1
The Rules of Politics
THE LOGIC OF POLITICS IS NOT COMPLEX. IN FACT, it is surprisingly easy to grasp most of what goes on in the political world as long as we are ready to adjust our thinking ever so modestly. To understand politics properly, we must modify one assumption in particular: we must stop thinking that leaders can lead unilaterally.
No leader is monolithic. If we are to make any sense of how power works, we must stop thinking that North Korea’s Kim Jong Il can do whatever he wants. We must stop believing that Adolf Hitler or Joseph Stalin or Genghis Khan or anyone else is in sole control of their respective nation. We must give up the notion that Enron’s Kenneth Lay or British Petroleum’s (BP) Tony Hayward knew about everything that was going on in their companies, or that they could have made all the big decisions. All of these notions are flat out wrong because no emperor, no king, no sheikh, no tyrant, no chief executive officer (CEO), no family head, no leader whatsoever can govern alone.
Consider France’s Louis XIV (1638–1715). Known as the Sun King, Louis reigned as monarch for over seventy years, presiding over the expansion of France and the creation of the modern political state. Under Louis, France became the dominant power in Continental Europe and a major competitor in the colonization of the Americas. He and his inner circle invented a code of law that helped shape the Napoleonic code and that forms the basis of French law to this day. He modernized the military, forming a professional standing army that became a role model for the rest of Europe and, indeed, the world. He was certainly one of the preeminent rulers of his or any time. But he didn’t do it alone.
The etymology of monarchy may be “rule by one,” but such rule does not, has not, and cannot exist. Louis is thought famously (and probably falsely) to have proclaimed, L’etat, c’est moi: the state, it is me. This declaration is often used to describe political life for supposedly absolute monarchs like Louis, likewise for tyrannical dictators. The declaration of absolutism, however, is never true. No leader, no matter how august or how revered, no matter how cruel or vindictive, ever stands alone. Indeed, Louis XIV, ostensibly an absolute monarch, is a wonderful example of just how false this idea of monolithic leadership is.
After the death of his father, Louis XIII (1601–1643), Louis rose to the throne when he was but four years old. During the early years actual power resided in the hands of a regent—his mother. Her inner circle helped themselves to France’s wealth, stripping the cupboard bare. By the time Louis assumed actual control over the government in 1661, at the age of twenty-three, the state over which he reigned was nearly bankrupt.
While most of us think of a state’s bankruptcy as a financial crisis, looking through the prism of political survival makes evident that it really amounts to a political crisis. When debt exceeds the ability to pay, the problem for a leader is not so much that good public works must be cut back, but rather that the incumbent doesn’t have the resources necessary to purchase political loyalty from key backers. Bad economic times in a democracy mean too little money to fund pork-barrel projects that buy political popularity. For kleptocrats it means passing up vast sums of money, and maybe even watching their secret bank accounts dwindle along with the loyalty of their underpaid henchmen.
The prospect of bankruptcy put Louis’s hold on power at risk because the old-guard aristocrats, including the generals and officers of the army, saw their sources of money and privilege drying up. Circumstances were ripe to prompt these politically crucial but fickle friends to seek someone better able to ensure their wealth and prestige. Faced with such a risk, Louis needed to make changes, or else risk losing his monarchy.
