Every Year a Regime Buys Its Population, the Eventual Reform Gets More Dangerous

There is a family of regimes that share a business model. They sit on something the rest of the world needs, oil mostly, and they sell it. The money flows to the top of a hierarchy that did nothing to earn it, and some of it flows back down as subsidies: cheap fuel, cheap bread, public-sector jobs that require no work, cash for the loyal. The population is not free, but it is fed, and the feeding is how the regime answers every demand for reform.

I want to describe what that arrangement does over time, because the interesting part is not the present but the trajectory.

The Ratchet

Each round of subsidy buys quiet. Quiet is valuable to a regime, so the next time pressure builds, the regime buys more quiet with more subsidy. The population gets used to it. Businesses get used to it: entire sectors exist only because the state pays for their inputs or buys their output. A generation grows up in which the normal relation between a citizen and the economy is that money arrives from the government.

The regime cannot then stop. Every subsidy has become a constituency, and withdrawing it produces exactly the unrest the subsidy was introduced to prevent. Fuel price increases, in several such countries, have produced riots within days; the price is put back within a week. The government has made itself the hostage of its own generosity.

So the arrangement is a ratchet. It only turns one way, and the longer it turns, the further the country is from an economy that could stand without it.

The Growing Up That Has to Happen

At some point the arrangement ends. The resource runs low, or the price collapses, or the buyers stop buying, or the population simply outgrows the money. When it ends, the country has to do something it has never done: develop an economy that produces value, which means an educated workforce, motivated people, functioning institutions and a state that lives on taxes it must justify.

Call that growing up. It is not a metaphor for something easy.

Growing up replaces the people who hold power with people who can actually run things, and the first group does not leave voluntarily. It replaces a culture in which the state provides with one in which you provide for yourself, and cultures do not turn on request. It replaces a cheap loyalty with an expensive legitimacy that the regime has never had to earn. Every one of those transitions is painful, and every one of them has been violent somewhere.

The pain is proportional to how long the ratchet turned. A country that starts growing up after ten years of subsidy has a population that remembers working. A country that starts after fifty has a population that has never seen a state that was not a cash machine, and a business class that has never competed. The adjustment is not merely larger; it is of a different kind.

Where the Danger Enters

So far this is a story about somebody else's misfortune. Here is why it is ours.

The growing-up phase is the most dangerous moment in the life of such a regime, both for its own people and for everyone in reach. The old powers are fighting to keep their position; new powers are fighting to take it; the population is angry and has been taught for decades that its anger is someone else's fault. That is the classic setting for an external war as a distraction, for a collapse into factions, for the emergence of the most radical movement as the only one with organisation.

Now add the detail that changes the arithmetic. Several of these regimes have nuclear weapons, or are within reach of them. A country that goes through its growing-up phase after it has the bomb is a different problem from one that goes through it before. The convulsion that would have been a regional tragedy becomes a threat to everyone.

The number of young people in autocratic countries is rising faster than anywhere else, and a frightened population is easily turned outward by its rulers. The subsidised petrostate is the sharpest instance of both. It has a large young population, taught to depend and taught to blame, and a regime with every incentive to point that population at an enemy when the money stops.

The Cost of Waiting

The conclusion I draw is the one nobody wants, because it demands action at a moment when action is inconvenient.

The free countries that buy the oil are financing the ratchet. Every year of purchase without any demand for reform is another turn: a population more dependent, a business class more parasitic, a regime more hostage to its own subsidies, and, in the worst cases, a weapons programme a year closer to completion. The growing up is not avoided by waiting. It is only made more painful and more dangerous, and it is moved into a future where the regime is better armed.

The reason we wait is the reason we always wait: the pain of demanding change is now and concentrated, and the pain of not demanding it is later and diffuse. Cheap oil today, a nuclear-armed convulsion in twenty years. Every government that has to face an election in three has made that trade, and I have argued before that the system cannot help making it.

But the trade should at least be named. When the growing up finally comes, and it will, the people who are hurt by it will have been made more numerous and more desperate by every year we chose not to ask. That is what the subsidies are buying, and it is being bought with our money as much as with theirs.