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There is No Such Thing as a “Dumb” Question

There is No Such Thing as a “Dumb” Question. Bates, Greif, Singh. Synopsis. Two steps in the argument. Two person society – no government Private provision of security/property rights What are the properties of this system? How will people behave? What are the implications for welfare?

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There is No Such Thing as a “Dumb” Question

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  1. There is No Such Thing as a “Dumb” Question

  2. Bates, Greif, Singh Synopsis

  3. Two steps in the argument • Two person society – no government • Private provision of security/property rights • What are the properties of this system? • How will people behave? • What are the implications for welfare? • Then two person society with a government • What are the properties of this system? • How will people behave? • What are the implications for welfare?

  4. Two Member SocietySet up as a Game Actors: i є(i,j) Actions: wi , or work li,, or leisure mi,, or military activity Constraint: Ti=wi + li + mi Payoffs to i: Ui=Ui(Yi,Ii) where Yi=f(wi)+g(mi)f(wj)

  5. What is the Nature of this Game?

  6. With Repeated Interactioncan have political order In repeated interaction, can play punishment strategies If one person steals at t=0, Then other can choose to punish: E.g. “Grim trigger” For t=1,2,...,∞, mj>0. If future losses given sufficient weight, then mi=0,at t=0 This claim follows from the “folk theorem” of repeated games

  7. Yields Following PayoffsPossibility of “Folk Theorem” Defection Payoffs + 0 - Punishment phase Time

  8. I Study Development • Why may I not wish to appeal to the Folk Theorem?

  9. What if Development Took Place:What if economic growth? Defection Increment of value Payoffs + 0 - Punishment phase Time

  10. Importance for Fighting

  11. First Best Therefore Unlikely Therefore we looked at two other equilibria Neither first best. But: One with peace One with prosperity

  12. Peace mi = 0 Implies: Ti=wi + li + mi Or that better to be poor

  13. Prosperity f(wi) Implies Ti=wi + li + mi Or that better to be prepared to fight

  14. Think what this implies Demilitarization Prosperity

  15. People Like Both Demilitarization Prosperity

  16. Think of a Third Axis:Wellbeing Wellbeing Ideal point Demilitarization Prosperity

  17. Implies Political System (Statelessness) Constrains Level of Welfare Demilitarization #1: mi going to 0 Ideal point #2: f(wi) Prosperity

  18. One Implication Demand for change in political institutions Demand for the state

  19. Our strategy Posit a 3rd Actor Call this actor G Also values income and leisure Doesn’t work for a living Rather: income from m That is: from the use of force G a specialist in violence

  20. First Question We Asked Are there conditions under which a specialist in violence will choose to use force to protect rather than prey upon private citizens? OR Are there conditions under which will promote the production of wealth rather than secure its redistribution?

  21. 2nd Question Are there conditions under which private citizens will choose to put down their arms and refrain from raiding; pay taxes; and devote their time to production and leisure?

  22. Political order When both the government and the citizens choose those actions Specialist in violence: Protection Citizens: Setting aside arms Note stress on choice

  23. The State When those choices prevail in equilibrium can say there is a state.

  24. What is different about this approach

  25. Look at the problem from the point of view of G G’s Choices Equilibrium Path Punishment Phase Deviation

  26. Punishment Phase • Warlord equilibrium • States may choose to go there

  27. Payoffs Temptation + Tax revenues 0 - Punishment phase – state failure Time

  28. (Some of) The conditions for G to Adhere to the Equilibrium Path Conditions on tax revenue Not too high Not too low Conditions on discount rate High levels of patience Conditions on payoffs off the equilibrium path

  29. Note These are the conditions under which a state becomes possible. These conditions also represent the conditions under which states will fail.

  30. Thus my recent book

  31. Finishing note • State yields peace + prosperity • Goes to the first best as discount rate approaches 0.

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