Disrupting the Dysfunctional Equilibrium in Naples  
Thursday, November 29, 2012
Daron Acemoglu and James Robinson

In our discussion of factors that might create a transition from patronage to programmatic politics, our focus has been on politics, the emergence of new political parties that form outside the system of patronage (Shefter) or the transition to democracy (Lizzeri and Persico). Obviously, it’s not just politics but also economics that shapes the feasibility of transitioning out of patronage politics.

As Avinash Dixit and John Londregan pointed out in “The determinants of success of special interests in redistributive politics”, the poor value patronage more than the rich. This is intuitive (but of course it does depend on assumptions). A natural assumption is a diminishing marginal utility of income and a constant disutility of switching one’s vote in response to monetary rewards (or a disutility that increases with income). This would then imply that when someone is poor, the offer to buy their vote or give a job creates a larger increase in utility than when someone is rich. To get the same increase in utility a rich person would have to be offered more money or a higher wage (and with a constant disutility of switching one’s vote, the poor and the rich have to be given the same increase in utility for purposes of patronage politics). All of this then leads to a simple conclusion: patronage will be more effective and cheaper when targeted to the poor.

One consequence of this reasoning is that the poor’s economic options might have a first-order impact on the cost and feasibility of patronage. If so, one way of ending patronage politics might be to improve the economic opportunities of the poor and of other target groups of patronage.

An interesting example of this is in political scientist Judith Chubb’s Patronage, Power, and Poverty in Southern Italy: A Tale of Two Cities. Chubb’s book is a wonderful analysis of how the patronage machine of the Italian Christian Democratic Party functioned. It provides powerful examples of how the party bought votes and how they made sure that people voted as they agreed. For instance, prior to an election a person would be given a left shoe and told how to vote. If they went through with the agreement after the election, then they got the right shoe. The genius of the whole thing was of course that, to both the voter and the party, one shoe was useless without the other, thus helping to cement the deal on both sides. 

Chubb’s analysis also explains how this system could function in a democracy even with a large number of voters. One reason was that though giving patronage employment was expensive, it didn’t just give the Christian Democrats one vote for each job, but the vote of the whole extended family connected to the employed person. By having a relative employed, these people got preferential access to many scarce resources, for example public healthcare. Such access didn’t cost anything (they just got ahead of other people in the queue), but it was very effective in ensuring political support.

Chubb’s book is split into two parts. The first shows this machine at work at full effectiveness in Palermo. The second part, more relevant to this post, shows how it crumbled in Naples in the 1970s. After the discussion of Palermo, it is quite a shock that this complex and very effective patronage machinery, which seemed to have every angle covered, just collapsed. How did it happen?

What Chubb shows is how important simple economic opportunities can be. In Naples, a regional development policy emanating from Rome led to the construction of car factories. These created new jobs which were relatively well paid, reducing dependence on patronage. Possibly also important, the car factories were taken over by northern communist trade unions. The combination of high paid jobs and unions was a double whammy for the Christian Democrats. The unions ended their control of appointments in the car factories while the higher wages meant that people were not so ready to sell their vote (or at least according to Dixit and Londregan’s logic which we just discussed) would have demanded a higher price, making this strategy more expensive and less feasible for the Christian Democrats). The result was a significant loosening of their grip on local politics, and in 1975 they fell from power.

Article originally appeared on Why Nations Fail by Daron Acemoglu and James Robinson (http://whynationsfail.com/).
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