The Dictator's Handbook

by Bruce Bueno de Mesquita

  Cautionary Tales: Never Take the Coalition for Granted

  Whistle-blowing is not the only way to get in trouble. Leaders can put themselves at dire risk if they take their coalition’s loyalty for granted. The rules governing rulers teach us that leaders should never underpay their coalition whether they do so to reward themselves or the common people. Those who want to enrich themselves must do so out of discretionary funds, not coalition money. Those who want to make the people’s lives better likewise should only do so with money out of their own pockets and not at the expense of the coalition. Leaders sometimes miscalculate what is needed to keep the coalition happy. When they make this mistake it costs them their leadership role and, very often, their life. The stories of crime boss “Big” Paul Castellano and Roman emperor Julius Caesar are cautionary tales for any who would make the mistake of not giving the coalition its due.

  “Big” Paul Castellano, who inherited control of the Gambino crime family in 1976, made just such a mistake. He shifted the focus of the family business to racketeering and shaking down the construction industry. Indeed it was said that no concrete could be poured on projects worth over $2 million in New York City without the mafia’s permission. That would have been fine for his crime family if the wealth from these new activities flowed to its members, or if he continued to pay sufficient attention to their traditional revenue sources. Instead, he neglected the traditional businesses, like extortion, loan sharking, and prostitution that were the source of income for his coalition of mafiosi. When a moment of opportunity presented itself, triggered by the death of a key supporter, Aniello “Neil” Dellacroce, and the pressures from the ongoing Mafia Commission Trial prosecuted by Rudy Giuliani, Castellano’s erstwhile backers turned on him. John “the Dapper Don” Gotti, Frank DeCicco, Sammy “The Bull” Gravano, and other captains worked together to gun down Castellano outside of Sparks Steak House on Forty-sixth Street in New York.13

  Castellano rewarded himself at the expense of his supporters and it cost him his life. A few thousand years earlier, Julius Caesar’s mistake was to help the people at the expense of his backers and this too cost him his life. Julius Caesar’s death at the hands of some of his closest supporters is often portrayed as the slaying of a despot. But the facts don’t support this interpretation.

  Julius Caesar was a reformer. He undertook important public works, from redoing the calendar and relieving traffic congestion, to stabilizing food availability. He also took steps specifically designed to help the poor. For instance, he provided land grants to former soldiers and got rid of the system of tax farming, replacing it with a more orderly and predictable tax system. Not only that, he relieved the people’s debt burden by about 25 percent.

  Not surprisingly, though these policies were popular with the people, many came at the expense of Rome’s prominent citizens. Tax farming was, of course, lucrative for those lucky few who got to extract money from the people. High indebtedness was also lucrative for those who were owed money. These groups found Caesar’s reforms hitting them straight in their anachronistic pocketbooks and, therefore, not at all to their liking. Popular though many of his reforms might have been with the man on the street, they harmed the welfare of the powerful influentials and essentials, and it was of course these people who cut him down.14

  Caesar made the mistake of trying to help the people by using a portion of the coalition’s share of rewards. It is fine for leaders to enrich the people’s lives, but it has to come out of the leader’s pocket, not the coalition’s. The stories of Caesar and Castellano remind us that too many good deeds or too much greed are equally punished if the coalition loses out as a result.

  As we have seen, there is a fine balance between giving enough private goods to keep the coalition loyal and giving too much or too little. When money is spent elsewhere that “rightfully” belongs to the coalition, there is a serious risk of a coup d’état. When more money is spent on the coalition than is their due, then the incumbent wastes funds that would otherwise have been his.

  Discretionary Money

  What is a leader to do with any money that need not go to the coalition to buy loyalty? There are two answers to this question: sock it away in a secret account or lavish it on the people. Those who are most successful at stealing for their own benefit open the door to joining our Haul of Fame. Those who are more civic-minded spend discretionary money to help the people, but only some of them are good at it. The successful join our Hall of Fame and the unsuccessful, those with bad ideas about civic improvement, become members of our Hall of Shame.

