The Economics of Autocracy and Majority Rule

Productive public good investment allocations, and group discriminatory redistributions are conflicting resource use options between which every government must choose irrespective of its political make up. This paper is the first to derive an incisive explanation of how governments combine political and economic calculation to balance these competing choices. The political logic of these economic decisions will lie on a spectrum between two polar extremes. At one extremes is an idealized, utopian, consensual democracy. At the other extreme is perfect autocracy ruled by a dictator who taxes and spends solely to satisfy his own selfish desires. Realistic societies can be analyzed as a mixture -- a weighted sum -- of these two polar cases. Thus, in making the choice between social investment and redistributive taxation from the powerless to the powerful, every government behaves somewhat like an pure democracy and somewhat like a selfish dictatorshi