The Dictator's Handbook Read online

  Think about the company you work for. Who is your leader? Who are the essentials whose support he or she must have? What individuals, though not essential to your CEO’s power, are nonetheless influential in the governance of the company? And then, of course, who is there every day at the office—working hard (or not), just hoping for the breakthrough or the break that will catapult them into a bigger role?

  These three groups provide the foundation of all that’s to come in the rest of this book, and, more importantly, the foundation behind the working of politics in all organizations, big and small. Variations in the sizes of these three groups give politics a three-dimensional structure that clarifies the complexity of political life. By working out how these dimensions intersect—that is, each organization’s mix in the size of its interchangeable, influential, and essential groups—we can come to grips with the puzzles of politics. Differences in the size of these groups across states, businesses, and any other organization, as you will see, decide almost everything that happens in politics—what leaders can do, what they can and can’t get away with, to whom they answer, and the relative qualities of life that everyone under them enjoys (or, too often, doesn’t enjoy).

  Virtues of 3 - D Politics

  You may find it hard to believe that just these three dimensions govern all of the varied systems of leadership in the world. After all, 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!

  It’s a convenient fiction, but a fiction nonetheless. Governments do not differ in kind. They differ along the dimensions of their selectorates and winning coalitions. These dimensions limit or liberate what leaders can and should do to keep their jobs. How limited or liberated a leader is depends on how selectorates and winning coalitions interact.

  No question, it is tough to break the habit of talking about democracies and dictatorships as if either of these terms is sufficient to convey the differences across regimes, even though no two “democracies” are alike and neither are any two “dictatorships.” In fact, it is so hard to break that habit that we will continue to use these terms much of the time throughout this book—but it is important to emphasize that the term “dictatorship” really means a government based on a particularly small number of essentials drawn from a very large group of interchangeables and, usually, a relatively small batch of influentials. On the other hand, if we talk about democracy, we really mean a government founded on a very large number of essentials and a very large number of interchangeables, with the influential group being almost as big as the interchangeable group. When we mention monarchy or military junta, we have in mind that the number of interchangeables, influentials, and essentials is small.

  The beauty of talking about organizations in terms of essentials, influentials, and interchangeables is that these categories permit us to refrain from arbitrarily drawing a line between forms of governance, pronouncing one “democratic” and another “autocratic,” or one a large republic and another small, or any of the other mostly one-dimensional views of politics expressed by some of history’s leading political philosophers.

  The truth is, no two governments or organizations are exactly alike. No two democracies are alike. Indeed, they can be radically different one from the other and still qualify perfectly well as democracies. The more significant and observable differences in the behavior of governments and organizations are dependent on the absolute and relative size of the interchangeable, influential, and essential groups. The seemingly subtle differences between, say, France’s government and Britain’s, or Canada’s and the United States’s are not inconsequential. However, the variations in their policies are the product of the incentives leaders face as they contend with their particular mix of interchangeable, influential, and essential groups.

  There is incredible variety among political systems, mainly because people are amazingly inventive in manipulating politics to work to their advantage. Leaders make rules to give all citizens the vote—creating lots of new interchangeables—but then impose electoral boundaries, stacking the deck of essential voters to ensure that their preferred candidates win. Democratic elites may decide to require a plurality to win a particular race, giving themselves a way to impose what a majority may otherwise reject. Or they might favor having runoff elections to create a majority, even though it may end up being a majority of the interchangables’ second-place choices. Alternately democratic leaders might represent political views in proportion to how many votes each view got, forging governments out of coalitions of minorities. Each of these and countless other rules easily can fall within our belief in democracy, yet each can—and does—produce radically different results.

  We must remember that labels like democracy or dictatorship are a convenience—but only a convenience.

  Change the Size of Dimensions and Change the World1

  Changing the relative size of interchangeables, influentials, and essentials can make a real difference in basic political outcomes. As an example, we can look to the seemingly prosaic election of members of San Francisco’s board of supervisors.

  San Francisco used to elect its board of supervisors in citywide elections. That meant that the selectorate consisted of the city’s voters, and the essentials were the minimum number needed to elect a member to the board. In 1977 the method changed, and at-large, citywide elections were replaced by district voting. Under the old rules, members of the board of supervisors were elected by and represented the whole city as if it were one large constituency. Under the new rules, they were elected by and represented their district; that is, their neighborhood, so each supervisor was chosen by a much smaller constituency. The policy and candidate preferences of San Francisco residents as a whole were little different between 1975 and 1977—nevertheless in 1975 a candidate named Harvey Milk failed in his bid to be elected to the board, but went on to be elected in 1977 (and tragically assassinated not long after). As Time magazine reported later, Harvey Milk was “the first openly gay man elected to any substantial political office in the history of the planet.”2

  What changed in Harvey Milk’s favor between 1975 and 1977 was simple enough. In 1975, he needed broad-based support among San Francisco’s influentials to get elected. He got 52,996 votes. This meant he finished seventh in the election of supervisors, with the top five being elected. Milk did not have enough support, and so he lost. In 1977 he only needed support within the neighborhood from which he ran, the Castro, a dominantly gay area. He was, as he well knew, popular within his district. He received 5,925 votes, giving him a plurality of support with 29.42 percent of the vote in district 5, which placed him first in the 5th Supervisory District contest and so he was elected.

