The Economics of Autocracy and Majority Rule.pdf

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1、38TheStateandDevelopment3TheEconomicsofAutocracyandMajorityRule:TheInvisibleHandandtheUseofForce*MartinC.McGuireUNIVERSITYOFCALIFORNIA-IRVINEandMancurOlson,JrIRISCENTERANDUNIVERSITYOFMARYLAND1INTRODUCTIONConsidertheinterestsoftheleaderofagroupofrovingbanditsinananarchicenvironment.Insuchanenviro

2、nment,thereislittleincentivetoinvestorproduce,andthereforenotmuchtosteal.Ifthebanditleadercanseizeandholdagiventerritory,itwillpayhimtolimittherateofhistheftinthatdomainandtoprovideapeacefulorderandotherpublicgoods.Bymakingitclearthathewilltakeonlyagivenpercentageofoutput–thatis,bybecomingasettl

3、edrulerwithagivenrateoftaxtheft–heleaveshisvictimswithanincentivetoproduce.Byprovidingapeacefulorderandotherpublicgoods,hemakeshissubjectsmoreproductive.Outoftheincreaseinoutputthatresultsfromlimitinghisrateoftheftandfromprovidingpublicgoods,thebanditobtainsmoreresourcesforhisownpurposesthanfrom

4、rovingban-ditry.Thisrationalmonopolizationoftheftalsoleavesthebandit’ssub-jectsbetteroff:theyobtaintheincreaseinincomenottakenintaxes.Thebanditleader’sincentivetoforgoconfiscatorytaxationandtoprovidepublicgoodsisbecauseofhis‘encompassinginterest’intheconquereddomain.Asthemonopolytax-collector,heb

5、earsasubstantialpartofthesociallossthatoccursbecauseoftheincentive-distortingeffectsofhistaxation,andweproveinthispaperthatthislimitstherateofhis38McGuire&Olson:EconomicsofAutocracy&MajorityRule39taxtheft.Thiscontroloftaxreceiptsalsogiveshimasignificantshareofanyincreaseinthesociety’sproductionan

6、d,asweshallheredem-onstrate,thisgiveshimanincentivetoprovidepublicgoods.Inshort,an‘invisiblehand’givesarovingbanditanincentivetomakehimselfapublic-good-providingking.Thesameinvisiblehandalsoinfluencesdemocraticsocieties.Sup-posethemajorityincontrolofademocracyactswithself-interestandthatnoconstit

7、utionalconstraintskeepitfromtakingincomefromtheminorityforitself.Ifthosewhomakeupthismajorityearnsomemarketincome,themajoritywillbestserveitsinterestsbylimitingredistribu-tionfromtheminoritytoitselfandbyprovidingpublicgoodsf