The Dictator's Handbook (23 page)

We have seen how the coalition's rewards can come in the form of public goods, especially when the group of essentials is large. However, as the essential coalition gets smaller, the efficient thing for any ruler to do is to emphasize more and more the allocation of resources in the form of private benefits to her cronies. Why? Private goods to a few cost less in total than public goods for the many, even when the few get really lavish rewards. This is all the more true when the coalition not only is small but also is drawn from a very large pool of interchangeable selectorate members, each clamoring to become a member of the winning coalition with its access to myriad private gains.

Successful leaders must place the urge to do good deeds a distant third behind their own political survival and their degree of discretionary control. Private goods are the benefits that most help rulers keep coalition loyalty. It is only the private gains that separate the essentials from the masses.

For this reason, it's crucial that we next explore the use of private rewards as the means to survive in power. It remains to be seen what rulers do with money they do not have to spend on buying their coalition's loyalty; that is, any money whose use is at the incumbent's discretion. As we investigate these uses of revenue we will see that Lord Acton's adage, “Power tends to corrupt, absolute power corrupts absolutely,” holds generally true—however it doesn't quite capture the causality. The causal ties run both ways: power leads to corruption and corruption leads to power. As the title of this chapter instructs us, corruption empowers leaders and absolute corruption empowers them absolutely—or almost so. Remember, as we saw with Louis XIV, no leader ever has absolute power. That's why leaders need coalition members who support them, and why coalition members need opportunities for enrichment if they are to remain loyal to their leader, empowering her to stay on in office, getting and spending money—on them.

Corrupt politicians are attractive to would-be supporters, and politicians eager for power find it easiest to attract corrupt people to their
cause. Leaders want to stay in power and must take whatever actions are needed to do so. Successful leaders are not above repression, suppression, oppression, or even killing their rivals, real and imagined. Anyone unwilling to undertake the dirty work that so many leaders are called on to do should not pursue becoming a leader. Certainly anyone reluctant to be a brute will not last long if everyone knows he is unprepared to engage in the vicious behavior that may be essential to political survival. If an aspiring leader won't do terrible things, they can be sure that there are plenty of others who will. And if they don't pay their backers to do terrible things, they can be pretty confident that those cronies will be bought off, exchanging terrible deeds for riches and power.

Genghis Khan (1162–1227) understood this principle. If he came across a town that did not immediately surrender to him, he killed everyone that lived there, and then made sure the next town knew he had done so. That way, in aggregate, he didn't actually have to slaughter that many townspeople. They worked out that things would be better for them by giving up, turning their wealth over to him, and accepting that the Mongols would then pass through, leaving the survivors to fend for themselves. Genghis went on to rule much of the known world and to die in his sleep of old age at sixty-five. True, he doesn't have the greatest reputation in the West (although he is revered in his homeland of Mongolia), but he most assuredly was a successful leader.

It is fair to say that England's Henry V has a better reputation than Genghis Khan.
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His Saint Crispin's day speech in Shakespeare's play,
Henry V
, is received even by the modern reader with passion and admiration. We sometimes forget that Henry was capable of brutality. Much as the English revere him, it may be that he is less warmly received in France where, at the siege of Harfleur, Shakespeare had him announce, in a properly brutal leader's terms, what he would do if the town's governor did not surrender:

Fortunately for Harfleur, on hearing Henry's words, the governor surrendered.

The most powerful leaders in history, people like Genghis Khan, Henry V, or Russia's Catherine the Great, tend to be autocrats beholden to only a small coalition. Those who are most successful, especially in the modern world, also enjoy a secure means of extracting vast revenues, such as mineral wealth. Provided they remain healthy, such leaders are practically unassailable. That is to say, they are as close to being absolute leaders as one can get.

What, then, is an autocrat to do once in power? They should tax excessively—Genghis Khan is said to have levied a tax of 100 percent following a conquest. Being a nomad, he didn't need those he defeated to produce for the next year, since by then he and his horde would be elsewhere. They should enthusiastically suppress the people—Joseph Stalin worked out that killing many to catch but a few “enemies of the people” was worth the expense and loss of innocent lives. He therefore made clear to his commissars that an exorbitant error rate in executing potential enemies of the people was perfectly acceptable. They should hand out lavish rewards to essential supporters—Catherine the Great made sure that even her ex-lovers remained loyal by giving them control over vast tracts of land, thousands of serfs, and the income that came with them. And finally, they should sock money away for their personal use, giving them a rainy-day fund to bail themselves out of trouble or assuring a soft landing when their luck runs out and they are overthrown—Haiti's Jean-Claude “Baby Doc” Duvalier did just that, living lavishly in exile in France until he lost most of his fortune to his ex-wife in a nasty divorce.
³

How should nearly absolute leaders behave? In short:
Be corrupt.

As surely as money makes the world go round, so too does it make the coalition go round. 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.

Leaders, essentials, and influentials of autocratic states can flaunt a dauntingly extravagant degree of wealth, especially when you consider that their populations are otherwise destitute, starving, and often dying. Nevertheless, their monopoly on power and force keeps the people down, and it's the money that keeps the select few happy to enforce the regime's will and to protect the leader's power.

Lest anyone jump to the conclusion that this is an apt description only of dictators, private goods in the democrat's domain are indeed worthy of examination. Needing the help of so many, they don't pay as much as autocrats, but still, even backers of democrats must have their rewards.

