Godfather Politicians and Organized Violence

Sydney, Australia 24 August 2025 – 26 August 2025

Xinyu Fan (Cheung Kong Graduate School of Business); Shuo Chen (Fudan University); Xuanyi Wang (Fudan University); Yuzheng Wang (Central University of Finance and Economics)

F2 — Ronald Coase Institute Alumni Panel: Effects of Shocks, Polarization, and Anti-Corruption Campaigns on Political Behavior: Studies from China, Mexico, and Russia

Chair: Mary Shirley, President, Ronald Coase Institute

Discussants: Scott Gehlbach, University of Chicago, and Lixin Colin Xu, Cheung Kong Graduate School of Business, Beijing

Room UNSW Business School 115

Economics / Institutions and organizations in political economy

Abstract

We analyze the ironic breakdown of social order when good politicians replace flawed ones. A corrupt politician (“Godfather”) may arbitrate otherwise violent conflicts peacefully for extralegal personal benefits, while eradicating such politicians leads to social unrest. Utilizing a unique natural experiment that systematically removed corrupt officials, a difference-in-differences test shows that organized violence surged by an additional 15% in cases where local officials were found colluding with organized criminals. The violence surge was not due to their successors’ increased monitoring intensity, government failure, or gangster infightings, thus highlighting the institution design – not moral characters – that shapes politicians’ behavior.

This paper has been marked as unpublished by the author.

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