This book is about the macroeconomics of inequality in the USA, beginning around 1970. The analysis is based on a data framework combining the distributions by size of income and wealth with the income and output sides of the national accounts, flows of funds, and full balance-sheet accounting of real capital and financial claims. The numbers entering the household size distributions are mutually consistent and satisfy double-entry national accounting balances, making analysis and modeling roughly right about the big picture of distribution. The picture is “roughly right” because of the double-entry accounting consistency that goes into its creation.

This chapter discusses how I measure the concept of regime institutionalization and introduces thedata. I present my original dataset of forty-six countries in sub-Saharan Africa from 1960-2010. I use variables constructed from constitutional and presidential cabinet data in order to measure institutionalization.

Illustrating how the three income classes may fare under various circumstances is the goal of simulations from a demand-driven model of economic growth discussed in this chapter. It uses the SAM of Figure 2.2 as the database. The model’s key assumptions draw on ideas previously discussed. A succinct list follows.

This chapter examines the consequences of institutionalization on leader outcomes: in particular leader tenure and vulnerability to coups. I show that conditional on entering power weak, initially weak leader who do institutionalize face better outcomes comapred with initiall weak leaders who do not institutionalize.

This chapter provides an overview of the entire book by outlining two puzzles: (1) Why do some leaders institutionalize their regimes while others do not? (2) Do institutionalized regimes perform better on regime outcomes compared with noninstitutionalized regimes? I preview two main arguments. First, I argue that leaders who enter power weak are more likely to institutionalize their regimes. Second, I argue that conditional on being an initially weak leader, those who institutionalize face better regime outcomes.

This chapter provides my main theoretical argument. I argue that leaders institutionalize their regimes when they enter power weak. Initially weak leaders institutionalize in order to credibly commit to sharing future benefits with other regime elites. This promise is made credible by giving elites access to the state via cabinet appointments and constitutional rules. I demonstrate the logic of this argument through a formal model.

In this chapter, I highlight the historical prevalence of sovereign default as a potentially devastating form of economic crisis.I also identify that, despite the decision to default being held by politicians or politically-appointed actors, our understanding of the political dynamics surrounding default is limited.I conclude by summarizing my regime-contingent argument on the political economy of default.

While earlier chapters have compared urban or rural biases across different countries, in this chapter I make use of a rare confluence of historical conditions in the Turkish case, in which an identical ruler---Turgut Ozal---presided over agricultural price policies under autocratic and democratic institutions.While serving as minister of finance under military rule, Ozal was a fierce critic of costly agricultural support programs that had developed under prior electoral competition between Turkish parties, and successfully removed many of these farm support programs. However, when competing for office following restoration of multiparty elections, Ozal discovered the necessity of winning rural support for electoral success, and subsequently reinstated costly farm subsidies.The Turkish case helps validate the broader expectations of urban or rural bias, within the same country, across differing institions of executive survival, and also demonstrates that the inability of elected leaders to remove costly subsidies was a key factor driving Turkey to default on its sovereign debt.

In concluding the book, while noting that the political salience of food prices may be lessened in the developed world, I also highlight the applicability of my theory of sovereign default to a wider set of issue areas than just food price policy, including politically-sensitive areas such as oil pricing policy as well as costly "entitlement" programs such as Social Security and Medicare.In addition,

This chapter develops my theory of regime-contingent sovereign default by focusing on two strategies of mass politics:voting and revolt.I argue that partitioning citizens into urban versus rural agents aligns closely with traditional accounts of groups with advantages in these two strategies:specifically, urban citizens are generally considered to enjoy advantages for protest activity, whereas rural citizens have frequently been identified as crucial swing voters.After noting that these groups differ in their preferences for food price policy, I link the pressure from urban revolt to sovereign default in autocracies, particularly those that import a great deal of food.Conversely, rural electoral pressure often leads to large farm price supports which can be difficult to remove during fiscal crisis, suggesting that more rural democracies (especially those that export a great deal of costly food) should be more likely to default.The chapter concludes by also considering variation within regimes:electoral autocracies are argued to dilute the sole focus of autocrats on urban areas, whereas contentious democracies should lead to reduced emphasis on rural voters.

This chapter begins with the case of Zambia under the rule of Kenneth Kaunda, a regime that became increasingly centered on urban consumers as a crucial base of support.As expected by my theory of urban bias in closed autocracies, the Zambian regime pursued a number of cheap food policies, particularly for maize, the staple crop.Yet, as the fiscal costs of these programs began to mount, the government repeatedly proved unwilling to remove such food subsidies, even under increasing pressure from the IMF, culminating in default on Zambia's debt after a major protest triggered by attempts to limit food subsidies.Yet, this over-riding concern for urban consumers is contrasted against the strong state support for rural agriculturalists in the Malaysian case, where the dominant UMNO regime relied on turnout of rural supermajorities to maintain rule in a system of electoral autocracy.While still sensitive to urban costs of living, at no point did Malaysian policy become overwhelmingly biased towards one geographic area; when faced with fiscal crisis in the 1980s, this also eased the ability of the government to reform a series of burdensome state programs and avoid default.