What’s the dirtiest secret about corruption? Just how little we know about it. Treasuries are plundered and kickbacks are paid, but the nature and scale of the world’s shady transactions largely remain a mystery to us. Luckily, a little economic detective work is all that is needed to expose the smuggling, cheating and bribing that is hiding in plain sight.
It was the odd uniformity of the suitcase’s contents that tipped off the baggage inspector: six thick, identical rectangles. They could have been books, but then again, they could have been six bundles of cocaine. And in August 2007, security was tight at Buenos Aires airport; the country was in the midst of a presidential election. The suitcase’s owner, a Venezuelan businessman just in from Caracas, hesitated briefly when asked to open his suspicious luggage. Out tumbled $800,000 in cash. It was, according to US investigators, an illegal campaign contribution from Venezuelan President Hugo Chávez intended for Cristina Fernández de Kirchner, wife of Argentina’s former president & candidate for presidency herself. What better to grease the countries’ friendship, investigators alleged, than a suitcase full of cash?
Such tales of bribery and corruption are as old as politics. Try as we might to rid officialdom of crooks, extorting senators, vote-buying presidents and judges for sale remain all too common. Whether it’s the $90,000 in cold cash that turned up a few years ago in a US congressman’s freezer, the “Versailles in the jungle” built with the billions embezzled by Zaire’s Mobutu Sese Seko, or the bank balances of oil autocrats in Central Asia, venality and excess remain the scourge of modern global politics.
But corruption is not simply a moral concern. It’s blamed – perhaps rightly – for many of the world’s ills; widely accused of being an endemic barrier to economic development, responsible for Africa’s lasting poverty and Latin America’s perennial stagnation. It is, says conventional wisdom, what makes poor countries poor. It undermines the rule of law, distorts trade, and confers economic advantages on a privileged few. It prevents aid money from reaching victims, topples buildings thanks to shoddy construction, and strangles business with constant burden of bribes and payoffs. Yet the truth is that we have very little idea about how corruption works or how pervasive it is. We have anecdotes about rotten individuals – a Ferdinand Marcos, a Robert Mugabe, or Charles Taylor – but this tells us almost nothing about the breadth and depth of global corruption. After all, when bribery and embezzlement is done right, it’s invisible. Economists haven’t even resolved if and when corruption is really a problem: East Asian economies have boomed in recent decades under reputedly corrupt regimes.
It was the odd uniformity of the suitcase’s contents that tipped off the baggage inspector: six thick, identical rectangles. They could have been books, but then again, they could have been six bundles of cocaine. And in August 2007, security was tight at Buenos Aires airport; the country was in the midst of a presidential election. The suitcase’s owner, a Venezuelan businessman just in from Caracas, hesitated briefly when asked to open his suspicious luggage. Out tumbled $800,000 in cash. It was, according to US investigators, an illegal campaign contribution from Venezuelan President Hugo Chávez intended for Cristina Fernández de Kirchner, wife of Argentina’s former president & candidate for presidency herself. What better to grease the countries’ friendship, investigators alleged, than a suitcase full of cash?
Such tales of bribery and corruption are as old as politics. Try as we might to rid officialdom of crooks, extorting senators, vote-buying presidents and judges for sale remain all too common. Whether it’s the $90,000 in cold cash that turned up a few years ago in a US congressman’s freezer, the “Versailles in the jungle” built with the billions embezzled by Zaire’s Mobutu Sese Seko, or the bank balances of oil autocrats in Central Asia, venality and excess remain the scourge of modern global politics.
But corruption is not simply a moral concern. It’s blamed – perhaps rightly – for many of the world’s ills; widely accused of being an endemic barrier to economic development, responsible for Africa’s lasting poverty and Latin America’s perennial stagnation. It is, says conventional wisdom, what makes poor countries poor. It undermines the rule of law, distorts trade, and confers economic advantages on a privileged few. It prevents aid money from reaching victims, topples buildings thanks to shoddy construction, and strangles business with constant burden of bribes and payoffs. Yet the truth is that we have very little idea about how corruption works or how pervasive it is. We have anecdotes about rotten individuals – a Ferdinand Marcos, a Robert Mugabe, or Charles Taylor – but this tells us almost nothing about the breadth and depth of global corruption. After all, when bribery and embezzlement is done right, it’s invisible. Economists haven’t even resolved if and when corruption is really a problem: East Asian economies have boomed in recent decades under reputedly corrupt regimes.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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