Hello all,

Happy Easter to those who celebrate, or who are just lucky enough to get some time off work. I’ve been making the most of the lovely weather with some family and dog time, and it’s been lovely.

This week’s article is about the tricky dynamics of dictators, and why they often make huge errors – things like Vladimir Putin’s invasion of Ukraine or Leopoldo Galtieri’s war in the Falklands. Just why do dictators make these disastrous errors – moreso, seemingly, than democracies?

I hope you enjoy, and have a great week.

— Rob

This week’s article

The decisions of dictators

Why do dictators so often make terrible decisions that lead to their downfall?

Dictators have a terrible habit of making truly bad decisions. Sometimes just how bad they are only becomes apparent in hindsight; sometimes it’s perfectly clear to everyone else at the time. Think of Vladimir Putin invading Ukraine, or Saddam Hussein invading Kuwait, or Mao Zedong’s Great Leap Forward. Why, when dictators are seemingly so powerful, do they mess up so badly so often? Why don’t they seek out sensible advice and listen to it?

Economists Georgy Egorov and Konstantin Sonin came up with an elegant theory to explain why this might be.

An autocrat who comes to power makes decisions based on the advice of those close to them. Seeking to preserve that power, they’re likely to pick the best advisers they can.

For the advisers, though, there are different incentives. It might not always be in the advisers’ interests for the autocrat to remain in power, and so savvy advisers will constantly think about what would happen if the autocrat lost power. Would they be better off in the new world, the world run by the opposition? If they would, they might choose to hasten that new world – by dispensing poor advice to the current leader:

“Deciding what advice to provide to the incumbent leader, the agent weighs two factors: first, the vulnerability of the incumbent, and, second, the agent’s own prospects under the new regime if the incumbent fails. Since the leader himself is not as well-informed as the advisor, the advisor has leverage: the advisor might tell the leader that he is not vulnerable, when he actually is. The wrong policy choice by a vulnerable leader will result in a change at the top.”

As a leader becomes more vulnerable, then, the quality of the advice they receive decreases.

But there’s a further vicious cycle involved. As a leader fears the threat of opposition, they might demand loyalty from their advisers. But a vulnerable leader who demands loyalty will receive even worse advice. Those advisers who are best informed will know which way the wind is blowing, and won’t be loyal to a leader with a limited shelf life. Those advisers who lack awareness, and fail to see that the leader is vulnerable, will offer their loyalty – and their poor advice. So, as the leader becomes more vulnerable, the quality of the advisers advising them will decrease; they’ll be surrounded by good advisers deliberately dispensing bad advice, and bad advisers doing so accidentally.

The problems for dictators don’t stop there, either. As well as demanding loyalty, they might seek to shore up their position by cracking down on the opposition. But a leader who represses the opposition harshly is more likely to be killed in a transition of power. After all, if you as the opposition think that you’re going to be killed should the person you’re overthrowing return to power, it becomes very tempting to kill them first.

This final dynamic completes the dilemma. An autocrat who is vulnerable receives less effective advice. An autocrat who is vulnerable tends to crack down on the opposition. An autocrat who cracks down on the opposition particularly fears losing power, because they’re likely to be eliminated if they lose it, and so hangs onto it for as long as possible. So they remain in power, receiving poor advice from loyal but ineffective advisers. At that point, it’s only a matter of time before they mess things up catastrophically.

This elegant model explains the behaviour not just of the leaders of repressive countries, but of all sorts of organisations. How many leaders of companies are subject to the same dynamics? Can Mark Zuckerberg’s disastrous pivot to the metaverse be explained in similar terms? What about Elon Musk’s acquisition of Twitter? How many companies become compromised in their decision-making as autocratic leaders, demanding loyalty, find the quality of the advice they’re receiving diminishes?

The point of Egorov and Sonin’s analysis is not that these dictators are somehow stupid, or irrational. At every stage they’re acting rationally to preserve power. They’re just trapped by something fundamental to the business of being a dictator, some fundamental dynamic that is always likely to emerge at some point. You’re better off, it seems, not being dictator in the first place. Now who’s going to tell Zuck?

Click here to read the article »

This week’s three interesting links

Why Lego won (YouTube)

Lego wasn’t the first stacking brick aimed at kids, but it became overwhelmingly dominant. Why? Phil Edwards explains. #

How to beat roulette

A long read from Bloomberg on a Croatian gambler who seemingly cracked roulette, winning millions at casinos across the world apparently without cheating.

“It wasn’t the amount of money at stake that made the Ritz security team anxious. Customers routinely made several million pounds in an evening and left carrying designer bags bulging with cash. It was the way these three were winning: consistently, over hundreds of rounds. ‘It is practically impossible to predict the number that will come up,’ Stephen Hawking once wrote about roulette. ‘Otherwise physicists would make a fortune at casinos.’ The game was designed to be random; chaos, elegantly rendered in circular motion.

“When the Croatian left the casino in the early hours of March 16, he’d turned £30,000 worth of chips into a £310,000 check. His Serbian partner did even better, making £684,000 from his initial £60,000. He asked for a half-million in two checks and the rest in cash. That brought the group’s take, including from earlier sessions, to about £1.3 million. And Tosa wasn’t done. He told casino employees he planned to return the next day.”


The paradox of Alan Watts

There’s a P&O advert airing at the moment with a voiceover of Alan Watts spouting platitudes about following your dreams. The choice of Watts for a luxury cruise ad was a decision I found odd, given Watts’s reputation (in my mind) as a schlocky new-age huckster. Gus Carter agrees, in some entertaining detail:

“Watts’s philosophy is difficult to define. He spoke in aphorisms, linguistically clear but conceptually fragmented reflections on the contradictions of human experience. He rejected the idea of the individual and spoke of the ‘European dissociation’, the feeling of oneself as an outsider in a hostile world. Instead, he argued, we are all the universe and any sense of one’s own desires or exertions are merely an expression of the singular universe unfolding.

“In one lecture, Watts explains: ‘As you cannot conceive, possibly, of the existence of a living body with no environment, that is the clue that the two are basically one… You are both what you do and what happens to you.’ It is a strange argument: you can easily imagine an environment without humans. How is it then that nature and human experience can be described as one and the same? But his pronouncements aren’t designed to be logically analysed. It’s a philosophy of vibes.”