Monetizing Democracy

The San Francisco Chronicle’s Sunday opinion section ran a stunning piece today reviewing the rise and fall of the government of Peru’s Alberto Fujimori. More specifically, the story (a cut-down version of an article that ran in the Journal of Economic Perspectives in fall 2004) focuses on how Fujimori’s chief of national intelligence, Vladimiro Montesinos Torres systematically turned the nation’s legislature, judiciary and news media into subsidiaries of the executive. Montesinos set up a bribery network in which everyone who needed to be bought to ensure the administration’s success — lawmakers, judges, media magnates — was paid.

The breathtaking part of Montesinos’s scheme: He documented everything: The people he bribed were required to sign contracts laying out exactly what they’d promised to do for the money they were getting; Montesinos videotaped many of his meetngs with bribe takers (and givers) to ensure he could pressure those who might want to back out of their arrangements. The end to all this came when cable network that had refused bribes got hold of one of the tapes and put it on the air.

The authors, John McMillan and Pablo Zoido (a professor and former student at the Stanford Graduate School of Business, respectively, emphasize the importance Montesinos attached to controlling the media. TV broadcasters and newspaper owners received payments in the millions of dollars to ensure their coverage both promoted the government’s views and attacked the opposition. Montesinos’s contract with one station gave him direct editorial control over its daily newscasts. The media bribes were orders of magnitude larger than anything paid to elected and appointed officials. The rationale was twofold, McMillan and Zoido say:

“The judges’ bribes were one-and-a-half times to four times their official salaries. The politicians’ bribes were multiples of their official income. By contrast, a few thousand dollars a month might not have impressed a wealthy television-channel owner.

“The difference between the news media and the other checks and balances in a democracy is that television, by informing the citizenry, can bring forth the ultimate sanction of citizen reaction. In the absence of citizens’ oversight, there would be little to prevent the government from buying off politicians and judges. …

“…’If we do not control the television, we do not do anything,’ said Gen. Elesván Bello at a 1999 meeting involving Montesinos, high-ranking members of the armed forces and television executives.”

The original McMillan-Zoidos study is available through the Journal of Economic Perspectives (for $11) or from Zoidos’s personal Stanford home page: (PDF file).

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