Table of Contents Title Page Dedication Epigraph Introduction Chapter 1 - The Rules of Politics Three Political Dimensions Virtues of 3 - D Politics Change the Size of Dimensions and Change the World Rules Ruling Rulers Taxing Shuffling the Essential Deck Do the Rules Work in Democracies? Chapter 2 - Coming to Power Paths to Power with Few Essentials Speed Is Essential Pay to Play Mortality: The Best Opportunity for Power Inheritance and the Problem of Relatives Papal Bull - ying for Power Seizing Power from the Bankrupt Silence Is Golden Institutional Change Coming to Power in Democracy Democratic Inheritance Democracy Is an Arms Race for Good Ideas Coalition Dynamics A Last Word on Coming to Power: The Ultimate Fate of Sergeant Doe Chapter 3 - Staying in Power Governance in Pursuit of Heads The Perils of Meritocracy Keep Essentials Off-Balance Keep Essentials Off-Balance Democrats Aren’t Angels Bloc Voting Leader Survival Chapter 4 - Steal from the Poor, Give to the Rich Taxation Tax Collectors Privatized Tax Collection Extraction Borrowing Debt Forgiveness Chapter 5 - Getting and Spending Effective Policy Need Not Be Civic Minded Bailouts and Coalition Size Is Democracy a Luxury? Public Goods Not for the Public’s Good Who Doesn’t Love a Cute Baby? Clean Drinking Water Building Infrastructure Public Goods for the Public Good Earthquakes and Governance Chapter 6 - If Corruption Empowers, Then Absolute Corruption Empowers Absolutely Power and Corruption Private Goods in Democracies Private Goods in Small Coalition Settings Wall Street: Small Coalitions at Work Dealing with Good Deed Doers Cautionary Tales: Never Take the Coalition for Granted Discretionary Money Chapter 7 - Foreign Aid The Political Logic of Aid The Impact of Aid An Assessment of Foreign Aid Aid Shakedowns Fixing Aid Policy Nation Building Chapter 8 - The People in Revolt To Protest or Not To Protest Nipping Mass Movements in the Bud Protest in Democracy and Autocracy Shocks Raise Revolts Are Disasters Always Disasters for Government Survival? Responding to Revolution or Its Threat Power to the People Chapter 9 - War, Peace, and World Order War Fighting To Try Hard or Not Fighting for Survival Who Survives War The Peace Between Democracies Defending the Peace and Nation Building Chapter 10 - What Is To Be Done? Rules to Fix By Lessons from Green Bay Fixing Democracies Removing Misery Free and Fair Elections: False Hope Acknowledgments Notes Index Copyright Page To our dictators, who have treated us so well— Arlene and Fiona What is important here is cash. [A] leader needs money, gold and diamonds to run his hundred castles, feed his thousand women, buy cars for the millions of boot-lickers under his heels, reinforce the loyal military forces and still have enough change left to deposit into his numbered Swiss accounts. —MOBUTU SESE SEKO OF ZAIRE, PROBABLY APOCRYPHAL Men at some time are masters of their fates. The fault, dear Brutus, is not in our stars, but in ourselves, that we are underlings. —WILLIAM SHAKESPEARE, Julius Caesar(I, II, 140-141) Introduction Rules to Rule By What remarkable puzzles politics provides. Every day’s headlines shock and surprise us. Daily we hear of frauds, chicanery, and double-dealing by corporate executives, new lies, thefts, cruelties and even murders perpetrated by government leaders. We cannot help but wonder what flaws of culture, religion, upbringing, or historical circumstance explain the rise of these malevolent despots, greedy Wall Street bankers, and unctuous oil barons. Is it true, as Shakespeare’s Cassius said, that the fault lies not in the stars but in ourselves? Or, more as Shakespeare’s Cassius said, that the fault lies not in the stars but in ourselves? Or, more particularly, in those who lead us? Most of us are content to believe that. And yet the truth is far different. Too often we accept the accounts of historians, journalists, pundits, and poets without probing beneath the surface to discover deeper truths that point neither to the stars nor to ourselves. The world of politics is dictated by rules. Short is the term of any ruler foolish enough to govern without submitting to these rules to rule by. Journalists, authors, and academics have endeavored to explain politics through storytelling. They’ll explore why this or that leader seized power, or how the population of a far-flung country came to revolt against their government, or why a specific policy enacted last year has reversed the fortunes of millions of lives. And in the explanations of these cases, a journalist or historian can usually tell us what happened, and to whom, and maybe even why. But beneath the particulars of the many political stories and histories we read are a few questions that seem to emerge time after time, some profound, some seemingly minor, but all nagging and enduring in the back of our minds: How do tyrants hold on to power for so long? For that matter, why is the tenure of successful democratic leaders so brief? How can countries with such misguided and corrupt economic policies survive for so long? Why are countries that are prone to natural