to be the self-serving claim of leaders who keep their people poor and oppressed.

Democracies are not lucky. They do not attract civic-minded leaders by chance. Rather, they attract survival-oriented leaders who understand that, given their dependence on many essentials, they can only come to and stay in power if they figure out the right basket of public goods to provide. Small-coalition leaders figure out their solution to the exact same survival problem. It is just that when the coalition on which they rely is small then the mix of public goods is slimmer and trimmer. It is designed for survival purposes in both cases.
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.

private rewards can be provided directly out of the government’s treasury, the easiest way to compensate the police for their loyalty—including their willingness to oppress their fellow citizens—is to give them free rein to be corrupt. Pay them so little that they can’t help but realize it is not only acceptable but necessary for them to be corrupt. Then they will be doubly beholden to the regime: first, they will be grateful for the wealth the regime lets them accumulate; second, they will understand that if they waver in loyalty, they are at risk of losing their privileges and being prosecuted.

Corruption is a private good of choice for exactly the reasons captured by the Dymovsky Affair. It provides the means to ensure regime loyalty without having to pay good salaries, and it guarantees the prosecutorial means to ferret out any beneficiaries who fail to remain loyal. What could be better from a leader’s perspective?

Neither a smokescreen nor a witch hunt will root out sleaze. But make political leaders accountable to more people and politics becomes a competition for good ideas, not bribes and corruption. Of course, leaders don’t want to be more accountable. It reduces their tenure in office and gives them less discretion.

not to put the needs of the people above the wants of his essential supporters.

foreign aid deals have a logic of their own. Aid is decidedly not given primarily to alleviate poverty or misery; it is given to make the constituents in donor states better off. Aid’s failure to eliminate poverty has not been a result of donors giving too little money to help the world’s poor. Rather, the right amount of aid is given to achieve its purpose—improving the welfare of the donor’s constituents so that they want to reelect their incumbent leadership. Likewise, aid is not given to the wrong people, that is, to governments that steal it rather than to local entrepreneurs or charities that will use it wisely. Yes, it is true that a lot of aid is given to corrupt governments but that is by design, not by accident or out of ignorance. Rather, aid is given to thieving governments exactly because they will sell out their people for their own political security. Donors will give them that security in exchange for policies that make donors more secure too by improving the welfare of their own constituents.

Effectively the government told these survivors to go away and die quietly: inhumane in the extreme, but good small-coalition politics. Dead people cannot protest.

Letting people die is good governance in an autocracy, but it is disastrous for the tenure of democrats.

Earthquakes pose a threat to autocratic leaders when people are forced into refugee camps and can organize against the regime. People dying from an earthquake can’t organize and so they do not endanger a dictator’s survival in office.

The Sichuan quake occurred in an economically and politically important center where amassed protest could potentially threaten the government. Qinghai is remote and of little political importance. The protest there would do little to threaten the government. The government did much less to assist people who could

Autocrats don’t squander precious resources on the battlefield. And elite well-equipped units are more for crushing domestic opposition than they are fighting a determined foreign foe.

Autocratic leaders are wary of expending resources on the war effort, even if victory demands it. They know their fate depends more upon the loyalty of their coalition than success on the battlefield.

Autocrats and democrats, at one level, fight over the exact same thing: staying in power. At another level, they are motivated to fight over different things. Democrats more often than autocrats fight when all other means of gaining policy concessions from foreign foes fail. In contrast, autocrats are more likely to fight casually, in the pursuit of land, slaves, and treasure.

while it is the people who do the fighting, it is leaders who start wars. Naturally, the common people don’t want war. . . . But, after all, it is the leaders of the country who determine the policy, and it is always a simple matter to drag the people along, whether it is a democracy, or a fascist dictatorship, or a parliament or a communist dictatorship…. All you have to do is tell them they are being attacked, and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country.

A man always has two reasons for doing anything: a good reason and the real reason. —J. P. MORGAN

the time for outside intervention to facilitate democratic change or improved corporate responsibility is when a leader has just come to power or when a leader is near the end of his life.

A country’s relative share of freedom is ultimately decided by its leaders. Behind the world of misery and oppression lie governments run by small cliques of essentials who are loyal to leaders who can make them rich. Behind the world of freedom and prosperity lie governments that depend on the backing of a substantial coalition of ordinary people drawn from a large pool of influentials, who are in turn drawn from a large pool of interchangeable. It is not difficult to draw a line from the poverty and oppression of the world to the corrupt juntas and brutal dictators who skim from their country’s revenues to stay in power.

Every government and every organization that relies on a small coalition eventually erodes its own productivity and entrepreneurial spirit so much that it faces the risk of collapsing under the weight of its own corruption and inefficiency.