Bryan Caplan  

Durability vs. Stability: The Kim Dynasty and the Stationary Bandit Model

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Thanks for many good answers on the Kim dynasty vs. the stationary bandit model.  But as far as I can tell, no one drew the distinction I was looking for: durability versus stability.

The Kim dynasty is clearly durable: it's ruled North Korea for 64 years and three generations.  But it's much harder to tell if the Kim dynasty is stable - i.e., if it could survive a diverse array of disturbances.*  The Kims have clearly weathered a few big storms: the Korean War, the collapse of the Soviet Union and drastic decline in energy subsidies, and the death of two leaders.  But for the most part, the Kims keep such a tight lid on things that no one, not even Kims themselves, knows whether reforms would spiral out of control and end their rule.

The stationary bandit model fails to clearly distinguish durability from stability.  But on reflection, the model's hopeful implications presuppose not mere durability, but stability.  A stationary bandit who knows he'll retain power whatever he does has a solid selfish motive to adopt pro-growth policies.  But the latest scion of a rigid thousand-year dynasty can't afford to be so open-minded.  He knows a formula for holding power; but for all he knows, it's the only formula.  Even if there's merely a 10% chance that reform brings the regime crashing down, that's a big deterrent.

I freely admit the relevance of many of the other stories readers told; as a few readers pointed out, I've told them myself.  A dictator is effectively super-wealthy, so the prospect of getting even richer may fail to entice him.  A super-wealthy dictator may prefer lavish parades to bigger palaces.  Etc.  Nevertheless, North Korea isn't a great test of the stationary bandit model because durability and stability are not the same.

Of course, once you take this distinction seriously, you have to ask yourself: When, if ever, do bandit rulers know beyond a reasonable doubt that they're genuinely stable?  To quote Merlin in Excalibur, "Looking at the cake is like looking at the future, until you've tasted it what do you really know? And then, of course, it's too late."

* If you want to see stability in action, take a look at the Weeble.  As the toy's jingle famously said, "Weebles wobble but they don't fall down."


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COMMENTS (13 to date)
Saturos writes:

The Weeble: Truly a classic example of a stable equilibrium.

Saturos writes:

I still think Philo, Warren, Floccina and also Jim Glass were on the money.

david writes:

Is there such a thing as a stable non-durable regime? Isn't durability a proxy for gauging stability ex post?

Postwar post-colonial authoritarian regimes did embark upon vast amounts of dramatic reform. Many collapsed nonetheless. If stability is the binding constraint here, authoritarians must be too stupid for the stationary bandit model to be meaningful at all.

North Korea itself is not utterly static; it engaged in the Sunshine Policy era and permitted substantial ROK investment in selected cities, as dramatic a reversal of isolation and juche if there ever was one. If the 'ignorant dictator' hypotheses were really binding, Pyongyang should have no way of assessing whether this change is any more destabilizing than any other.

Steve Sailer writes:

I thought your question was "Doesn't the stationary bandit model imply that the country should be prospering?"

The best answer is: No.

The Stationary Bandit Model does not imply a country should be prospering, just that it should be better off than if various El Guapos are raping and pillaging interminably throughout the countryside.

david writes:

@Steve Sailer

Korea happily has a southern portion which was also ruled by an authoritarian regime. As far as controlling for third factors go...

Saturos writes:

@david, I think Bryan's saying that although stability implies durability, durability doesn't necessarily imply stability.

Greg G writes:

I see what you are getting at here Bryan. Maybe calling it an issue of flexibility versus brittleness would be even more clear than the stability versus durability description.

Roger Sweeny writes:

The classic example of a ruler who mistook 70 years of durability for stability was Mikhail Gorbachev.

Finch writes:

> But as far as I can tell, no one drew the
> distinction I was looking for: durability
> versus stability.

I hope you learned a lesson here. This was a bad exam question.

While I'm sure you graded fairly, questions that basically ask the student to guess what the professor is thinking (when the professor is thinking about the 7th best answer or has defined some new concepts in his own mind) are bad ones. It should be possible for someone as smart and knowledgeable as you to have a reasonable likelihood of coming up with the expected answer.

In this instance I think the answers in the comments were similar to, but a bit better than yours. The stationary bandit theory doesn't just work very well, and a little bit of extra wealth isn't worth the amount of extra risk that comes with it. I do think the comments saying "The Kims are stupid - they should listen to economists more!" were wrong and should receive a low grade.

Philo writes:

You write ‘durability’, but I think you mean ‘duration’. Durability is dispositional, as is stability; in fact, they are roughly the same. Duration is not dispositional. A regime that lasts a long time has duration, but not necessarily durability: it may have survived just by luck, in that many possible disturbances would have ended it, but by happenstance none of these occurred. Note, though, that a regime that lasts a long time is *probably* durable: duration is some evidence for durability.

Michael Wiebe writes:

One key aspect of the stationary bandit model is that the autocrat will maximize growth subject to the constraint that he stays in power to reap the benefits. So if growth leads to creative destruction and weakens the autocrat's power, he has an incentive to restrict growth. Acemoglu's new book makes this point very well.

Robert Peterson writes:

I agree with Finch. Not a terribly good exam question, because it requires mind-reading on the part of the students.

I hope you accepted "because the Stationary Bandit Model is inherently flawed and cannot work in the real world" as an answer. The distinction you draw between durability and stability -- particularly "A stationary bandit who knows he'll retain power whatever he does ..." cannot ever exist in the real world. If "the Korean War, the collapse of the Soviet Union and drastic decline in energy subsidies, and the death of two leaders" -- plus massive famine, assassination attempts, national humiliations in the form of failed high-profile rocket launches and having your power cut off by the Chinese -- don't count as weathering a diverse array of problems, I'm not sure what possibly could.

Jim Glass writes:

I do think the comments saying "The Kims are stupid - they should listen to economists more!" were wrong and should receive a low grade.

North & Co and Acemoglu & Co, in their separate takes on economic development, both emphasize the point that the popular conceit in the wealthy world that leaders of poorer nations are stupid and/or ignorant, and only need to take our expert advice, is totally wrong. They don't get to the top of cutthroat (often literally) politics by being stupid -- and are as fully informed as any of us, with experts from the IMF, World Bank, Harvard, MIT pressed on them all the time.

They know full well what they are doing and the consequences, and do it because it is best for them and the "electorate" that keeps them in power.

In his Econtalk podcasts, Bueno de Mesquita emphasizes this with emphasis.

"for the most part, the Kims keep such a tight lid on things that no one, not even Kims themselves, knows whether reforms would spiral out of control and end their rule".

Well, there's uncertainty in every situation. You may not really know what's best for you in yours, and I might not really know what's best for me in mine. But who knows better?

I'd think that after surviving 60+ years of pretty brutal challenges as described by Robert Peterson just above, the Kims and their electorate have a pretty darn good idea of what it takes to stay in power in their situation, and the amount of change and kinds of policies that maximize their chance of keeping power going forward. And we see the results.

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