The Curley Effect: The Economics of Shaping the Electorate

Is the deliberate destruction of the American worker an accident of bad policies or a plan to stay in power?

James Michael Curley, a four-time mayor of Boston, used wasteful redistribution to his poor Irish constituents and incendiary rhetoric to encourage richer citizens to emigrate from Boston, thereby shaping the electorate in his favor. As a consequence, Boston stagnated, but Curley kept winning elections. We present a model of using redistributive politics to shape the electorate, and show that this model yields a number of predictions opposite from the more standard frameworks of political competition, yet consistent with empirical

evidence.

...

We call this strategy—increasing the relative size of one’s political base through distortionary, wealth-reducing policies—the Curley effect. But it is hardly unique to Curley. Other American mayors, but also politicians around the world, have pursued policies that encouraged emigration of their political enemies, raising poverty but gaining political advantage. In his 24 years as mayor, Detroit’s Coleman Young drove white residents and businesses out of the city. ‘‘Under Young, Detroit has become not merely an American city that happens to have a black majority, but a black metropolis, the first major Third World city in the United States. The trappings are all there—showcase projects, black-fisted symbols, an external enemy, and the cult of personality’’

... Zimbabwe’s President Robert Mugabe abused white farmers after his country’s independence, openly encouraging their emigration

even at a huge cost to the economy.

The Curley effect turns traditional views about the requirements for good government on their head. Writers like Olson (1993) argue that sufficiently forward-looking leaders would avoid policies that harm their electorate. But the Curley effect relies critically on forward-looking leaders: when it operates, longer time horizons raise the attraction of socially costly political conduct. Others follow Tiebout (1956) in arguing that large response elasticities to bad policies serve to limit them: ‘‘the fiscal discipline that is forced upon these units [local governments] emerges from the mobility of resources across subordinate governmental boundaries within the inclusive territorial jurisdiction’’ (Brennan and Buchanan, 1980:178). With the Curley effect, in contrast, large response elasticities make bad policies more, not less, attractive to incumbents.

Read the whole thing.  

It may be intuitively obvious that political leaders benefit from improving the lot of the people in general.  But experience shows that this is not always the case.  To stay in power, rulers often try to shape the people rather than the other way around.  

In dictatorships, the people's resentment is suppressed with force.  In democracies, it's suppressed by social pressure and by a media complicit with the ruling class.  But there is eventually a reckoning.  The reckoning can be violent as in the case of Romania, or the end of the old order, which appears to be happening in the EU and in the U.S.  In any case, it's messy and can be violent.  

Let us pray.