The Dictator’s Handbook as development book

Bueno de Mesquita, author of The Dictator’s Handbook, is a political scientist but his analysis is very much economic, in both the methods (rational choice & methodological individualism) and in the focus on material incentives as the main driver of behavior. The book is good as a manual for aspiring tyrants, but suprisingly great as an explanation for why many poor countries stay poor.

In short, leaders’ primary goal is to stay in power, and their secondary goal is to enrich themselves. 

Staying in power is easier when the people have little freedom and little ability to communicate and coordinate, but restricting these freedoms also tends to suppress economic activity. Leaders then aim to appropriate as much of the economy as possible for themselves (and, where necessary to maintain support, their essential backers). This further harms ordinary people, both by directly taking resources from them and by disincentivizing economic growth (because corrupt politicians or their cronies will just take what you build). Thus, poor countries are stuck being poor unless they get lucky with a benevolent dictator (though even a dictator who isn’t personally greedy may be pushed by his greedy essential backers to plunder) or if the dictator is willing to risk losing power to grant more economic freedoms (so he can tax a larger economy, perhaps because another source of revenue like oil money or foreign aid is running out).

It gives a visceral feel for the reasoning behind the resource curse that I didn’t have before: resources provide enough revenue to let a dictator be rich and pay off his key backers without needing to allow the freedoms necessary for broad economic prosperity and a broad tax base.

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