Our version of political logic tells us that private rewards capture a larger percentage of government spending when there are fewer essentials. That is surely one reason why we are so much more conscious of gross corruption in dictatorships than in democracies and rightfully so. Transparency International, which rates government corruption every year, shows that our intuition about dictatorships and autocracies is generally right. Of the twenty-five most corrupt regimes, according to Transparency International's 2010 corruption index, not even one is a mature democracy. Only a very few—Russia and Venezuela, for instance—might be described by some as quasi democratic, at least in the sense that they appear to have multiparty elections. We say “appear” because it is also clear in both cases that the opposition parties are severely restricted in their access to the media or in their ability even to hold public rallies. So, to be sure, the
highest levels of corruption do belong to illiberal, small-coalition regimes. But that does not mean that dependence on a big coalition exempts a government from corruption. It doesn't even mean that large-coalition regimes spend absolutely less on corruption than their more autocratic counterparts.

Because democratic settings foster lower taxes and more spending on productivity-enhancing public goods than small-coalition regimes, dependence on lots of essentials tends to correlate with a successful economy. Consequently, it is likely to promote a bigger revenue pie than small-coalition settings, as we discussed earlier. Less of the total income pie is taken by big-coalition governments, but they are taking a smaller share of a bigger pie, so they could have more revenue at their disposal. Even though the private/public goods mix favors more private benefits in small-coalition regimes, the total amount of private rewards can be greater in a large-coalition environment.

Iran and Turkey are two predominantly Muslim countries (one Shia and the other Sunni), both situated in the Middle East. Iran has vast oil reserves that should lighten the people's tax load, or so one might think. Turkey does not have oil or other substantial natural resource wealth and so needs tax revenue to sustain the government. Both Iran and Turkey have histories of autocratic rule, but with Turkey now a maturing (though still transitional) democratic country while Iran, despite some trappings of democracy, remains authoritarian. In Iran, the votes of the people and the laws of parliament can all be overturned by the will of the Supreme Leader. In Turkey, the president has limited legislative veto power, as in the United States, so basically it takes unlawful action, like a military coup, to overturn the will of the people.

Iran's population is 73 million, Turkey's 75 million, meaning that the two nations are of comparable size. Iran's corruption ranking in 2010 was the thirty-second worst (that is, it ranked 146 out of 178 countries in honest business dealings), making it one of the more corrupt regimes in the world. Turkey's ranking was fifty-sixth, placing it in the top third of the world in terms of avoiding corruption. That is, 122 countries were rated as more corrupt than Turkey. Not stellar, but a good performance for a transitional democracy. Per capita income in Turkey
is about $13,730; in Iran only $4,530.
⁴
Thus, despite its vast oil wealth, Iranians, on average, earn only about one third what Turks earn. Tax rates are higher in Iran than in Turkey so, despite the oil wealth, Iran extracts more income tax than does Turkey. Both countries have progressive income taxes although a small group in Iran, known as the Bonyads, is exempt from taxation and even exempt from accusations of corruption. They manage the money of the senior ayatollahs and some key military leaders. The Bonyads are reputed to control 20 to 25 percent of Iran's annual income—not bad as private benefits go.

To properly compare the countries, it's useful to look at how much tax an Iranian and a Turk must pay. On $4,530, an Iranian pays $762 and a Turk pays only $680 (based on exchange rates as of December 2, 2010, for the Turkish lira and the Iranian rial to the US dollar) in income tax.
⁵
At the Turkish per capita income of $13,730, a Turk pays $2,450 and an Iranian $2,809. So, as expected, Iran's government takes a bigger part of a smaller gross national product pie. In fact, the World Bank reports that Turkey's government's revenue came to 22.5 percent of GDP in 2008 (the latest year reported); Iran's in the same year was 32 percent. At Turkey's GDP, government revenue in 2009 (the latest year reported) was $138.8 billion. Iran's government revenue given its 2009 GDP was $105.9 billion. Despite the higher taxes in Iran, Turkey's government's revenue pie is larger than Iran's.

Iran's revenue pie, despite its greater tax take, is only about 76 percent of Turkey's. Thus, if Iran spends 25 percent of its revenue on private goods for its relatively small coalition of essential backers, then Turkey would only need to allocate 19 percent to private rewards to spend the same amount of dollars as Iran spends on private benefits. It is very likely that Turkey spends much less both as a percentage of the pie and in total than does Iran on corruption and other private goods. But as we saw, it is entirely possible to engage in an absolute amount of corruption in a large-coalition regime that is equal to the absolute amount in a small-coalition setting. Corruption will be reported as greater in the small coalition environment because, after all, it is a bigger proportion of the available revenue or GDP pie.

It is important to remember that the value of private gains for the millions of individual supporters in a democracy is small. It is
substantial for the few key individual backers in an autocracy even if the total spent on private goods is the same in both. For instance, Turkey's winning coalition could easily be about 20 million voters. Turnout in Turkey's 2007 election was just under 36 million, out of 42.5 million registered voters and 48.4 million total eligible voters. With 36 million voting, the winning coalition in Turkey's first-past-the-post elections could have been more than 18 million. Iran's winning coalition could easily be no more than several thousand. Let's err on the side of overstating Iran's winning coalition by assuming it is as many as 100,000 people, including religious leaders, local and national political elites, important civil servants, key military officers, and the government's goon squads (the Basij led by Ayatollah Khomeini's son), who enforce its antiprotest efforts. If Iran spends as little as $5 billion on private rewards (we have no way of knowing the actual amount), then the average coalition member gets $50,000, more than ten times per capita income. If Turkey spends the same amount on private benefits (and, again we have no way of knowing the actual amount), then the average Turkish coalition member can expect to receive only $250, less than 2 percent of per capita income. Of course, in either case most coalition members will get much less than the average and a few will get vastly more. But obviously there will not be many coalition members in Turkey who are willing to beat and even kill their fellow citizens for $250. It is equally obvious that in relatively poor Iran, for $50,000 a head it should be easy for the regime to get supporters to go out and oppress their fellow citizens.