Presidents Don’t Matter, but Dictators Do

On Monday, Dubner argued that the President of the United States matters far less than people think.

As it turns out, there is some economic research to back him up, at least when it comes to influencing economic growth. Ben Olken (one of my favorite young economists) at the Harvard Society of Fellows and Ben Jones from Northwestern (not the same Ben Jones of Dukes of Hazzard) have two recent papers on the subject.

The first of these papers, published in the Quarterly Journal of Economics in 2005, uses deaths of leaders in office as a quasi-random source of variation in the identity of the leaders. (You don’t want to use switches in leadership that arise when an incumbent gets voted out of office, because poor economic performance might be one of the reasons the incumbent was beaten.) They find that, in democratic countries, leaders don’t matter much. Dictators, on the other hand, appear to exert substantial influence on the economic fortunes of their countries. This result makes intuitive sense, since there are so many fewer checks on the power of an autocrat.

The second paper is slightly farther afield. In this study, Jones and Olken compare a country’s outcome after a leader is assassinated with the outcome after a failed attempt on the leader’s life. Their most notable finding is that successful assassinations of autocratic leaders are more likely to produce transitions to democracy than unsuccessful assassination attempts.


Troy Camplin

I like ils vont's suggestion -- and so did, dare I say, the founders of the U.S., which is why they set up a federalist system. Were were supposed to have states where different systems are tried, but with increased nationalization, that has been less and less true over the years. My guess, though, is that those who know their system will not work would not want thee to be test states, but would rather prefer to eliminate choices so nobody knows what they're missing.

Nick Jorgensen

One reason that the identity of particular leaders might be of greater signficance in dicatorships rather than democracies is that the latter tend to have more veto points (institutional "gateways" through which new policies must pass; examples include congressional ratification of laws, judicial review, presidential vetoes, parliamentary votes of no confidence, and so on) than the former. Depending on the kind of dictatorship, the absence of democracy can lead to greater variance in economic performance depending on who's occupying the poobah's palace. In a democracy like the US, the chief executive might be prone to passing "bad" policy, but that policy is going to be attenuated by the possibility of congressional opposition, judicial challenges, and so on. Dictatorships face at least two obstacles where setting good policy is concerned -- first, the possibility that the leader might be a kleptocrat and use the powers of his office to enrich himself and his cronies, and second, the difficulty in establishing a clear succession mechanism when El Queso Grande passes from the scene. In Indonesia, for example, Suharto was able to combine steady economic growth with fabulous levels of corruption as long as his longevity in office wasn't an issue, but the combination of the 1997 Asian financial crisis and increased concerns about his age led to a scramble for loot within his inner circle that made the crisis even worse. It probably isn't an accident that the effects of the crisis in Korea, the Philippines, and Thailand (all three of which were under democratic rule in 1997) were less severe than in Indonesia. In other words, the difference between a "good" democracy and a "bad" one is smaller than the difference between a "good" dictatorship (Singapore?) and a "bad" dictatorship (Iraq under Saddam, inter alia).

Read more...

Nate

#4, as far as I'm concerned this would be the best solution that would allow individuals to live in a society that fits their preferences.
The only problem is politicians are really good at scaring the conservatives with the idea of left coast abortion clinics on every corner, and the liberals feel they have a moral obligation to extend their benevolent all knowing government on the conservatives.
There is a good paper...
Lin, Justin Yifu, “Collectivization and China's Agricultural Crisis in 1959-1961”. Journal of Political Economy, Vol. 98, pp 1228-52, December 1998.
Lin shows how eliminating the threat of a farmer exiting a voluntary collective when Mao coerced their formation led to the lack of agricultural production from 59-61.
I see the States in the same way. Prior to 1865 there was the threat of a State seceding the Union. After 1865, we instituted the BS motto, 'United we stand, divided we fall', and we moved to a coerced collectivization of State governments.

Read more...

Steve

I thought in a democracy the people are the ones to implement change, not a president...

GipperCVN76

I thought in a democracy the people are the ones to implement change, not a president…

— Posted by Steve

We do not live in a democracy. The form of government that governs the United States is a representative republic (Civics 101). That is why the president matters.

K.Premnath

It is interesting how ethnocentric and myopic the reactions to the article has been.

Apparently no one has bothered to compare the real life experiment going on before our very eyes. Namely, the economic competition between China, a totalitarian communist system and India , a messy Parliamentary democracy modeled after Britain.

Right now, China has been ahead of the race, but long term???

Intrigues me as to why nobody has seen this real life validation of this theory being played out in the world today. How smug and ethnocentric can we be living in the US!?.

