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Source link: http://archive.mises.org/14160/a-theory-of-bribes/

A Theory of Bribes

October 6, 2010 by

Regardless of their relative merits, bribes are a phenomenon distinct from taxation and regulation. Examining where and to what extent illicit bribes exist sheds further light on the distinction between the private, voluntary economy, and the public, coercive one. FULL ARTICLE by Roman Skaskiw

{ 13 comments }

Ryan October 6, 2010 at 9:06 am

Great article. You’ve stated the issues perfectly.

Patrick Barron October 6, 2010 at 9:17 am

Congratulations, Roman, on a wonderful article. It explains the nature of bribes in the public sector and is just one more reason to limit government as much as possible.

Dimitri October 6, 2010 at 10:13 am

Where in this bribery analysis does “tipping” sit? It sure fits the description of “Bribe to Employee”. Poor tip or no tip equals poor service, for example, in a restaurant. Poor service = employer loses business. To circumvent this situation employer encourages customers to “tip”. All other employers follow suit. Tipping becomes an accepted part of the transaction. Looks like a back door entry for bribery into any business. Shall we promote a ban on tipping? – Come to think of it, I have been to a restaurant or two where you are specifically asked NOT to tip. This is presented as a rationalization for slightly inflated menu prices. I must say though, that the waiter help in these establishments was on the gloomy side.

Jordan Viray October 6, 2010 at 3:34 pm

Certainly there should be no ban on tipping. In general, tips are given after service is received so it is up to the waiter to try to win that price through good service. The reward aspect has mostly been lost since tipping is customary now with a gratuity often included in the bill!

Allen Weingarten October 6, 2010 at 2:47 pm

With regard to countering bribes, the author writes “the public sector offers no effective mechanism for doing so.” Now, it is illegal for a judge to accept a bribe. Even when it is unclear as to whether the judge has an interest in the outcome of a trial, he is expected to recuse himself to avoid the appearance of impropriety.

Today, earmarks are harmful, because they lead to expensive government programs. An effective mechanism to remove these bribes would be to require a politician to recuse himself from voting on an issue if he has accepted any (significant) payment, such as a campaign contribution, that could bias his vote.

Why shouldn’t a politician’s mercenary behavior be as prohibitive as that for a judge?

J. Murray October 6, 2010 at 2:54 pm

Because it’s the politician that passes all the laws.

Allen Weingarten October 6, 2010 at 5:12 pm

J. Murray, do you believe that if the public were insistent, the politicians would not heed their demands?

Capn Mike October 6, 2010 at 5:39 pm

Hate to butt in, and answer for the great J., but do you not remember the bailout votes?????

Allen Weingarten October 7, 2010 at 3:30 am

Capm Mike, do you believe that the majority of Americans have been insistent against government intervention? I think instead that they have insisted upon social security, medicare, minimum wage, government education, etc. When the public in principle favors intervention, a soft rejection of some bailouts is not a serious rejection.

Allen Weingarten October 7, 2010 at 6:57 am

To clarify, it is not that when there is a majority who opposes a position (such as a bailout) it is reversed. It takes time and effort, especially when it is not opposed in principle.

Walt D. October 7, 2010 at 12:02 am

When all is said and done lobbying is merely a euphemism for a bribe. In China the people being bribed are more in control than the politicians are here. The politicians in the US are a wholly owned subsidiary of the beltway lobbyists. The Pelosi-Reid Congress let the cat out of the bag when they allowed it to be known that beltway lawyers had drafted the healthcare legislation- thousands of pages that the Congress had not even bothered tor read. We would be better off if the Congress could be bought and sold on EBay. At least lobbyists would be forced to pay a market driven price.

Dallas Beaufort October 7, 2010 at 7:54 am

A further endorsement for a better return on investment via a smaller statutory government.

Patrick Lee January 3, 2011 at 6:52 am

Interesting article, thank you, but I disagree with the following statement in it: “Bribes in the case of employees operating with their employer’s resources are rare because every employer is naturally vigilant toward his private property.”On the contrary, I think the following sort of bribes are very common: – Airmiles: the employer pays for the flight, but the employee gets the benefit of the air miles, thus giving the employee an incentive to choose an airline which might not be the most cost effective one from the employer’s point of view – free gifts provided to employees when they order from business stationery/furniture catalogues: again the employee gets a gift (of value say $40) when s/he places the order, but the employer pays. This again distorts competition between suppliers of stationery/furniture. Both these are similar to the public sector bribery issue, because they involve spending “other people’s money”.

PS Although in theory, employers could devote resources to monitoring the value of airmiles and other “free” gifts to employees from orders that the employees place, but I suspect that few employers bother to do that, and besides, wouldn’t it be more efficient for employers to make clear to suppliers – including airlines – that “gifts” to employees are frowned upon, and instead suppliers should pass on the value of such gifts directly to their customers simply by reducing their prices?)

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