On De Facto Political Power, Rent Extraction and Tenure

A political leader redistributes income between herself and society in a deterministic endowment economy. Higher rent extraction leads to higher odds of deposition. To overcome the trade-off between rent extraction and survival in power, the leader deviates resources from her consumption into de facto political power. Society can depose the leader if it is able to buy back the de facto power investments, and face other deposition costs. In equilibrium, the leader will be able to last longer in office than in the case when investment in de facto power would not be possible. The model differences between democracy and non-democracy are kept to a minimum, and leaders are assumed to behave in the same way regardless of political regime. In democracy, leaders stay in power much shorter periods, do not invest in de facto power, and in most cases appropriate less resources. The model thus accounts for important aspects of the data on durability in power and government effectiveness in both democracies and non-democratic regimes. It prescribes a high degree of independence of the economy from government for the purpose of achieving potential GDP; short term limits, and regular checks on the executive power; and great scrutiny of public procurement and spending on security, and defense.