A Theory of Minimalist Democracy
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1 1 Econ SFU; UBC and CIFAR; UBC, CIFAR and NBER; respectively
2 Motivation Consolidated democracies are characterized by universal suffrage, free fair competitive elections, freedom of political participation organization, civil political rights, freedom of the media. A long list of complementary attributes that many scholars feel necessary for effective democratic representation of the populace. Dahl (1971) Polyarchy. The majority of democracies worldwide are less than consolidated: Diamond (2002): A political gray zone...between full-fledged democracy and outright dictatorship. In 2012 Polity IV of the 115 countries that had a Polity2 score above 0, only 51 had a score above 8 (i.e. above Paraguay, Philippines, Ghana or Indonesia).
3 Democracies: Consolidated vs. Gray Zone Year Share of Countries with Polity2 > 0 Share of Consolidated Democracies (Polity2 > 8)
4 The Importance of Hybrid Regimes the trend toward democracy has been accompanied by an even more dramatic trend toward pseudodemocracy. Only about half a dozen regimes in 1974 (less than 5 percent) would have met Schedler s criteria of electoral authoritarianism: undemocratic but with multiparty elections and some degree of political pluralism. [...] Today, at least 45 and perhaps as many as 60 are electoral authoritarian roughly between 1/4 and 1/3 of all states. In proportional terms, authoritarian forms of multiparty electoral competition have increased during the third wave much more rapidly than democratic ones. Diamond (2002)
5 Parcomp Extent to which non-elites are able to access institutional structures of expression Figure 5: Political inclusiveness emerges at Polity 2 levels around Polity 2 Score 95% CI linear fit B-spline smooth
6 Xrcomp Competitiveness of executive recruitment Figure 4: Competitiveness of executive recruitment emerges at Polity 2 levels around Polity 2 Score 95% CI linear fit B-spline smooth Notes:
7 Minimalist Democracy Most of these proto/psuedo-democracies meet only the electoral criterion for being called democracies. i.e., the minimalist stance of Schumpeter (1942) as summarized by Przeworski (1999): A system in which rulers are selected by competitive elections...governments are elected by the toss of a, not necessarily fair, coin...citizens have no electoral sanction and incumbents have no electoral incentives to behave well. Przeworski (1999)
8 Questions Many countries only meet such minimal criteria. Is there value in the minimalist approach? How relevant are competitive elections per se in the process of democratization of an autocratic regime? What is the point of elections when de facto power still coincides with dominant force? Relatedly: Under what conditions will those with dominant force choose to respect electoral rules?
9 We characterize the problem of leadership survival for an autocratic leader facing coup threats from regime insiders. The autocrat can assuage competitors to his leadership through patronage disbursements. What happens if resources are insufficient? A minimalist conception of democracy, i.e. the introduction of competitive elections that allow for some probability of replacement of the leadership without bloodshed, becomes important. A minimalist democracy can be a sufficiently attractive institutional setting to be endogenously selected by autocrats exposed to coup attempts. Nothing hinges on democracy being redistributive or representative. These are features that may arise later in the polity history, but are non essential to the political transition.
10 Literature Caveat: Massive literature(s), naturally incomplete list. Causes of Democratizations/Democratic Transitions: Lipset, 1959 (Modernization Hypothesis); Huntington, 1991; Przeworski, Alvarez, Cheibub, 1996; Barro, 1999; Boix, 2003; Geddes, 2003; Bruckner and Ciccone (Rain/Opportunity, 2011); Acemoglu and Robinson (2001,2006); Acemoglu, Johnson, Robinson and Yared (2008); Murtin and Wacziarg, 2013; etc. Socio-economic Consequences of Democratizations: Acemoglu, Naidu, Restrepo, and Robinson, 2013; Acemoglu and Robinson (2001; 2006); Przeworski, Alvarez, Cheibub, Limongi, 2000; Bueno de Mesquita, Smith, Siverson, Morrow, 2003; Persson and Tabellini (Democratic Capital, 2009); Rodrik and Wacziarg, 2005; etc. Democracies Conflict: Maoz and Russett, 1992 (Democratic peace); Russett, 1994; Enterline and Greig 2005; Baliga, Lucca, Sjostrom, 2011; etc.
