What impact does the head of state have on a country’s GDP? Do republics deliver a better standard of living for their citizens? These are some of the questions Wharton International Management Prof. Mauro Guillen sought to answer when he analyzed 110 years’ worth¹ of data from 137 countries.
While he expected to find evidence to support his theory that republics perform better than monarchies, Guillen found the opposite.
“Across the board, what I found was that no matter the comparisons, monarchies always delivered over this time period, on average, a higher standard of living for the population,” he said. “Even more surprising was the magnitude of the difference.”
His findings had a few caveats, though. Monarchies outperformed other forms of government only if it followed these mechanisms, related specifically to property rights:
- Keep Internal Conflict Under Control
“Countries that have fewer internal conflicts over the distribution of wealth are likely to protect property rights better.”
- Reduce Executive Tenure
Countries that limit governmental leadership terms protect property rights better. “When politicians perpetuate themselves in power, they start doing a lot of crazy things.”
- Limit Executive Discretion
Guillen cited the U.S. “checks and balances” system as an example of reducing a leader’s ability to make decisions on their own, which in turn minimizes the possibility that property will be confiscated in full or in part through taxes or seizures.
“If a monarchy actually uses all three mechanisms, then the increase in per capita income would be about $1,500 per person, per year. These are not small effects,” Guillen said.
Long live the Queen.
Posted: November 22, 2019