disasters so often unprepared when they happen? And how can lands rich with natural resources at the same time support populations stricken with poverty? Equally, we may well wonder: Why are Wall Street executives so politically tone-deaf that they dole out billions in bonuses while plunging the global economy into recession? Why is the leadership of a corporation, on whose shoulders so much responsibility rests, decided by so few people? Why are failed CEOs retained and paid handsomely even as their company’s shareholders lose their shirts? In one form or another, these questions of political behavior pop up again and again. Each explanation, each story, treats the errant leader and his or her faulty decision making as a one-off, one-of-a-kind situation. But there is nothing unique about political behavior. These stories of the horrible things politicians or business executives do are appealing in their own perverse way because they free us to believe we would behave differently if given the opportunity. They liberate us to cast blame on the flawed person who somehow, inexplicably, had the authority to make monumental—and monumentally bad—decisions. We are confident that we would never act like Libya’s Muammar Qaddafi who bombed his own people to keep himself in power. We look at the huge losses suffered under Kenneth Lay’s leadership by Enron’s employees, retirees, and shareholders and think we aren’t like Kenneth Lay. We look at each case and conclude they are different, uncharacteristic anomalies. Yet they are held together by the logic of politics, the rules ruling rulers. The pundits of politics and the nabobs of news have left us ignorant of these rules. They are content to blame the doers of evil without inquiring why the worlds of politics and business seem to succor miscreants or to turn good people into scoundrels. That’s why we are still asking the same old questions. We’re still surprised by the prevalence of drought- induced food shortages in Africa, 3,500 years after the pharaohs worked out how to store grain. We’re still shocked by the devastation of earthquakes and tsunamis in places like Haiti, Iran, Myanmar, and Sri Lanka, and by the seemingly lesser intensity of such natural disasters in North America and Europe. We’re still troubled by the friendly handshakes and winks exchanged between democratic leaders and the tyrants that they somehow justify empowering. In this book, we’re going to provide a way to make sense of the miserable behavior that characterizes many—maybe most—leaders, whether in government or business. Our aim is to explain both good and bad conduct without resorting to ad hominem claims. At its heart, this will entail untangling the reasoning and reasons behind how we are governed and how we this will entail untangling the reasoning and reasons behind how we are governed and how we organize. The picture we paint will not be pretty. It will not strengthen hope for humankind’s benevolence and altruism. But we believe it will be the truth and it will point the way to a brighter future. After all, even if politics is nothing more than a game that leaders play, if only we learn the rules, it becomes a game we can win. To improve the world, however, all of us must first suspend faith in conventional wisdom. Let logic and evidence be the guide and our eyes will be opened to the reasons why politics works the way it does. Knowing how and why things are as they are is a first, crucial step toward learning how to make them better. Bell’s Bottomless Blues In politics, as in life, we all have desires and contend with obstacles that keep us from getting what we want. A government’s rules and laws, for example, limit what we can do. Those in power differ from the rest of us: they can design rules to their advantage and make it easier for them to get what they want. Understanding what people want and how they get it can go a long way to clarifying why those in power often do bad things. In fact, bad behavior is more often than not good politics. This dictum holds up whether one governs a tiny town, a mom-and-pop business, a megacorporation, or a global empire. Let’s start with a tale of a small town’s team of seemingly greedy, grasping, avaricious louts so that we can appreciate how the world looks from a leader’s perspective. And yet it’s vital that we remember that this is a story about politics, not personality. Whether we’re discussing a cabal of corrupt reprobates or not, what really matters is that these are people who value power and recognize how to get it and keep it. Soon enough we will come to appreciate that this small tale of miserable conduct recurs at every level of politics and corporate governance, and that there is nothing out of the ordinary in the extraordinary story of Bell, California. Robert Rizzo is a former city manager of the small town of Bell (population about 36,600). Bell, a suburb of Los Angeles, is a poor, mostly Hispanic and Latino town. Per capita income may be as low as $10,000 or as high as $25,000—estimates vary—but either way it is way below both the California and national average. More