World Happiness Report 2023 85 towards pursuing common interests. Over the course of history, parliamentary oversight has become an increasingly important constraint on executive power, as has the legal principle that political leaders are also subject to the law. These constraints have been further reinforced as states have created independent judiciaries who uphold the law and apply justice impartially to all citizens, whether or not they are part of a political or social elite. Many states have deployed a range of institutional arrangements, which ensure that leaders cannot silence the media and that citizens can express critical opinions with impunity. A good starting point for building cohesive institutions is a broad social consensus on the rules and limits to government power. These can be enshrined in written documents, such as constitutions. But they can also be sustained by tacit agreement on taking a long-term view, understanding that corruption or nepotism by incumbent policy-makers can have damaging long-term consequences. The bedrock of cohesiveness is a shared understanding that the benefits from collective action are not zero-sum, meaning that citizens have strong motives to work together to achieve collective benefits. The political history of the past two hundred years shows that creating some kinds of cohesion is a real possibility as manifested in the transition to peaceful social orders. Indeed, many countries forged their politics in response to periods of violent conflict and turmoil. But how far it is possible to leave historical conflicts behind and move on is far from clear. To create empirical measures of cohesive institutions is not straightforward. In the results presented in this chapter, we use data from the V-Dem project to measure the strength of executive constraints; specifically, we take a simple average of two V-Dem variables: (i) executive constraints by the judiciary and (ii) executive constraints by the legislature and government agencies.15 In our opinion, this measure is preferable to broader indicators of whether a country is deemed to be democratic, as it stresses whether existing political institutions allow for checks on executive power which are more likely to create cohesive policy outcomes. This aspect of democracy has generally evolved more slowly than open contests for power using elections. The way political institutions aggregate preferences and distribute political power is also an important determinant of state-capacity investments. Besley and Persson16 formalize the political mechanics by highlighting a specific, but important, policy cleavage: how state revenue is split between broadly targeted and more narrowly targeted programs.17 In their stylized model, this decision is made without commitment by policymakers who look out for the interests of their own group. Absent any institutional constraints on executive behavior, this favors excessive spending on narrow programs targeted to the special interests of the ruling group. Classic examples would include spending on tertiary education by a wealthy and well-educated ruling elite, or public programs targeted to the home region of the ruling group. However, executive power can be constrained by institutional forces: electoral systems inducing the ruling group to gain wide appeal to be (re)elected, rules for legislative decision-making motivating executives to seek broad agreements, or independent judiciaries enforcing rules for minority protection. Transparency in decision-making supported by free media may also make it harder for executives to get away with using their power to narrowly target benefits toward their own groups. Besley and Persson18 argue that cohesive political institutions that induce greater spending on common-interest public goods may also support common interests in other ways. For example, they may ensure that property rights are extended broadly to all citizens, without discrimination towards groups that are not connected to the ruling group. The bottom line is that more cohesive institutions create a stronger interest in investing in an effective state. Less cohesive institutions allow the state to be run more in the interest of a narrow segment of the population, which weakens the motive to improve the core functions of revenue collection, market augmentation, and market support. Nevertheless, governing groups in such special- interest states may decide to invest in state capacities if these support the ruling group’s specific ambitions. Cohesive political institutions
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