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Most great thinkers have speculated about the kind of leadership that might give rise to a better society, analyzing it through what's sometimes called a “normative” lens: What should we be doing?
In Leviathan, for example, Thomas Hobbes argued for a single, absolute sovereign to hold together the social contract. He was addressing a debate over how leaders should act—whether they should follow their citizens' wishes or act in the interests of future generations, against current pressures.
Other thinkers have focused on the real-world, actual path to leadership, leaving justice and civic virtue out of it; a more “descriptive” lens. For example, Robert Caro's The Power Broker, required reading at many college campuses, focuses on just that idea. How does power actually work? (Part of his answer was that power doesn't always corrupt, but it does always reveal.)
Or take Niccolò Machiavelli’s well-known brand of statecraft:
Whoever desires to establish a kingdom or principality where liberty and equality prevail, will equally 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.
Machiavelli may not have had access to statistical analytic tools, but the cross-national data seems to back up his crony-focused approach, according to the four authors of The Logic of Political Survival.
Over the course of 500+ pages of formal game theory proofs and model testing, they make a strong case for what they call Selectorate Theory.
That book is a bit dense, so for the layperson, two of the authors—Bruce Bueno de Mesquita and Alastair Smith—also distilled their findings into the far more readable The Dictator’s Handbook: Why Bad Behavior is Almost Always Good Politics.
Their idea is that governance—public or corporate—is driven by the self-interested effort of leaders to acquire and keep their power.
Under this lens, all policy decisions are a play for the loyalty of key backers, whether it’s the inner circle in a dictatorship or a whole populace in a democracy.
The logic of a leader’s political survival dictates all of the varieties of governments we see, from monarchies or corporate boards to communist states and democracies. According to Selectorate Theory, it boils down to the relative size of three groups:
The Nominal Selectorate (interchangeables), which has at least some small voice in choosing the leader. This is the pool of potential supporters.
Example: Millions of individual voters or small shareholders.
The Real Selectorate (influentials), who actually choose the leader.
Example: Senior members of the Saudi royal family or big institutional shareholders.
The Winning Coalition (essentials), whose support is critical both to gaining the leadership and to keeping it.
Example: A handful of board members and senior management.
Our starting point is the realization that any leader worth her salt wants as much power as she can get, and to keep it for as long as possible. Managing the interchangeables, influentials, and essentials to that end is the act, art, and science of governing.
The difference in the relative size of these groups determines how much a leader can get away with and what the quality of life is like for those at the bottom of the system.
Dictatorships are governments based on a small winning coalition formed of a handful of generals, bureaucrats and regional leaders. The real selectorate is also small, and drawn from a large population.
In democracies, the opposite is true: the winning coalition is large, and the real selectorate is almost as large as the nominal selectorate. This means that dictators can keep their jobs by handing out private goods to their cronies, whereas democratic leaders have to dole out public goods to maintain their power. That seems to square pretty well with observations in the real world.
De Mesquita and Smith place the governance of most publicly-traded companies on the dictator side of the scale. A very small number of people usually determine the political survival of a CEO – small enough that the CEO can maintain power by making this small group happy rather than working for all of the shareholders.
In cases where companies have large groups whose approval is essential for leadership, public goods like increasing share value reward everyone and become the focus of the leader.
Much of political theory has focused on what justice and civic virtue looks like, without much evidence of the way things really work. But to change the world for the better, it is not enough to take a philosophical position. Wishful thinking has never been a wise starting point.
De Mesquita and Smith conclude that leaders shouldn’t be taken at face value on their motives.
Appeals to ideological principles and rights are generally a cover. J.P. Morgan had it right: There is always some principled way to defend any position, especially one’s own interests.
They propose five rules to keep a hold on power in any system:
1. Keep your “Winning Coalition” as small as possible.
The smaller the symbiotic group of people beholden to you, the more efficient it is to retain leadership through giving private benefits.
2. Keep your “Nominal Selectorate” as large as possible.
You’ll want to keep your inner circle on its toes by having many people waiting in the wings to replace them. You also want a large tax base to draw from.