Louis’s specific circumstances called for altering the group of people who had the possibility of becoming members of his inner circle—that is, the group whose support guaranteed his continued dignity as king. He moved quickly to expand the opportunities (and for a few, the actual power) of new aristocrats, called the noblesse de robe. Together with his chancellor, Michel Le Tellier, he acted to create a professional, relatively meretricious army. In a radical departure from the practice observed by just about all of his neighboring monarchs, Louis opened the doors to officer ranks—even at the highest levels—to make room for many more than the traditional old-guard military aristocrats, the noblesse d’épée. In so doing, Louis was converting his army into a more accessible, politically and militarily competitive organization.
Meanwhile, Louis had to do something about the old aristocracy. He was deeply aware of their earlier disloyalty as instigators and backers of the antimonarchy Fronde (a mix of revolution and civil war) at the time of his regency. To neutralize the old aristocracy’s potential threat, he attached them—literally—to his court, compelling them to be physically present in Versailles much of the time. This meant that their prospects of income from the crown depended on how well favored they were by the king. That, of course, depended on how well they served him.
By elevating so many newcomers, Louis had created a new class of people who were beholden to him. In the process, he was centralizing his own authority more fully and enhancing his ability to enforce his views at the cost of many of the court’s old aristocrats. Thus he erected a system of “absolute” control whose success depended on the loyalty of the military, the new aristocrats, and on tying the hands of the old aristocrats so that their welfare translated directly into his welfare.
The French populace in general did not figure much into Louis’s calculations of who needed to be paid off—they did not represent an imminent threat to him. Even so, it’s clear that his absolutism was not absolute at all. He needed supporters and he understood how to maintain their loyalty. They would be loyal to him only so long as being so was more profitable for them than supporting someone else.
Louis’s strategy was to replace the “winning coalition” of essential supporters that he inherited with people he could more readily count on. In place of the old guard he brought up and into the inner circle members of the noblesse de robe and even, in the bureaucracy and especially in the military, some commoners. By expanding the pool of people who could be in the inner circle, he made political survival for those already in that role more competitive. Those who were privileged to be in his winning coalition knew that under the enlarged pool of candidates for such positions, any one of them could easily be replaced if they did not prove sufficiently trustworthy and loyal to the king. That, in turn, meant they could lose their opportunity for wealth, power, and privilege. Few were foolish enough to take such a risk.
Like all leaders, Louis forged a symbiotic relationship with his inner circle. He could not hope to thrive in power without their help, and they could not hope to reap the benefits of their positions without remaining loyal to him. Loyal they were. Louis XIV survived in office for seventy-two years until he died quietly of old age in 1715.
Louis XIV’s experience exemplifies the most fundamental fact of political life. No one rules alone; no one has absolute authority. All that varies is how many backs have to be scratched and how big the supply of backs available for scratching.

