Thursday, October 7, 2010

Do Rentier states impede democracy and economic liberalization?

This is the last question on today's sliderocket. We briefly answered it in class, but I would like to talk about the question more.

A rentier state, as we discussed, is a state which derives most its income from collecting rent rather than taxes. The Pathology of Oil by Ross also does a great job in explaining this too. An example, the one we used in class, is Egypt collecting rent from ships using the Suez canal. The government usually spends this high income on the state and programs for its citizens. However, since the government doesn't (or minimally) tax the people, it does not need to provide adequate representation. "No representation without taxation", as Professor Webb wrote on the board. Thus, subscribing to this idea, states do not need to listen to its populace for governance. I am not endorsing this style of leadership, its just a fact. Look a Kuwait or Saudi Arabia for other examples.

Since leaders do not have to listen to their people, as they are only being minimally to not taxed while using the states' services, it continues autocratic rule. Why would a state need democracy, if they are getting income and providing its citizens? The rentier concept presents a direct hurdle to democracy, and accelerates the stability of autocratic control in the Middle East. Therefore, there are no real reasons or incentives to reform government or liberalize the economy. If  one liberalizes, they have a chance of the rentier state backfiring and democracy growing.

People often wonder why democracy hasn't 'spread' to the Middle East. We discussed whether the region was "exceptional". Is it? The only way the region is "exceptional" is that it is comprised of many rentier states because of its resources. The need for oil by nations, the use of the Suez canal for shipping, and other reasons have made the rentier state possible in the region. The rentier concept, combined with history, and religion produced the region we see today.

I made a point in class that the rentier state has flaws. First, the resource or whatever the state was getting rent on could run out or become obsolete. If this happens, the state is going to need to tax and thus (eventually at least) provide representation to the people. It will also encourage the state to diversify its economy to have the people earn an income so they can continue to pay taxes. It  forces the state to find other means of production such as industrializing. Industrializing leads to modernization of society; roads, electricity, technology, organizations and special interst groups. The other way the rentier state model fails is since the government is providing for its people, this often provides education. In class Milstein pointed out that education can often be conservative. This is completely true. But other times, as Professor Webb pointed out, people send there children to western or American universities. At these institutions, the children are often educated and exposed to democracy and liberty and bring it home with them. Over time, groups form and push for reform. Its a longer process.

After being exposed to this concept, I truely believe that the rentier state is a significant factor in the authoritarian presence in the Middle East. Without the rentier concept, the region would be a totally different place. Maybe once the rentier state eventually falls, we will have democracy in the region.

Speaking on democracy, and on a much lighter note, I can't resist posting this. It has absolutely no connection to this blog post, but maybe we need Robert Burck (aka The Naked Cowboy of NYC) to fix these problems as president. Maybe if he takes a picture with Arab leaders, they may decide to democratize after all. Too bad he won't be in Times Square anymore, it was a better job for him.

1 comment:

  1. I agree with all your points about the flaws in rentier states. I'm doing my paper on migrant workers in the Gulf states and how that effects international business and their opening up to the world economy. Doing my research I've noticed that States like Saudi Arabia are realizing that they will eventually run out of money and now are diversifying their economies and trying to attract foreign investment (such as their economic cities projects.) I just wonder how the concept of the rentier state will change as these economies start to diversify their economies.