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Abstract

Why do elected officials often suffer from political paralysis and fail to implement the best policies available? This paper considers a new and intuitive explanation that focuses on the quality of the politicians competing for office. The key insight is that a “good” incumbent with preferences identical to those of a representative voter will want to keep rent-seeking politicians out of office; he may do so by distorting his policy choices to signal his type and win reelection. The value of signaling and staying in office increases with the fraction of rent-seeking types in the population of politicians. Electing good types may therefore not be enough to ensure that the best policies are implemented, especially when rent seeking is widespread. This provides a new explanation for why political failure is particularly severe in corrupt democracies.