09 January 2011

Side payments

Power is the difference between Pareto optimality and Hicks-Kaldor optimality. Hicks-Kaldor factors in side payments to return the allocation to a welfare optimum. Those side payments are an essential feature of strongman rule, which palliates the population after siezing power, along with the national wealth. 
Policies that go beyond Pareto to Hicks-Kaldor optima could well be policies that serve the radical transformative and autocratic impulses of the resource curse rather than the moderate instincts of the democrats and creatives. 

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