Robert Rizzo -- nicknamed "Ratzo Rizzo" by L.A. Times Columnist Steve Lopez -- is featured prominently in a new book that rivals Machiavelli's famous "The Prince" in its scope, while being much more relevant to the 21st Century. Written by Bruce Bueno de Mesquita and Alastair Smith "The Dictator's Handbook: Why Bad Behavior Is Almost Always Good Politics" (PublicAffairs, 352 pages, $27.99) is a good introduction to an academic discipline I'd never heard of, selectorate theory.
Rizzo, the former city manager of Bell, California, a small community south of Los Angeles, stayed in power because he had the support of the city council, which was effectively elected by 473 voters (out of 2,235 who actually voted). The 473 constituted the essential electorate.
The other two legs of this political tripod are the nominal selectorate -- everybody eligible to vote -- and the real selectorate. In the former Soviet Union, the real selectorate -- the winning coalition-- consisted of a few members of the Communist Party who chose the candidates (some would say this has been revived under the regime of Vladimir Putin, who has the power to reject potential candidates for office).
For eighteen years, the authors have been part of a team revolutionizing the study of politics by turning conventional wisdom on its head. They start from a single assertion: Leaders do whatever keeps them in power. They don't care about the "national interest"--or even their subjects--unless they have to.
Selectorate theory posits that the difference between tyrants and democrats is that there is no difference. Governments don't differ in kind but only in the number of essential supporters, or backs that need scratching. The size of this group determines almost everything about politics: what leaders can get away with, and the quality of life or misery under them. The picture the authors paint is not pretty. But it just may be the truth, which is a good starting point for anyone seeking to improve human governance.
Selectorate theory applies to Wall Street, too, where the authors (Pages 148-149 ff) describe how small coalitions are in play: "The best way to organize a business is exactly the same as the best way to organize a government: rely on a small group of essentials..."
This applies to business in general, as the recent dumping of the CEO of HP, Leo Apotheker, who walked away with a platinum parachute of more than $25 million after 11 months on the job and was replaced by billionaire Meg Whitman, formerly of CEO of eBay and a former Republican candidate for governor of California.
Rizzo was in power for 17 years, starting at $72,000 a year in 1993 and ending up in the summer of 2010 with the munificent salary of $787,000 a year in a poor, mostly Latino city. No parachute for him, he's being investigated for corruption. Rizzo and his assistant spent seven years conspiring to illegally boost their pensions, created fake contracts, secretly increased their benefits and then filed workers' compensation claims in 2010, according to a grand jury indictment unsealed March 31, 2011.
Bueno de Mesquita and Smith's "theory of political survival" provides often surprising, counterintuitive insights on issues ranging from the so-called "Arab Spring" and U.S. foreign policy to corporate governance and tax codes. Among the topics explored:
. Why countries with oil and other natural resources -- the "resource curse" -- are more likely to be autocratic, have less economic growth and more civil wars than countries without readily accessible resources. The authors explain why President Obama should focus on resource poor countries like Syria and Cuba, rather than rich ones like Libya and Venezuela.
. Why foreign aid -- from humanitarian aid and disaster relief to the funding of Pakistan to fight the Taliban and hunt down Bin Ladin -- is so ineffectual, and how -- unless we restructure the way it's given -- both aid and debt forgiveness just encourage countries to let their problems fester. Speaking of Pakistan, on Thursday, Sept. 22, Admiral Mike Mullen, chairman of the U.S. Joint Chiefs of Staff, saying that the Haqqani "militants" who attack U.S. targets in Afghanistan are a "veritable arm" of Pakistan's Inter-Services Intelligence secret police. Pakistan denied Mullen's charges on Sept. 23.
. Why natural disasters seem to disproportionately strike poorer nations, like Haiti.
. Why the easiest way to encourage political reform is to force a leader to rely on tax revenue.
The authors ask us to consider why it's important to not take a coalition's loyalty for granted -- why it's essential that you don't underpay your coalition.
The advice applies, they say, to Mafia boss "Big" Paul Castellano and an Italian of a different era, Julius Caesar. Both didn't give the coalition that brought them to power their due.
Castellano, who inherited the leadership of the Gambino crime family in 1976, neglected the Mafia's traditional businesses of prostitution, extortion and loan sharking that kept his coalition happy. Instead, he shifted the focus to racketeering and the construction business, which wasn't profitable to members of his coalition, that included John Gotti and Sammy "The Bull" Gravano. This lead to the Dec. 16, 1985 gunning down of Castellano at Sparks Steak House in Midtown Manhattan.
Similarly, Julius Caesar, they write, was not assassinated because he was a despot, as the common view holds, but because he was a reformer! Being a reformer who got ride of the policy of tax farming, which gave the job of tax collecting to persons outside government, instead rationalizing tax collection and reducing the tax bite. This was great for the common people, but not for the coalition that had put him in power -- the powerful "influentials and essentials" -- who ended up cutting him down -- literally.
The takeaway from "The Dictator's Handbook" that Castellano and Caesar both neglected: always attend to the interests of whatever group put them in power and kept them in office. Whether its the Oligarchs of Russia, who found out that crossing Vladimir Putin was a major mistake (see my review of "The Oligarchs" link: [...]) or a small coalition dictator like Egypt's Mubarak who outlived his usefulness to the Egyptian army, this rule applies.
"The Dictator's Handbook" is an important book -- a "must read" -- to anyone who wants to understand how politics really works in the political sphere and the world of business, in democracies and dictatorships alike.