Dynasties in democracies: The political side of inequality

Ronald U Mendoza , 11 March 2012

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For those who care about such things, rising income inequality is considered an obstacle for development. Indeed, numerous articles and studies have helped elevate our understanding of this social issue as well as identify and sharpen various policies to bridge the growing income and development divides between the über-rich and the destitute (eg Atkinson et al 2011, Fernholz and Fernholz 2012, Galbraith 2011, Milanovic 2007, and Rajan 2010).

Nevertheless, far less attention has been given to the mirror image of income inequality in the political sphere: political dynasties. The rise of elected officials with extensive familial links to present and previous politicians in power signals a growing inequality in access to power and political influence. That, in turn, could also affect the persistence and prevalence of social and economic divides.

Numerous politicians have since taken over the reins of power from their family members (notably fathers and husbands) so that a few families dominate the top echelons of power in many democracies. A brief list includes: President Cristina Fernández de Kirchner (wife of former President Nestor Kirchner) in Argentina, Prime Minister Yingluck Shinawatra (sister of former Prime Minister Thaksin Shinawatra) in Thailand, former President George W Bush (son of former President George HW Bush) in the United States, Prime Minister Najib Razak (son of former Prime Minister Abdul Razak) in Malaysia, and former President (now Congresswoman) Gloria Macapagal-Arroyo (daughter of former President Diosdado Macapagal ) in the Philippines. The President of the Philippines, Benigno ‘Noynoy’ Aquino, III, is the scion of the Aquino clan. His mother is the very popular former President Corazon Aquino and his father is former Senator Benigno ‘Ninoy’ Aquino, Jr.

Dynastic leaders in line to the throne

Many other leaders appear to be ‘pipelined’ for the top leadership positions in their respective countries. These include Rajiv Gandhi, the son of former Indian Prime Minister Indira Gandhi, who in turn was the daughter of India’s first Prime Minister, Jawaharlal Nehru. Another is Aung San Suu Kyi, the Nobel laureate who is now running for Parliament in Myanmar. She is the daughter of Aung San, whom many consider to be the founding father of the Union of Burma.

In varying degrees, political dynasties can exist in any democracy regardless of its structure, history, or the level of economic development of the country. Legislators and parliamentarians with dynastic links range from 6% in the United States to as high as 37–40% in the Philippines and Mexico. In the case of the Philippines, if we also consider familial links to local government units, the figure reaches an amazing 70%. Roughly 80% of the youngest legislators in the Philippines also hail from dynastic political families.

Dynasties across democracies nevertheless differ in important ways. During the period between 1996 and 2007, over 90% of Japanese politicians were male and some 30% of the Japanese parliament was from political dynasties. Daughters are unlikely to form part of political dynasties in that country, as power is often passed on to sons. A recent study noted that of over 120 Japanese politicians described as dynastic, only 3 are women (Asako et al 2010). On the other hand, one study of political dynasties in the US Congress showed how dynasties helped to improve the gender balance in the US Congress, by allowing more female legislators to get in via their familial ties (Dal Bo et al 2009).

The longer runway and the stationary bandit

Former Prime Minister Lee Kuan Yew of Singapore served for over three decades and remains the world’s longest serving Prime Minister. Most were not surprised when his eldest son, Lee Hsien Loong, eventually followed in his father’s footsteps and took over the reins of power in 2004. Many credit the Lee dynasty for the sustained and stable reform and development process that have enabled Singapore to reach first world status today. Indeed some analysts concede that the performance of a government official is a function of the security and longevity of his or her tenure in office. A famous theory by Mancur Olson suggests that even less benign leaders with a secure hold on power may behave like a ‘stationary bandits’, benefiting from their position yet ensuring that growth and development nevertheless takes place in order to continue to secure their hold. A darker view suggests that the less-benevolent and less-scrupled would turn to wide-scale and more destructive pillaging if given a short window of power.