3. Control the flow of revenue.
State bankruptcy is a political crisis. It either means the leader cannot purchase political loyalty from key backers or, in a democracy, cannot afford pork-barrel projects to buy popularity.
4. Pay your key supporters just enough to keep them loyal.
And make sure you’re the only one with access to the treasury.
5. Don’t take money out of your supporters’ pockets to make the people’s lives better.
Starving illiterates don’t make good revolutionaries, whereas dissatisfied cronies can oust you.
As a ruler, your inner circle may include very few of the people who brought you to power in the first place. Your fellow revolutionaries may be too much in the habit of revolution to be safe colleagues going forward. As Machiavelli wrote in The Prince:
It is easier for the prince to make friends of those men who were contented under the former government, and are therefore his enemies, than of those who, being discontented with it, were favourable to him and encouraged him to seize it.
Much as we may wish it weren’t the case, the authors’ data suggest corrupt dictatorships or oligarchies handled in this way are actually quite stable and long-lasting.
As long as the leader offers more benefits to his essentials than they could expect from alternate leadership, the incumbent enjoys a large advantage, and coup attempts often fail. For example, from 1917 until the 1980s, all but one Soviet leader ruled until his natural death. The exception, Kruschev, was deposed after reneging on promises to cronies.
The three most important characteristics of a coalition are: (1) Loyalty; (2) Loyalty; (3) Loyalty. Successful leaders surround themselves with trusted friends and family, and rid themselves of any ambitious supporters.
Though the logic of politics cannot be changed, it can be applied to finding windows for change.
The beginning of a leader’s rule or his or her terminal illness mark unstable periods of the reign, particularly if an heir has not been assigned and groomed. Sometimes it's a financial angle: Under severe financial pressure, even an autocratic leader may see that political reform holds the best promise of political survival.
(In Taiwan, for example, Chiang Kai-Shek expanded his own coalition, in response to various pressures, until one day he found himself in a democracy.)
If an autocrat's “inner circle” feels that their future is insecure, they will be incentivized to improve the lot of the nominal selectorate in case they someday find themselves on the outside. Mobs may take to the streets or storm government buildings when they are encouraged to do so by someone powerful, like a military leader. And with this blessing from the inner circle, the power of the people can often topple the leadership.
While there is a lot of precedent for nasty regimes being overthrown, certain conditions are necessary to prevent another dictatorship from taking hold. Countries without the political curse of natural resource wealth are more likely to succeed in democratic revolution, because they rely on a well-fed and productive populace to sustain them. The overall structure of the populace and its underlying stability or instability, cohesiveness or disjointedness matters greatly.
And in the end, given that political regimes are extremely complex systems, some of this can simply be hard to predict.
If you liked this post, you might also love:
Breaking the Rules to Rise to Power: How Norm Violators Gain Power in the Eyes of Others – Idealists among us would hope that people with power who break the rules quickly and loudly fall off the corporate ladder. But, as the research asks, is this the case? Or does the very act of breaking the rules fuel perceptions of power and make the person more powerful?
Why Performance Won’t Get You Promoted – If you’re going to play the game you should at least educate yourself on the unwritten rules. In an NPR interview, Stanford business professor Jeffrey Pfeffer highlights why performance won’t get you promoted and why power is corrupting.
Most of us periodically struggle to manage our relationships, whether we're trying to manage a company, a team, a marriage, or a friendship. The problem is that we're often fighting, rather than riding, the tremendous current of human nature. And when we fight a tide we could be riding, we do ourselves a great disservice.
There are two possible causes of our struggle to act in harmony with the way people really are:
The first one is addressable. Studying great practical philosophers is one step. Aristotle, Montaigne, Marcus Aurelius, Seneca, and Munger are just a few of our favorites. Much has been written about human nature. The great classics of literature are really all about human nature. Great biographical works give us tremendous understanding of people if we are willing to read them and understand them. Even Seinfeld wasn't really a show about nothing, but about how silly our behavior is around one another.