than a quarter of the town’s hard-working people live below the poverty line. Life is not easy in Bell. Still, it is a community that takes pride in its accomplishments, its families, and its prospects. Despite its many challenges, Bell consistently outperforms other California communities in keeping violent crime and property crime below average. A cursory glance at Bell’s official website suggests a thriving, happy community brimming over with summer classes, library events, water play, and fun-filled family trips. And Bell seems to be a concerned community too. The town offers, for instance, Housing and Urban Development (HUD) grants to pay for repairs to single-family homes provided certain basic residency and income requirements are met.1 Robert Rizzo, in his job for seventeen years, must surely look back on his time as city manager with pride. In 2010, Bell’s then-mayor, Oscar Hernandez (later jailed on corruption charges), said the town had been on the verge of bankruptcy in 1993 when Rizzo (also ultimately charged with corruption) was hired. For fifteen consecutive years of Rizzo’s leadership, up until he stepped down in 2010, the city’s budget had been balanced. Hernandez credits Rizzo with making the town solvent and helping to keep it that way.2 That, of course, is no mean feat. Surely he and the town leaders with whom he worked were deserving of praise and tangible rewards for their good service to the people of Bell. deserving of praise and tangible rewards for their good service to the people of Bell. Behind the idyllic façade, however, lies a story that embodies how politics really works. You see, Robert Rizzo, hired at $72,000 a year in 1993, and in his job for seventeen years before being forced to step down in the summer of 2010, at the end of his tenure was earning a staggering $787,000 per year. Let’s put that in perspective. If his salary had just kept up with inflation, he would have made $108,000 in 2010. He made seven times more! During long years of low inflation, his salary went up at an annual, compounded rate of more than 15 percent, almost exactly the return promised by Bernie Madoff, the master Ponzi schemer, to his hapless investors. How does Rizzo’s city manager’s pay compare to other responsible government jobs? The president of the United States is paid $400,000.3 The governor of California’s salary is just over $200,000. The mayor of Los Angeles, just a hop, skip, and a jump from Bell, is paid only a bit over $200,000. To be sure, Robert Rizzo was not even close to the highest paid public employee in California. That distinction, as in most states, went to the coach of a university football team—UC Berkeley’s coach earned about $1,850,000 in 2010, but then he probably brought in a lot more revenue than Mr. Rizzo.4 Robert Rizzo was indeed credited with doing a good job for Bell, but was it really that good? It seems that he was the highest paid city manager in the entire United States (or at least until we discover another Bell). The natural thought is that somehow Robert Rizzo must have been stealing money, dipping into the proverbial cookie jar, taking funds that were not rightfully and legally his or, at least, doing something or other that was immoral and illegal. The California attorney general (and Democratic candidate for governor) at the time of the Bell scandal in the summer of 2010, Jerry Brown, promised an investigation to find out if any laws had been violated. The implicit message in his action was clear enough: No one would pay a small town city manager nearly $800,000 a year. The truth, however, is quite a bit more complicated. The actual story is one of clever (and reprehensible) political maneuvering implicitly sanctioned by Bell’s voters and the city council members who represent them, supplemented only by a touch of larceny. Cities comparable to Bell pay their council members an average of $4,800 a year. But four of Bell’s five council members received close to $100,000 a year through the simple mechanism of being paid not only their (minimal) base council salaries but also nearly $8,000 per month to sit on city agency boards. Only poor councilman Lorenzo Velez failed to reap such rewards. Velez apparently received only $8,076 a year as a council member, approximately equal to what his fellow council members were getting each month. How can we possibly explain these disparities, let alone the outrageous salaries and pensions provided not only to Mr. Rizzo, but also to the assistant city manager and Bell’s chief of police (all subsequently jailed on corruption charges)? The answers lie in a clever manipulation of election timing. The city’s leaders ensured that they depended on very few voters to hold power and to set their compensation. To see how a poor community could so handsomely reward its town leaders we must start with the 2005 special election to convert Bell from a “general city” to a “charter city.” What, you may well ask between yawns, is the difference between a general city and a charter city? The answer is day and night: decisions are made in the open daylight in general