Dynamic Dilemma of Political Distrust

Abstract

While it has been argued that money politics magnifies political distrust, little is known about how political distrust affects money politics. To reveal this overlooked aspect, we first construct a static electoral competition model where two candidates propose policy platforms, and an interest group determines the number of campaign contributions for each candidate. We show that political distrust mitigates money politics; that is, in the presence of high political distrust, candidates do not propose a policy favored by the interest group. Based on this mechanism, we identify the dynamic dilemma of political distrust: political distrust improves future democratic performance, whereas it is a signal of past low performance. By extending the model to a dynamic one with short-lived players, we find that this dynamic dilemma could create endogenous cycles of political distrust and money politics when the misalignment of policy preferences between voters and the interest group is severe. Political trust is accumulated, consumed, and then restored, following cycles of money politics.