How political dynasties lead to rise in inequality

As the economic season is discussing inequality, we get more and more interesting stuff on the same.

Ronald U Mendoza of Asian Institute of Management write this very interesting piece on how dynasties in democracies lead to higher inequality.

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.

He looks at Philippines as a case study. The dynasties have made the gains whereas their constituency has remained as it is:

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).

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).

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.

Will be really interesting to replicate this study in Indian context. We have dynasty politics everywhere.

Media/newspapers continuously  point how wealth of politicians have gone up and beaten the sensex several times for many years together. They are better than any active mutual fund managers we have.

So we could just divide the politicians into dynasty and non-dynasty and see whose wealth grew more? And then see the regions they represent to figure the state of development. I will be very surprised to see if the results are any different from the one seen in Philippines above…


2 Responses to “How political dynasties lead to rise in inequality”

  1. maheep Says:

    would be an interesting exercise to compare how dynasties have fared in India vis-a-vis growth in their constituencies, state and country

  2. Aaditya Says:

    It’s interesting that you mentioned this. This is not hard to do and in fact, a step has been made in this direction (see this: Feel free to write back if you want to collaborate on this and expand the data set further.

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