  Strange as it may seem, the same ideas and subtle differences that held true in San Francisco can be applied to illiberal governments like Zimbabwe, China, and Cuba, and even to the more ambiguous sorts of governments like current-day Russia or Venezuela or Singapore. Each is easily and uniquely placed on the three organizational dimensions: interchangeables, influentials, and essentials.

  Once we learn to think along these three dimensions, we can begin to unravel some of politics’ most enduring puzzles. Our starting point is the realization that any leader worth her salt wants as much power as she can get, and to keep it for as long as possible. Managing the interchangeables, influentials, and essentials to that end is the act, art, and science of governing.

  Rules Ruling Rulers

  Money, it is said, is the root of all evil. That can be true, but in some cases, money can serve as the root of all that is good about governance. It depends on what leaders do with the money they generate. They may use it to benefit everyone, as is largely true for expenditures directe
d toward protecting the personal well-being of all citizens and their property. Much public policy can be thought of as an effort to invest in the welfare of the people. But government revenue can also be spent on buying the loyalty of a few key cronies at the expense of general welfare. It can also be used to promote corruption, black marketeering, and a host of even less pleasant policies.

  The first step in understanding how politics really works is to ask what kinds of policies leaders spend money on. Do they spend it on public goods that benefit everyone? Or do they spend mostly on private goods that benefit only a few? The answer, for any savvy politician, depends on how many people the leader needs to keep loyal—that is, the number of essentials in the coalition.

  In a democracy, or any other system where a leader’s critical coalition is excessively large, it becomes too costly to buy loyalty through private rewards. The money has to be spread too thinly. So more democratic types of governments, dependent as they are on large coalitions, tend to emphasize spending to create effective public policies that improve general welfare pretty much as suggested by James Madison.

  By contrast, dictators, monarchs, military junta leaders, and most CEOs all rely on a smaller set of essentials. As intimated by Machiavelli, it is more efficient for them to govern by spending a chunk of revenue to buy the loyalty of their coalition through private benefits, even though these benefits come at the expense of the larger taxpaying public or millions of small shareholders. Thus small coalitions encourage stable, corrupt, private-goods-oriented regimes. The choice between enhancing social welfare or enriching a privileged few is not a question of how benevolent a leader is. Honorable motives might seem important, but they are overwhelmed by the need to keep supporters happy, and the means of keeping them happy depends on how many need rewarding.

  Taxing

  To keep backers happy a leader needs money. Anyone aspiring to rule must first ask how much can he extract from his constituents—whether they are citizens of a nation or shareholders in a corporation. This extraction can take many forms—personal income taxes, property taxes, duties on imports, licenses, and government fees—but we will refer to it generically as taxation to keep the discussion from wandering too far afield. As we’ve already seen, those who rule based on a large coalition cannot efficiently sustain themselves in power by focusing on private benefits. Their bloc of essential supporters is too large for that. Since they must sustain themselves by emphasizing public goods more than private rewards, they must also keep tax rates low, relatively speaking. People prefer to keep their money for themselves, except when that money can be pooled to provide something they value that they cannot afford to buy on their own.

  For example, we all want to be sure that a reliable fire department will put out a fire that threatens our home. We could conceivably hire a personal firefighter to protect our house alone. However, not only is that expensive, we would also have to worry about whether our neighbor’s house is itself well enough protected that it won’t catch fire and threaten our home. Furthermore, our neighbor, realizing that we won’t want his house to burn if in doing so it threatens ours, may attempt to free ride on the fact that we hired a personal firefighter who will have to step in to protect the neighbor’s house as well. In no time we are in the position of paying for neighborhoodwide fire protection single-handedly, a very costly proposition. The easiest way to get neighbors to share the burden of fire protection is to let government leaders take the responsibility for fire protection. To provide such protection we happily pay taxes.

  Though we may willingly pay taxes for programs that provide tangible benefits to us, for instance protection from fire, felons, and foreign foes, we would not be so willing to see our tax money used to pay a tremendous salary to our president or prime minister—or, in the case of Bell, California, to our local government officials. As a result, heads of governments reliant on a large coalition tend not to be among the world’s best paid executives.

