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Corruption is good

  • Published at 06:58 pm December 28th, 2013
Corruption is good

Those who are familiar with US Congressional politics know the term “pork-barrel politics” very well. In the US Congress, often when passage of a bill required support from a few or more congressmen or senators from the other side of the political divide, the leaders of the party in control, attach with the bill special spending earmarks that will benefit the constituency of those few congressmen or senators.

These earmarks, which are outside federal purview, usually fund projects in the home districts like roads, bridges, airports, museums, etc. The earmarks help the politicians to go back to their partisan constituents and say to them that although he has voted with the opposing political party, he will bring in substantial federal cash that would create jobs and benefit the community greatly.

These earmarks, named pork-barrel (after the barrels of salted pork meat), has been a long-standing congressional way to exchange political favours, helping embattled politicians win re-elections, and most importantly win over opposing politicians for legislations that may be unpopular to their own party supporters.

Those who have watched the Spielberg movie “Lincoln” (2012) have seen that how a bill like the 13th Amendment, which emancipated slaves in the USA in 1865, required furious horse-trading, pork-barrel politics in the house of Congress to get the two third majority required.

Whether pork barrels were used to pass righteous bills like the emancipation, or run-of-the-mill legislations of usual politics, there can be no denying that this practice is pure and simple political bribery.

Votes of the legislators are being bought with gold from the purse of the republic; albeit not for personal use, but for constituents. As it is, the history of politicians crusading against the immorality of such naked bribery is as old as the history of pork-barrel politics itself.

In recent decades, the most vocal opposition came from anti-government Republican politicians who saw in pork-barrel politics an easy target to illustrate the venality and wastefulness of government spending.

The crusade culminated in a blanket ban on pork-barrel politics passed in both the Senate and the House of Representatives in late 2010 and early 2011, with broad bi-partisan support.

So what has been the outcome of this sweeping of the Aegean Stable? Congressional legislative activity has come to a near halt. 2012 and 2013 have been among the least productive years in US Congressional history.

Between 1999 and 2011, an average of 70 substantive bills passed every year. Now the average has dropped below 50 and only 44 substantive laws have passed the floor of Congress in 2013.

All of us are aware of the impasse in the Congress and government shutdown that happened this year. Few of us are aware of the role played by the absence of pork barrel politics in exacerbating this gridlock.

There were several times when the Republican Congressional leadership were ready to compromise, but they could not convince the hard ideological party men in Congress to go along with the decision.

If pork-barrel were in place, conceivably many of these recalcitrant congressmen who are from poor, rural constituencies that can greatly use federal earmarks for economic stimulus, could have budged and reached across the aisle for passing budget and other bills.

They have no incentive now to compromise on ideological points and brave the inevitable confrontation with hyper partisan primary voters back in home. This is the general picture all over the country as the whole land has been divided in two sharply divided political camps with no meeting in the middle.

Belatedly the politicians are learning that pork barrels, rather than the corruption polluting the Congress, was the grease that kept the gears of legislative politics running.

The arguments against corruption are universal and easy to understand. Corruption is unethical, unfair, hinders meritocracy, promotes inefficiency, and many more. As intuitive the arguments against corruption are, people do not make the effort to analyse the role of corruption deeply, and see that in many situations and contexts, some form of corruption can actually be better for the polity in its presence than its absence.

Particularly when corruption is reframed as favours done in exchange of doing a job, it can make systems of governance and economy more efficient than before.

Economists have studied corruption, empirically and theoretically, for a long time but only recently they are analysing effects of corruption in all its nuances and already some of the researches have yielded surprising results.    

Game theoretic modelling has shown some interesting insights into the role of corruption: A society or community functions because of cooperation among its members. The models tell us that the bulk of society cooperates consistently because the law enforcers induce them to stay in line.

However, in most societies, the law enforcers themselves enjoy a de-facto privilege of avoiding the full force of law when they breach it personally. This privilege allows them to engage in corruption.

Researchers have found that in spite of this corruption, overall societal cooperation is maintained as long as the extent of power and corruption is limited because the enforcers still do their duty of enforcing, although in exchange of some illegal income.

