| dcterms.abstract | Most countries in the world are governed by autocracy; that is, some form
of one man rule - be it monarchy or dictatorship. Dictatorship is a
prevalent form of autocracy, with a majority of the world's population living
under this type of rule. Yet when analyzed from an economic point of
view, dictatorships do not appear to be efficient. They are not efficient in
'social' terms, and more strangely, they do not appear to be efficient from
the dictator's viewpoint.
Take one example. In Bulandia, a fictitious country, a general from the
army overthrows the government and establishes himself as the supreme
- leader. He promptly places those who helped him in the revolution in key
government positions, as well as granting them favors in the business world.
Such positions and favors are-considered rewards for supporting the revolution;
they can be considered a cost of the revolution. Suppose the general
appoints his brother, an air force colonel, as head of the newly established
National Mining Industry. His brother, having no background in business
or engineering is, to say the least, not the most qualified man for the job.
But it is assumed that he must be granted the position in order to maintain
a stable coalition - he must be paid off. If this is the only problem (the payoff),
why does the dictator use such an inefficient method of pay-off? Why
doesn't he, for example, have the industry managed by a foreign mining
company which can actually generate profits, and then use these profits to
payoff the members of the coalition?
Some examples of the inefficient behavior of real-world dictators may illustrate
the claim we have made above. In many African dictatorships, appointments
to senior management positions are usually based upon the
family lineage or the tribal heritage of the dictator. Such people are not'
• We wish to thank Gordon Tullock for his helpful suggestions. In addition, Gary Anderson
and Phil Coelho provided useful comments on an earlier draft. However, we are the sole
residual claimants of an§.-errors. | |
