Posts tagged with: corruption

Last week, Istituto Acton’s close Italian ally in defense of liberty, Istituto Bruno Leoni (IBL), presented the 2008 Index of Economic Freedom in Rome. The IBL invited speakers to discuss the decline of economic freedom in Italy over the last 12 months. Il bel paese ranks as the 64th freest economy in the world, with Hong Kong at number one and the U.S. at five.

Italy’s economic problems were blamed on corruption and weak law enforcement. While corruption to some extent reflects individual moral failings and certainly does affect economic growth, the reverse is also true: corruption tends to flourish in environments already hostile to markets and free competition.

Bad and excessive regulation tends to create opportunities for the arbitrary use of power when dealing with citizens and companies. This, in turn, distorts market incentives and deters investment but it also creates mistrust among people and alienates them from the governing institutions. Better and less regulation, on the other hand, not only boosts economic growth but could tackle a more deeply-rooted crisis of political and social ethics.

Not surprisingly, a labor union representative at the IBL event argued for stronger government to fight corruption at the expense of additional economic reforms. He unfortunately missed the point: The lack of economic freedom simply leads to more opportunities for the moral evils that already plague Italy.

Blog author: jballor
Tuesday, November 20, 2007
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Regis Nicoll over at The Point notes a WaPo story that is getting a lot of play on the blogosphere about the UN’s downgrade of the estimate of the extent of the AIDS epidemic, “U.N. to Cut Estimate Of AIDS Epidemic: Population With Virus Overstated by Millions.”

Nicoll writes that while of course it is good news that fewer people are infected than were previously thought, “The bad news is that previous estimates were inflated because of politics, bad science, or both.”

Nicoll continues, “While reading the announcement, I couldn’t help but draw parallels with certain climate change proponents and Intelligent Design critics whose tactics involve alarmism, exaggerated estimates and the politicization of science to protect their study grants and mandarin status.”

That’s something I’ve been wondering about a long time, and have previously drawn comparisons between climate change alarmism and the exaggerated claims of the spread of AIDS (as well as between the challenged position that ID proponents and climate change skeptics share).

The financial incentive for governments, the UN, and NGOs to play up potential cash cows for their pet social and scientific agendas is one that cannot be overlooked. And it’s the sort of corruption that those who really want to tackle corruption should take a hard look at.

An interesting article in the Los Angeles Times detailing how badly wrong Robert Mugabe’s supporters in the West have been from the very beginning (requires “free” registration; may I suggest BugMeNot?):

From the beginning of his political career, Mugabe was not just a Marxist but one who repeatedly made clear his intention to run Zimbabwe as an authoritarian, one-party state. Characteristic of this historical revisionism is former Newsweek southern Africa correspondent Joshua Hammer, writing recently in the liberal Washington Monthly that “more than a quarter-century after leading his guerrilla army to victory over the racist regime of Ian Smith in white-minority-ruled Rhodesia, President Robert Mugabe has morphed into a caricature of the African Big Man.”

But Mugabe did not “morph” into “a caricature of the African Big Man.” He has been one since he took power in 1980 — and he displayed unmistakable authoritarian traits well before that. Those who were watching at the time should have known what kind of man Mugabe was, and the fact that so many today persist in the contention that Mugabe was a once-benign ruler speaks much about liberal illusions of African nationalism.

It turns out that useful idiots still exist, and sadly, probably always will.

Lawrence Lessig, a legal scholar and high-profile advocate of copyright reform, has decided to “shift my academic work, and soon, my activism, away from the issues that have consumed me for the last 10 years, towards a new set of issues.”

His new task? “‘Corruption’ as I’ve defined it elsewhere will be the focus of my work. For at least the next 10 years, it is the problem I will try to help solve.”

Just how does Lessig define “corruption”? In an extended Disclosure Statement and Statement of Principle, Lessig writes about his non-corruption principle, which is “about money.” Corruption is further defined as “the subtle pressure to take views or positions because of the financial reward they will bring you.”

Here is Lessig’s non-corruption principle, in its precise form: “I never promote as policy a position that I have been paid to advise about, consult upon, or write about. If payment is made to an institution that might reasonably be said to benefit me indirectly, then I will either follow the same rule, or disclose the payment.”

Lessig discloses the motivation for his decision, saying, “I am someone who believes that a free society — free of the ‘corruption’ that defines our current society — is necessary for free culture, and much more. For that reason, I turn my energy elsewhere for now.”

Kris Mauren (far right) and African guests get ready to visit GFS.

Acton University is now well underway, and on Wednesday a group of seven African attendees joined Kris Mauren on a visit to Gordon Food Service’s Grand Rapids headquarters for an up-close look at ethical capitalism. Mauren called it a great opportunity for people from countries with barren and corrupt markets to see an efficient, principled business for themselves. “The management of GFS also has a strong concern for philanthropy and international missions,” he said. “So it’s a great model of the capitalist ideal to hold up for these folks, who are used to a much more hostile economic climate.”

