Draft:Predatory State

The predatory state theory describes how a select group inside the government, the politicians, bureaucrats or military, or an outside group with strong lobbying power, who use the state and the policymaking process to promote private interest. This group will hoard power for themselves to keep their position and will deliberately sabotage any reforms who would endanger their wealth. The neo-institutionalist economics define meanwhile each state as a predator state. States after their definition relay on predation to offer protection and to provide public goods Predatory behaviour may differ from kleptocratic behaviour by the appropriation of non-monetary property for the benefit of the elites or to weaken their enemies.

Appearance of predatory behaviour

Predatory behaviour is likely to arise in circumstances who are common in developing nations. Those circumstances are societal in nature or are placed in the environment of the society. Predatory behaviour emerges in the societies in which political power is beneficial and society itself is unstable, possibly highly politicised. Economic circumstances supporting the rise of predatory behaviour is the abundance of natural resources and a lack of factors complementary to public investment. (Robinson 1999, 3). In the case of Africa showed a study in 1997 that ethnically diverse societies can increase predatory behaviour. While the study did not produce a mechanism for this, explained Robinson this with ethnic groups being better in solving collective problems and in this way contest political power than other social groups.

Perspectives

Economists see the state in two different approaches, predatory or contractual. In the first approaches acts the state as a coercive and exploitative, while in the second he acts as a provider of services. Neo-institutionalists economists see the contractual perspective as a system of predators protecting the prey for its own predation into the private sector. Such perspectives of state behaviour dates back to Platon who described predation and Hobbes who described in his work Leviathan the states function as a contractual.

Contractual Perspective

Neo-institutionalist economics emphasize three features of predatory behaviour in a contractualvision:

• Contractual rationales for rationales: Predation is a form of implicit transaction whichextends the meaning of “mutual gain from trade” and “voluntary exchange” far beyond oftheir meaning. Involuntary transactions can be treated as voluntary.

• Everyone is a predator: Everyone in power is or can be a predator, and only losers are prey.

• Positive rent-seeking: A contractual vision in which does not exclude predatory behaviour, but enough rent may turn the predator into a protector. Rent can be positive or welfare-enhancing.

Predatory Perspective

An appropriate vision of the state argues that a predatory state only protects to promote its predation. Predators offer protection only under three circumstances:

• Domestication to limit exit option of prey: A protection racket is offered in a multiple-predatory system to prevent prey from leaving the country. Predators are in competition with each other, and prey is offered some form of protection.
• Maximizing the state’s revenue: The predator is motivated to protect subjects to gain more from their production than from a final pillaging. The ruler’s time horizon determines if this means occasionally pillaging or a production enhancement by a combination of aggression and protection.
• Political stability: Political stability is seen as a key factor to maximize revenue. To ensure stability, it is necessary to protect a few rights of the prey to keep them from leaving or from becoming disloyal.

A challenge for the predatory perspective is the explanation of how liberal democratic welfare states can be predatory. Political economists have argued that states are either active or passive predators and have convinced the prey that it is not a prey by hidding the predation as wealth transfer.

Rent-creating devices

Predators use so called rent-creating devices to profit from their position. The methodes and secrecy in which they operate are depending on the power of the predator. Examples for rent-creating devices are:

• Taxation on foreign trade: Taxation on foreign trade can be abused by predators to lower or increase the import costs for specific goods. So were fine liquors for the elite of Haiti virtually absent from duty lists between the 1910s and the 1970s, while textiles soap and kerosene had been heavily taxed.

• Smuggling: The illegal export or import of goods, especially if illegal goods. An example was Ernest Bennett, the father-in-law of the Haitian dictator Jean-Claude Duvalier.

• Sales of public offices: The sale of position in the military and administration used to be a legal and standardized practice in Europe and China. The Philippines had such an institutionalized sale of offices during the 1970s that a regular market with price tags. In India, trickled the money generated by this up into the hierarchy.
• Government Contracts: Government contracts can be made into a kickback system.
• Relocation of budgeted funds: The transfer of funds from one category or project to another. Idi Amun used up to 50& of Uganda’s government money for the military, which had only needed a fraction of the money.
• Confiscation: Confiscation is the most arbitrary form of taxation. Property of individuals as well as of entire groups are possible. A case for the latter was the expulsion of the Asians from Uganda in 1972 and the following seizure of 3,500 companies. Handed to Idi Amin’s supports went most of them bankrupt in 1975 having been stripped down of all of their assets.
• Milking State Enterprises: State-owned enterprises can lose funds who are then siphoned tothe elites. An example is Ferdinand Macros, who channelled funds from state owned companies to his family and supporters.

Consequences of Predation

Predation has a width range of negative consequences for the country ranging from income and wealth inequality, inefficient distribution of resources and investments, migration and technological development. Taxing practices targeting are used against companies or branches not controlled by the predators or their supporters while high tariffs decrease the amount of imported goods which forces people to pay the price of the locally produced alternatives – who are produced by the companies of the predators and their supporters. Revenue from the taxes can go completely into the pockets of the elite and corruptions is way easier to hide. Mismanagement of former Asian companies in Uganda caused many of them being closed down and stripped of every asset. Public projects can lose their social profitability because of the interest for personal profitability, and the distribution of resources in the government is manipulated towards the goals of the predatory elite. Public investments into projects beneficial will be granted higher priorities than ones who are not or not made. A brain drain similar to the one in Haiti between 1960 and 1968 is also observable. The brain drain in Equatorial Guinea under Franciso Macìas Nguema was so extreme that after his death in 1979 it might have been possible that all university graduates had left the country. Technological development done by small start-ups is especially hampered by the passive effects of predatory states, the ineffective distribution of resources and the brain drain, and may not be able to pay the rents and are at risk of being confiscated by the elite.

Political and military ramifications include government posts filled by people who achieved their jobs by buying them and not by merit. Politicians are motivated to rely on illegal options to stay in power, with presidents being able to enforce their survival with threats and even murder. Military officers are more swayed by money when deciding for new weapons of the military, and the enforcement of laws becomes less effective.