When democratic leaders come to power they need to seize control of government, but there is not the frenzied rush that we observe in autocracies. In the United States, for instance, leaders elected in the November election are not sworn in until the following January. This lag gives incoming presidents time to prepare, nominating their cabinet and appointing people to positions that need to be filled. Originally the delay (which lasted until March) was required because leaders needed months to travel to the Capitol from the state that elected them. Contenders to become a new dictator or monarchs never extend the courtesy of waiting for their more distant kin to travel great distances to compete with them. Democrats lack urgency when assuming power because the democratic rules that determine that the incumbent has been defeated simultaneously create a coalition of supporters.
Democratic Inheritance
Democrats, because they rely on a large coalition, cannot lavish great wealth on their supporters personally. They simply do not have enough money to go around. Instead democrats need to find effective public policies that their supporters like and reward their loyalty that way. But this is not to say there are no private goods in democratic politics. There are. And this explains why dynastic rule is common even in democracies. It may be surprising to learn, for instance, that a careful study finds that 31.2 percent of American female legislators (and 8.4 percent of men) had a close relative precede them in their political role.10 Nearly 20 percent of American presidents were close relatives of each other. That’s a lot more than chance and fair competition suggest.
Dynastic rule is commonplace in democracies for exactly the same reasons that it is popular among autocrats and monarchs. Who better to protect the wealth and prestige of the family than family members? Elected officials get to dole out money and enjoy power and money in return. They are as eager to see their progeny enjoy the same benefits—and protect their own legacy—as Emperor Augustus or Carlo Gambino. And so it is that the Tafts of Ohio have held high office generation after generation. Ohio’s governor from 1999–2007, Bob Taft, has an illustrious pedigree. His father and his grandfather were both US senators, his great grandfather was president of the United States, and his great great grandfather was attorney general and secretary of war. The Kennedys, the Rockefellers, the Roosevelts, the Bush family, and many other American families also have long and distinguished political histories.
Of course, dynastic rule is more common outside of democracy. Even if you don’t have the good fortune to be born into a political dynasty, you can come to power in a democracy if you have good, or at least popular, ideas. Good ideas that help the people are rarely the path to power in a dictatorship.
Democracy Is an Arms Race for Good Ideas
Competition in democracies is cerebral, not physical. Killing foes works for dictators, but it is a pretty surefire path to political oblivion in a democracy. That’s a good thing, from a moral standpoint, of course. But from a democrat’s point of view, the corollary is that even good public policy does not buy much loyalty.
Everyone consumes policy benefits whether they support the incumbent or not. If a leader cleans up the environment or solves global warming then everyone is a winner, although of course the extent to which individuals value these things will vary. But past deeds don’t buy loyalty. When a rival appears with a cheaper way to fix the environment, or the rival finds policy fixes for other problems that people care about more, then the rival can seize power through the ballot box. Autocratic politics is a battle for private rewards. Democratic politics is a battle for good policy ideas. If you reward your cronies at the expense of the broader public, as you would in a dictatorship, then you will be out on your ear so long as you rely on a massive coalition of essential backers.
Winston Churchill is certainly a candidate for Britain’s greatest statesman. He is deservedly famous for his wonderful oratory. Yet patriotic rhetoric alone was not enough to defeat Hitler’s Nazi Germany in World War II. Churchill did not just deliver rhetoric; he delivered policy results too. He convinced President Franklin D. Roosevelt to implement the Lend-Lease program that enabled a virtually bankrupt Britain to keep fighting. He converted the British economy to an efficient wartime footing and found ways to pressure the Axis powers on multiple fronts. He was fondly admired and praised by the vast majority of Britons at the end of the war. Yet Clement Atlee’s Labour Party decisively defeated Churchill’s Conservative Party at elections held in July 1945. Technically speaking, World War II, a war that Winston Churchill, as much as any single individual, might be credited with having won, wasn’t even over yet. And already the people of Britain were ready to toss Winston out.
Churchill famously stated in November 1942, following Britain’s victory at El Alamein, that, “I have not become the King’s First Minister in order to preside over the liquidation of the British Empire.” British voters ensured he did not have to. Churchill offered the policies of continued austerity to make Britain great again. After six hard years of war, rationing, and sacrifice, these policies had little appeal. Atlee chose to promote the National Health Service and the creation of a welfare state over reestablishing international dominance. He won the battle for good ideas. Few would deny Churchill did a magnificent job and he was much loved. But it was Atlee who won.
Coalition Dynamics
That democrats need so many supporters makes them vulnerable. If you can find an issue over which the incumbent’s supporters disagree, then it will soon be your turn to lead. Divide and conquer is a terrific principle for coming to power in a democracy—and one of the greatest practitioners of this strategy was Abraham Lincoln, who propelled himself to the US presidency by splitting the support for the Democratic Party in 1860.
