Godfather Politicians and Organized Violence: the Good, the Bad, and the Bloody
Abstract: Social order is compromised when mafias fight violently to resolve disputes. Ironically, a corrupt local politician – instead of an honest one – may serve as an impartial arbitrator (“Godfather”) to safeguard local peace. This paper builds a model of politician-mafia interaction to show, both theoretically and empirically, that a rent-seeking local politician, with the power of the state, may provide credible commitment to enforce peaceful mafia negotiations. However, when such godfather politicians are eradicated, the local power vacuum leads to surges of local violence. The anti-corruption campaign in China since 2012 – an institutional shock to eradicate corrupt politicians – provides a unique natural experiment to corroborate our theory. A difference-in-differences test suggests that violence surged by 30% in regions with local officials eradicated due to collusion with mafias, compared to the regions without. We also conduct a series of robustness checks and placebo tests to confirm the link between the violence surge and the removal of corrupt local officials.