Three Political Dimensions

For leaders, the political landscape can be broken down into three groups of people: the nominal selectorate, the real selectorate, and the winning coalition.
The nominal selectorate includes every person who has at least some legal say in choosing their leader. In the United States it is everyone eligible to vote, meaning all citizens aged eighteen and over. Of course, as every citizen of the United States must realize, the right to vote is important, but at the end of the day no individual voter has a lot of say over who leads the country. Members of the nominal selectorate in a universal-franchise democracy have a toe in the political door, but not much more. In that way, the nominal selectorate in the United States or Britain or France doesn’t have much more power than its counterparts, the “voters,” in the old Soviet Union. There, too, all adult citizens had the right to vote, although their choice was generally to say Yes or No to the candidates chosen by the Communist Party rather than to pick among candidates. Still, every adult citizen of the Soviet Union, where voting was mandatory, was a member of the nominal selectorate. The second stratum of politics consists of the real selectorate. This is the group that actually chooses the leader. In today’s China (as in the old Soviet Union), it consists of all voting members of the Communist Party; in Saudi Arabia’s monarchy it is the senior members of the royal family; in Great Britain, the voters backing members of parliament from the majority party. The most important of these groups is the third, the subset of the real selectorate that makes up a winning coalition. These are the people whose support is essential if a leader is to survive in office. In the USSR the winning coalition consisted of a small group of people inside the Communist Party who chose candidates and who controlled policy. Their support was essential to keep the commissars and general secretary in power. These were the folks with the power to overthrow their boss—and he knew it. In the United States the winning coalition is vastly larger. It consists of the minimal number of voters who give the edge to one presidential candidate (or, at the legislative level in each state or district, to a member of the House or Senate) over another. For Louis XIV, the winning coalition was a handful of members of the court, military officers, and senior civil servants without whom a rival could have replaced the king.
Fundamentally, the nominal selectorate is the pool of potential support for a leader; the real selectorate includes those whose support is truly influential; and the winning coalition extends only to those essential supporters without whom the leader would be finished. A simple way to think of these groups is: interchangeables, influentials, and essentials.
In the United States, the voters are the nominal selectorate—interchangeables . As for the real selectorate—influentials—the electors of the electoral college really choose the president (just like the party faithful picked their general secretary back in the USSR), but the electors nowadays are normatively bound to vote the way their state’s voters voted, so they don’t really have much independent clout in practice. In the United States, the nominal selectorate and real selectorate are therefore pretty closely aligned. This is why, even though you’re only one among many voters, interchangeable with others, you still feel like your vote is influential—that it counts and is counted. The winning coalition—essentials—in the United States is the smallest bunch of voters, properly distributed among the states, whose support for a candidate translates into a presidential win in the electoral college. And while the winning coalition (essentials) is a pretty big fraction of the nominal selectorate (interchangeables), it doesn’t have to be even close to a majority of the US population. In fact, given the federal structure of American elections, it’s possible to control the executive and legislative branches of government with as little as about one fifth of the vote, if the votes are really efficiently placed. (Abraham Lincoln was a master at just such voter efficiency.) It is worth observing that the United States has one of the world’s biggest winning coalitions both in absolute numbers and as a proportion of the electorate. But it is not the biggest. Britain’s parliamentary structure requires the prime minister to have the support of a little over 25 percent of the electorate in two-party elections to parliament. That is, the prime minister generally needs at least half the members of parliament to be from her party and for each of them to win half the vote (plus one) in each two-party parliamentary race: half of half of the voters, or one quarter in total. France’s runoff system is even more demanding. Election requires that a candidate win a majority in the final, two-candidate runoff.
Looking elsewhere we see that there can be a vast range in the size of the nominal selectorate, the real selectorate, and the winning coalition. Some places, like North Korea, have a mass nominal selectorate in which everyone gets to vote—it’s a joke, of course—a tiny real selectorate who actually pick their leader, and a winning coalition that surely is no more than maybe a couple of hundred people (if that) and without whom even North Korea’s first leader, Kim Il Sung, could have been reduced to ashes. Other nations, like Saudi Arabia, have a tiny nominal and real selectorate, made up of the royal family and a few crucial merchants and religious leaders. The Saudi winning coalition is perhaps even smaller than North Korea’s.
How does Bell, California, measure up? We saw that in 2009, the interchangeables in Bell consisted of 9,395 registered voters; the influentials, the 2,235 who actually voted; and the essentials, not more than the 473 voters whose support was essential to win a seat on the city council. Bell definitely looks better than North Korea or Saudi Arabia—we’d hope so. It looks alarmingly close, however, to the setup of a regime with mostly phony elections, such as prerevolutionary Egypt, Venezuela, Cambodia, and maybe Russia. Most publicly traded corporations have this structure as well. They have millions of shareholders who are the interchangeables. They have big institutional shareholders and some others who are the influentials. And the essentials are pretty much those who get to pick actual board members and senior management. Bell doesn’t look much like Madison’s or Montesquieu’s idealization of democracy and neither do corporations, regardless of how many shareholders cast proxy ballots.
Think about the company you work for. Who is your leader? Who are the essentials whose support he or she must have? What individuals, though not essential to your CEO’s power, are nonetheless influential in the governance of the company? And then, of course, who is there every day at the office—working hard (or not), just hoping for the breakthrough or the break that will catapult them into a bigger role?
These three groups provide the foundation of all that’s to come in the rest of this book, and, more importantly, the foundation behind the working of politics in all organizations, big and small. Variations in the sizes of these three groups give politics a three-dimensional structure that clarifies the complexity of political life. By working out how these dimensions intersect—that is, each organization’s mix in the size of its interchangeable, influential, and essential groups—we can come to grips with the puzzles of politics. Differences in the size of these groups across states, businesses, and any other organization, as you will see, decide almost everything that happens in politics—what leaders can do, what they can and can’t get away with, to whom they answer, and the relative qualities of life that everyone under them enjoys (or, too often, doesn’t enjoy).