cities and often in secret, behind closed doors in charter cities. While a general city’s governing system is dictated by state or federal law, a charter city’s governance is defined by—well, as you would expect— its own charter. The California legislature decided in 2005 to limit salaries for city council members in general cities. No sooner did the state legislature move to impose limits than creative politicians in Bell—some allege Robert Rizzo led the way—found a way to insulate politicians in Bell—some allege Robert Rizzo led the way—found a way to insulate themselves from the “whims” of those sent to California’s state capitol, Sacramento. A special election was called, supported by all five council members, to turn Bell into a charter city. The selling point of the change to charter city was to give Bell greater autonomy from decisions by distant state officials. Local authorities know best what is right for their community, more so than distant politicians who are not in touch with local circumstances. Or, at least, so the leaders of Bell, California, argued. Special elections on technical questions—to be a charter city or to remain a general city— are less than captivating to the general voter. Of course, if the decision had been made in the context of a major national or even statewide election, the proposition would likely have been scrutinized by many prospective voters, but as it happens—surely by political design— the special election, associated with no other ballot decisions, attracted fewer than 400 voters (336 in favor, 54 opposed) in a town of 36,000 people. And so the charter passed, placing within the control of a handful of people the right to allocate city revenues and form the city budget, and to do so behind closed doors. As best as one can tell, the charter changed nothing else of consequence concerning Bell’s governance. It just provided a means to give vast discretion over taxing and spending decisions to a tiny group of people who were, as it happens, making choices about their own compensation. Lest one think the council members were stupid as well as venal, it is worth noting how clever they were in disguising what they had done. Should anyone care to ask a city council member’s part-time salary, any councilman or councilwoman could say openly and honestly that they were each paid just a few hundred dollars a month, a pittance for their services. As we have already seen, the bulk of their pay—the part denied to Lorenzo Velez—was for participation on city agency boards. That, as it turns out, may ultimately have been their Achilles’ heel. As of this writing all of the principal players in Bell’s scandal have been jailed, but not for their lavish salaries. As reprehensible as these may have been, it seems they were perfectly legal. No, they were jailed for receiving payments for meetings that allegedly never took place. It seems they collected a lot of money while overlooking their obligation to actually attend committee meetings. This is to say that the well-paid managers of Bell may end up falling victim to what one might describe as a legal technicality. Outrageous salaries were okay, but getting paid for attending meetings while being absent from them was not. We cannot help but wonder how many government officials are held to that standard. How many senators and representatives, for instance, draw their full salaries while skipping meetings of the Senate or House so that they can raise campaign funds, give speeches, or go on boondoggles? You may well wonder how a little town like Bell could balance its budget—one of Mr. Rizzo’s significant accomplishments—while paying such high salaries. (Indeed, we anticipate a high probability that once Bell’s governance is cleaned up, its spending will involve indebtedness rather than a balanced budget.) Remember, the town’s leaders got to choose not only how to spend money but also how much tax to levy. And did they ever tax their constituents. Here’s what the Los Angeles Times reported about property taxes in Bell: Bell’s rate is 1.55%—nearly half again as much as those in such affluent enclaves as Beverly Hills and Palos Verdes Estates and Manhattan Beach, and significantly higher than just about everywhere else in Los Angeles County, according to records provided by the county Auditor-Controller’s Office at the Times request. That means that the owner of a home in Bell with an assessed value of $400,000 would pay about $6,200 in annual property taxes. The owner of the same home in Malibu, whose rate is 1.10%, would pay just $4,400.5 In plain and simple terms, Bell’s property tax was about 50 percent higher than nearby In plain and simple terms, Bell’s property tax was about 50 percent higher than nearby communities. With such high taxes, the city manager and council certainly could pay big salaries and balance the budget, all the while enriching themselves and their key cronies. Now that we have Bell’s story let’s look at the subtext. In the city, council members are elected, although their election was not contested for many years before 2007. That means that council