Studying evolutionary biology, a more modern development, is the other place to go. The biologists have done a good job explaining where we come from and what's sitting there in our DNA. We get a lot of that by studying our evolutionary ancestors and cousins — the members of the animal kingdom. Chimps go to war. Bonobos have non-procreative sex, just like we do. Ants organize towards a common goal. We can derive a lot of knowledge about ourselves by asking how we're similar and dissimilar to our “family tree.”
The second cause of our lack of congruence with human nature is tougher to solve for most. Are we aware of human nature but not executing on what we know? You might call this an Intention-Execution Gap. We know what to do, we just don't have the discipline to do it. Success would mean closing that gap, probably through a great deal of self-criticism and working on our emotional discipline.
A wonderful Edge talk with Darwinian philosopher Helena Cronin has a telling excerpt on the topic:
Certainly, human nature is fixed. It's universal and unchanging — common to every baby that's born, down through the history of our species. But human behavior — which is generated by that nature — is endlessly variable and diverse. After all, fixed rules can give rise to an inexhaustible range of outcomes. Natural selection equipped us with the fixed rules — the rules that constitute our human nature. And it designed those rules to generate behavior that's sensitive to the environment. So, the answer to ‘genetic determinism' is simple. If you want to change behavior, just change the environment. And, of course, to know which changes would be appropriate and effective, you have to know those Darwinian rules. You need only to understand human nature, not to change it.
Munger has echoed this in the past, arguing that the way to have a happy partnership is to be a great partner. Buffett has echoed the same: Marrying with the intention of changing the other person is insane. Better to marry right with the intention to change yourself. Learn to be a better partner and create a better environment for the relationship to succeed. How do you think a manager operating in a business environment as awful as steel production was able to do it? He understood human nature and acted in accordance.
Who else understood human nature pretty well? Machiavelli. Quite possibly the most talked about, least actually read, practical philosopher of all time. For an example, here he is discussing why hiring mercenary soldiers was such a poor choice for 16th century Italy:
Mercenaries and auxiliaries are useless and dangerous; and if one holds his state based on these arms, he will stand neither firm nor safe; for they are disunited, ambitious, and without discipline, unfaithful, valiant before friends, cowardly before enemies; they have neither the fear of God nor fidelity to men, and destruction is deferred only so long as the attack is; for in peace one is robbed by them, and in war by the enemy. The fact is, they have no other attraction or reason for keeping the field than a trifle of stipend, which is not sufficient to make them willing to die for you. They are ready enough to be your soldiers whilst you do not make war, but if war comes they take themselves off or run from the foe.
Isn't that a pretty simple idea, in accordance with our nature? Incentives drive behavior. And of course we see, with insights like that, The Prince has held up pretty well.
The modern book on dealing with others is Dale Carnegie's How to Win Friends and Influence People. It's so popular, and so “out of date” that it's easy to dismiss. But Carnegie, like Robin Dreeke, hit on some deep insights about human nature that, if taken seriously, really work. Like understanding others' incentives:
Why talk about what we want? That is childish. Absurd. Of course, you are interested in what you want. You are eternally interested in it. But no one else is. The rest of us are just like you: we are interested in what we want. So the only way on earth to influence other people is to talk about what they want and show them how to get it.
Again, Carnegie's wisdom is simple, but absolutely correct. (Another reminder that greats succeed by exploiting unrecognized simplicity.) We are all the protagonists of our own story, aren't we? And yet, how often do we forget that as we go about our relations with others?
Ben Franklin phrased it famously by saying “If you wish to persuade, appeal to interest, rather than reason.” All that Carnegie and Franklin are doing is recognizing people for what they are, and living in harmony with that reality. When we do so, we go a long way towards well-deserved success. Failing here costs us greatly.
So resolve this year, and all of the rest of your years, to come to a better understand of the way people really are and to start living in accordance with it.
A voracious reader, Machiavelli stripped out the ideals and drew examples from history. He believed that anyone who ignores reality in a misguided attempt to live up to an ideal will quickly destroy himself. He de-emphasized the importance of moral considerations, and focused instead on effectiveness. He believed that the ends justified the means.
Yes, the book can be ruthless. But there are still many surprisingly apt lessons. Here's what I've learned from reading The Prince.
