Inclusiveness and the Exchange of Political Support for Rent

In: https://ir.library.carleton.ca/pub/15851

Abstract

In this paper, governments maximize their political support, obtained by creating wealth and also by creating rent. Starting from a support maximum, economic reforms are feasible only when combined with political reforms that make the economic changes support-increasing. A competitive economy with low rent seeking and low protectionism maximizes support only when inclusiveness, as defined here, is high. When support is maximized, political stability depends on the sensitivity of support to changes in rent and wealth, and the quest for support causes inclusiveness to change. Depending on comparative political advantage, it can become either the road to serfdom or the road to an inclusive society. The approach here contrasts with selectorate theory in which political advantage depends on the size of a 'winning coalition.'