A model of a predatory state

We provide a model of a primitive state whose rulers extort taxes for their own ends. This "predatory" state can result in lower levels of both output and popular welfare than either organized banditry or anarchy. The predato ry state may provide public goods, such as protection, and hence may superf icially resemble a contractual state. But the ability to provide such goods can actually reduce popular welfare after allowing for tax changes. Moreov er, the kinds of public goods that predatory states provide are those that increase revenue, not necessarily welfare. We consider when primitive state s are likely to emerge from organized banditry, and argue that poverty may result: in statelessness rather than vice versa. We show that even a weak s tate (in transition from banditry) can be bad for output and welfare, and t hat a "corrupt" state that makes side deals with bandits is especially bad.