members are beholden to the voters, or at least the voters whose support was needed to win office. Before 2007 that was hardly anyone since elections were not contested. Since 2007, as it turns out, even with contested elections, it still took very few votes to win a council seat. For instance, Bell had about 9,400 registered voters in 2009, of which only 2,285—that is, 24.3 percent—turned out to vote. Each voter could cast a ballot for two candidates for city council out of the six candidates seeking that office. The two winners, Luis Artiga and Teresa Jacobo, received 1,201 and 1,332 votes respectively, out of 2,285 votes that were cast, but they didn’t need that many votes to win. Speaking generously, election was achieved with supportive votes from only about 13 percent of the registered electorate. We say “speaking generously” because to get elected to the city council in 2009 all that was necessary was to have one more vote than the third largest vote- getter among the candidates. Remember, two were to be elected. The number three candidate had just 472 votes. So, 473 votes—about 5 percent of the registered voters, just over 1 percent of the city population, and only about one fifth of those who actually turned out to vote—is all that was needed to win election. Whatever the reason for the vote being divided among so many candidates, it is evident that election could be achieved with support from only a tiny percentage of Bell’s adult population. This goes a long way to explaining the city government’s taxing and spending policies. One thing we can be sure of: those on the city council could not have been eager for competing candidates (or even fellow council member Velez) to get wind of the truth about their compensation package. City manager Rizzo had to maintain the council’s confidence to keep his job and they needed his support to keep theirs. He could have exposed how deeply they were dipping into the public’s hard-earned money, which would have sent them packing (as it now has). It is in this need for mutual loyalty that we see the seeds of Bell’s practices and of politics in general. Rizzo served at the pleasure of the mayor and city council. They, in turn, served at the pleasure of a tiny group of Bell’s citizens, the essential supporters among Bell’s considerably larger prospective electorate. Without the council’s support, Rizzo would be, as he now is, out on his ear—albeit with a fabulous pension estimated at $650,000 per year. How best to keep their loyalty? That was easy: promote the means to transfer great private rewards in the form of lavish compensation packages to council members.6 Of course, if all were being done in the open, or if Bell remained a general city subject to control over compensation from Sacramento, Rizzo could not have provided the means to ensure that he would scratch the city council members’ backs and they his. When a leader’s hold on power—his or her political survival—depends on a small coalition of backers (remember the small percentage of voters needed to actually win a seat on the city council), then providing private rewards is the path to long tenure in office: Mr. Rizzo kept his job for seventeen years. Furthermore, when that small coalition is drawn from a relatively large pool —just five council members, elected under a city charter ratified by only 354 voters out of a registered voter population (in 2009) of 9,395—then not only are private rewards to the small coalition an efficient way to govern, but so much budgetary and taxing discretion is created that the folks at the top have ample opportunity for handsome compensation, an opportunity that the city’s top leadership did not fail to exploit. Bell presents a number of lessons to teach us about the rules to rule by. First, politics is about getting and keeping political power. It is not about the general welfare of “We, the people.” Second, political survival is best assured by depending on few people to attain and retain office. That means dictators, dependent on a few cronies, are in a far better position to retain office. That means dictators, dependent on a few cronies, are in a far better position to stay in office for decades, often dying in their sleep, than are democrats. Third, when the small group of cronies knows that there is a large pool of people waiting on the sidelines, hoping to replace them in the queue for gorging at the public trough, then the top leadership has great discretion over how revenue is spent and how much to tax. All that tax revenue and discretion opens the door to kleptocracy from many leaders, and public-spirited programs from a very few. And it means enhanced tenure in power. Fourth, dependence on a small coalition liberates leaders to tax at high rates, just as was true in Bell. Taxing at high rates has a propensity to foment the threat of popular uprisings, just as happened in Bell. Of course, in Bell it was easy for the people to rise up and end Rizzo’s rule because they have essential freedoms: the rights to free speech and assembly. We shall see that how the structure of government and the economy