  Because the acceptable uses of taxation in a regime that depends on a large coalition are few—just those expenditures thought to buy more welfare than people can buy on their own—taxes tend to be low when coalitions are large. But when the coalition of essential backers is small and private goods are an efficient way to stay in power, then the well-being of the broader population falls by the wayside, contrary to the view expressed by Hobbes. In this setting leaders want to tax heavily, redistributing wealth by taking as much as they can from the poor interchangeables and the disenfranchised, giving that wealth in turn to the members of the winning coalition, making them fat, rich, and loyal. For example, a married couple in the United States pays no income tax on the first $17,000 they earn. At that same income, a Chinese couple’s marginal tax rate is 45 percent. That is well above the highest personal income tax rate in the United States and so no one, no matter how high their income, pays that much to the US federal government. And then there are small coalition regimes like Bell, California. Chief Administrative Officer Rizzo’s small number of supporters did not complain about the excessively high level of property taxes. They had to pay these taxes, but then so did thousands of others. And unlike others they received the rewards financed by those same taxes. The private gains the few crucial cronies got from their city government more than repaid the high taxes everyone had to pay.

  Obviously, self-interest plays a large role in these equations. We must wonder, therefore, why incumbents don’t take all the revenue they’ve raised and sock it away in their personal bank accounts. This question is especially pertinent for corporate executives. Once investors have entrusted money in the hands of a CEO or chairman of the board, what can the investors do to assure themselves that the money will be invested wisely to produce benefits for them? Investors want increased value. They want share prices to rise, their portion of ownership to go up, and dividend payments to be large and predictably regular. To be sure, focusing on self-interest tells us that rulers and business leaders, and in fact, all of us, would love to take other people’s money and keep it for ourselves. This means that the next step in explaining the calculus of politics is to figure out how much a leader can keep and how much must be spent on the coalition and on the public if the incumbent is to stay in power.

  Shuffling the Essential Deck

  Staying in power, as we now know, requires the support of others. This support is only forthcoming if a leader provides his essentials with more benefits than they might expect to receive under alternative leadership or government. When essential followers expect to be better off under the wing of some political challenger, they desert.

  Incumbents have a tough job. They need to offer their supporters more than any rival can. While this can be difficult, the logic of politics tells us that incumbents have a huge advantage over rivals, especially when office holders rely on relatively few people and when the pool of replacements for coalition members is large. Lenin designed precisely such a political system in Russia after the revolution. This explains why, from the October 1917 Revolution through to Gorbachev’s reforms in the late 1980s, only one Soviet leader, Nikita Khrushchev, was successfully deposed in a coup. All the other Soviet leaders died of old age or infirmity. Khrushchev failed to deliver what he promised to his cronies. It is the successful, reliable implementation of political promises to those who count that provides the basis for any incumbent’s advantage.

  The story of survival is not much different, although the particulars are very different, in political settings that rely on many essential backers. As even a casual observer of election campaigns knows, there is a big discrepancy between what politicians promise when making a bid for power and what they actually deliver once there. Once in power, a new leader might well discard those who helped her get to the top, replacing them with others whom she deems more loyal.

  Not only that, but essential supporters can’t just compare what the challenger and incumbent offer today. The incumbent might pay less now, for instance, but the pay is expected
to continue for those kept on or brought into the new incumbent’s inner circle. True, the challenger may offer more today, but his promises of future rewards may be nothing more than political promises without any real substance behind them. Essentials must compare the benefits expected to come their way in the future because that future flow adds up in time to bigger rewards. Placing a supporter in his coalition after a new leader is ensconced as the new incumbent is a good indicator that he will continue to rely on and reward that supporter, exactly because the new incumbent has made a concerted effort to sort out those most likely to remain loyal from those opportunists who might bring the leader down in the future. The challenger might make such a promise to keep backers on if she reaches the heights of power, but it is a political promise that might very well not be honored in the long run.

  Lest there be doubt that those who share the risks of coming to power often are then thrown aside—or worse—let us reflect on the all-too-typical case of the backers of Fidel Castro’s revolution in Cuba. Of the twenty-one ministers appointed by Castro in January 1959, immediately after the success of his revolution, twelve had resigned or had been ousted by the end of the year. Four more were removed in 1960 as Castro further consolidated his hold on power. These people, once among Fidel’s closest, most intimate backers, ultimately faced the two big exes of politics. For the luckier among them, divorce from Castro came in the form of exile. For others, it meant execution. This includes even Castro’s most famous fellow revolutionary, Che Guevara.