Virtues of 3 - D Politics

You may find it hard to believe that just these three dimensions govern all of the varied systems of leadership in the world. After all, our experience tends to confirm that on one end of the political spectrum we have autocrats and tyrants—horrible, selfish thugs who occasionally stray into psychopathology. On the other end, we have democrats—elected representatives, presidents, and prime ministers who are the benevolent guardians of freedom. Leaders from these two worlds, we assure ourselves, must be worlds apart!
It’s a convenient fiction, but a fiction nonetheless. Governments do not differ in kind. They differ along the dimensions of their selectorates and winning coalitions. These dimensions limit or liberate what leaders can and should do to keep their jobs. How limited or liberated a leader is depends on how selectorates and winning coalitions interact.
No question, it is tough to break the habit of talking about democracies and dictatorships as if either of these terms is sufficient to convey the differences across regimes, even though no two “democracies” are alike and neither are any two “dictatorships.” In fact, it is so hard to break that habit that we will continue to use these terms much of the time throughout this book—but it is important to emphasize that the term “dictatorship” really means a government based on a particularly small number of essentials drawn from a very large group of interchangeables and, usually, a relatively small batch of influentials. On the other hand, if we talk about democracy, we really mean a government founded on a very large number of essentials and a very large number of interchangeables, with the influential group being almost as big as the interchangeable group. When we mention monarchy or military junta, we have in mind that the number of interchangeables, influentials, and essentials is small.
The beauty of talking about organizations in terms of essentials, influentials, and interchangeables is that these categories permit us to refrain from arbitrarily drawing a line between forms of governance, pronouncing one “democratic” and another “autocratic,” or one a large republic and another small, or any of the other mostly one-dimensional views of politics expressed by some of history’s leading political philosophers.
The truth is, no two governments or organizations are exactly alike. No two democracies are alike. Indeed, they can be radically different one from the other and still qualify perfectly well as democracies. The more significant and observable differences in the behavior of governments and organizations are dependent on the absolute and relative size of the interchangeable, influential, and essential groups. The seemingly subtle differences between, say, France’s government and Britain’s, or Canada’s and the United States’s are not inconsequential. However, the variations in their policies are the product of the incentives leaders face as they contend with their particular mix of interchangeable, influential, and essential groups.
There is incredible variety among political systems, mainly because people are amazingly inventive in manipulating politics to work to their advantage. Leaders make rules to give all citizens the vote—creating lots of new interchangeables—but then impose electoral boundaries, stacking the deck of essential voters to ensure that their preferred candidates win. Democratic elites may decide to require a plurality to win a particular race, giving themselves a way to impose what a majority may otherwise reject. Or they might favor having runoff elections to create a majority, even though it may end up being a majority of the interchangables’ second-place choices. Alternately democratic leaders might represent political views in proportion to how many votes each view got, forging governments out of coalitions of minorities. Each of these and countless other rules easily can fall within our belief in democracy, yet each can—and does—produce radically different results.
We must remember that labels like democracy or dictatorship are a convenience—but only a convenience.

Change the Size of Dimensions and Change the World1

Changing the relative size of interchangeables, influentials, and essentials can make a real difference in basic political outcomes. As an example, we can look to the seemingly prosaic election of members of San Francisco’s board of supervisors.
San Francisco used to elect its board of supervisors in citywide elections. That meant that the selectorate consisted of the city’s voters, and the essentials were the minimum number needed to elect a member to the board. In 1977 the method changed, and at-large, citywide elections were replaced by district voting. Under the old rules, members of the board of supervisors were elected by and represented the whole city as if it were one large constituency. Under the new rules, they were elected by and represented their district; that is, their neighborhood, so each supervisor was chosen by a much smaller constituency. The policy and candidate preferences of San Francisco residents as a whole were little different between 1975 and 1977—nevertheless in 1975 a candidate named Harvey Milk failed in his bid to be elected to the board, but went on to be elected in 1977 (and tragically assassinated not long after). As Time magazine reported later, Harvey Milk was “the first openly gay man elected to any substantial political office in the history of the planet.”2
What changed in Harvey Milk’s favor between 1975 and 1977 was simple enough. In 1975, he needed broad-based support among San Francisco’s influentials to get elected. He got 52,996 votes. This meant he finished seventh in the election of supervisors, with the top five being elected. Milk did not have enough support, and so he lost. In 1977 he only needed support within the neighborhood from which he ran, the Castro, a dominantly gay area. He was, as he well knew, popular within his district. He received 5,925 votes, giving him a plurality of support with 29.42 percent of the vote in district 5, which placed him first in the 5th Supervisory District contest and so he was elected.
Strange as it may seem, the same ideas and subtle differences that held true in San Francisco can be applied to illiberal governments like Zimbabwe, China, and Cuba, and even to the more ambiguous sorts of governments like current-day Russia or Venezuela or Singapore. Each is easily and uniquely placed on the three organizational dimensions: interchangeables, influentials, and essentials.
Once we learn to think along these three dimensions, we can begin to unravel some of politics’ most enduring puzzles. 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.

