Greasing the wheels

By Saad Hafiz:

The view that corruption is widespread in public places is generally held around the world, but it is not just in governments that corruption is found. It has permeated all levels of society. Corruption has been around for just about as long as institutions and opportunities of any sort.

[The King] shall protect trade routes from harassment by courtiers, state officials, thieves and frontier guards…(and) frontier officers shall make good what is lost…Just as it is impossible not to taste honey or poison that one may find at the tip of one’s tongue, so it is impossible for one dealing with government funds not to taste, at least a little bit, of the King’s wealth. –From the treatise The Arthashastra by Kautilya (chief minister to the king in ancient India), circa 300 BC-150 AD.

This citation attests to the ancient nature of corruption, which amounts to the abuse of public office for private gain. Yet it also illustrates that even then corruption was regarded as corrosive to the development of the state and that specific measures were therefore needed in response. The king’s adviser perceptively hinted at the link between illiberal trade, bureaucratic harassment at the border and corruption. And he understood that corruption encompassed far more than bribery: the theft of public revenues was explicitly addressed.

In the modern day, corruption occurs in local and national governments, civil society, judicial functions, large and small businesses, military and other services and so on. In 1974, a team of correspondents of the Far Eastern Economic Review (FEER) surveyed the extent of corruption in 10 Asian countries featured in a cover story titled, “The Asian Lubricant”. It concluded: “If you want to buy a Sherman tank, a Red Cross blanket, or simply speed up the installation of a telephone, there is probably no easier place in the world in which to do just that than in Asia — if you are willing to part with some cash, that is. With pathetically few exceptions [China and Singapore], the countries in this region are so riddled with corruption that the paying of ‘tea money’ has become almost a way of life.”

Politicians and generals in developing countries have amassed their wealth through bribe-taking and kickbacks from crony monopolies; through the diversion of government loans and contracts; through the profits from over-priced goods and construction; through unaudited government revenue, usually raised from taxes; and through the expedient of taking over businesses by decree and the diversion of yet more funds from government-controlled entities. Corruption ‘scandals’ surrounding the purchase of Bofors guns, Agusta Westland choppers and Agosta submarines have been widely reported in the press.

A more insidious trend is to put a positive spin on corruption by asking the question whether corruption is a curse or a blessing. A central theme of the ‘grease-the-wheels’ argument by ‘corruption apologists’ is that bribery can be an efficient way of getting around burdensome regulations and ineffective legal systems. This rationale has not only inspired sophisticated academic models but has legitimised the behaviour of private companies that are willing to pay bribes to start business. China, which has enjoyed an average annual growth rate of approximately 10 percent over the last 20 years, in spite of endemic corruption, is often cited as an example. China is not alone; there are other countries that show similar patterns, mostly in East Asia. On closer examination, this argument is full of holes. First, it ignores the enormous degree of discretion that many politicians and bureaucrats can have, particularly in corrupt societies. They have discretion over the creation, proliferation, and interpretation of counterproductive regulations. Thus, instead of corruption being the grease for the squeaky wheels of a rigid administration, it becomes the fuel for excessive and discretionary regulations. This is one mechanism whereby corruption feeds on itself.

The world’s wealthy countries frequently criticise developing nations for corruption –especially that perpetrated by those among government and business leaders who abuse their positions by looting tens of billions of dollars in national assets or the profits from state-owned enterprises that could otherwise be used to relieve the plight of some of the world’s poorest peoples. Yet the west is culpable too in that it often looks the other way when that same dirty money is channelled into real estate and bank accounts in Europe and the US. Indeed, the west even provides the getaway vehicles for this theft, in the shape of anonymous offshore companies and investment entities, whose disguised ownership makes it too easy for the corrupt and dishonest to invest and squirrel away stolen funds overseas.

It is hard to see any solution to corruption other than transparency and criticism. It will take an unprecedented degree of international cooperation to promote good governance through enhancing accountability and transparency, and enforcement of the rule of law and administrative justice in public offices. Those who engage in corruption must be strictly investigated and not tolerated, as this would greatly increase the risk and cost of corruption, creating the requisite deterrent effect. Government must make the reduction of corruption the biggest objective of its governance. The people must resolutely increase supervision through public opinion, pushing the government to fight corruption. Societies must realise that “to oppose corruption in government is the highest obligation of patriotism” (G Edward Griffin).

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