Building political consensus and distributing resources: A trade-off or a compatible choice?

This article explores the interactive relationships among welfare transfers, income distribution, and government change, controlling for the effects of demographic and economic variables. We argue that governments are involved in the redistribution of resources to enhance political stability and survival rather than enhancing economic performance or wealth equality. Hence, they tend to respond to groups that are essential for their political survival. Although the presented empirical results are not conclusive, they tend to support our first hypothesis-namely, that welfare transfers increase income inequality. They also provide important insights into the relationships between welfare transfers and three kinds of government change by testing the three other hypotheses. Welfare transfers reduce the likelihood of irregular government change, increase the chance of the same party remaining in office, and have no effect on the major regular government change characteristic of democracies. While the first two kinds of government change are typical of autocratic or semidemocratic societies, the third is characteristic of democratic nations. The implication is that the governments in the first two societies are more capable of using welfare transfers to prolong their tenure than their democratic counterparts. This finding is important in the sense that it provides a major reason why many autocratic governments are long-lived (e.g., in Zaire, Indonesia, and the Soviet Union) compared with democratic governments. In general, governments utilize welfare transfers to alter their political future. This goal can be successful in the long run only if it does not increase income inequality that can threaten the stability of the political regime. Hence, the policy choices that a government makes to maintain political power through redistribution of resources can be undermined by demographic structures and by the long-term effects of such redistribution of resources.