During the Illinois senate race in 1858, Abraham Lincoln forced Stephen Douglas to declare his position on slavery just one year after the Supreme Court’s Dredd Scott decision made clear that Congress did not have the right to ban slavery in federal territories. Douglas was cornered. If he said that slavery could be excluded, he would win the election in Illinois but he would shake the foundations of his party; if he said that it couldn’t, he would lose the election and thereby diminish his chances of being the Democrat’s presidential nominee in 1860. Douglas declared that the people could exclude slavery and won the race, of course, but his response on slavery came at the expense of dividing the Democratic Party two years later in the 1860 presidential election, clearing the way for Lincoln’s coalition to elect him president.
Lincoln, more than any other winner of the presidency, foresaw that he would not be popular among a vast segment of voters in the presidential election. He understood that his best chance, maybe even his only chance for election in 1860, lay in dividing and conquering. Had Douglas answered Lincoln’s question with a pro-slavery response (that is, in support of the Dredd Scott Decision as the law of the land), he almost certainly would have lost the senate race to Lincoln. That might have kept the Democrats united in 1860, but it would have boosted Lincoln’s prospects as the senate incumbent with a popular following. By answering as he did, Douglas guaranteed that his own party would divide over his presidential bid. With competitors Breckinridge and Bell contesting the presidency, Douglas lost his opportunity to win the southern vote, dooming him—and his Democratic rivals—to defeat, even though Lincoln’s vote total was slim. Lincoln beat the divided Democrats with less than 40 percent of the popular vote and almost no votes in the South. Similarly, Bill Clinton, with just 43 percent of the vote beat the incumbent President George H. W. Bush (who won 38 percent of the popular vote) in 1992, in no small measure thanks to the run by H. Ross Perot (who got 19 percent of the vote).11 Lincoln understood that he needed to keep the coalition as small as possible—even in an inherently large coalition system.
Lincoln did not lose sight of this important principal as he sought reelection in 1864. Seeing that his prospects were not great, he maneuvered to expand the set of interchangeables and influentials so that he could forge a
winning coalition out of those who previously had no say at all. How did he do this? He introduced absentee ballots so that soldiers could vote, with an especially important impact in New York. It is widely believed that the vote of soldiers carried the state for Lincoln in his 1864 race against General George B. McClellan. Lincoln was a master at using the rules of politics to his advantage, winning while being unpopular with a large swath of the American people.
In democracies, politics is an arms race of ideas. Just as the democrat has to be responsive to the people when governing, when seeking office it helps to propose policies that the voters like and it pays to want to do more (as opposed to less)—even if the economic consequences are damaging down the road (when you’re no longer in office). Satisfy the coalition in the short run. When democratic politicians lament “mortgaging our children’s future,” they’re really regretting that it was not them who came up with the popular policy that voters actually want. Sure, voters might feel guilty about the latest $1 trillion program, but see if they actually vote to reject it. With parents like that, what children need enemies?
A Last Word on Coming to Power: The Ultimate Fate of Sergeant Doe
Our account of coming to power began with the story of Liberia’s Sergeant Doe. His end provides a useful cautionary tale for those seeking power. Coming to power and staying in power, as the rest of this book makes clear, are very different things.
Sergeant Doe knew where Liberia’s money was. And so long as he knew where it was and used it to keep the army faithful he was able to survive numerous attempts to overthrow him. The trouble is that you only have to lose once, and that question—Where’s the money?—ended up being the last thing that Sergeant Doe ever heard.
With the end of the cold war, the United States no longer needed Doe’s assistance, and in 1989 the US government cut off his future aid. Rivals Charles Taylor and Prince Johnson, backed by the governments of Burkina Faso and Côte d’Ivoire, saw their opportunity and launched an insurgency. Doe sent soldiers to counter them, but rather than act as a professional army ought to, his soldiers proceeded to rape, pillage, and kill, not exactly endearing themselves to the very people whose support might have saved Doe.
Civilians flocked to join the revolt. Showing his characteristic lack of statesmanship or judgment, Doe decided to take a car and personally go off in search of recently arrived Nigerian peacekeepers. Following a gun battle that killed all of Doe’s entourage, Prince Johnson captured the president and videotaped his subsequent interrogation. The interrogators repeated the same questions over and over again before Johnson turned to cutting off Doe’s ear and eating it: “Where is the money? What is the bank account number?” Doe didn’t answer. Maybe, knowing he was going to die regardless, he figured at least by keeping silent his family could enjoy the fruits of his labor, living out their lives in a comfortable exile.
Doe was incompetent at running a country. He drove an already poor nation into even deeper poverty and civil war. But he knew the essence of coming to power. Although dressed up in many forms, successful challengers follow basic principles. They offer greater expected rewards to the essential supporters of the current leader than those essentials currently receive. Unfortunately for the challenger, the incumbent has a significant advantage because the members of the established winning coalition can be confident that their leader will keep on lining their pockets or providing the public policies they want. But if the incumbent is known to be dying, takes too much for himself, chooses the wrong policies, or is seen to have only weak loyalty from his critical backers, then the door swings wide open for a challenger to step in and depose the incumbent.