Rules Ruling Rulers

Money, it is said, is the root of all evil. That can be true, but in some cases, money can serve as the root of all that is good about governance. It depends on what leaders do with the money they generate. They may use it to benefit everyone, as is largely true for expenditures directed toward protecting the personal well-being of all citizens and their property. Much public policy can be thought of as an effort to invest in the welfare of the people. But government revenue can also be spent on buying the loyalty of a few key cronies at the expense of general welfare. It can also be used to promote corruption, black marketeering, and a host of even less pleasant policies.
The first step in understanding how politics really works is to ask what kinds of policies leaders spend money on. Do they spend it on public goods that benefit everyone? Or do they spend mostly on private goods that benefit only a few? The answer, for any savvy politician, depends on how many people the leader needs to keep loyal—that is, the number of essentials in the coalition.
In a democracy, or any other system where a leader’s critical coalition is excessively large, it becomes too costly to buy loyalty through private rewards. The money has to be spread too thinly. So more democratic types of governments, dependent as they are on large coalitions, tend to emphasize spending to create effective public policies that improve general welfare pretty much as suggested by James Madison.
By contrast, dictators, monarchs, military junta leaders, and most CEOs all rely on a smaller set of essentials. As intimated by Machiavelli, it is more efficient for them to govern by spending a chunk of revenue to buy the loyalty of their coalition through private benefits, even though these benefits come at the expense of the larger taxpaying public or millions of small shareholders. Thus small coalitions encourage stable, corrupt, private-goods-oriented regimes. The choice between enhancing social welfare or enriching a privileged few is not a question of how benevolent a leader is. Honorable motives might seem important, but they are overwhelmed by the need to keep supporters happy, and the means of keeping them happy depends on how many need rewarding.

Taxing

To keep backers happy a leader needs money. Anyone aspiring to rule must first ask how much can he extract from his constituents—whether they are citizens of a nation or shareholders in a corporation. This extraction can take many forms—personal income taxes, property taxes, duties on imports, licenses, and government fees—but we will refer to it generically as taxation to keep the discussion from wandering too far afield. As we’ve already seen, those who rule based on a large coalition cannot efficiently sustain themselves in power by focusing on private benefits. Their bloc of essential supporters is too large for that. Since they must sustain themselves by emphasizing public goods more than private rewards, they must also keep tax rates low, relatively speaking. People prefer to keep their money for themselves, except when that money can be pooled to provide something they value that they cannot afford to buy on their own.
For example, we all want to be sure that a reliable fire department will put out a fire that threatens our home. We could conceivably hire a personal firefighter to protect our house alone. However, not only is that expensive, we would also have to worry about whether our neighbor’s house is itself well enough protected that it won’t catch fire and threaten our home. Furthermore, our neighbor, realizing that we won’t want his house to burn if in doing so it threatens ours, may attempt to free ride on the fact that we hired a personal firefighter who will have to step in to protect the neighbor’s house as well. In no time we are in the position of paying for neighborhoodwide fire protection single-handedly, a very costly proposition. The easiest way to get neighbors to share the burden of fire protection is to let government leaders take the responsibility for fire protection. To provide such protection we happily pay taxes.
Though we may willingly pay taxes for programs that provide tangible benefits to us, for instance protection from fire, felons, and foreign foes, we would not be so willing to see our tax money used to pay a tremendous salary to our president or prime minister—or, in the case of Bell, California, to our local government officials. As a result, heads of governments reliant on a large coalition tend not to be among the world’s best paid executives.
Because the acceptable uses of taxation in a regime that depends on a large coalition are few—just those expenditures thought to buy more welfare than people can buy on their own—taxes tend to be low when coalitions are large. But when the coalition of essential backers is small and private goods are an efficient way to stay in power, then the well-being of the broader population falls by the wayside, contrary to the view expressed by Hobbes. In this setting leaders want to tax heavily, redistributing wealth by taking as much as they can from the poor interchangeables and the disenfranchised, giving that wealth in turn to the members of the winning coalition, making them fat, rich, and loyal. For example, a married couple in the United States pays no income tax on the first $17,000 they earn. At that same income, a Chinese couple’s marginal tax rate is 45 percent. That is well above the highest personal income tax rate in the United States and so no one, no matter how high their income, pays that much to the US federal government. And then there are small coalition regimes like Bell, California. Chief Administrative Officer Rizzo’s small number of supporters did not complain about the excessively high level of property taxes. They had to pay these taxes, but then so did thousands of others. And unlike others they received the rewards financed by those same taxes. The private gains the few crucial cronies got from their city government more than repaid the high taxes everyone had to pay.
Obviously, self-interest plays a large role in these equations. We must wonder, therefore, why incumbents don’t take all the revenue they’ve raised and sock it away in their personal bank accounts. This question is especially pertinent for corporate executives. Once investors have entrusted money in the hands of a CEO or chairman of the board, what can the investors do to assure themselves that the money will be invested wisely to produce benefits for them? Investors want increased value. They want share prices to rise, their portion of ownership to go up, and dividend payments to be large and predictably regular. To be sure, focusing on self-interest tells us that rulers and business leaders, and in fact, all of us, would love to take other people’s money and keep it for ourselves. This means that the next step in explaining the calculus of politics is to figure out how much a leader can keep and how much must be spent on the coalition and on the public if the incumbent is to stay in power.

