Bruce Bueno de Mesquita
About
Political scientist, former EconTalk guest
Claims by Bruce Bueno de Mesquita (20)
Foreign aid is given in exchange for policy concessions that benefit the donor government's democratic constituents, not the recipient's citizens — because if the recipient would follow those policies anyway, there'd be no need to pay them — making aid harmful to recipient citizens while helping autocrats supplement bribes.
Hitler did not fully mobilize the German steel industry early in WWII (unlike WWI) because he feared losing the loyalty of comfortable middle-class supporters if he stopped producing consumer goods — driving his need for slave labor and the Ukraine — and only cranked up the war effort late when defeat clearly meant being deposed, while the Allies mobilized fully from day one.
Autocrats start wars for two reasons: they have policy beliefs (sometimes that conquering neighbors will expand the extractable resource base via land grabs or tribute), and because their rent-seeking inefficient economies run down over time, creating a shortage of resources to bribe cronies — exemplified by Saddam Hussein's 1991 move on Kuwait's oil fields.
Democracies cut aid to elected governments whose policies they dislike (e.g., Hamas in the Palestinian Authority) because voters prefer cutting money to inducing better policies over funding abhorrent ones — making it anti-democratic for a re-election-seeking leader to fund foreign agendas their constituents reject.
The World Bank is itself a small-coalition political entity whose loan decisions are made by representatives of guaranteed-risk banks and recipient-country governments who profit from continued flows — so it does what is incentive-compatible for its constituents rather than advancing welfare, and exists fundamentally to make loans.
Autocrats can be more adventurous in war because they are judged on delivering goodies to cronies, not policy performance — so they fight in a broader range of circumstances, are less likely to add resources when losing if it would cost their cronies, and survive defeat as long as they keep paying cronies and aren't removed by a victorious foreign rival.
When the selectorate is very large relative to the winning coalition, the incumbent need not spend as much to keep supporters loyal, because a defector has a low probability of being essential to a rival — leaving more discretion for the leader to keep resources for himself or pursue clever or dumb policies.
The implicit tax rate is higher when the coalition is small: in North Korea, with per-capita income around $600, the average tax rate is about 10%, whereas in the US a person with comparable income pays nothing — so the comparable-income person in North Korea pays a much higher rate to feed the leadership's rent-seeking demands.
Ahmadinejad's nuclear weapons program is a skillful political strategy: it resonates with young professionals' pride amid a declining economy, restores Iran's primacy as the exporter of Shia fundamentalism against the rising al-Qaeda, creates bargaining leverage, and secures his hold on power — not the act of a madman.
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