Murder by the State

Policy Reports | Crime

No. 211
Monday, September 01, 1997
by Gerald W. Scully

Democide and Genocide as Rent-Seeking Activities

Humans prefer to dominate rather than be dominated. They also tend to distrust and dislike people who are different. These traits often manifest themselves in government, either as official government policy or by toleration of antipathy. The extreme expression of antipathy is murder; its less pernicious expression is discrimination. Civilized societies are committed to the rule of law, which constrains the scale and scope of domination and punishes illegal acts, but the rule of law is not widespread.11 Apart from moral considerations, enmity has economic implications. The extent to which discrimination is practiced depends on its cost to the discriminator, including its legal repercussions.

"Majority groups usually have higher per capita incomes because they
discriminate against minorities."

Among groups of equal productivity, the majority group usually has higher per capita income than minority groups.12 The majority group usually gains this advantage through discrimination, which transfers income from the minority and is a form of rent seeking. The majority resists any rule or policy change that limits discrimination, since it lowers their relative income.

Among authoritarian states, domination and rent seeking by one group over another are often associated with restrictions on occupational choice, denial of educational opportunities, preferences in the licensing of trade, confiscation of land, nationalization of business, restrictions on property ownership and exchange, mobility restrictions and so on. The dominant group has an obvious vested interest in maintaining these sanctioned restrictions. For example, holders of large tracts of land in Asia and Latin America resist peasant pressure for land redistribution and often control governments. Politicians also benefit from maintaining domination; bribery and corruption are endemic throughout the less-developed world and exist in some advanced nations as well.

"A dominant group clings to power in part so it can seek ‘rents'."

Thus part of the motivation for maintaining rule is to protect the rent-seeking capacity of the dominant group. Politicians extract a fee for "renting" the coercive power of the state to that group. The aggregate size of these rents is largely unknown. In one case, it has been estimated that licensed trade in India and Turkey generated rents of about 7.3 and 15 percent of national income, respectively.13 The size of the rulers' fees also is unknown. Anecdotal evidence suggests that some, including Batista, Peron, Marcos, Duvalier and Mobutu, have extracted many millions of dollars.

Measuring the amount of rent seeking in a society is difficult in part because measuring the size and scope of rent-seeking activity is difficult. It also is hard to measure the potential national income lost because special interests capture the trade. For example, in measuring the value of trade licensing, one can compare the prices and volumes of imports under license with what they would be under free trade. But for every winner in the rent-seeking game, many others seek government favor by devoting resources to acquiring it but are unsuccessful.14 Those resources are wasted. They could have been employed in private, productive activity. Some fraction of GDP is not produced as a result of that rent-seeking activity. Where rent seeking is on a grand scale, the lost GDP may be quite large. Thus the rent-seeking losses associated with trade restrictions and other market restrictions ought to include the value of the resources withdrawn from private, productive activity.

My purpose here is to estimate the rents associated with democide. It is quite impossible to know the value (not necessarily pecuniary) of those activities to the officials who have practiced it. But it is possible to crudely calculate lost national output arising from democide. Democide makes life and property insecure and lowers the rate of savings. Reduced capital formation lowers the rate of economic growth. I hypothesize that the path of per capita income in nations that practice democide is below the path of income in nations that do not engage in it. By comparing the divergent paths of per capita income, I estimate the order of magnitude of this form of rent-seeking activity.

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