works explains variation in how many of these rights people have. This in turn accounts for whether the people take to the streets and whether they can succeed in orchestrating change, as we recently saw in some parts of the Middle East, or remain oppressed, as we saw in others. We will see that Bell’s story offers a nearly perfect script for how to govern when the hold on office depends on very few people, especially when they are selected from among many. The politicians of Bell intuitively understood the rules of politics. Leaders who follow these rules faithfully truly can stay on top without ever having to do “the right thing” for their subjects. The people governing Bell clung to power for a very long time before probes from outside uncovered their means of holding on to office. As we will see, what works for those at the top usually works against those at the bottom, hence our shock and surprise at headlines of the misdoings of so many in high positions. The way places like Bell are governed (and that is the way most places and most businesses are governed) assure the Bell Bottom Blues. One important lesson we will learn is that where politics are concerned, ideology, nationality, and culture don’t matter all that much. The sooner we learn not to think or utter sentences such as “the United States should do . . . ”or “the American people want . . . ” or “China’s government ought to do . . . ,” the better we will understand government, business, and all other forms of organization. When addressing politics, we must accustom ourselves to think and speak about the actions and interests of specific, named leaders rather than thinking and talking about fuzzy ideas like the national interest, the common good, and the general welfare. Once we think about what helps leaders come to and stay in power, we will also begin to see how to fix politics. Politics, like all of life, is about individuals, each motivated to do what is good for them, not what is good for others. And that surely is the story of Robert Rizzo of Bell, California. Great Thinker Confusion As Robert Rizzo’s story highlights, politics is not terribly complicated. But by the same measure, history’s most revered political philosophers haven’t explained it very well. The fact is, people like Niccolò Machiavelli, Thomas Hobbes, James Madison, and Charles-Louis de Secondat (that is, Montesquieu), not to forget Plato and Aristotle, thought about government mostly in the narrow context of their times. Hobbes sought the best form of government. His search, however, was blinded by his experience of the English civil war, the rise of Cromwell, and his fear of rule by the masses. Fearing the masses, Hobbes saw monarchy as the natural path to order and good governance. Believing in the necessary benevolence of an absolute leader, the Leviathan, he also concluded that, “no king can be rich, nor glorious, nor secure, whose subjects are either also concluded that, “no king can be rich, nor glorious, nor secure, whose subjects are either poor, or contemptible, or too weak through want, or dissension, to maintain a war against their enemies.”7 Taking a bit of liberty with Hobbes’s more nuanced philosophy, we must wonder how Robert Rizzo, by Hobbesian lights, could grow so rich when his subjects, the citizens of Bell, were so demonstrably poor. Machiavelli, an unemployed politician/civil servant who hoped to become a hired hand of the Medici family—that is, perhaps the Robert Rizzo of his day—wrote The Prince to demonstrate his value as an adviser. It seems the Medicis were not overly impressed—he didn’t land the job. He had, we believe, a better grasp than Hobbes on how politics can create self-aggrandizing practices such as were experienced in Bell half a millennium later. Writing in The Discourses, Machiavelli observes that anyone seeking to establish a government of liberty and equality will fail, “unless he withdraws from that general equality a number of the boldest and most ambitious spirits, and makes gentlemen of them, not merely in name but in fact, by giving them castles and possessions, as well as money and subjects; so that surrounded by these he may be able to maintain his power, and that by his support they may satisfy their ambition. . . .”8 Robert Rizzo might have done well to study Machiavelli as the best source of his defense against public opprobrium. He maintained his power for long years by satisfying the ambition for wealth and position of those loyal to him on Bell’s city council, and they really were the only people whose support he had to have. James Madison, a revolutionary trying to bring his brand of politics into power, was, like Hobbes, looking revolution in the face. Unlike Hobbes, however, Madison actually liked what he saw. In Federalist 10, Madison contemplated the problem that was to bedevil the citizens of Bell a quarter of a millennium later, “whether small or extensive Republics are most favorable to the election of proper guardians of the public weal: and it is clearly decided in favor of the latter.”9 His conclusion, not easily reached as he was fearful