1. Skip to navigation
  2. Skip to content
  3. Skip to sidebar
Source link: http://archive.mises.org/18963/privatepublic-collusion/

Private/Public Collusion

November 2, 2011 by

The Economist publishes a chart of what country’s companies are more likely to bribe [third world] government officials for special privileges:

 

 

 

 

 

 

 

 

 

 

 

I would like to see a charge that charts the propensity for a company to bribe their own government (i.e. what we call ‘corporate lobbying’) to gain special priviliges.  Bribery is not a black and white issue (for example, should we look down on a company bribing the government for the sake of protecting their property rights?), but I think it is safe to make the claim that the majority of public/private collusion is bad and gives certain companies advantages that they would not have had in a free market.  Anyways, for some reason I expect the U.S. to be as charted highly in that hypothetical graph as it is in the one above.

The Economist piece tries to emphasize the role of government in being the partner in crime.  I think the effort is commendable, but at the same time we can all agree that perhaps we here would place most of the blame on government.  If there was no government, there would be no bureaucrats to bribe.  We should remember that corruption does not stem from money, but from holding power.

{ 29 comments }

Jonny November 2, 2011 at 9:52 pm

“We should remember that corruption does not stem from money, but from holding power.”
Almost as quotable as the famous line about absolute power corrupting absolutely. It’s a keeper. Thanks!

feudalredux November 3, 2011 at 12:35 am

FYI, the shorter phrase “power breeds corruption” gets 37,500 hits on google.

Artisan November 3, 2011 at 4:43 am

originated from what country ?

jmorris84 November 3, 2011 at 7:59 am

How the heck does one get enough information and what information is being obtained to come even remotely close to being able to chart something like this accurately?

Jonathan M.F. Catalan November 3, 2011 at 10:58 am

This chart is semi-historical. It takes empirical evidence — which in this case is apparently direct testimony from a sample pool of American companies — and then uses this information to chart the graph. It really doesn’t say anything about how companies will act in the future, except give you some information about how they’ve acted in the past (and the expectation is that their behavior will not change, everything else remaining the same).

jmorris84 November 3, 2011 at 11:08 am

In other words, it’s a Mickey Mouse chart.

No offense, but this web site has been full of weak sauce lately. Maybe it’s time to take a break and come back in another couple months or so.

Jonathan M.F. Catalan November 3, 2011 at 11:12 am

Well, what makes it a ‘Mickey Mouse’ chart?

jmorris84 November 3, 2011 at 12:20 pm

First of all, the survey asks, “3,016 senior business executives in 30 countries around the world for their perceptions of the likelihood of companies, from countries they have business dealings with, to engage in bribery when doing business in their country.” So, what, the people being surveyed are basically saying what they “think” about other businesses that they deal with? What if their answers are just flat out wrong? What if they don’t like the companies that they are being asked about? Could their answers be complete lies? What if they like the companies they are being asked questions about and don’t want to give up certain information? Again, isn’t there room for lying in this particular scenario as well? How about the questions themselves; what are they? I just went through the web site and didn’t find a list of all questions asked in these surveys.

And then there is this little gem from the web site: “Transparency International is funded by individuals, governmental agencies, foundations and corporations.” Wait a minute; government agencies are helping with the funding for this survey?

Again, no offense, but mises.org is really hurting for material it seems. Maybe start reaching out to people and seeing if anyone out there is interested in writing articles. Many of the regulars just seem to be writing articles and blogs out of sheer boredom these days.

Jonathan M.F. Catalán November 3, 2011 at 12:55 pm

Those are all possibilities in a statistical study, yes. When statisticians interview population samples, though, they have to account for these possibilities. That’s why big magazines such as the Economist tend to rely on statistics companies which have better reputations than other ones. Publications such as the Economist tend to come under careful scrutiny by many of their readers, so there is a pressure to be accurate. You can have your doubts — and that is understandable — but, you should also acknowledge that there is a “regulation”, of sorts, working to reduce the likelihood of an inaccuracy in a statistical study.

I mean, is there anything that stands out as obviously wrong in the chart? Or, are you just criticizing the chart because a mainstream magazine published it and the statistics company is funded by government (both of these being very lazy criticisms)?

Walt D. November 3, 2011 at 11:17 am

“The US has the best elected officials that money can buy”.

