Bribes and culture by mattsteinglass
June 18, 2008, 10:36 am
Filed under: Economics

Is corruption basically a cultural phenomenon, rooted in social habits and implicit conventions, which takes decades or generations to change? Or is it largely dependent on economic and political factors, and susceptible to changing quickly in response either to deliberate political decisions or new economic incentives? Megan, talking about the extent to which cultural norms underpin legal and economic realities more generally, thinks corruption falls on the cultural side, and points to the example of Mexico.

I think libertarians tend to vastly underestimate the extent to which liberalism and free markets are sustained not by proclaimed belief or legal institutions, but by unobserved cultural norms that are transmitted slowly, if at all. Mexico can see all the things that are better about the US, none of which are particularly difficult to reproduce at the institutional level, but enforcement depends on things like a visceral indignant reaction to policemen who take bribes, rather than an attempt to work the system by developing friends in the police force. Tyler Cowen now believes that returning immigrants are shifting those norms, but we’re talking about a process of decades, if not centuries.

It’s true that Americans in general – not just libertarians – underestimate the extent to which cultural norms shape political and economic reality. But I’m not so sure the case of corruption in Mexico is so cut-and-dried. If you looked at the US and Mexico in the late 1800s, it would have been far less clear which country had the more corrupt political system. More recently, extremely corrupt political systems in Southern Europe have shifted very rapidly towards transparency as the price, or the prize, of their integration into the EU. And of course Singapore wiped out corruption over a period of two decades or so after independence in ’63, while similar Chinese, Indian and Malay cities are still rife with it — including Hong Kong, in case one were tempted to congratulate the Brits on this count.

To adduce the Vietnamese experience: South Vietnam was one of the most notoriously corrupt countries in the world. That was partly linked to cultural factors, but it had a huge amount to do with the legacy of colonialism (which rendered the government’s relationship to its subjects transactional, rather than patriotic or civic) and with the staggering floods of ill-monitored American money that poured in once the US entered the war, which ruined the government much as similar anti-Communist aid helped wreck Zaire. North Vietnam was vastly less corrupt, which is in part why it won the war; and while corruption of certain kinds ticked up after the war, as Communist officials maneuvered to get study grants in Moscow so they could buy Russian televisions and import them to Vietnam for small profits, the scale was nothing like what had gone on in the South. Still today, Vietnam’s government is notably less corrupt on major issues than many comparable third-world countries, and, crucially, on issues of critical political importance, it is simply impossible for foreigners to bribe anyone. The reason a country which, 25 years ago, was largely corruption-free is now increasingly corrupt is that it lacks the legal or political structures which could have codified that honesty and strengthened it as it went capitalist. The West can do Vietnam – and itself – a favor by trying to embed transparency requirements in trade and aid structures in ways that make it natural for non-corrupt elements in the Vietnamese economy to strengthen themselves, and that shut out the corrupt elements.

I guess what I would say is that the process by which corrupt countries become less corrupt doesn’t have so much to do with “looking” at other countries and “seeing” benefits of transparency, but rather with integration into economic and political structures that reward transparency and punish corruption. I don’t really know much about Mexico, and I’m sure that any major social shift towards transparency would have to come chiefly from inside the country. But I have a feeling that the US could be doing a lot more to create multilateral North American structures that encourage chunks of Mexico’s economy and society to move towards transparency. The benefits of that kind of change would bear tremendously on the US’s drug, crime, and illegal immigration problems. So, yeah, corruption is cultural, but there are political and economic solutions that, while not sure-fire fixes, can push culture in a better direction.

Addendum: I ought to note that there’s a big difference between non-transparency and corruption. Communist Party decisionmaking is not at all transparent. But it is often non-corrupt.


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