Suppose that a political leader raises $1 billion in tax revenue. Assume that the leader can supply public goods worth $2,000 to each individual in society if he spends all of this tax revenue on providing public goods.

2.2. (5 points) On September 17, 2011, protesters occupied Zuccotti Park in the nancial district of New York as part of a movement that became known as Occupy Wall Street (OWS). Many of the protesters had been inspired by the popular uprisings that had occurred in Egypt and Tunisia in early 2011. The OWS protesters were opposed to what they perceived to be the undue inuence of banks and multinational corporations on the political system. They believed that the wealthiest 1 percent of society had a disproportionate share of capital and political inuence, and they used the slogan We are the 99% to highlight the problem of social and economic inequality. The OWS led to the creation of the international Occupy Movement, which has organized protests in dozens of countries around the world. The occupation of Zuccotti Park ended on November 15, 2011, when the protesters were forcibly removed by the police. Imagine that you are discussing issues of inequality and the power of the nancial sector with some of the Occupy Wall Street protesters in the fall of 2011. How would you explain the implications of the structural dependence of the state on capital to someone who doesn’t understand why left-wing parties do not always expropriate the rich when they come to power?

Because although they are 99% of the population but they belongs to “labor” class, they don’t really make big decisions. They devote more of they time on investing, how to make the maximum profits under the limited time period, unlike them, the rest of the 1% spends their time deciding how to shape the economy to benefit themselves the most.

3.

(a) Guinea Bissau

(b) Iraq under Saddam Hussein (pre-2003)

(c) The United States in 1776

(d) The United Arab Emirates

(e) Chile under Augusto Pinochet

(f) Argentina

4. Suppose that a political leader raises $1 billion in tax revenue. Assume that the leader can supply public goods worth $2,000 to each individual in society if he spends all of this tax revenue on providing public goods. Assume also that the size of the winning coalition is 250,000. With all of this in mind, answer the following questions.

(a) If the leader were to spend all of the tax revenue on providing private goods, what would the maximum value of the private goods be for each member of the winning coalition if we assume that they all receive the same amount?

(b) Would the leader prefer to provide only public goods or only private goods in this situation? Why?

(c) Now suppose that the size of the winning coalition is 750,000. Keeping everything else the same, answer the following questions.

(d) If the leader were to spend all of the tax revenue on providing private goods, what would the maximum value of the private goods be for each member of the winning coalition if we assume that they all receive the same amount?

(e) Would the leader prefer to provide only public goods or only private goods in this new situation? Why?

(f) Based on the answers you have given and the description of selectorate theory in this chapter, why is providing public goods a more ecient way for leaders in democracies to stay in power?

(g) Based on the answers you have given and the description of selectorate theory in this chapter, why is providing private goods a more ecient way for leaders in dictatorships to stay in power?

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