11 Model Preliminaries The Model An infinite horizon, discrete time economy, Per period probability of death, δ. Leader obtains a per period return to office F whilst leader. Non-divisible ego rents, prestige, status, power Death leads to per period returns of zero. U denotes patronage value of posts Allocated by leader (can keep all) Divisible graft, cash, resources, patronage
12 The distinctive institutional hallmark of African regimes is neopatrimonialism. In neopatrimonial regimes, the chief executive maintains authority through personal patronage,...the essence of neopatrimonialism is the award by public officials of personal favors, both within the state (notably public sector jobs) and in society (for instance licenses, contracts and projects)....it is the core feature of politics in Africa... Bratton and Van de Walle (1994)
13 The Players N elite At time zero, a single elite is the country s leader, the other elite are his insiders If an elite dies, replaced by another one next period Voters more on these later
14 Coups Each period one (and only one) member of elite has the opportunity to mount a coup. This opportunity is drawn randomly each period, is time independent, and is identical across all insiders. The identity of this individual is private information. If coup undertaken: Coup leader s patronage foregone Coup succeeds with probability γ < 1. Successful coup deposes current leader, who receives zero (death) in perpetuity, and replaced with coup leader Unsuccessful coup maintains current leader, coup leader receives zero from then on.
15 Tyranny At start of new term in office leader receives a tyranny draw. Becomes a tyrant with probability ɛ and remains so forever; ɛ can be arbitrarily small. Tyrants pursue sole goal of power; tyrannical leaders never voluntarily leave office. With probability 1 ɛ leader is not a tyrant and decides to leave office rationally (based on utility comparisons).
16 Citizens Citizens vote in elections. Lexicographic preferences over leaders. Bayesian. Never vote for known tyrant if non-tyrants available. If uncertain, vote for candidate believed less likely to be tyrant. With equal likelihood of tyranny, reelect incumbents with probability p Challenger s probability of being tyrannical ruler is ɛ. Let β denote voter beliefs that the current incumbent is a tyrant.
17 Governance Modes Autocracy: Leader remains in power until dead or deposed Minimalist Democracy: An election (lottery) held each period to determine leader next. Participants respecting electoral results. Elected leaders not violently overthrown. N.B. No formal or mechanical constraints in democracy No stickiness Leaders free to anul election results and remain in power. Insiders free to stage coups, provided they have opportunity to do so.
18 Beliefs and Voting Voter beliefs determine π, the probability of an incumbent winning as follows: Not possible that β < ɛ. π(t) = { 0 if β > ɛ, p if β = ɛ. (1)
19 Timing 1 Each period, t, starts with leader determined at end of previous period 2 Leader moves and decides on allocation of U and chooses democracy/autocracy (elections or sham/not). 3 Insiders decide whether to exercise coup opportunity, seeing their own allocation of patronage 4 Coup (γ) and election (π) outcomes realized. 5 If elections were held, leader decides whether to respect outcome or not. 6 Exogenous terminations occur and next period s leader determined.
20 States Restrict attention to Markov Equilibria State space: Binary. π = p, or π = 0.
21 Autocracy Leaders would never respect an election loss, All election candidates would act like tyrants (both types ignore election results). Thus π t = p for all t Hence only one state.
22 Equilibrium Strategies in Autocracy Player Choices: A patronage transfer level, τ a, A coup probability function, σ(τ). Assume for simplicity a single insider all results generalize to multiple insiders.
