This is a very important article. It deals with politicians and the nature of power. It explores the differences between dictatorships and democracies. It questions some of the core democratic tenets that we are told to believe. It provides an important perspective that is not only plausible but probable. In my opinion, it is an indispensable view for making stone cold rational sense of modern society and all its complicacies.

The state is a territorial monopoly on legislation and violence. This means that it can tell you how to live and it can beat you up with or without reason. And there are no other legitimate institutions or actors on the territory that provide new legislation or administer violence. Thus, while within the border of the state, you better abide by its rules, and hope that it doesn't decide to harm you.

The main source of funding for the state is involuntary taxation. It does not ask you whether you want to pay or not. It forcefully taxes almost every activity of your life - from consuming to investing. In exchange, the state provides various public services and public goods - roads, defense, education, law & order. Members of the state live off of taxes. They do not "earn" their wage in the same way that people in the corporate sector "earn" it, by creating value for customers through voluntary transactions. Taxes sustain a way of living in which you don't have to find ways to make the lives of other people better. The money which you need to live is given to you automatically by the force of government, not through peaceful voluntary cooperation. This is power - the ability to live off of other people.

The benefits of being in power are obvious. Life is easy when you don't have to provide for your own sustenance. As a public official you will receive your salary irrespective of the quality of the job you did. Concretely, this means that for example when you commission the construction of a new bridge, no comparison will be made to the quality of a private bridge that could have been built by a corporate entrepreneur. If such a comparison is made, your salary will certainly not depend on the results. Thus, living off of taxes allows you to obtain resources with less effort, making life easier. Based on this result, we can expect people to want to come into power. Futher, since people maximize the small long-term rewards in life, a long prosperous and easy life is preferred to one in which you have to spend a lot of effort to obtain the same results. Hence, once in power, there will be a tendency for people to want to stay in power.

Abstractly, our system of governance creates pockets of power which allow for easy living. These power opportunities become attractors in a dynamic system, creating gradients (paths to power) along which people flow. Things like ideology or moral values have relatively less effect in determining people's behaviour compared to the practical economic incentives.

So let's analyze the effect of power from a pragmatic view. Firstly, we should acknowledge that nobody rules alone - neither dictators, nor heads of state in democracies. Ruling requires the coordination of many parties and what keeps a ruler in power is how well he is perceived to govern in the eyes of those on which he most depends. Thus, a ruler needs to reward those people that jointly keep his rule in place - this includes army generals, the army (which provide the means to enact violence), and various other interest groups.

The political landscape can be broken down into three groups:

  1. The nominal selectorate. This is everyone who has at least some legal say in choosing their leader. In a democracy this selectorate is large and consists of everyone who is eligible to vote. However small the weight of their vote may be, they are still able to affect the outcome of an election deciding who is to come into power. This group is called interchangeables.
  2. The real selectorate. These are the people that actually choose the leader. Examples here include all the members of the Communist Party in China or back in the Soviet Union, the senion members of the royal family in Saudi Arabia, or the voters backing members of parliament from the majority party in Great Britain. This group is called influentials.
  3. The winning coalition. These are the ones whose support is essential in order for the wining coalition to survive. For Louis XIV this included a handful of members of the court, military officers, and senion civil servants. For the US, it is the minimal number of voters who give the edge to one presidential candidate over another. This group is called essentials.

Let's consider the United States. The nominal selectorate consists of all voters. The real selectorate consists of the electors of the electoral college. However, nowadays they are normatively bound to vote the way their state's voters voted. As a result, the real selectorate and the nominal selectorate are very closely aligned. The winning coalition consists of those voters, properly distributed among the states, whose support for a candidate translates into a presidential win in the electoral college.

Different forms of government can be put on a spectrum according to the size of their interchangeables, influentials, and essentials. Dictatorships have very few essentials chosen from a very large group of interchangeables, and usually a relatively small batch of influentials. Democracies have very large sets of essentials, interchangeables, and also influentials. A monarchy or a military junta has a small number of interchangeables, influentials, and essentials.

Historically and even up to today, politicians have been very inventive in finding ways to manipulate these three groups to their advantage. Even though they believe they are public servants and always operate in the name of the public good, it is not difficult to intuitively understand how the relationships between the three groups of people can and, in fact, do determine outcomes of elections. Consider the following examples:

  • Leaders make rules to allow more people to vote, yet impose electoral boundaries.
  • Democratic elits may decide to require a plurality, instead of majority, in order to win.
  • A runoff election may be held to create a majority, even though it may end up being a majority of the interchangeables' second-place choices.
  • Leaders can represent political views in proportion to how many votes each view got, forging a government out of a colition of minorities.

All of these can be considered democratic practices, yet may lead to wildly different outcomes. Thus, it is very important how the governance system is designed.

To stay in power, leaders need to keep their essential coalition intact, which happens by rewarding the supporters financially. Small coalitions encourage stable, corrupt, private-goods-oriented regimes. On the contrary, where coalitions are large, as in democracies, it is too costly to buy loyalty through private rewards. Therefore, leaders emphasize spending to create effective public policies that improve the general welfare of most influentials.

Since the ruler depends on other people, who in turn depend on yet other people, a complicated hierarchical power relationship forms. Each leader must spend enough to keep those on which he depends satisfied. Otherwise, a challenger may steal the supporters by offering them increased rewards under his leadership. We can delineate 5 rules that help leaders stay in power:

  1. Keep your winning coalition as small as possible. It is good to depend on fewer people which makes staying in power easier.
  2. Keep your nominal selectorate as large as possible. Being able to easily replace troublemakers in your coalition puts more pressure on them and keeps them in check.
  3. Control the flow of revenue. By creating a bottleneck in incoming revenue, a leader can divert large amounts from one group of people, e.g. interchangeables, to another, e.g. essentials. Controlling the flow of rewards increases bargaining power.
  4. Pay your key supporters just enough to keep them loyal. Naturally, this helps the ruler to stay in power while minimizing expenditures for doing so.
  5. Don't take money out of your supporter's pockets to make the people's lives better. Disappointed coalition members can defect if the leader prioritises the people instead of them.
Power principles
Figure 1: A schematic showing hierarchical power structure.

For dictatorships it is obvious that these rules apply. But they are present also in democracies. District gerrymandering can keep coalitions small. Immigration can expand the set of interchangeables. Changing the tax code helps to control revenue. Welfare programs help to reward essentials. In general, democrats have a harder time staying in power because of the large group of essentials and as a result have to provide more to its supporters.

Thus, even if in a democracy most of the time public policies are beneficial to most of the people, it is not the case that in general good economics will get you re-elected. Depending on the governance system architecture and the incentives it creates, the policies which benefit a small group of supporters may wildly disadvantage another larger group of non-supporters. For further details, the book to read is this one.