Violent political insurgencies display resilient structures that allow their growth and success. They must provide incentives to avoid internal rent-seeking among the members and, at the same time, discourage coalitions from undermining the direction and control of the insurgency. I study how insurgencies’ response to these trade-offs determines their political and military structures. A vertical and centralized hierarchy will prevail to minimize monitoring costs. However, a horizontal hierarchy will emerge within the insurgency to cede part of the insurgency surplus to solve their collective action problems and effectively coordinate violence. The evidence rests on the analysis of the Shining Path, the most radical face of the Communist revolution in the Western Hemisphere and a pioneer organization for the most recent insurgencies. I argue that the variation of this internal hierarchy played a significant role in its dramatic growth from a small group of students to a lethal terrorist organization with international outreach.
{"title":"The Shining Path of Peru: An Organizational Theory for Conflict","authors":"Edwar E. Escalante","doi":"10.2139/ssrn.3941380","DOIUrl":"https://doi.org/10.2139/ssrn.3941380","url":null,"abstract":"Violent political insurgencies display resilient structures that allow their growth and success. They must provide incentives to avoid internal rent-seeking among the members and, at the same time, discourage coalitions from undermining the direction and control of the insurgency. I study how insurgencies’ response to these trade-offs determines their political and military structures. A vertical and centralized hierarchy will prevail to minimize monitoring costs. However, a horizontal hierarchy will emerge within the insurgency to cede part of the insurgency surplus to solve their collective action problems and effectively coordinate violence. The evidence rests on the analysis of the Shining Path, the most radical face of the Communist revolution in the Western Hemisphere and a pioneer organization for the most recent insurgencies. I argue that the variation of this internal hierarchy played a significant role in its dramatic growth from a small group of students to a lethal terrorist organization with international outreach.","PeriodicalId":348474,"journal":{"name":"Free Market Institute at Texas Tech University Research Paper Series","volume":"78 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122821422","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The Foreign Corrupt Practices Act (FCPA) prohibits US firms from paying bribes to foreign public officials. We show that FCPA enforcement has no positive effect on the GDP per capita of the countries of these officials but, rather, increases their countries’ shadow economy. When public officials take bribes both from legal and illegal markets, corruption enforcement in legal markets induces them to make up for lost rents by taking more bribes from illegal markets. In equilibrium, they enforce less against illegal producers, thereby increasing the size of illegal markets. We find that one case of FCPA enforcement alone increases the shadow economy by as much as 0.25 percentage point (pp), homicide rates by 0.02 pp, and trade misinvoicing by 0.5 pp.
{"title":"Bribe-Switching","authors":"Desiree A. Desierto, Jamie Bologna Pavlik","doi":"10.2139/ssrn.3843425","DOIUrl":"https://doi.org/10.2139/ssrn.3843425","url":null,"abstract":"The Foreign Corrupt Practices Act (FCPA) prohibits US firms from paying bribes to foreign public officials. We show that FCPA enforcement has no positive effect on the GDP per capita of the countries of these officials but, rather, increases their countries’ shadow economy. When public officials take bribes both from legal and illegal markets, corruption enforcement in legal markets induces them to make up for lost rents by taking more bribes from illegal markets. In equilibrium, they enforce less against illegal producers, thereby increasing the size of illegal markets. We find that one case of FCPA enforcement alone increases the shadow economy by as much as 0.25 percentage point (pp), homicide rates by 0.02 pp, and trade misinvoicing by 0.5 pp.","PeriodicalId":348474,"journal":{"name":"Free Market Institute at Texas Tech University Research Paper Series","volume":"140 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-05-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122679755","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
I examine 19th century Mexico for a better understanding of how and why it was so difficult to create the institutions of a modern state. I show that Mexico suffered from a vicious cycle in that period, something that is probably common to many developing countries, in that they needed a large army in order to create a monopoly on violence, but they did not have the money to fund such an institution. The chronic lack of funding led to a situation where the country was littered with roving bandits, and the central government had little ability to stop the constant revolts and banditry that prevailed. It was not until the late 19th century that the government was finally able to create a centralized police force and the beginnings of centralized, state control.
{"title":"Crawling towards Weber? Mexican State Capacity in the 19th Century","authors":"Robin M. Grier","doi":"10.2139/ssrn.3940700","DOIUrl":"https://doi.org/10.2139/ssrn.3940700","url":null,"abstract":"I examine 19th century Mexico for a better understanding of how and why it was so difficult to create the institutions of a modern state. I show that Mexico suffered from a vicious cycle in that period, something that is probably common to many developing countries, in that they needed a large army in order to create a monopoly on violence, but they did not have the money to fund such an institution. The chronic lack of funding led to a situation where the country was littered with roving bandits, and the central government had little ability to stop the constant revolts and banditry that prevailed. It was not until the late 19th century that the government was finally able to create a centralized police force and the beginnings of centralized, state control.","PeriodicalId":348474,"journal":{"name":"Free Market Institute at Texas Tech University Research Paper Series","volume":"11 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122425535","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper, we analyze the e ect that alternative decision-making structures have on equilibrium in ation rates. Our analysis considers four scenarios: strong dictatorship, weak dictatorship, strong democracy and weak democracy. Each scenario implies different ownership structures over the real value of the money stock, which we treat as a common pool resource. We find that the equilibrium inflation rate that emerges under strong dictatorship and strong democracy is consistent with the revenue-maximizing rate, while the rate that emerges under weak dictatorship or weak democracy exceeds the revenue-maximizing rate. In other words, when political property rights over the real value of the money stock are ill-defined, there is a tragedy of the monetary commons. Our analysis explains why inflation rates are lower in more democratic countries and those that experience lower bouts of political instability.
{"title":"Democracy, Dictatorship, and the Monetary Commons","authors":"Bryan P. Cutsinger, L. Rouanet","doi":"10.2139/ssrn.3934048","DOIUrl":"https://doi.org/10.2139/ssrn.3934048","url":null,"abstract":"In this paper, we analyze the e ect that alternative decision-making structures have on equilibrium in ation rates. Our analysis considers four scenarios: strong dictatorship, weak dictatorship, strong democracy and weak democracy. Each scenario implies different ownership structures over the real value of the money stock, which we treat as a common pool resource. We find that the equilibrium inflation rate that emerges under strong dictatorship and strong democracy is consistent with the revenue-maximizing rate, while the rate that emerges under weak dictatorship or weak democracy exceeds the revenue-maximizing rate. In other words, when political property rights over the real value of the money stock are ill-defined, there is a tragedy of the monetary commons. Our analysis explains why inflation rates are lower in more democratic countries and those that experience lower bouts of political instability.","PeriodicalId":348474,"journal":{"name":"Free Market Institute at Texas Tech University Research Paper Series","volume":"108 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115485852","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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