Shuffling the Essential Deck

Staying in power, as we now know, requires the support of others. This support is only forthcoming if a leader provides his essentials with more benefits than they might expect to receive under alternative leadership or government. When essential followers expect to be better off under the wing of some political challenger, they desert.
Incumbents have a tough job. They need to offer their supporters more than any rival can. While this can be difficult, the logic of politics tells us that incumbents have a huge advantage over rivals, especially when office holders rely on relatively few people and when the pool of replacements for coalition members is large. Lenin designed precisely such a political system in Russia after the revolution. This explains why, from the October 1917 Revolution through to Gorbachev’s reforms in the late 1980s, only one Soviet leader, Nikita Khrushchev, was successfully deposed in a coup. All the other Soviet leaders died of old age or infirmity. Khrushchev failed to deliver what he promised to his cronies. It is the successful, reliable implementation of political promises to those who count that provides the basis for any incumbent’s advantage.
The story of survival is not much different, although the particulars are very different, in political settings that rely on many essential backers. As even a casual observer of election campaigns knows, there is a big discrepancy between what politicians promise when making a bid for power and what they actually deliver once there. Once in power, a new leader might well discard those who helped her get to the top, replacing them with others whom she deems more loyal.
Not only that, but essential supporters can’t just compare what the challenger and incumbent offer today. The incumbent might pay less now, for instance, but the pay is expected to continue for those kept on or brought into the new incumbent’s inner circle. True, the challenger may offer more today, but his promises of future rewards may be nothing more than political promises without any real substance behind them. Essentials must compare the benefits expected to come their way in the future because that future flow adds up in time to bigger rewards. Placing a supporter in his coalition after a new leader is ensconced as the new incumbent is a good indicator that he will continue to rely on and reward that supporter, exactly because the new incumbent has made a concerted effort to sort out those most likely to remain loyal from those opportunists who might bring the leader down in the future. The challenger might make such a promise to keep backers on if she reaches the heights of power, but it is a political promise that might very well not be honored in the long run.
Lest there be doubt that those who share the risks of coming to power often are then thrown aside—or worse—let us reflect on the all-too-typical case of the backers of Fidel Castro’s revolution in Cuba. Of the twenty-one ministers appointed by Castro in January 1959, immediately after the success of his revolution, twelve had resigned or had been ousted by the end of the year. Four more were removed in 1960 as Castro further consolidated his hold on power. These people, once among Fidel’s closest, most intimate backers, ultimately faced the two big exes of politics. For the luckier among them, divorce from Castro came in the form of exile. For others, it meant execution. This includes even Castro’s most famous fellow revolutionary, Che Guevara.
Che may have been second in power only to Fidel himself. Indeed, that was likely his greatest fault. Castro forced Che out of Cuba in 1965 partly because of Che’s popularity, which made him a potential rival for authority. Castro sent Che on a mission to Bolivia, but towards the end of March 1967 Castro simply cut off Guevara’s support, leaving him stranded. Captain Gary Prado Salmon, the Bolivian officer who captured Che, confirmed that Guevara told him that the decision to come to Bolivia was not his own, it was Castro’s. One of Fidel’s biographers remarked,
