Demagogues and the Economic Fragility of Democracies

We investigate the susceptibility of democracies to demagogues, studying tensions between representatives who guard voters’ long-run interests and demagogues cater short-run desires. Parties propose consumption investment. Voters base choices on current-period valence shocks. Younger/poorer economies economically disadvantaged voters are attracted demagogue’s disinvestment policies, forcing farsighted mimic them. This electoral competition can destroy democracy: if capital falls below a critical level, death spiral ensues with stocks falling thereafter. identify when economic development mitigates this risk characterize how death-spiral declines as grows large. (JEL D72, E21, E22, E32)