23 Value Functions Autocracy Let VA L be value of starting a period as leader Let VA N be value of starting a period as insider Leader is optimizing in transfer choice if { τ A arg max F + U τ + (1 σa (τ) γ) (1 δ) V L } A (2) τ [0,U] Insider is optimizing at each possible transfer if { σ A (τ) arg max σ [γ (1 δ) V L A ] + (1 σ) [τ + (1 δ) VA N ] } σ [0,1] (3) for all τ 0.
24 Value Functions cont. Given equilibrium outcomes, τ A and c A σ A (τ A ), value functions satisfy V L A = F + U τ A + (1 c A γ) (1 δ) V L A (4) V N A = c [γ (1 δ) V L A] + (1 c A ) [τ A + (1 δ) V N A ]. (5) Strategies τ A and σ A (τ) form an autocratic equilibrium if conditions (2)-(5) are satisfied.
25 Transfers and Coups There exists a critical transfer level that the insider requires in order to be dissuaded from a coup: denoted ˆτ A ˆτ A = (1 δ) [γ VA L VA N ]. (6)
26 Coups Are Avoided Lemma Coups are avoided whenever it is strictly feasible to do so: ˆτ A < U implies τ A = ˆτ A. Political violence in equilibrium reflects insufficient patronage rather than leader s optimal risk-taking. Intuitively: Coups are surplus destroying either leader or challenger dies with probability one Avoiding them raises surplus claimed by leader through adjusting τ a.
27 Taxonomy of Autocratic Equilibria Result Denote availability of patronage by ψ U/(U + F ) An Autocratic equilibrium always exists and is generically unique. Specifically: A secure Autocratic equilibrium (no coups) exists if and only if ψ µ 2 γ (1 δ), 1+γ (1 δ) A strongly insecure Autocratic equilibrium (perpetual coups) exists if and only if ψ µ 1 δ γ (1 δ). δ+γ (1 δ) A weakly insecure Autocratic equilibrium (occasional coups) exists if and only if ψ [µ 1, µ 2).
28 Van de Walle (1994) argues that Cameroon s patrimonial orientation was due to its political leaders management of oil wealth and that this wealth, along with foreign aid, allowed the authoritarian regime to endure. From Fjelde 2009: The conversion of public funds into private payoffs has prolonged poverty and bred economic inequality in many oil-wealthy states, but it has also helped foster powerful alliances with a stake in the continuation of the prevailing rule (Smith, 2004). Countries such as Gabon, Libya and Saudi Arabia illustrate how oil-based rent- seeking can strengthen regimes, by extending their clientelist networks and thus placating restive groups.
29 Minimalist Democracy Equilibrium Features of democracy: Leaders respect election results Democratic leaders do not have rule truncated by coups. Key role in sustaining minimalist democracies are beliefs of voters.
30 Voter Beliefs Challenger has probability ɛ of being tyrant if becoming leader. Winning election and remaining in office not informative Voters beliefs on tyrant leaders stay at ɛ. Losing election and remaining in office Voters beliefs on tyrant leader β > ɛ Given voter preferences never vote back transgressing leader
31 Democratic States Two possible states: π = 0 tyranny state: current leader failed to step down from a loss π = p democratic state: otherwise. If π = p: Remains so if leader wins election, loses and steps down, or dies. Transitions to π = 0 if leader loses election and stays. If state is π = 0: Remains so if leader stays in power. Transitions if leader dies or deposed.