In a very real sense Che followed in the shadows of Frank Pais, Camilo Cienfuegos, Huber Matos, and Humberto Sori Marin [all close backers of Castro during the revolution]. Like them, he was viewed by Castro as a ‘competitor’ for power and like them, he had to be moved aside ‘in one manner or another.’ Che Guevara was killed in Bolivia but at least he escaped the ignominy of execution by his revolutionary ally, Fidel Castro. Humberto Sori Marin was not so ‘fortunate.’ Marin, the commander of Castro’s rebel army, was accused of conspiring against the revolution. In April 1961, like so many other erstwhile backers of Fidel Castro, he too was executed.3
Political transitions are filled with examples of supporters who help a leader to power only to be replaced. This is true whether we look at national or local governments, corporations, organized crime families, or, for that matter, any other organization. Each member of a winning coalition, knowing that many are standing on the sidelines to replace them, will be careful not to give the incumbent reasons to look for replacements.
This was the relationship Louis XIV managed so well. If a small bloc of backers is needed and it can be drawn from a large pool of potential supporters (as in the small coalition needed in places like Zimbabwe, North Korea, or Afghanistan), then the incumbent doesn’t need to spend a huge proportion of the regime’s revenue to buy the coalition’s loyalty. On the other hand, more must be spent to keep the coalition loyal if there are relatively few people who could replace its members. That is true in two circumstances: when the coalition and selectorate are both small (as in a monarchy or military junta), or the coalition and selectorate are both large (as in a democracy). In these circumstances, the incumbent’s ability to replace coalition members is pretty constrained. Essentials can thereby drive up the price for keeping them loyal. The upshot is that there is less revenue available to be spent at the incumbent’s discretion because more has to be spent to keep the coalition loyal, fending off credible counteroffers by political foes.
When the ratio of essentials to interchangeables is small (as in rigged-election autocracies and most publicly traded corporations), coalition loyalty is purchased cheaply and incumbents have massive discretion. They can choose to spend the money they control on themselves or on pet public projects. Kleptocrats, of course, sock the money away in secret bank accounts or in offshore investments to serve as a rainy-day fund in the event that they are overthrown. A few civic-minded autocrats slip a little into secret accounts, preferring to fend off the threat of revolt by using their discretionary funds (the leftover tax revenue not spent on buying coalition loyalty) to invest in public works. Those public works may prove successful, as was true for Lee Kwan Yew’s efforts in Singapore and Deng Xiaoping’s in China. They may also prove to be dismal failures, as was true for Kwame Nkrumah’s civic-minded industrial program in Ghana or Mao Zedong’s Great Leap Forward, which turned out to be a great leap backwards for China.
We have seen how the desire to survive in office shapes some key revenue generation decisions, key allocation decisions, and the pot of money at the incumbent’s discretion. Whether the tax rate is high or low, whether money is spent more on public or private rewards, and how much is spent in whatever way the incumbent wants dictates political success within the confines of the governance structure the leader inherits or creates. And our notion of governing for political survival tells us that there are five basic rules leaders can use to succeed in any system:
 
Rule 1: Keep your winning coalition as small as possible. A small coalition allows a leader to rely on very few people to stay in power. Fewer essentials equals more control and contributes to more discretion over expenditures.
Bravo for Kim Jong Il of North Korea. He is a contemporary master at ensuring dependence on a small coalition.
 