  According to Hank Gonzalez, a politician in Mexico before democratization, “A politician who stays poor is poor at politics.”15 On this basis, Zaire’s Mobutu was a political genius. He allegedly stole billions. His biographer, Michela Wrong, observes that, “No other African autocrat had proved such a wily survivor. No other president had been presented with a country of such potential, yet achieved so little. No other leader had plundered his economy so effectively or lived the high life to such excess.”16 Indeed, the word kleptocrat, meaning rule by theft, was coined to describe Mobutu’s style of governance. But though Mobutu made kleptocracy famous, he didn’t invent it.

  King Solomon is reported to have had 700 wives. One can only wonder for how many of them the choice was theirs or his alone. And then who can forget the economic looting of the Caliphate. A serious estimate of the Caliphate’s income for the years 918–919 is 15.5 million dinars, 10.5 million of which was spent on the Caliphs household.17 To put that in perspective, if President Barack Obama had that proportion of the US economy available for his household’s discretionary use, he and Michelle would personally control a cool $5 trillion, give or take a few hundred billion. There, indeed, is the reason people took such great risks to become the Caliph.

  Small-coalition leaders have tons of money to use as they see fit. Even though they compensate their coalition of essential backers well, with so few who need to be bribed, plenty is left over. Some incumbents may choose to use their discretionary pile of money for civic-minded purposes—we’ll talk about them when we discuss hall of shame and hall of fame leaders—but an awful lot just want to sock the money away for a rainy day. It is to accommodate just such leaders that secret bank accounts exist.

  The prevalence of master thieves among world leaders is striking. Some succeed on a relatively small scale like Alberto Fujimori, Peru’s president from 1990–2000 (including a so-called self-coup in 1992, in which he suspended his own Congress and constitution). He probably didn’t take more than a few hundred million. And with Peru’s return to democracy, Fujimori, who went into self-imposed exile, found himself extradited, returned to Peru, put on trial, and convicted of murder, human rights violations, bribery, and a host of other crimes for which he was imprisoned. He just did what any small-coalition leader does, but he had the misfortune of being removed following popular discontent with his corruption and being replaced by a large-coalition regime.

  Others do considerably better considering the meager means of their society. Serbia’s Slobodan Milosevic, for instance, is believed to have accumulated $1 billion in a country where per capita income fell by 50 percent during his rule. He followed key political principles: his coalition was small; he taxed heavily, allowing him to make a fortune on the backs of the poor Serbs; and he made sure to keep the people downtrodden. Reliable reports indicate that he precipitated food shortages and massive unemployment for Serbs who opposed him, leaving millions in desperate circumstances while enriching 10,000 influential supporters.

  Moving up the ladder of success when it comes to treating the national treasury as one’s personal account, we come to Iraq’s Saddam Hussein. He built billion-dollar palaces for himself while his country’s infants died of easily treated diseases. Other notable national thieves distinguished by their relative take given the impoverishment of their societies are such figures as Uganda’s Idi Amin, Haiti’s Papa Doc Duvalier, and then his son, Baby Doc D
uvalier, and the list goes on. They all typify the rule of successful autocrats—they know how to build, manage, and finance tight coalitions while enriching themselves. But they are all—except for Mobutu—little leaguers when compared to the champion haul of famers.

  When it comes to the crème de la crème of kleptocrats, some of the greats include Indonesia’s Suharto (president from 1967 to 1997), Zaire’s Mobutu (president from 1965 to 1997), the Philippines Ferdinand Marcos (ruled from 1965 to 1986), and perhaps the current incumbent front-runner, Sudan’s Omar al-Bashir. He came to power in 1993 and still is in office as of this writing, despite indictment by the International Criminal Court for human rights violations, war crimes, and genocide.