Thus, a limited amount of corruption actually acts as incentive for law enforcers to do their duty. Without this incentive, they can become totally apathetic and let law enforcement deteriorate completely. But this equilibrium breaks down when law enforcers have too much power and corruption runs rampant. In a monopoly of corruption the law enforcers have no incentives to carry on their duties and overall societal cooperation becomes threatened.

Empirical cross-country studies have also shown that in many third world countries corruption is actually helping economic growth by helping to circumvent inefficient rules and bureaucratic delays. When government is overbearing and inefficient, regulations are sclerotic, corruption can be a beneficial way to get around growth-retarding governance. When government size is small and/or economic freedom is already high, corruption becomes harmful to growth.

Famous political scientist Samuel Huntingdon, in 1968, said: “The only thing worse than a society with a rigid, over-centralised, dishonest bureaucracy is one with a rigid, over-centralised, honest bureaucracy.” In countries where civic institutions are weak and social capital is small, policy efforts for ending corruption by solving principle agent problems may not improve growth.

In these countries corruption within inefficient institutions is a second best result because optimal condition is hard to attain in foreseeable future. Long-term efforts should have the objective of improving institutional quality and economic freedom.

Readers may question the relevance of this article now, when the whole country is falling apart in a kingly Game of Thrones. All sane people in the country agree that the root cause of the political crisis in this country is monopolisation of power by subversion of democracy. Monopolisation of corruption is inextricably linked with this exclusive control of the power of state.

Researchers have proposed that monopoly is a vital component of rampant corruption. Corruption flourished, “where officials have a monopoly power over a good or service, unlimited discretion in deciding who gets that good or service or how much they get, and there is no accountability whereby others can see what that person is deciding.”

In the article “There Will be Blood” published in alalodulal.org, I argued that unprecedented cash flow from RMG export and foreign remittances is fast transforming Bangladesh into a resource-based “Petro-state.” We know how the easy money from resources have entrenched repressive, autocratic regimes in these countries and hindered growth of accountable politics. In these countries, since the authoritarian leaders and their organ of government do not fear retribution from society, they can engage in forms of corruption that are very costly to society.

A similar thing is happening in Bangladesh. Governments are not feeling economic pressure to be more inclusive and accountable. With the visible hand of government in every part of the growing economic pie, the ruling set has now access to previously undreamt amount of riches.

And the governments are utilising this fabulous horde of money to develop and embed a huge rent-seeking class throughout the country that owes its allegiance not to the state or the people but the patrons at the top of the ruling pyramid. This, in effect, is a monopolisation of corruption where corrupt law enforcers do not feel obligation to render the service fully, even in return of the ill-gotten money.

Moreover, as they primarily owe their riches from their top-patrons, and not the rent-giving public, they act as loyal vassals of the overlord. A government can literally buy off the entire organ of state now. Monopoly of power is engendering monopoly of corruption and developing a positive feedback loop to reinforce itself.

Bangladesh is not going to be a cohesive, orderly country with high social capital like the Nordic countries that routinely top the list of the least corrupt. We will have corruption in our country come what may the way the future politics evolves.

Rather than revel in utopian dreams of eradicating corruption we should think soberly how to manage corruption and channel it towards directions that promote growth and efficiency. If in the distant future we attain a sufficient level of income and social cohesion, we will be able to undertake programmes to get rid of corruption for good. Meanwhile we should seriously look into the ways to mitigate effects of corruption.

Just as for most of the ills afflicting the country, the answer probably lies in politics. Democratisation of politics is the best way that corruption does not get out of hand and becomes a stranglehold on the economy and society.

A lot of research supports the view that while corruption has a greatly negative effect in authoritarian regimes, democracies can have relatively high level of corruption without crippling the economy.

When corruption does not become the exclusive purview of the ruling party, when opposition also can partake in the feeding trough through decentralisation of power, an even, accountable and growth supporting corruption regime can thrive.

A little corruption can be good, large corruption is bad but monopolistic corruption is absolutely the worst.

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