Julien Couvreur November 3, 2011 at 3:04 pm

“the U.S. to be as charted highly”

Actually, the US rates relatively low in corruption, according to the above graph. The scales are inverted (higher number is less corruption). I was initially confused by reading the graph when I saw Russia in the far bottom-left corner ;-)

Jonathan M.F. Catalán November 3, 2011 at 6:36 pm

You’re right, of course, but the U.S. still preformed relatively worse than other industrialized countries.

Daniel November 3, 2011 at 9:06 pm

When you can front-load then use political engineering, you don’t need “bribes”

Andras November 4, 2011 at 1:46 pm

Daniel,
You would think so but the fact is that the US scores rather high in terms of relative to GDP and absolut quantity of dollars used in corruption.
Only in the last three years 5T$ was distributed and 17T$ was guaranteed to the banksters to eliminate the effects of their previous actions without a single indictment. Of course, it was done under the clout of politicians bought and paid for.
The question thus remains “Where do honest operations end and where does corruption start?”

Daniel November 5, 2011 at 12:32 pm

Your question is very relevant because the discrepancy between definitions of what is corruption could allow the interviewed to to not interpret (or even understand) certain [corrupt] acts which are symptomatic of government largesse as actually being corruption

mushindo November 10, 2011 at 8:51 am

the interesting thing about this graph is not so much how far from th eorigin a country is, but where th ecountry lies relative to the regression line. Assuming the bribe payers’ index does indeed reflect the reality of corruption, a country being on the regression line implies that perception matches reality. It seems to me that the population of countries above th eline are more intolerant of corruption, hence the exaggerated perception relative to reality. And vice versa for countries below the line.

ergo, ( and forgive the momentary proto-keynesian lapse into shameless aggregation) this graph could also be worked up into a comparitive national morality index………………

Whittaker November 4, 2011 at 9:56 am

“If there was no government, there would be no bureaucrats to bribe.”

If there was no government, there would also be no corporations, because corporate laws and charters are enacted and issued by the government. This is what you guys always miss.

It’s fine to complain about bribery and lobbyists, but the fact of the matter that simply by coming into existence, corporations have tremendous advantages over individual workers and business people– because of the doctrine of limited liability. This is a breathtakingly broad exemption not only from the normal workings of the law, but from basic notions of fairness and responsibility. Bribery– whether in the form of cash payoffs, or more subtle forms like 3-martini lunches– is simply a natural outgrowth of this doctrine.

Jonathan M.F. Catalan November 4, 2011 at 10:01 am

Why are corporations the only entities able to lobby government? Are you saying that without corporate laws large companies would not try to lobby the government? Legal protection of corporations and lobbying are two separate issues.

Whittaker November 6, 2011 at 8:02 am

Without limited liability there would be concepts of responsibility in business. Business managers would focus on doing business ethically and safely with concern for their customers and neighbors, because they would know that they would be held PERSONALLY accountable for misdeeds and negligence. They would not be focussed from the start on getting special privileges from the government, nor would they have a lot of extra time on their hands to engage in lobbying activities.

Try this out: there are 15,000 registered lobbyists in Washington, DC and another 25,000 in all the state capitals. How many of these do you think represent unincorpoated businesses?

nate-m November 5, 2011 at 1:22 pm

If there was no government, there would also be no corporations, because corporate laws and charters are enacted and issued by the government. This is what you guys always miss.

You are just being bombastic.

People always have created charters and setup formal entities for creating businesses. The government registered ‘corporation’ is just a aggressive take over of this process. It just adds layers of bureaucracy over the normal process of forming businesses. Ostensibly for taxation purposes. Creating charters and formal contracts for enterprises pre-dates even Roman times.

The original point still stands. Without government officials there would be no need to bribe them.
In fact I will take it one step further and say:

When other people say “we need to limit government corruption” they entirely miss the point and thus will never stumble on the truth as long as they follow this line of thinking. State Government _IS_ corruption. The mere existing of the thing is evil. Therefore the correct approach is to limit government as a whole. Up to, and including, eliminating state government completely.

Whittaker November 6, 2011 at 8:20 am

“The government registered ‘corporation’ is just a aggressive take over of this process. It just adds layers of bureaucracy over the normal process of forming businesses. Ostensibly for taxation purposes.”

No, it’s worse than that, it grants special privileges and immunities to a politically favored group, which is then implicitly expected to return the favor via campaign contributions and other kickbacks. It has nothing to do with taxation.