about tyranny of the majority, is close to what we argue is correct although, as always, the devil is in the details and Madison, we believe, fell a bit short on the details of good governance. In describing a republic as large or small, he failed to distinguish between how many had a say in choosing leaders and how many were essential to keeping a leader in place. The two, as we will see, can be radically different. Madison’s view was at odds with that of Montesquieu, who maintained that, “In a large republic the public good is sacrificed to a thousand views; it is subordinate to exceptions; and depends on accidents. In a small one, the interest of the public is easier perceived, better understood, and more within the reach of every citizen; abuses have a lesser extent, and of course are less protected.”10 Not so in Bell—and in Bell we trust. For Montesquieu, the Enlightenment, the new Cartesian thinking, and the emerging constitutional monarchy of Britain all combined to stimulate his insightful ideas of political checks and balances. Through these checks and balances he hoped to prevent exactly the corruption of public welfare that the charter city election in Bell foisted on its citizens. Of course, the option of forming a charter city was motivated, in theory, exactly by a quest for checks and balances on the authority of California’s state legislature. But the electoral public in the charter city special election was a meager 390 souls, and even in Bell’s contested elections before the scandal, fewer than a quarter of registered voters, themselves only a quarter of the city’s population, bothered to vote. That’s not enough to prevent the very corruption Montesquieu hoped to avoid. Now there is no doubt that Montesquieu, Madison, Hobbes, and Machiavelli were very clever and insightful thinkers (and surely brighter than us). However, they got an awful lot of politics wrong simply because they were coping with momentary circumstances. They were looking at but a small sample of data, the goings-on surrounding them, and bits and pieces of looking at but a small sample of data, the goings-on surrounding them, and bits and pieces of ancient history. They also lacked modern tools of analysis (which we, luckily, have at our disposal). Consequently, they leapt to partially right, but often deeply wrong, conclusions. In all fairness to these past luminaries, their shortcomings often have to do with the fact that, besides being bound by their then-present contexts, these thinkers were also caught up in “the big questions”—what the highest nature of man ought to be, or what the “right” state of government really is, or what “justice” truly means in political terms. This shortsightedness extends not only to history’s legends in political thought, but also to contemporary thinkers like Jürgen Habermas, Michel Foucault, and John Rawls—thinkers who someday may be viewed in the same light. The big questions of how the world ought to be are indeed important. But they are not our focus. Questions of philosophical values and metaphorical abstractions—these simply don’t apply to the view of politics that we’ll present in the pages ahead. We do not start with a desire to say what we think ought to be. It is hard to imagine that anyone, including ourselves, cares much about what we think ought to be. Neither do we exhort others to be better than they are. Not that we do not hope to find ways to improve the world according to our lights. But then, we believe that the world can only be improved if first we understand how it works and why. Working out what makes people do what they do in the realm of politics is fundamental to working out how to make it in their interest to do better things. The modern vernacular of politics and international relations, from balances of power and hegemony to partisanship and national interest, is the stuff of high school civics and nightly news punditry. It has little to do with real politics. And so, you may be delighted—or disappointed—to hear that this particular book of politics is not concerned with any of this. Our account of politics is primarily about what is, and why what is, is. In this book, we hope to explain the most fundamental and puzzling questions about politics, and in the process give all of us a better way to think about why the worlds of rulers and subjects, of authorities and rights, of war and peace, and, in no small way, of life and death all work in the ways that they do. And maybe, just maybe, from time to time we will see paths to betterment. The origins of the ideas developed here came years ago during heated lunchtime discussions between one of the authors of this book—Bruce Bueno de Mesquita—and a coauthor of many earlier works, Randolph M. Siverson (now Professor Emeritus at the University of California, Davis). While munching on burritos, Randy Siverson and Bueno de Mesquita discussed a rather basic question: What are the consequences for leaders and their regimes when a war is lost? Oddly, that question had not been much addressed in the copious research on international affairs, and yet surely any