The group met with Gordon Food Service management for a luncheon, then toured the company’s office and factory area. Harry Ayile, formerly from Ghana and now residing in Norway, was completely blown away by what he observed. “It was like … wow,” Ayile commented with a smile. He was struck by the dedication shown by the company’s workers. “At every level, the workers are extremely well-organized, focused, and committed to doing their jobs excellently,” he said.

Ayile was astonished at how the “energetic” GFS employees took pains to avoid mistakes in the orders they were filling. “The business has a good system of checks and balances, and most of the employees have been there for fifteen years or more,” he said. “They take true satisfaction in their work.”

Comparing Gordon Food Service’s methods to the way business is done in Africa and even in Europe, Ayile said his visit couldn’t have been more of an eye-opener. “Before I came to Acton, I thought all people who did business were evil,” he said.

Ayile recalled one food-production company in Ghana that deliberately had been selling expired grain infested with maggots. “They would just sift out the maggots, package the grain, and sell it at full price,” he said. “Finally one employee caught on to what was happening and was able to produce evidence and pictures, but it went on for awhile.” Ayile called the incident typical of business practices in much of Africa, which lacks the institutional support necessary for free enterprise to flourish. When the rule of law is unreliable, incentives for greedy and corrupt behavior often outweigh the benefits of integrity. He added that many businesses “show very little respect for the consumer, as opposed to the way American businesses like Gordon Food Service care about their customers.”

Ayile and others from the group — which included visitors from the Congo, Kenya, and other African countries — all said they were very impressed with the way GFS invested in its employees and how these employees, in turn, were invested in the success of the company. Although Africa has a long way to go, Ayile said his visit was inspiring and gave him hope for the future of Ghana and other developing countries in Africa.

Check out Global Integrity, “an independent, non-profit organization tracking governance and corruption trends around the world. Global Integrity uses local teams of researchers and journalists to monitor openness and accountability” (HT: Librarians’ Internet Index: New This Week).

There are limitations, of course, such that countries such as Venezuela or China are not listed as of yet. But Global Integrity might be one valuable tool to add to your “global citizen’s” toolkit.

And while we’re on the topic, don’t forget to add this to your toolkit as well: A Theory of Corruption, by Osvaldo Schenone and Samuel Gregg.

Blog author: jspalink
Wednesday, December 6, 2006
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Delta Airlines has rejected a hostile $8.53 billion takeover bid from U.S. Airways, saying that it much prefers to remain independent. But Delta, and a lot of other airlines, might be doing consumers a favor by joining a consolidation push, says Anthony Bradley. “Given the nature of the industry today, proper stewardship of commercial airlines implies reform,” he writes.

Read the commentary here.

Transparency International is a group devoted to exposing corruption of all kinds. One of the most sickening forms of corruption in many poor countries is health care corruption. One sort of corruption is absentee-ism: medical personel bill for their services even when they aren’t at work, but are doing another job.

The increasingly large and legal market for pharmaceutical drugs is attracting criminal activity. Pharmaceuticals are high value and easily portable, and the penalty for stealing or smuggling them is far lower than for narcotics, so trade is brisk. This is especially the case in Africa where borders are porous to those prepared to pay bribes. Furthermore pharmaceutical markets are segmented internationally since companies recouping research and development costs want to charge efficient prices in vastly different settings for products with very low marginal costs. Antiretrovirals (ARVs) to treat HIV have 20-fold price differentials between western and African countries, which mean illegal but massive arbitrage possibilities exist for smugglers.

Once again, lack of virtue retards economic development.

Reading through the narrative of king Saul in 1 Samuel, it occurs to me that it is in part an object lesson of Lord Acton’s dictum about the corrupting influence of power, in this case political. The story begins in 1 Samuel 8, when Israel asks for a king.

When Samuel was old and had passed on his rulership of Israel to his sons, who did “not walk” in Samuel’s faithful ways, the people of Israel clamor for a king. They say to Samuel, “You are old, and your sons do not walk in your ways; now appoint a king to lead us, such as all the other nations have.” Samuel is taken aback. He sees the request as an indictment of his ability to lead.

When he takes the request before the Lord, however, Samuel is set straight: “Listen to all that the people are saying to you; it is not you they have rejected, but they have rejected me as their king. As they have done from the day I brought them up out of Egypt until this day, forsaking me and serving other gods, so they are doing to you. Now listen to them; but warn them solemnly and let them know what the king who will reign over them will do.”

God then proceeds to enumerate some of the differences in authority and the exercise of power that will distinguish the period of the judges from that of a monarchy. “This is what the king who will reign over you will do,” says Samuel:

  • He will take your sons and make them serve with his chariots and horses, and they will run in front of his chariots. Some he will assign to be commanders of thousands and commanders of fifties, and others to plow his ground and reap his harvest, and still others to make weapons of war and equipment for his chariots.

