Equality, the Disinterested Government and Economic Growth*
Daxing He Yang Yao[1]
No. E2013002 May 9, 2013
Abstract: We put forward a dynamic model to explain how initial political and economic equality can lead to a disinterested government in an autocracy. By a disinterested government, we mean a government that does not take into consideration non-productive factors, the political power of social groups in particular, when it allocates resources across the society. Equality of political power reduces the probability of any social group to overthrow the autocrat, and equality of economic assets reduces social groups’ incentives to grab from other groups. We show that the social output and its growth rate are both higher under a disinterested government than under a biased government. We also analyze the stability of social structure and the evolution of inequality under a disinterested government when social groups have different levels of production efficiency. Lastly, we conduct case studies on China, Korea and Taiwan to show that our model can provide new insights to understanding the diverse performance of autocracies.
Keywords: Equality, disinterested governments, authoritarian states
*We thank Uri Bram, Daniel Bromley, Michael Carter, Eward Friedman, Oded Galor, Yukon Huang, Phillip Keefer, John Knight, Mi Luo, Rui Mao, Gerard Padro-I-Miquel, Debraj Ray and James Wen for their helpful comments and suggestions. An early version of the paper has been presented in seminars in Brown University, Fudan University, Harvard University, The New School, New York University, University of Oxford, Peking University, Trinity College, World Bank, Wuhan University, and Xiamen University. We thank the participants for their comments. Financial support provided by the Key Research Bases project 04JJD790002, the Ministry of Education, the People’s Republic of China is greatly appreciated.
[1] Daxing He, assistant professor, School of Marxism, Peking University; Yang Yao, professor, China Center for Economic Research, National School of Development, Peking University, Phone: 86-10-62753103, Fax: 86-10-62751474, Email: yyao@ccer.pku.edu.cn.
