Machiavelli’s book “The Prince” is about how a leader gains and maintains power, he differed from other analysts in that he talked about the leader’s self interests as opposed to the nation’s best interests. He is under attack constantly because he reveals the unpleasant truth that all leaders, or all governments from democracies to dictatorships are only concerned about one thing which is maintaining power. Unfortunately for Machiavelli, game theory had not been invented, so all he had to rely on was historical examples and his own observations.

The book The Dictator’s Handbook: Why Bad Behavior is Almost Always Good Politics started out as a mathematical analysis on what a leader needs to gain control and to keep control. It then shows the primary concern of all leaders is to maintain control and self benefit. The authors also give historical examples of this and an explanation why this is so. A leader which switch from an absolute dictatorship to a democracy depending on which benefits him more. An example of this is Chiang Kai-shek, when he controlled parts of mainland China he was a dictator, when he was driven out of mainland China to Taiwan he setup a democracy. The authors then show the same principles for Presidents and CEOs of companies and all other forms of leadership.

A mathematical model does not need to be perfect

People often think that a model needs to be perfect to gain knowledge from it. Also the moment you mention math, it scares people away, and if you mention the word mathematical model it terrifies people. They get the idea you need to be mathematical geeks like the authors of this book. The brilliance of the book, is the authors show how to setup simple mathematical models with just basic math skills. This type of knowledge then can be applied in other areas. The important thing to remember is the model will not be 100% accurate, but regardless we can learn something from it.

Lets setup our own mathematical model

There is a small nation in darkest Africa, ok in our politically correct times we are no longer supposed to refer to places like Africa as darkest. This nation has the following attributes, we will intentionally make them extremely simple to illustrate a point.

  • it has a population of 100 people
  • it has a diamond mine which can employ 5 people
  • any member of the population can work inside the diamond mine
  • to control the diamond mine and the entire population requires 5 people with AK47s. All members of the population can operate an AK47.

In this scenario you want to become the leader of this nation, the first thing that you realize is you need 5 people with AK47s take over the nation. Right away we have learned that to gain power a leader needs other people to help gain power.

You manage to get 5 AK47s from a US military aide program, the USA in this scenario is very devious they give aspiring leaders non USA equipment. You then seize control of the island, you stick 5 people in the diamond mine and they are mining diamonds which you then sell to USA where they are made into engagement rings. You now are faced with the following questions:

  • How much to pay the 5 workers in the diamond mine ?
  • How much to give the other 90 citizens of your nation ?
  • How much to pay yourself ?
  • How much to pay the 5 soldiers with the AK47s ?

The first question is fairly easy to answer, the amount you pay the 5 diamond miners should be less then the cost of 5 AK47s, but higher then the rest of the population so they have an incentive to work. If they get 5 AK47s they will revolt and kill you and your career as a tyrannical dictator will be over.

The amount you pay the other 90 citizens should be just a subsistence level, like the workers you do not want them to have the ability to get 5 AK47s. You might ask the question, why give them anything at all ? Why not let them all starve to death ? A leader wants to have what the authors of the book call interchangeables. Basically people who can replace in this case either the miners or your 5 soldiers. The reasoning is, if you suspect that 1 of your 5 soldiers is going to do a coup d’é·tat and overthrow you. Then you can eliminate him and replace him with one of the 90.

The amount you should pay yourself, should be as much as possible. The reason being, maybe you might lose control. If you lose control, you want enough money socked away to flee your nation and then pay off a country like USA to let you stay there. Being a dictator who has planned ahead, you have kept evidence that USA was the one who gave you the AK47s in the first place. There are always factors beyond your control, Russia decides they want to get in on the engagement ring market, they decide to arm 10 of your citizens with M16s. After you flee, you want to be able to live well.

The amount that you pay your 5 soldiers is the tricky part, basically you have to do a balancing act. They already are armed, so each soldier has the ability to connive and attempt to organize the other 4 soldiers to go with him and overthrow you. So you need to pay him enough that his current rewards are greater then the risk he takes if he attempts to overthrow you. The more interchangeables you have, the lower the amount you have to pay him because there are more people who can potentially replace him. On the other hand you will spend more money on sustaining these interchangeables.

In the majority of cases, leaders are overthrown because they are unable to pay their soldiers. So in this case, maybe the price of diamonds collapses or your shipment of diamonds gets stolen or lost etc.

What have we learned from our model ?

The first thing we can see despite being extremely simplistic our model seems to resemble most resource rich countries with easily extractable resources quite closely. This indicates that our model is accurate enough to be useful. We have also learned that a leader requires people in power. One might ask the question, how come a resource rich country like Canada does not have a tyrannical dictator ? The key is Canada’s resources are plentiful but they are hard to extract, this means you need to employ more workers to extract them.

Most importantly we have learned that

A leader does no care about morality or civilization

From our model we learned that if a leader does the morally right thing it often means he will get overthrown. In this case, if he tries to educate the rest of his citizens or develop other industries it will lead to his downfall. If our dictator decided to develop an engagement manufacturing industry, this means he will no longer have a monopoly on resources and it will mean his downfall.

Why a leader would switch from a dictatorship to a democracy ?

Earlier we talked about Chiang Kai-shek, when he was leader of mainland China he had a dictatorship, but when he fled to Taiwan he established a democracy. We could setup a model, but in this case we won’t bother. On mainland China, there was a large population that had extremely low productivity. If he controlled 300 million people and only took $1 per a person per a year. This would mean an income of $300 million a year. Again if he attempts to improve the average person’s situation this increases the chances of him getting overthrown.

When he fled to Taiwan, he no longer had many people and Taiwan has few resources. The only way his new nation could make money was by developing things like manufacturing and technology. This mean his workers needed to be highly skilled, educated and needed a way to communicate with the rest of the world so they can sell their products. This meant he could no longer use brute force to maintain control, he had to provide other incentives like a higher standard of living etc.

The only difference between a dictatorship and a democracy is the number of people required to maintain power.

The terms democracy and dictator are terms which describe the number of people which the leader needs to maintain control. They are often given out arbitrarily. Oil rich Kuwait is called a democracy while oil rich Saudi is called a monarchy. But in oil rich Kuwait the amount of voters is roughly equivalent to the number of people the King of Saudi requires to maintain control.

Creating different models allows one to see things from different perspectives

If you create a model, it often allows you to see things without bias. Also when using the model it is important to ask different types of questions and attempt to answer them without biases. Often people will discover what are unpleasant truths, they will then often rationalize by stating the model is not valid. To test the validity of your model, try and see how well it compares to actual events. Of course it will never duplicate real life exactly, but in the majority of the cases it might be accurate enough to be useful.

The book itself deals with mainly leadership and control. There is a section for example on the HP/Compaq merger, at the time Carly Fiorina was attacked for the merger and called stupid. From a personal perspective what she did was brilliant.

This type of simplistic modeling does not have to be limited to just maintaining leadership for example. In my opinion similar techniques can be used in other areas.