Demagogues and the Fragility of Democracy
Dan Bernhardt (),
Stefan Krasa and
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Stefan Krasa: University of Illinois
Mehdi Shadmehr: University of North Carolina at Chapel Hill
QAPEC Discussion Papers from Quantitative and Analytical Political Economy Research Centre
We investigate the susceptibility of Democracy to demagogues, studying tensions between representatives who guard voters’ long-run interests and demagogues who cater to voters’ short-run desires. Parties propose consumption and investment. Voters base choices on current-period consumption and valence shocks. Younger/poorer economies and economically-disadvantaged voters are attracted to the demagogue’s dis-investment policies, forcing far-sighted representatives to mimic them. This electoral competition can destroy democracy: if capital falls below a critical level, a death spiral ensues with capital stocks falling thereafter. We identify when economic development mitigates this risk and characterize how the death-spiral risk declines as capital grows large.
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