To achieve power means recognizing the moment of opportunity, moving fast, and moving decisively to seize the day. And, for good measure, coming to power also means seizing any opponents, figuratively in democracies, and physically in dictatorships. Coming to power is not for the faint of heart.
Politics, however, does not end with becoming a leader. Even as you take up the reins of power and enjoy its rewards, others are gunning for you. They want the same job that you so desperately sought! Politics is a risky business. As we will see, successful leaders manage these risks by locking in a loyal coalition. Those who fail at this first task open the door for someone else to overthrow them.
3
Staying in Power
AT LONG LAST, THE ASPIRANT TO HIGH OFFICE HAS triumphed. Whether through inheritance, coup, election, revolt, murder, or mayhem, he has seized power. Now he faces a new challenge: hanging on to it.
As Sergeant Doe’s brutal career has taught us, rising to a high position often requires skills altogether different from those needed to maintain control. And even the rules for surviving in power do not always resemble the skills necessary for ruling well. The novelist Italo Calvino has clearly and succinctly described the tribulations of those who have risen to power: “The throne, once you have been crowned, is where you had best remain seated, without moving, day and night. All your previous life has been only a waiting to become king; now you are king; you have only to reign. And what is reigning if not this long wait? Waiting for the moment when you will be deposed, when you will have to take leave of the throne, the scepter, the crown, and your head.”1
What, then, must a newly minted leader do to keep his (or her) head? A good starting place is to shore up the coalition of supporters. This may seem like a simple enough task. After all, as we’ve seen, the heights of power are unattainable without the backing of a coalition strong enough to beat back rivals. However, a wise leader does not count too much on those who helped her gain power. Remember the fate of many of Fidel Castro’s closest allies. After toppling the previous leader, it’s only a matter of time until they realize that they can do the same again.
A prudent new incumbent will act swiftly to get some of them out of the way and bring in others whose interests more strongly assure their future loyalty. Only after sacking, shuffling, and shrinking their particular set of essentials can a leader’s future tenure be assured.
Nor is this only true of dictators. To see this urge to build a modified coalition at work in the seemingly less ferocious world of business, let’s take a look at Carly Fiorina’s rise and fall as CEO at Hewlett-Packard.
Governance in Pursuit of Heads
CEOs, just like national leaders, are susceptible to removal. Being vulnerable to a coup, they need to modify the corporate coalition (usually the board of directors and senior management), bringing in loyalists and getting rid of potential troublemakers. Usually, they have a large potential pool of people to draw from and prior experience to help guide their choices. But, also like national leaders, they face resistance from some members of their inherited coalition and that may be hard to overcome.
Most publicly traded corporations have millions of interchangeables (their shareholders), a considerably smaller set of influentials (big individual shareholders and institutional shareholders), and a small group of essentials, often not more than ten to fifteen people. In a group of this size, even seemingly minor variations in the number of coalition members can have profound consequences for how a company is run. As we will see, this was particularly true for Hewlett-Packard (HP), because, as in all companies, small shifts in coalition numbers can lead to large percentage changes in the expected mix of corporate rewards.
In the case of HP, the CEO’s winning coalition made up a relatively large fraction of the real selectorate because ownership is heavily concentrated in a few hands. That is, we might count corporate coalition size in terms of the number of its members or in terms of the number of shares owned by them. In HP’s case, the essential bloc and the influential bloc are a tiny part of the total selectorate because the families of the company’s founders, William Hewlett and David Packard, retain significant ownership just as was true of the Ford Motor Company, Hallmark Cards, and quite a few other businesses for many years.
Involvement in a corporation can yield benefits, just like a
ny other form of government. These benefits can take the form of rewards given to everyone or private payments directed just to the essentials. In a corporate setting, private benefits typically come as personal compensation in the form of salary, perks, and stock options. Rewards to everyone—what economists call “public goods”—take the shape of dividends (an equal amount per share) and increased stock value. When the winning coalition is sufficiently large that private rewards are an inefficient mechanism for the CEO to buy the loyalty of essentials, public goods tend to be the benefit of choice. Usually, coalition members are eager to receive private benefits. However, dividends and growth in share value are preferred over private rewards by very large shareholders who happen also to be in the winning coalition—this would make them the biggest recipients of the rewards that go to all shareholders. That was precisely the situation in HP, where the Hewlett and Packard families owned a substantial percentage of the company.
Who makes up the essentials in a corporation? The coalition typically includes no more than a few people in senior management and the members of the board of directors. These directors are drawn from a mix of senior management in the company, large institutional shareholders, handpicked friends and relatives of the CEO (generally described as civic leaders, no doubt), and the CEO herself. In the parlance of economists who study corporations, the makeup of these boards boils down to insiders (employees), grey members (friends, relatives), and outsiders. One part of any corporate board’s duties is to appoint, retain, or remove CEOs. Generally CEOs keep their job for a long time and that certainly was true of HP’s first CEO, founder David Packard. He was replaced in 1992 by an insider, Lewis Platt, who had worked for the firm since the 1960s. Platt retired in 1999 and was replaced by outsider Carly Fiorina. The HP board has repeatedly deposed CEOs since then.
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