leader would want to know before getting involved in a risky business like war what was going to happen to him after it was over. This question hadn’t been asked because the standard ideas about war and peace were rooted in notions about states, the international system, and balances of power and polarity, and not in leader interests. From the conventional view of international relations, the question just didn’t make sense. Even the term “international relations” presumes that the subject is about nations rather than being about what Barack Obama or Raul Castro or any other named leader wants. We so easily speak of United States grand strategy or China’s human rights policy or Russian ambitions to restore Russia to great power status, and yet, from our point of view, such statements make little sense. States don’t have interests. People do. Amidst all the debate about national interest, what States don’t have interests. People do. Amidst all the debate about national interest, what did President Obama fret about in formulating his Afghan policy? If he did not announce a timetable for withdrawal from Afghanistan he would lose support from his Democratic—not his national, but his Democratic—electoral base. President Kennedy similarly fretted that if he took no action in what became the Cuban missile crisis, he would be impeached and the Democrats would pay a heavy price in the 1962 midterm election.11 National interest might have been on each of their minds, but their personal political welfare was front and center. The prime mover of interests in any state (or corporation for that matter) is the person at the top—the leader. So we started from this single point: the self-interested calculations and actions of rulers are the driving force of all politics. The calculations and actions that a leader makes and takes constitute how she governs. And what, for a leader, is the “best” way to govern? The answer to how best to govern: however is necessary first to come to power, then to stay in power, and to control as much national (or corporate) revenue as possible all along the way. Why do leaders do what they do? To come to power, to stay in power and, to the extent that they can, to keep control over money. Building on their lunchtime question about leaders and war, Randy and Bruce wrote a couple of academic journal articles in which they looked at international relations as just ordinary politics in which leaders, above all else, want to survive in power. These articles caught on quickly. Researchers saw that this was a different way to think about their subject, one tied to real people making real decisions—in their own interest—rather than metaphors like states, nations, and systems. (It seems obvious now, but among the dominant realist school of international relations this is still heresy.) But Siverson and Bueno de Mesquita also saw that the theory could be stretched across a bigger canvas. Every type of politics could be addressed from the point of view of leaders trying to survive. The idea that the canvas was that big was scary. It meant trying to recast everything (or nearly everything) we knew or thought we knew about politics in a single theoretical whole. It was a humbling moment, and Bueno de Mesquita and Siverson felt in need of help. Enter James D. Morrow—now a professor at the University of Michigan but back then a Senior Research Fellow at Stanford’s Hoover Institution, where Bueno de Mesquita was also based —and Alastair Smith. And so a foursome was born (sometimes affectionately known as BdM2S2). Together we wrote a thick, dense, technical tome called The Logic of Political Survival, as well as a long list of journal articles, that remain the foundation for this translation of our ideas into an account that we hope anyone can follow, argue with, and maybe even come to accept.12 Today the theory behind this body of research has inspired many spin-off studies by us and by other researchers, theoretical expansions and elaborations by us and by others, and some lively debate—and no shortage of controversy as well. Using this foundation, we look at politics, the choices of public policies, and even decisions about war and peace as lying outside of conventional thinking about culture and history. It also means that we put ideas of civic virtue and psychopathology aside as central to understanding what leaders do and why they do it. Instead, we look at politicians as self- interested louts, just the sort of people you wouldn’t want to have over for dinner, but without whom you might not have dinner at all. The structure of the book is simple. After outlining the essentials of ruling in Chapter 1, each subsequent chapter will probe a specific feature of politics. We’ll assess why taxes are higher in many poor countries than in rich countries; or why leaders can spend a fortune on the military and yet have a weak and almost useless army when it comes to the national defense. Together, the chapters will detail how the political logic of political survival—the rules to rule by—connects dots of political consequence across the widest canvas