32 Democratic Strategies A patronage transfer level and a coup probability function for each of the two states: Democracy : {τ D, σ D (τ)}, Tyranny : {τ T, σ T (τ)}. Let Vθ L and V θ N denote values of starting a period as leader and insider in state θ {D, T } respectively. Optimal Transfers/Coups
33 Optimal Actions For leaders to optimally hold elections: V L D V L T. (7) For leader to optimally step down following an election defeat (prefer being an insider in democracy to being a tyrant): V N D V L T. (8) Democracy is peaceful (no coups in the democracy state): τ D + (1 δ) ((1 p) V L D + p V N D ) γ (1 δ) V L D. (9)
34 Value Functions Democracy Given τ D, τ T and c T σ(τ T ), value functions satisfy: V L D = F + U τ D + (1 δ) [p V L D + (1 p) V N D ] (10) V N D = τ D + (1 δ) [p V N D + (1 p) V L D] (11) V L T = F + U τ T + (1 c T γ) (1 δ) V L T (12) V N T = c T [γ (1 δ) VD]+ L (1 c T ) [τ T + (1 δ) {δ VD N + (1 δ) VT N }]. (13)
35 Democratic Equilibrium The strategies {{τ D, σ D (τ)}, {τ T, σ T (τ)}} constitute a democratic equilibrium if (7)-(13) are satisfied.
36 Transfers in Democracy Lemma Similar to Autocracy: There exists a unique transfer level ˆτ D, where insider is indifferent to holding a coup And peace is sought when feasible: If democratic leaders need to make a positive transfer to avoid coups, then they always prefer making the transfer. That is, if ˆτ D (0, U] then there is no profitable deviation from τ D = ˆτ D.
37 Lemma Unlike Autocracy: ˆτ D < 0 is possible. Democratic equilibrium involves τ D = 0 if and only if p p 1 γ 1 γ (1 δ). Democratic equilibrium involves τ D (0, U] if and only if p > p and ψ f (p) (1 δ) (γ (p γ (1 δ)+(1 p))) δ (1+γ (1 δ)).
38 1 Patronage Availablilty: ψ µ 2 µ 1 P 1 P 2 f(p) Incumbent Bias: p Figure: Peaceful Power Transfers p
39 Respect for Elections Lemma Leaders respect elections only if ruling as a tyrant involves perpetual coups. Secure tyrannical rule is too attractive for electoral credibility to hold Democracy rests on credible, violent threats
40 Low Patronage Helps Democracy Lemma A tyrant is insecure only if patronage is sufficiently small. Specifically, only if ψ g(p) γ (1 δ) (1 p (1 δ)) 2 δ 2 (1 δ) p if parameters are in P 1 and, or ψ µ 2 if parameters are in P 2.
41 0 p 1 Introduction The Model Analysis Incumbent Bias: p 1 Patronage Availablilty: ψ µ 2 µ 1 g(p) S 2 S 1 f(p) 0 1 Incumbent Bias: p 2 Figure: Self-Enforcing Democracy p
42 Existence and Uniqueness Result Let δ (1 δ) 2 γ 2. A democratic equilibrium exists if and only if (i) p p and ψ g(p), or (ii) p > p and ψ [f (p), µ 2 ], and is generically unique. Specifically, if p p and ψ < g(p), the equilibrium involves zero transfers in the democracy state, and zero transfers and coups with probability one in the tyranny state. if p > p and ψ [f (p), µ 2 ), the equilibrium involves positive transfers in the democracy state, and zero transfers and coups with probability one in the tyranny state.
43 Features Autocrats with low patronage constantly at threat democracy becomes attractive If aim of leadership is wealth/patronage (F /U 0), never have democracy Electoral commitment is credible because leaders fear entering autocracy; happens if violate election results. Essential features: A coin toss, but more: Voters punish leaders who violate the electorate s will by committing them to permanent autocracy Low patronage in the autocratic state makes it insecure and unattractive.
44 Violent Threats Underpin Democratic Peace Violence important: Threat of violent removal from office is a valuable tool in sustaining democracy. If this threat could be mitigated as it is with sufficient graft to buy off threats to autocratic rule then democracy can never be sustainable.
45 Welfare Result The democratic equilibrium generically strictly Pareto dominates the autocratic equilibrium. In the special case where ψ = µ 2 we have V L D = V L A and V N D = V N A, otherwise V L D > V L A and V N D > V N A.
