The Anatomy of Corruption – Why Should We Care?

Corruption is an age-old phenomenon. The word corruption means destruction, ruining or spoiling – a society or nation. Selfishness and greed are at the root of it; it also implies lack of integrity and honesty. A corrupt society is characterized by immorality and lack of fear or respect for the law. When it stops valuing integrity, virtue or moral principles it starts decaying. Corruption is the abuse of public power for private gain. Corruption comes under many different guises: bribery, misappropriations of public goods, nepotism (favoring family members for jobs and contracts), and influencing the formulation of laws or regulations for private gain.

Corruption is not just the clearly “bad” cases of government officials skimming off money for their own benefit. It also includes cases where the systems don’t work well, and ordinary people are left in a bind, needing to give a bribe to get a work done or the licenses they need.

The state of economy also plays an important role in corruption. Inequality of wealth distribution, exploitation by employers, and low wages and salaries provide ideal breeding ground for corruption. A license-permit regime or scarcity of basic commodities adds fuel to the fire. India is a textbook example of how license-permit Raj can vitiate political as well as economic atmosphere of the nation.

Broadly speaking, there are two forms of corruption:

Administrative Corruption: Corruption that alters the implementation of policies, such as getting a license even if you don’t qualify for it.

Political Corruption: Corruption that influences the formulation of laws, regulations, and policies, such as revoking all licenses, and gaining the sole right to operate some public utility with monopoly.

The Root Cause of Corruption

The New Law of Einstein

Corruption is always contextual and rooted in a country’s policies, bureaucratic traditions, political development, and its social and cultural history. Still, corruption tends to flourish when policies are complicated, their implementation is weak, and the general public has no redressal mechanism. Klitgaard has modeled the dynamics of corruption (C) in the public sector in the following equation:

C = M + D – A

Corruption tends to increase when an organization or person has monopoly (M) power over a good or service, which generates income, has the discretion (D) on its allocation, and is not accountable (A).

Why should We Care?

Average income is about three times lower than in less corrupt countries (the difference between, say, Ukraine and Czech Republic, Indonesia and South Korea, or Chad and Namibia).

When the ruling elite fail to curb the activities of the corrupt and the selfish within it, the governance begins to rot and the ordinary people begin to lose faith in the ruling class. Such a society begins to decay and sets itself on the road to self-destruction. A state of unchecked political corruption is known as kleptocracy, which literally means “rule by thieves”.

According to World Bank estimates, between $1 trillion and $1.6 trillion dollars are lost globally to illegal activities each year. Corruption decreases the amount of wealth in a country and lowers the standard of living. Corruption affects you even if you don’t come into direct contact with it. For example, corruption:

  • Vitiates the business atmosphere and discourages businesses from operating freely; thus, acts as a demotivating force, which reduces opportunities for all.
  • Reduces the amount of money government has and degrades the quality of government services; for example education, healthcare, infrastructure, welfare programs, police, etc
  • Is an important factor behind the widespread poverty inIndia. A large chunk of funds meant for the welfare programs for the poor is siphoned off by the corrupt officials and the intermediate agencies.
  • Allows criminal activities such as money laundering, extortion and drug trafficking to thrive.
  • Allows those with money or connections to bend the law or government rules in their favor. This is how rich businessmen and politicians are always hand in gloves.
  • Puts weaker section of the society to disadvantage because those with less power are particularly disadvantaged in corrupt systems, which typically reinforce gender discrimination.
  • Distorts national and international trade.
  • Jeopardizes sound governance and ethics in the private sector.
  • Undermines democracy and the rule of law.

The conclusion – Corruption hurts everyone.

Impact on the Poor

There is considerable evidence to show that although rich people are more likely to pay bribes, the poor bear a disproportionately high burden of corruption if measured as the fraction of income paid in bribes. They often face outright exclusion when access to public goods and services require bribing, given their powerlessness due to lack of voice or political influence. Moreover, when corruption results in shoddy public services, the poor have no other options but to live with sub-standard services.

Corruption also unfairly weighs heavily on trade and service activities of small enterprises not only for the added cost but also as a discouraging factor. Corruption allows already influential individuals or groups of individuals to take advantage of state activities at the cost of the rest of the population; it hurts the poor disproportionately and increases income inequality.

A study of recent economies in transition indicates that the changes in income distribution have been partly the result of corrupt actions of non-transparent privatizations.

How to Stop Corruption

Accountability and transparency are two great antidotes to corruption. If the legal system is quick, fair and uncomplicated, it makes the task of fighting corruption easier. Free and strong press is the third facilitating factor. Therefore, laws fixing accountability and encouraging transparency combined with efficient judiciary and free press provide ideal atmosphere to tackle the menace of corruption.

Anna Hazare’s crusade for an effective Janlokpal Bill and reforms of election and judicial system, if implemented properly, will go a long way in curbing corruption inIndia.

About Goodpal

I am a firm believer in healthy people (mind and body both), healthy societies and healthy environment. Please feel free to comment, share and broadcast your views -- I like rational and intellectual discussions. Thanks for stopping by. Have a Good Day!
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One Response to The Anatomy of Corruption – Why Should We Care?

  1. Pingback: Ethics « tsakova

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