A government-granted corporate charter basically amounts to the establishment of a new government agency, whose bureaucrats are invited to reap large profits without the normal mechanisms of accountability and responsibility in business. There is no incentive for the managers to be efficient or productive in their business activities. This is why corporations soon stray from their supposed purpose of making goods and services, and become essentially political lobbying organizations. It explains the Peter principle and the Dilbert phenomenon: that corporations are managed by people who are competent in political lobbying, but not in business. Without corporation laws and charters, company would focus on efficient and safe production of goods that the marketplace wants– not on politics.

Jimbo November 6, 2011 at 8:03 am

The Economist piece tries to emphasize the role of government in being the partner in crime. I think the effort is commendable.

Indeed – but look at the countries towards to top of the indices – Switzerland, Netherlands, Germany, Canada. These apparently low bribery / low corruption countries also have rather high scores of press freedom (look for the reporters without borders reports). Press freedom, I would suggest is a decent proxy for individual liberty.

So it would seem – on the basis of this evidence – that living in a country with a more social-democrat model of economics is, at worst, no barrier to living in a society with a high degree of personal liberty.

Franklin November 6, 2011 at 9:19 am

Splitting liberty into parts (personal vs. economic) is subterfuge, in my view. Even though it’s oftentimes exercised by libertarians as well, this construct (or, rather, deconstruct!) allows the leftist to justify instrusion into another’s life, under the cover of “social justice.”
Either there is more liberty or less liberty.
The fact that trade might be involved is irrelevant.

Jimbo November 6, 2011 at 10:24 am

“Splitting liberty into parts (personal vs. economic) is subterfuge, in my view. Even though it’s oftentimes exercised by libertarians as well, this construct (or, rather, deconstruct!) allows the leftist to justify instrusion into another’s life, under the cover of “social justice.”
Either there is more liberty or less liberty.
The fact that trade might be involved is irrelevant.”

so what are we to conclude from the Economists’ data?

The empirical evidence presented is that countries with low corruption / bribery are also ones which are (broadly speaking) built around a social-democrat model (Netherlands, Switzerland, German, Belgium, Canada).

It is true that these countries have a freeer press (itself a crude proxy for a ‘free’ society).

The only thing I can conclude is that you simply can’t take a particular economic model and predict the level of bribery/corruption that will result.

consider this – a country like Somalia has zero functioning government – yet ‘corruption’ is endemic – if piracy doesn’t fit into the definition of bribery/corruption then what does!

Matthew Swaringen November 6, 2011 at 11:04 am

Somalia has multiple well functioning violent indendent entities vying for control. It doesn’t exist as a single state, but rather multiple states.

The only reason it’s even remotely conceived as being in anarchy right now is because of a lack of a central government over that geographical area, but this is entirely arbitrary as those boundaries were never of the people’s choosing and even here in the US it’s not as though the boundaries didn’t involve plenty of bloodshed and violations of rights.

Jimbo November 6, 2011 at 2:46 pm

correct – but if we were to plot on of these entities on the Economist chart they’d be way to the bottom left in terms of bribery/corruption – yet they clearly espouse a more ‘liberal’ market based approach to society than, say, Sweden.

what this means, I’m not sure, but it strikes me as patently obvious that it’s impossible to quantify ‘freedom’ (in the sense that I imagine Austrian-type economics does) using perceived levels of corruption as the metric. And if you do, you end up facing an unpalatable (to Austrians, anyway) observation that living in ‘social-democrat’ Germany seems to be a less bribery-prone existence than in (nominally) more ‘capitalist’ USA.

Or perhaps I’m missing the point?

Jimbo November 6, 2011 at 10:32 am

what I guess I’m saying is that if these were the only data, you could conclude that social democracy leads to a lower bribery/corruption society.

Matthew Swaringen November 6, 2011 at 10:52 am

How would this ever be the only data?

Jimbo November 6, 2011 at 2:38 pm

I don’t dispute these are not the only data – think I was clear in that respect.

but – the Economist present a simple chart based upon (I believe) self-reported perceptions of bribery/corruption and attempts to (perhaps) draw some inferences from it.

To my mind to correlate the incredibly nebulous concept of ‘liberty’ with something as equally subjective as perceived corruption doesn’t do much of anything.

*but* if we take the data at face value (as were encourage to do) then all I can say is that living in a social democracy-type government is not any barrier to living in a less-corrupt (and perhaps by extension more ‘free’) society.

Comments on this entry are closed.

Previous post:

Next post: