Policy persistence refers to the tendency of the political process to maintain policies once they have been introduced. This paper develops a theory of policy persistence based on the idea that policies create incentives for beneficiaries to take actions which increase their willingness to pay for these policies in the future. The theory is used to show that policy persistence may lead to "political failure", in the sense that policy sequences arising in political equilibrium can be Pareto dominated. In addition, the theory is used to provide an explanation as to why \policy conditionality" may have permanent effects.