1. Be present
“… if one is on the spot, disorders are seen as they spring up, and one can quickly remedy them; but if one is not at hand, they are heard of only when they are great, and then one can no longer remedy them.”
2. Be careful who you trust
“… he who is the cause of another becoming powerful is ruined; because that predominancy has been brought about by astuteness or else by force, and both are distrusted by him who has been raised to power.”
Treat people well or crush them.
… men ought either to be well treated or crushed, because they can avenge themselves of lighter injuries, of more serious ones they cannot; therefore the injury that is to be done to a man ought to be of such a kind that one does not stand in fear of revenge.
Injure all at once and give benefits over time.
in seizing a state, the usurper ought to examine closely into all those injuries which it is necessary for him to inflict, and to do them all at one stroke so as not to have repeat them daily; and thus by not unsettling men he will be able to reassure them, and win them to himself by benefits. He who does otherwise, either from timidity or evil advice, is always compelled to keep the knife in his hand; neither can he rely on his subjects, nor can they attach themselves to him, owing to their continued and repeated wrongs. For injuries ought to be done all at one time, so that, being tasted less, they offend less; benefits ought to be given little by little , so that the flavour of them may last longer.
Be leery of hired help.
The mercenary captains are either capable men or they are not; if they are, you cannot trust them, because they always aspire to their own greatness, either by oppressing you, who are their master, or others contrary to your intentions; but if the captain is not skilful, you are ruined the usual way.
Is it better to be loved than feared or feared than loved?
It may be answered that one should wish to be both, but, because it is difficult to unite them in one person, it is much safer to be feared than loved, when, of the two, either must be dispensed with. … I come to the conclusion that, men loving according to their own will and fearing according to that of the price, a wise prince should establish himself on that which is in his own control and not in that of others; he much endeavour only to avoid hatred …
A wise prince, when he has the opportunity, ought with craft to foster some animosity against himself, so that, having crushed it, his renown may rise higher.
Three classes of intellect.
one which comprehends by itself; another which appreciates what others comprehended; and a third which neither comprehends by itself nor by the showing of others; the first is the most excellent, the second is good, the third is useless.
Still curious? Read The Prince.
(#7 from the article is a bit more nuanced than it come across. If you read the book you'll understand.)
Parents are constantly looking around to beg, borrow, and steal ideas that work for others and apply them to their own lives. As such the rise of books like the
I have always wondered why no one applied ancient philosophy to parenting before as it offers time-tested wisdom. Enter Suzanne Evans, the Machiavellian mother.
Newly remarried, with four kids under the age of eight, Suzanne Evans is fed up with tantrums, misbehaving, and general household chaos. Desperate to get the upper hand, she turns to Machiavelli’s iconic political treatise, The Prince, and inspiration strikes. Maybe, she thinks, I can use his manipulative rules to bring order to my boisterous family.
Soon her experiment begins to play out in surprisingly effective ways. She starts off following Machiavelli’s maxim “It is dangerous to be overly generous” and soon realizes that for all its austerity, there is a kernel of truth in it. Her kids do behave when they are given clear limits. From there, she starts tackling other rules—“Tardiness robs us of opportunity” and “Study the actions of illustrious men”—and she is surprised at how quickly her brood falls in line once she starts adapting his advice to child rearing.
As she tries more and more of Machiavelli’s ideas on her family, Evans figures out this secret: You can get more out of your kids, with less fighting, if you figure out how to gently manipulate them to get what you want (and let them think it’s their own idea). But when events in her life start to spiral out of control and some of her earlier techniques are no longer working, she has to figure out her own answer to the ultimate Machiavellian question: Is it better to be feared than loved?
Niccolò Machiavelli (1469-1527) offered ruthless advice in his timeless classic The Prince, which was inspired on Xenophon’s Cyrus The Great: The Arts of Leadership and War. Based on force and ruthlessness, Machiavelli offered advice on how to get and keep power. Unbeknownst to most people, however, Machiavelli also had a softer side.
In this December 1513 letter to Francesco Vettori, a friend of Machiavelli’s and the then Florentine ambassador in Rome, Machiavelli introduces us to his enthusiasm for reading.
