Essay on Persistence Of Elites

Submitted By abpike28
Words: 559
Pages: 3

Persistence, of Power, Elites, and Institutions and Missing the Story The two articles Persistence, Power, Elites, and Institutions and Missing the Story both concentrate on the fact that the impact of institutions on economic outcomes depends on the interaction between de jure political power, political institutions, and de facto political power, the investments and organizations of different groups. In the first article by Acemoglu and Robinson, these ideas are developed into a model consisting of two groups, the elite and the citizens. Economy’s institutions are chosen by the elite or the citizens depending on who has more political power. Political power allocates the distribution of de jure power and de facto power within an economy. Due to the fact that the elite typically have smaller numbers and of course more money than the citizens, they find increased advantages in investing in de facto practices rather than de jure practices, uncovering that the amount of de facto political power of the elites is an equilibrium outcome and responds to incentives. In the model there is a “contest” between the elite and the citizens, and political institutions determine who has greater political power. Due to the fact that the elite class may invest more in the de facto political power, they can change de jure practices with their investments, and an invariance may occur. An invariance is when the changes in political power are based by the increased use of de facto power, or how incentives in society fuel certain groups to use lobbying, bribery, and extralegal force to achieve their political objectives. Two results of the model were found to be quite important. First, when the elite use less repressive methods, equilibrium institutions are more likely to favor the citizens. Secondly, a greater democratic advantage for citizens may result in the elite investing more to increase their de facto power. The model also displayed that there may be greater inefficiency in democracy than in nondemocracy because of the increased investments in de facto political power by the elite in the democracy, which is socially damaging and costly. In the excerpt, Missing the Story, “deregulation,” or new rules favoring big business interests and going against any sort of consumer