Rule 2: Keep your nominal selectorate as large as possible. Maintain a large selectorate of interchangeables and you can easily replace any troublemakers in your coalition, influentials and essentials alike. After all, a large selectorate permits a big supply of substitute supporters to put the essentials on notice that they should be loyal and well behaved or else face being replaced.
Bravo to Vladimir Ilyich Lenin for introducing universal adult suffrage in Russia’s old rigged election system. Lenin mastered the art of creating a vast supply of interchangeables.
 
Rule 3: Control the flow of revenue. It’s always better for a ruler to determine who eats than it is to have a larger pie from which the people can feed themselves. The most effective cash flow for leaders is one that makes lots of people poor and redistributes money to keep select people—their supporters—wealthy.
Bravo to Pakistan’s president Asif Ali Zardari, estimated to be worth up to $4 billion even as he governs a country near the world’s bottom in per capita income.
 
Rule 4: Pay your key supporters just enough to keep them loyal. Remember, your backers would rather be you than be dependent on you. Your big advantage over them is that you know where the money is and they don’t. Give your coalition just enough so that they don’t shop around for someone to replace you and not a penny more.
Bravo to Zimbabwe’s Robert Mugabe who, whenever facing a threat of a military coup, manages finally to pay his army, keeping their loyalty against all odds.
 
Rule 5: Don’t take money out of your supporter’s pockets to make the people’s lives better. The flip side of rule 4 is not to be too cheap toward your coalition of supporters. If you’re good to the people at the expense of your coalition, it won’t be long until your “friends” will be gunning for you. Effective policy for the masses doesn’t necessarily produce loyalty among essentials, and it’s darn expensive to boot. Hungry people are not likely to have the energy to overthrow you, so don’t worry about them. Disappointed coalition members, in contrast, can defect, leaving you in deep trouble.
Bravo to Senior General Than Shwe of Myanmar, who made sure following the 2008 Nargis cyclone that food relief was controlled and sold on the black market by his military supporters rather than letting aid go to the people—at least 138,000 and maybe as many as 500,000 of whom died in the disaster.4

Do the Rules Work in Democracies?

At this point, you may be saying, Hold on! If an elected leader followed these rules she’d be out of the job in no time flat. You’re right—almost.
As we’ll see throughout the chapters to follow, a democratic leader does indeed have a tougher time maintaining her position while looting her country and siphoning off funds. She’s constrained by the laws of the land, which also determine—through election procedures—the size of the coalition that she needs in order to come to power. The coalition has to be relatively large and she has to be responsive to it, so she does have a problem with Rule 1. But that doesn’t mean she doesn’t try to follow Rule 1 as closely as she can (and all of the other rules too).
Why, for example, does Congress gerrymander districts? Precisely because of Rule 1: Keep the coalition as small as possible.
Why do some political parties favor immigration? Rule 2: Expand the set of interchangeables.
Why are there so many battles over the tax code? Rule 3: Take control of the sources of revenue.
Why do Democrats spend so much of that tax money on welfare and social programs? Or why on earth do we have earmarks? Rule 4: Reward your essentials at all costs.
Why do Republicans wish the top tax rate were lower, and have so many problems with the idea of national health care? Rule 5: Don’t rob your supporters to give to your opposition.
Just like autocrats and tyrants, leaders of democratic nations follow these rules because they, like every other leader, want to get power and keep it. Even democrats almost never step down unless they’re forced to.5 The problem for democrats is that they face different constraints and have to be a little more creative than their autocratic counterparts. And they succeed less often. Even though they generally provide a much higher standard of living for their citizens than do tyrants, democrats generally have shorter terms in office.
Political distinctions are truly continuous across the intersection of the three dimensions that govern how organizations work. Some “kings” in history have actually been elected. Some “democrats” rule their nations with the authority of a despot. In other words, the distinction between autocrats and democrats isn’t cut and dried.
Having laid the foundation for our new theory of politics and having revealed the five rules of leadership, we’ll turn to the big questions at the heart of the book, often using the terms autocrats and democrats throughout, to show how the games of leadership change as you slide from one extreme to the other on the spectrum of small and large coalitions. But just remember, there’s always a little mix of both worlds regardless of the country or organization in question. The lessons from both extremes apply—whether you’re talking about Saddam Hussein or George Washington. After all, the old saw still holds true—politicians are all the same.