When evening has come, I return to my house and go into my study. At the door I take off my clothes of the day, covered with mud and mire, and I put on my regal and courtly garments; and decently reclothed, I enter the ancient courts of ancient men, where, received by them lovingly, I feed on the food that alone is mine and that I was born for. There I am not ashamed to speak with them and to ask them the reason for their actions; and they in their humanity reply to me. And for the space of four hours I feel no boredom, I forget every pain, I do not fear poverty, death does not frighten me. I deliver myself entirely to them.
Reading is the best way to gain insights and develop understanding. It's the best way to learn how the world really works, as you can let time be your filter. This is why I read hundreds of books a year. It's also why I make friends with the eminent dead and try to learn from their wisdom. Charlie Munger echoes these sentiments, “In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time—none. Zero. You’d be amazed at how much Warren reads—and how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.”
A summary of Samuel Bowles' lecture series entitled “Machiavelli's Mistake” at the Santa Fe Institute.
The classical thinkers from Aristotle to Aquinas, Rousseau, and Burke recognized the cultivation of civic virtue not only as the test of good governance, but also as its essential foundation. Machiavelli and Hobbes broke with this Aristotelian tradition.
Readers of Machiavelli's Discourses learned that “all men are wicked … hunger makes them industrious, laws make them good.” Adam Smith's invisible hand provided a decentralized model for how this constitutional alchemy might be accomplished. Good institutions thus came to displace good citizens as the sine qua non of good government. Prices would do the work of morals.
This classical economists approach – now the canonical model of policy-making in economics– now does not ignore moral behavior, but instead assumes it to be unaffected by incentive-based policies designed to harness self-interest. Along with civic virtue, explicit incentives and constraints could thus contribute additively to good government. The classical writers did not worry that laws designed to induce “wicked” citizens to act as if they were good might induce even the good to act as if they were wicked.
They should have worried. Experimental and other evidence show that while most individuals are far from wicked, treating people as if they were often crowds out the common generous, ethical, and reciprocal behaviors upon which the functioning of modern liberal democratic societies depend.
The parasitic liberalism thesis holds that markets and other institutions endorsed by liberals depend on family-based, religious and other traditional social norms that are endangered by these very institutions. Liberal society thus fails Rawls’ test of “stability:” it does not “generate its own supportive moral attitudes.” Experimental evidence presented in Lecture I, provides support for the idea. I represent the thesis in a model of the dynamics of institutional and cultural change, indicating the conditions under which the cultural dynamic of liberal society leads to economic dysfunction, instability and eventually collapse. I then provide surprising cross-cultural evidence that is inconsistent with the implications of the model.
Liberal societies are distinctive in their civic cultures, exhibiting levels of generosity, fairmindedness, and civic involvement that distinguish them from non-liberal societies. The parasitic liberalism thesis fails not because it misunderstands the cultural consequences of markets, but rather because it overrates the benign contribution of tradition to the moral underpinnings of liberal institutions, and underrates the contribution of the liberal state and other non-market aspects of the liberal social order to the flourishing of these civic virtues.
Two empirical puzzles show that some incentives work almost exactly as conventional economic theory predicts while others backfire. Under what conditions, then, can prices do the work of morals. Unraveling these puzzles and answering this question requires an understanding of the causal mechanisms by which material incentives crowd out moral motives. Experimental and other evidence suggests that explicit incentives and social motivations may be less than additive due to individual desires for autonomy, self esteem and fairness, which may be compromised by incentives. The material incentives favored by economists can also crowd out institutions that provide at least second best governance of social dilemmas.
How should a sophisticated hypothetical social engineer – that is, one who is aware of the motivational and institutional crowding out problem – design policies and institutions? Three results are demonstrated. First the optimal use of incentives may be either greater or less in the presence of motivational crowding out compared to a case where it is absent. Second, cultural market failures are pervasive, and result in overuse of markets even under ideal conditions for (Coasean) bargaining in the design of property rights and other institutions. Finally, a new second best theorem is proposed: the better definition of property rights and other policies considered by economists to improve incentives may degrade economic performance when they crowd out ethical motivations and alternative governance institutions.