There is really very little evidence to disprove either view. While Lee Kuan Yew and his family presided over the rapid development and industrialisation of Singapore, other leaders with similar long stints in power were not as benign. Examples include Ferdinand Marcos, who served as President of the Philippines and presided over a more than 20-year period which saw poverty almost double; and the Duvalliers in Haiti (Papa Doc the father who was President from 1957–71 and Baby Doc the son who was President from 1971–86), whose widely known regimes of plunder and excess left the country as the most indebted and least developed in Latin America.

Political inequality and poverty

Patterns of political dynasties in the Philippines offer a very sobering view of what political inequality looks like. Our recent study of political dynasties in the 15th Philippine House of Representatives during the 2003–07 period (see Mendoza et al 2012) suggests that about 80% of dynastic legislators experienced an increase in their net worth. About half of the sample did so well that their asset growth beat the returns from investing in the Philippines Stock Exchange. Political dynasties in the Philippine Congress also tend to dominate the major political parties, comprising anywhere from 60–80% of each of the major parties (see Figure 1).

Figure 1. Political dynasties dominate the key Philippine political parties

Source: Mendoza et al (2012).

Dynastic legislators are also richer, correcting for one non-dynastic outlier, Congressman Manny Pacquiao, the world champion Filipino boxer who was elected to the Congress in 2010. Political dynasties win in elections by much larger margins of victory, and in recent years increased as a share of the total legislators (see Figure 2).

Figure 2. Share of dynastic politicians in the Philippine Congress over time: Preliminary snapshot

Source: Mendoza et al (2012).

Most troubling – and this is the main link to the income inequality side – political dynasties in the Philippines are located in regions with relatively higher poverty levels (about five percentage points higher poverty incidence compared to districts with non-dynastic legislator incumbents). While these findings do not allow us to conclude causality, two competing explanations paint a worrying picture. Either poor people continue to vote for political dynasties, or dynasties continue to frustrate poverty-reduction efforts. Neither of these explanations is palatable for most of us who long to see development accompany democracy.

References

Asako, Y, T Iida, T Matsubayashi, and M Ueda (2010), “Dynastic legislators: Theory and evidence from Japan”, Mimeo.

Atkinson, AB, T Piketty, and E Saez (2011), “Top incomes in the long run of history”, Journal of Economic Literature, 49(1):3–71.

Balisacan, A and E Pernia (2002), “Going beyond cross-country averages: Growth, inequality and poverty reduction in the Philippines”, World Development 32(11):1891–907.

Dal Bo, E, P Dal Bo, and J Snyder (2009), "Political Dynasties", Review of Economic Studies,76(1):115–142.

Fernholz, R and R Fernholz (2012), “Wealth Distribution without Redistribution”, VoxEU.org, 27 February.

Galbraith, J (2011), “Inequality and economic and political change: a comparative perspective”, Cambridge Journal of Regions, Economy and Society, 4(1):13–27.

Mendoza, RU, E Beja, V Venida, and D Yap (2012), “An Empirical Analysis of Political Dynasties in the 15th Philippine Congress”, Asian Institute of Management Policy Center Research Paper.

Milanovic, B (2007), Worlds Apart: Measuring International and Global Inequality, Princeton University Press.

Olson, M (2003), “Dictatorship, Democracy, and Development” in Knack, S (ed) Democracy, Governance, and Growth, Ann Arbor: University of Michigan Press.

Rajan, R (2010), “How inequality fueled the crisis”, Project Syndicate, 9 July.

Rocamora, J (1998), “Corruption in the Philippines. A Beginner's Guide (Introduction)” in Coronel, S (ed) Pork and Other Perks: Corruption and Governance in the Philippines, Pasig: Philippine Center for Investigative Journalism. 

Topics: Development, Politics and economics, Poverty and income inequality
Tags: Inequality, Philippines, Political Economy

Ronald U Mendoza
Associate Professor of Economics, Asian Institute of Management

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