  • He will take your daughters to be perfumers and cooks and bakers.
  • He will take the best of your fields and vineyards and olive groves and give them to his attendants.
  • He will take a tenth of your grain and of your vintage and give it to his officials and attendants.
  • Your menservants and maidservants and the best of your cattle and donkeys he will take for his own use.
  • He will take a tenth of your flocks, and you yourselves will become his slaves.

That doesn’t sound very good, does it? Samuel warns that all these things will happen, and “when that day comes, you will cry out for relief from the king you have chosen, and the LORD will not answer you in that day.”

Why do the people still insist on having a king? Do they not believe Samuel? Or do they simply not care? “But the people refused to listen to Samuel. ‘No!’ they said. ‘We want a king over us. Then we will be like all the other nations, with a king to lead us and to go out before us and fight our battles.'” Here we get to the crux of the issue. The people were willing to sacrifice many of their freedoms and rights in order to feel secure.

Isn’t this a perennial tension? In 1755, Benjamin Franklin noted, “Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety.”

Duly warned, the people get what they want. God gives them Saul as their first king. And the safety they receive, especially from tyrannical rule, is certainly short-lived (and deservedly so, at least according to Franklin). At first, Saul is a good king, and successfully leads the people against their enemies, the Philistines.

As Saul takes up his kingship, there are a number of references to the divine blessing on him. For instance, in chapter 10, the text says that “God changed Saul’s heart,” and later on, before battle, “the Spirit of God came upon him in power.”

In time, however, Saul began to fulfill some of the prophecies that Samuel had predicted: “All the days of Saul there was bitter war with the Philistines, and whenever Saul saw a mighty or brave man, he took him into his service.”

When fighting the Amalekites, Saul does not listen to God’s command to destroy all the spoils of war. Instead, “Saul and the army spared Agag and the best of the sheep and cattle, the fat calves and lambs—everything that was good. These they were unwilling to destroy completely, but everything that was despised and weak they totally destroyed.”

Because Saul sins he is rejected as king. He admits and repents his sin, blaming his own weakness and fear of the people (only after claiming that he was disobedient out of piety). God indicts Saul’s motives, however, noting that following the battle he had “set up a monument in his own honor.”

After Saul’s disobedience, the tyranny degenerates and he becomes more and more corrupt: “The Spirit of the LORD had departed from Saul, and an evil spirit from the LORD tormented him.”

Even under the previous system of rulership, by means of judges, evil and corruption was possible. Despite a rule of fairness and justice under his own administration, Samuel’s own two sons were wicked and corrupt. But the extent of their authority was limited when compared to that of Saul. And not even Israel’s true king David was immune to corruption, as his covetousness of Bathsheba and murder of Uriah illustrate.

These kinds of stories make me sick, and they are all too common. In today’s Washington Post, a lengthy article examines the Livestock Compensation Program, which ran from 2002-2003, and cost over $1.2 billion.

In “No Drought Required For Federal Drought Aid,” Gilbert M. Gaul, Dan Morgan and Sarah Cohen report that over half of that money, “$635 million went to ranchers and dairy farmers in areas where there was moderate drought or none at all, according to an analysis of government records by The Washington Post. None of the ranchers were required to prove they suffered an actual loss. The government simply sent each of them a check based on the number of cattle they owned.”

Texas rancher Nico de Boer says, “The livestock program was a joke. We had no losses,” de Boer said. “I don’t know what Congress is thinking sometimes.” On the $40,000 he received, de Boer continues, “If there is money available, you might as well take it. You would be a fool not to.”

But the story doesn’t just stop there. The moral ambiguity of simply taking the money that is offered to you is eventually replaced by the incentives to actively seek out and campaign for more funds, effectively defrauding the government.

Under the original terms of the plan, “a rancher had to be in a county that was suffering from a drought and declared a disaster by the agriculture secretary in 2001 or 2002. More than 2,000 counties had such declarations at the time, including many with only modest dry spells.” But once the pork started flowing out of Washington, everyone wanted to get a spot at the trough.

Increasing pressure from lobbyists and special interests eventually made even the original flimsy requirements too onerous. Speaking of 2002, “There was pressure that year to grow emergency declarations for drought,” recalled Hunt Shipman, a former top USDA official who now works as a lobbyist in Washington.

The results? “Under Congress’s new version of the program in 2003, livestock owners could qualify as a result of any type of weather-related disaster declaration by the secretary of agriculture. Or they could become eligible if their county was included in a presidential disaster declaration. Under the new rules, the time period covered also was extended, to Feb. 20, 2003. One rule remained the same: Livestock owners still did not have to prove a loss.”

And under that new situation, “With the rules relaxed by Congress, federal agriculture officials pushed their local offices to find disasters that would make more livestock owners eligible, records and interviews show. It didn’t matter if it was a cold snap or a storm that was two years old.”

There’s not much else to say, I think, besides recognizing the truth that “the love of money is a root of all kinds of evil” (1 Timothy 6:10 NIV).