46 Predictions A permanent increase in graft to a sufficiently high level threatens democracy; it will always force democracy into autocracy. The fact that the democratic equilibrium strictly Pareto dominates the autocratic one suggests a reason for why elites would choose to coordinate on democracy whenever it is feasible. If we expect political elite are able to coordinate on the preferred equilibrium, we predict democratization in the minimalist sense following a decline in graft
47 Consistent with pattern described by Jensen and Wantchekon (2004) in SSA:..most African resource-dependent countries were authoritarian governments and struggled with democratic consolidation after the third wave of democratization. These resource-dependent countries include Algeria, Nigeria, Libya, Gabon, Cameroon, and the former Zaire. Besides South Africa, the transition to democracy has been successful only in resource-poor countries such as Benin, Mali, Senegal, and Madagascar.
48 Table 2: Resource Abundance and Autocratizations DPolity 2 DElectoral Competiveness DInclusivenes s DExecutive Constraints DPolity 2 DElectoral Competiveness DInclusivenes s DExecutive Constraints (1) (2) (3) (4) (5) (6) (7) (8) Log rainfall, t [0.52] [0.06] [0.20] [0.16] [0.53] [0.06] [0.20] [0.16] Log rainfall, t [1.00]** [0.09]*** [0.39]** [0.34]** [1.01]** [0.09]** [0.39]** [0.34]** Price Growth of Main Commodity between t-1 and t [0.38]** [0.03]*** [0.22] [0.12] [0.40]* [0.03]** [0.22] [0.12] Price Growth of Main Commodity between t-2 and t [0.50]** [0.04] [0.20] [0.15]** [0.50]* [0.04] [0.20] [0.15]** R-Squared Observation s Country FE Yes Yes Yes Yes Yes Yes Yes Yes Year FE Yes Yes Yes Yes Yes Yes Yes Yes Country- Specific Linear Trend Yes Yes Yes Yes Yes Yes Yes Yes Notes: All changes for the dependent variables (indicated with D) are computed between time t and t+1. Electoral Competitiveness is defined as a dummy taking value 1 if Polity dimension XRCOMP =2 (transitional arrangements between selection, ascription and/or designation, and competitive election) or XRCOMP =3 (election) and 0 otherwise. Inclusiveness is defined as a dummy taking value 1 if Polity dimension PARCOMP =4 (transitional arrangements to fully politically competitive patterns of all voters) or PARCOMP =5 (competitive: alternative preferences for policy and leadership can be pursued in the political arena.) and 0 otherwise. Executive Constraints is defined as a dummy taking value 1 if Polity dimension XCONST =5 (substantial limitations on executive authority) or higher, and 0 otherwise. Columns (5) to (8) report the same specifications as Columns (1) to (4) excluding periods of interregnum (Polity = -77). Standard errors clustered at the country level in brackets below coefficients. *Significant at 90% confidence; **95% confidence; ***99% confidence level.
49 Conclusions A theory of minimal democracy elections, turnover, not much else Importance of violent threats in sustaining minimal democracy Low levels of patronage helpful Relationship with consolidated democracy?
50 Optimal Coups/Transfers In democratic state, leader is optimizing in transfer choice if: τ D arg max τ [0,U] {F + U τ + (1 σ D(τ) γ) (1 δ) [p V L D+ (1 p) V N D ]} (14) Insider is optimizing at each possible transfer if: { σ D (τ) arg max σ [γ (1 δ) V L D ] + (1 σ) [τ+ (15) σ [0,1] (1 δ) (1 p) V L D + p V N D ]]. label
51 In tyranny state, leader is optimizing in transfer choice if: τ T arg max τ [0,U] {F + U τ + (1 σ T (τ) γ) (1 δ) V L T } (16) Insider is optimizing at each possible transfer if: { σ T (τ) arg max σ [γ (1 δ) V L D ] + (1 σ) [τ + (1 δ) VT N ]. } σ [0,1] (17) Back...
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