  Mr. Suharto, referred to by The Economist magazine as the king of kleptocrats, is alleged by Transparency International to have stolen up to $35 billion from his country.18 His late wife, Madame Tien, was often known as “Madame Tien percent.” Of course we cannot know what the true amount captured by his family was but we do know that he depended on a small coalition, he had lots of discretionary power, he survived in office for more than thirty years, and he lived out his life as a free man in Indonesia (he died in 2008). Apparently he was considered too ill to prosecute.

  Like Suharto, Zaire’s Mobutu lasted in power for more than thirty years, ousted only once he was known to be suffering from terminal cancer. Mobutu stole billions and lived the high life, whereas Suharto lived more modestly considering his alleged means. Mobutu owned villas in the Swiss Alps, Portugal, the French Riviera, and numerous residences in Brussels. In addition he had a presidential palace in just about every major town in Zaire, including a palace in his home town of Gbadolite. With a population of about 114,000, one would not have thought the town needed an airport that could handle the supersonic Concorde, but then one of the 114,000 sometimes residents was Mobutu. He apparently rented the Concorde from Air France for his personal use and, needing a proper airfield for it to land and take off, he built one for himself.

  Ferdinand Marcos, like Suharto, seemingly ran a successful economy. The growth rate during many of Marcos’s years was quite good, but then the Philippine population was growing faster than the economy. Whereas Suharto had been successful at controlling population growth, Marcos did not do so well. But he certainly did well through his so-called crony-capitalism system in enriching his coalition and himself. Transparency International estimated that Marcos looted billions from his country. His wife, Imelda, notorious for her enormous shoe collection, was brought up on charges related to the family’s theft of Philippine wealth and the government succeeded in recovering $684 million, a relatively small portion of the total allegedly taken by Marcos and his family. Despite their alleged thievery, the Marcos family, remarkably, is making a political comeback in the Philippines. It seems money really makes the world—of politics—go round!

  Omar al-Bashir, Sudan’s president, stands accused of having taken $9 billion, so far, from his country. This was one of the revelations that came to light when Wikileaks released US diplomatic cables in late 2010. The claim, made by Luis Moreno Ocampo, chief prosecutor for the International Criminal Court, includes the allegation that Bashir’s money is held by Lloyd’s of London. They deny it, and, of course, so does Bashir. Indeed, the Guardian newspaper reports that Khalid al-Mubarak, government spokesperson at the Sudanese embassy in London, said, “To claim that the president can control the treasury and take money to put into his own accounts is ludicrous—it is a laughable claim by the ICC prosecutor.”

  Our way of thinking tells us that it is not only not ludicrous, it is the way small-coalition petty dictators choose to govern, and it works for them. What would be ludicrous from a political survival perspective is if Bashir does not “control the treasury and take money to put into his own accounts.” Bashir has been in office for seventeen years so far, and despite his external legal problems he continues to hold on to power and the country’s not inconsiderable purse.

  Discretion means leaders have choices. So far we have looked at leaders who use their discretion to enrich themselves but we do not mean to suggest that people in power must be greedy louts like Marcos, Mobutu, Suharto, and Bashir. It is entirely possible for autocrats to be civic-minded, well-intentioned people, eager to do what’s best for the people they govern. The trouble with reliance on such well-intentioned people is that they are unconstrained by the accountability of a large coalition. It is hard for a leader to know what the people really want unless they have been chosen through the ballot box, and allow a free media and freely assembled groups to articulate their wishes. Without the accountability of free and fair elections, a free press, free speech, and freedom of assembly, even well-intentioned small-coalition rulers can only do whatever they and their coalition advisers think is best.

  We close by reflecting on exemplars among well-intentioned leaders of what we call the hall of shame and the hall of fame—that is, those who wanted to do well and didn’t, and those who wanted to do well and did. The Soviet Union’s Nikita Khrushchev well illustrates a member of the hall of shame.