T

I'm affected every day, that the last few US Presidents, during the Cold War, decided not to do a First Strike on the former USSR. If that doesn't matter, I don't know what. Even today's President has some influence on any nuclear strike decision. Talk about power and what matters.

I'll concede, though, that millions of other forces probably influenced that outcome, including people influencing the President what to decide.

As for what and what doesn't matter in anything, is the "butterfly effect" ever an issue in economics? Is such an analysis even possible?

Dr. Troy Camplin

It seems to me that the President's influence is inversely proportional to that of Congress. Reagan was influential because Congress was not, Clinton was not influential because Congress was.

Dr. Troy Camplin

Butterfly effects are always an issue in any complex system. With a complex system, you have to have all the variables at a high level of accuracy in order to get any sort of even short-term prediction. Leave out anything, and over time prediction varies widely (and wildly) from what actually happens. Which is why any sort of economic planning -- even slight amounts we find in welfare states -- are always and will always be miserable failures. One can never put in all the variables in as complex a system as a world economy, and one could never put them in with complete accuracy even if one could get them all.

And this is aside from the fact that there are also truly random and unpredictable elements in the world that would alter any number of those variables over time anyway.

KC

Presidents, or at least presidential party, seems to matter in shaping the distribution of growth in real disposable income since WWII: http://www.princeton.edu/~bartels/income.pdf

mgroves

That might suggest that totalitarian dictatorships are the best form of government, as long as the dictator is smart and benevolent.

Gmrauscher

"Their most notable finding is that successful assassinations of autocratic leaders are more likely to produce transitions to democracy than unsuccessful assassination attempts. "

Or as a metaphor: Successful purchases of lettuce and dressing are more likely to produce salads than unsuccessful purchases.
The assassins may not have wanted to create a democracy, but that democracy will not likely come about with the autocrator still in power (exceptions involving King Juan Carlos I of Spain not counted.)

ils vont

Is Democracy something that we really want in this country? Everybody complains about the president and the political climate as if there is a right and a wrong. If things were like x, y and z then our country would be perfect. Why don't we split up the country, liberals on one side and conservatives on the other and give each side their ideal ruler and see what happens.

http://www.ilsvont.com

Rita: Lovely Meter Maid

So....Dictators matter/presidents don't? Wow, that's...quite depressing. What about Kings and Queens? (I guess most of them are mere figure-heads, nowadays, though). Frankly, it all stopped mattering to *me* when the Queen Mum passed on. And I'm not even British, so it can't be that. I just liked her kindly, benevolent face and those rather delightful, fairy-godmother type outfits of soft pastel that she wore. Why must our presidents dressed so hard-edged and business-like? (Okay, I've really nothing to say on this topic, either. I guess I'm a bit inspired by the Lord, God! bird, I must admit).

Ole

Did they include Robert Mugabe's opposition on the distribution list?

Rita: Lovely Meter Maid

I meant a bit *more* inspired by the Lord God! bird (than this present topic). Jeez. It's horrible to hit the "submit comment" button and see it doing its thing, when all the while, a glaring error is flashing in front of one's face. But, it's too late!!

thew

ils vont wrote "Why don't we split up the country, liberals on one side and conservatives on the other and give each side their ideal ruler and see what happens."

That's a great idea! As long as us liberals get the western (better) half.

Alex Crosby

I think a glaring problem with these young fellows' research are their methods. How in the world do you measure the effects a president or dictator yields on the economy?

Let's take for instance the Freakonomics example where Roe v. Wade lowered crime rates and perhaps helped give boom to the lucrative 90's. The President appoints a Supreme Court Justice -> they make vital decisions such as Roe v. Wade -> said decision inadvertently or purposefully affects the economy.

Alright, we get it already, the President has no control over the Fed, but virtually every other decision - going to war, not going to war, the patriot act, appointing a Supreme Court Justice - is going to have some ripple effect on the economy. Would it be so outrageous to suggest that these ripple effects over the years have become predictable and are thus utilized by a team of experts under the President?

exprop

re:post 2

The Greek philosophers came to the same conclusion, i.e. that a wise benevolent dictator would be the best form of government. Unfortunately, they never could find one, so they settled on democracy.
Or, to paraphrase Winston Churchill:
Democracy is the worst possible from of government, until you consider all the others.

exprop

re: post #4

actually ils vont, we sort of tried that once. It was called the American Civil War. But the Northern Liberals would have none of that.

p.s. Remember that war was first about economics and only later about slavery.