Long Live The King?

An excerpt from, “Why Monarchies Produce Better Standards of Living” Upenn, Research at Penn, 2020, pg. 36:

In the 110 years between 1900 and 2010, monarchies had a better record than republics in protecting property rights of businesses and individuals, according to Mauro Guillén, the Zandman Professor of International Management at the Wharton School and a professor of sociology in the School of Arts and Sciences. 

Guillén looked at data on 137 countries that included republics of different types and dictatorships. Published in Social Forces, his paper, titled “Symbolic Unity, Dynastic Continuity, and Countervailing Power: Monarchies, Republics, and the Economy,” found that the long-term effects of monarchies are good for a country’s economy and standard of living.

Guillén says the form of government has an immediate, direct effect on the protection of property rights. When companies and individuals feel that their property rights will not be abused or violated by the government, they are more willing to invest in the economy, create more jobs, and generate other economic boosters.

Social or political conflict in a country, politicians serving for unlimited terms, and a lack of checks and balances on the executive branch can lead to the undermining of property rights and have negative economic consequences.

Guillén says some of the chief benefits in countries with constitutional monarchies such as the United Kingdom, Sweden, and Denmark, are the crown’s ability to compel politicians not to stay in power for too long and help a country navigate periods of uncertainty.

An excerpt from, “Why Monarchies Rule When It Comes to Standard of Living” Wharton, May 18, 2018:

Why exactly are property rights so important? “The form of government has an immediate, direct effect on the protection of property rights,” Guillen said. When companies and individuals feel confident that their property rights — including intellectual property — will not be abused or confiscated by the government, they are more willing to invest in the economy, create more jobs and generate other economic boosters, he explained.

According to Guillen, property rights come under attack in three specific situations. One is when there is a social or political conflict in the country. “That always leads to undermining of property rights and has negative economic consequences,” he said. The second is when politicians remain in power. “As they get used to being the ones who run the government, they become abusive and they tend to privilege their friends — that’s why we have term limits,” he explained. The third is the level of checks and balances on the government. For example, the Congress or the judiciary in a country could restrain the executive branch from acting arbitrarily or expropriating the assets of a company or an individual.

In order for countries to thrive, “[you] need to reduce conflict; you need to reduce the number of years that politicians sustain power because we know that they become abusive sooner or later; and you want to have checks and balances,” he said.

The study is timely, according to Guillen. “There is a lot of discussion about whether it’s better to have a democracy or a dictatorship, and another dimension to this debate has been whether monarchies have a reason to exist today,” he said. The results surprised him. “I wasn’t expecting monarchies actually to perform relatively well in terms of delivering higher standards of living for the population,” he says. “But in a nutshell, that’s what I found.”

Over the past century, many countries have gained independence, especially in the 1950s, 1960s and 1970s, Guillen noted. Today, of the 190 or so countries in the world, around 23 have monarchies, he said. As it happens, the number of monarchies has been rising over the past few years, he added. “There is something about monarchies that keeps them in place, and some of that is the economic performance that they deliver.”

. . .Guillen said he is aware that his finding that monarchies do a better job at protecting property rights is “very counter intuitive.” People may say “that sounds really weird,” because they think kings and queens are arbitrary, and in many cases, absolute rulers.

Many monarchies have changed for the better over time, Guillen said, and pointed to the so-called “constitutional democratic monarchies” like those in Europe or in Japan. Such monarchies “tend to be very protective of property rights,” have a better chance of reducing internal conflict, and put limits on politicians and prime ministers that want to abuse their powers, he said. For every four monarchies that are democratic and constitutional, one is non-democratic, he noted, adding that many of those are in the Middle East.

To be sure, more and more countries have become democracies over the years. “The historical trend is towards monarchies — essentially kings and queens — accepting a constitutional order and accepting … the democratic rules of the game,” said Guillen. That could also mean the best of both worlds. “You can get all of the benefits from being a democratic country with a constitutional order, and at the same time you get some of the benefits from having a monarchy in place.”