  Khrushchev visited the United States in 1959 and announced a new agricultural policy. He asserted that the USSR would overtake the United States in the production of meat, milk, and butter. He neither knew much about agriculture nor was he directly accountable to the people who did and who would be burdened with trying to achieve his goals. There is no reason to believe that Khrushchev hoped to gain personally from his ill-conceived agricultural policies. Indeed, there is no evidence that he socked away public money for his personal use. Rather, he seems genuinely to have wanted to improve the lot of the Soviet people.

  Good intentions notwithstanding, his agricultural program and its implementation were a disaster. Local officials, wishing to please Khrushchev and sensitive to the potential political consequences of failing to meet his expectations, committed to fulfilling his demand for increased production. Their pledges to meet his goals, of course, could not be met with the primitive farming technology available in the Soviet Union. The upshot of Khrushchev’s civic-minded ideas was that farmers had to slaughter even their breeding cattle to meet the meat quotas to which they were committed. They even went as far as to buy meat from state stores, pretending later that they had produced it when they sold it back to the government. This created both a false sense of improved production and subsequent increases in prices as the slaughter of the breeding herds reduced the size of future herds.

  A few short years into his program, food prices skyrocketed, leading to mass movements against the government. Official Soviet reports indicate that 22 people were killed, 87 wounded, 116 demonstrators were convicted, and 7 were executed in response to the people taking to the streets.19 Two years later, with the Soviet economy in shambles, rife with food shortages, and with the nation humiliated in the Cuban Missile Crisis, Khrushchev was overthrown in a peaceful coup. A bit more than twenty years later, Mikhail Gorbachev followed in Khrushchev’s footsteps, introducing economic reforms to mobilize the economy. His programs also failed to have the effect he desired, but in his case they not only led to his ouster but also to the end of the Soviet Union.

  Mao Zedong and Deng Xiaoping in China mirrored Khrushchev and Gorbachev, but with an important difference. All of these leaders seem to have been initially motivated by the sincere desire to improve their economy. All seemed to have recognized that failing to get their economy moving could pose a threat to their hold on power. But unlike Mao, Mikhail, and Nikita, Deng belongs squarely in the hall of fame. Like them, he was not accountable to the people and, like them, he was not hesitant to put down mass movements against his rule. The horrors of Tiananmen Square should not be forgotten. But unlike his fellow dictators, he actually had good ideas about how to improve economic performance.

  Deng and Singapore’s Lee Kwan Yew are surely among the contemporary world’s two greatest icons of the authoritarian’s hall of fame. They did not sock fortunes away in secret bank account
s (to the best of our knowledge). They did not live the lavish lifestyles of Mobutu Sese Seko or Saddam Hussein. They used their discretionary power over revenue to institute successful, market-oriented economic reforms that made Singaporeans among the world’s wealthiest people and lifted millions of Chinese out of abject poverty. Nothing about their actions contradicts the rules of successful, long-lasting governance. They were brutal when that served their interest in staying in power, Deng with murderous violence and Lee Kwan Yew through the power of the courts to drive his opponents into bankruptcy. Lee’s approach was vastly more civilized than Deng’s, but nevertheless it was the arbitrary and tough use of power dictated by the logic of political survival. And that, in the end, is what politics is all about.

  Most people think that reducing corruption is a desirable goal. One common approach is to pass additional legislation and increase sentences for corruption. Unfortunately such approaches are counterproductive. When a system is structured around corruption, everyone who matters, leaders and backers alike, are tarred by that corruption. They would not be where they were if they had not had their hand in the till at some point. Increasing sentences simply provides leaders with an additional tool with which to enforce discipline. It is all too common for reformers and whistle-blowers to be prosecuted for one reason or another. It is rumored that Yasser Arafat kept a record of all the corrupt activities of the cabinet members in his government in the Palestinian Authority. Increasing the punishment for corruption only increases the leverage people like Arafat and others have over their cronies. Arafat effectively induced loyalty to him both by allowing and monitoring crony-corruption within his inner circle. And, while claiming that the Palestinian Authority was bankrupt, he allegedly personally socked away a vast fortune, between $4.2 billion and $6.5 billion, according to Al-Jazeera.