Acts committed by individuals motivated by greed or envy are wrong. But is business or political corruption always harmful to the common good? Can it ever be helpful?
Not everything that is legal is good; abortion, for example. Similarly, not everything that is illegal is necessarily bad, like some forms of corruption. The corruption that Bernard Madoff apparently practiced was a version of the ponzi scheme, in which new investors’ money is used fraudulently to either pay off clients who want to cash out or to make new investments. The scheme worked for a long time, but was discovered once both cashing out and new investments occurred simultaneously at unsustainable levels. The corruption Illinois Governor Rod Blagojevich apparently practiced was attempting to auction off a seat in the US Senate vacated by President-elect Obama. Can corruption ever serve the common good?
According to Johann Graf Lambsdorff’s survey of economic analyses of corruption , the empirical answer appears to be no. In fact, in most of the studies based on multiple country cross section data which Lambsdorff reviewed, corruption was correlated with 1.) lower levels of GDP; 2.) more income inequality; 3.) higher inflation; 4.) increased crime; 5.) policy distortions; and 6.) lower levels of competition. Additionally, there is empirical evidence that corruption 7.) lowers a country’s ability to attract foreign investment; 8.) reduces the productivity of capital; 9.) distorts government spending; and 10.) reduces the quality of public services such as health care and environmental controls.
Interestingly, some countries with moderate levels of democracy can actually experience an increase in corruption. According to the Lambsdorff survey, countries with robust democratic practices experience a reduction in corruption levels over time. The United States could be cited as an example of a vibrant democracy in which corruption levels have declined over time, recent examples not withstanding. Italy comes to mind as a reasonably healthy democracy plagued by systemic corruption. I love Italy; home of the Church, garden of the saints; awesome food. But on the corruption metric, I love the United States more.
According to Rajeev K. Goel’s and Michael A. Nelson’s article in the journal Public Choice, there is a significant, positive correlation between the number of public officials convicted of corruption and state and local government expenditures. But is this because increases in government spending cause increases in corruption, or because a part of increased government spending goes to better law enforcement and prosecution?
Couldn’t a case be made that corruption might be a way for citizens living under an ineffective government to get things done, by “greasing the wheels” with bribery functioning as a kind of tax? Pierre-Guillaume Meon and Khalid Sekkat in another article published in Public Choice, asked does corruption grease or sand the wheels of growth? They conclude, “The results not only reject the “grease the wheels” hypothesis but are consistent with the reverse hypothesis: the “sand the wheels” hypothesis. It seems that corruption becomes even more harmful when governance is poor. In economics, there are well known situations where in the presence of existing distortions an additional distortion may improve welfare. Our finding illustrates the opposite case where adding a distortion deteriorates welfare.” (p. 71)
Corruption illustrates what the Church calls social sin (Compendium 118), or the direct assault against the justice owed to a person’s neighbor or community. An ethical elaboration of this is seen in the definition of the cardinal vice greed, understood as a behavioral tipping point in which the pursuit of personal gain becomes an end in itself or deprives others of acquiring gain legitimately. When worldly possessions, professional or political power become obsessions to the exclusion of God, this becomes the ultimate form of the corruption of properly ordered priorities.
Still, can some forms of corruption ever serve the common good? Gordon Tullock’s 1996 article Corruption Theory and Practice published in Contemporary Economic Policy, wondered if inefficiencies of government bureaucracies might not be offset by market-mimicking forms of corruption. He sites the example of the buying and selling of officer positions in the British military. Evidently, Arthur Wellsly became a colonel on his sixth day in the army by way of such a transaction. “Without this head start,” writes Tullock, ”he never would have become a Field Marshall in time to command at Waterloo. As Prime Minister in later life, Duke of Wellington made no effort to change the system. Apparently he thought this was a good way of recruiting senior officers. Certainly in his case, no one would doubt the merits of the system.”
To the extent that the defeat of Napoleon Bonaparte was partly caused by what many would now label the corrupt practice of buying military office, and assuming the defeat of Napoleon was a good thing, does this rise to the level of an example of corruption serving the common good? If so, are there other such examples? If it does not, why does it not?
