Abstract
Politicians made exuberant by winning control of government with a promise to get rid of corruption are tempted to believe that their victory removes all the obstacles that are a legacy from their predecessors. Thus, when the Berlin Wall fell, well-intentioned theorists of the end of history saw no need to worry about corruption because democratic institutions would be a corrective mechanism for the legacy of bad governance from Communist times.
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Politicians made exuberant by winning control of government with a promise to get rid of corruption are tempted to believe that their victory removes all the obstacles that are a legacy from their predecessors. Thus, when the Berlin Wall fell, well-intentioned theorists of the end of history saw no need to worry about corruption because democratic institutions would be a corrective mechanism for the legacy of bad governance from Communist times. If governors engaged in corrupt practices, voters could use the ballot box to throw misbehaving rascals out of office (Schumpeter 1952; cf. Rose 2009). However, in much of the world corrupt governance is stronger than the capacity of electoral institutions to get rid of it. In more than three-quarters of countries in which competitive elections are held, corruption plays a significant part in the process of governance (Mungiu-Pippidi 2015: 48).
As Max Weber (1948) noted, ‘Public policy is the strong and slow boring of hard boards’. Overcoming obstacles to the reform of bad governance requires patience. However, patience is in short supply in a world of 24/7 media and international financial markets. Reflecting on the experience of being the minister of finance in Nigeria, where corruption is widespread, Ngozi Okonjo-Iweala (2013) concluded:
A common approach to tackling corruption in developing countries has been for officials to target high-profile cases, publishing the arrest of offenders often as a deterrent to others. Such stories tend to generate big headlines. Yet after a few weeks interest fades and corruption may still continue unabated. To change this cycle requires that such high-profile approaches be firmly coupled with relentless action to put in place the rules and processes that enshrine transparency and limit discretion and subjectivity.
The logic of making prescriptions is that diagnosis of the causes of bad governance comes first. The second step is to identify causes that in principle can be directly affected by government action, for example, laws defining corrupt practices and penalties for their violation. The results of such actions will show the extent to which they may reduce bad governance and the extent to which success is limited by such factors as public officials not having been socialized to behave as bureaucrats.
Many anti-corruption prescriptions reflect the law of the hammer: If you give children a hammer, they will want to hammer everything they see. The belief in a single prescription having a pervasive effect ignores differences in the causes of corruption in capital-intensive contracts and delivering public services retail. The approach of social scientists tends to be limited by a priori assumptions of their own discipline. This violates the Titanic rule: What you leave out will sink you every time. Thus, in response to the collapse of Communist regimes, economists advised promoting the market economy by privatizing major state-owned firms with capital assets. In the triumphalist words of the World Bank’s chief economist at the time, Larry Summers (1991), this prescription would succeed because ‘The laws of economics are like the laws of engineering. One set of laws works everywhere.’ The result of the privatization of valuable public assets was that people who knew how to get things done in their country by hook or by crook gained capital-intensive fortunes.
Given the extent of corruption in many Commonwealth countries receiving British aid, in 2016 Prime Minister David Cameron called an action-oriented high-level Anti-Corruption Summit attended by representatives of Commonwealth governments and civil society institutions. There was agreement at the rhetorical level that corruption was a major problem in countries that were once under the British crown, such as India and Nigeria. The proposals in the Leaders’ Anti-Corruption Manifesto were long on general exhortation, moderate in specific details, and subsequently have been short of evidence of success.
A government headed by politicians who benefit from corruption may accept prescriptions for institutional reforms without swallowing the medicine prescribed. This creates a dilemma for governments funding foreign aid for political, economic and humanitarian ends. National aid agencies can proclaim, as the British minister for foreign aid has done, that the UK government’s policy is ‘zero tolerance for overseas bribery and corruption’ (DfID 2015). However, where corrupt officials control the national institutions receiving foreign aid, the British government is hesitant to impose the “cold turkey” solution of cutting off aid to countries that it wants to support.
Diagnoses and prescriptions that inveigh against corruption are of little help in reducing bad governance. It makes about as much sense as having a health policy that simply calls for ‘fighting disease’ (Heywood 2016: 11). Like disease, corruption in the body politic is a phenomenon that can take many forms. In order to reduce it, each form requires a diagnosis that identifies its distinctive characteristics, which part of the body politic it affects, and what its specific causes are. Without doing so, any prescription will tend to fall back on generalized prescriptions that have no specific application to the corrupt delivery of public services.
1 Changing Institutions
The political institutions that deliver public services are established by national laws that specify bureaucratic rules about how they ought to be administered. However, public officials may abuse these laws for their private gain. Many explanations of the maintenance of corruption stress the importance of path-dependence. Those in power can reject foreign criticisms of corrupt behaviour by arguing with some historical justification that delivering services by hook or by crook is the traditionally accepted way of getting things done in their society. If threatened with reforms that would remove their benefits, they may mobilize political resources strong enough to maintain a stable equilibrium of bad governance (Persson et al. 2013).
When bad governance is path-dependent, it is logical to conclude that corruption can be reduced only by a ‘big bang’ approach that creates a disequilibrium that disrupts the institutions benefiting corrupt officials (Mungiu-Pippidi 2015: 129). The word disrupt emphasizes that the change required is more than an adjustment in the name of increased efficiency or piling more rules on top of those that are being successfully evaded. Instead, disruption involves structural changes sufficient to undermine the power of those who have been benefiting from bad governance. Although civil society and grass-roots public opinion can demand fundamental changes, the power to do so is in the hands of national leaders.
Introduce new institutions and laws. Most forms of corruption involve the absence or non-enforcement of anti-corruption laws and institutions. A prescription that follows from this is to introduce new and stronger anti-corruption laws and institutions. Since 1990 there has been a dramatic increase in the number of good governance laws and institutions. By 2008 the number of anti-corruption agencies concerned primarily with capital-intensive corruption rose from 12 to 98. In the first five years following the adoption of the UN Convention Against Corruption, 125 countries ratified it (Norad 2011: 49).
The conventional advice for reducing corruption is the adoption of best practice laws and institutions. The practices are those associated with countries in which corruption appears low. Foreign aid agencies can make the adoption of such practices a condition of a country receiving a grant. Best practice recommendations are also part of intergovernmental agreements such as the UN Convention Against Corruption. However, the national context of badly governed countries is by definition very different from countries that are often the source of best practices and it is unwise to assume that lessons drawn from that latter can be successfully planted in very different soil (cf. Rose 2005). To tell policymakers that want to reform a badly governed state to emulate the best practice of Denmark does not tell reformers how to do so (Mungiu-Pippidi 2013). The advice most immediately required is how to make changes that will start the lengthy process of becoming better governed by getting rid of its worst current features.
The large number of countries introducing new institutions and laws provides the basis for a statistical evaluation of the extent to which introducing an anti-corruption agency or an ombudsman or adopting the UN Convention Against Corruption has had a positive effect. The results of an analysis commissioned by the Norwegian Agency for Development Cooperation are very consistent. In seven different statistical tests, none of the measures intended to reduce corruption consistently showed a significant impact on a country’s governance (Norad 2011: Table 13). While case studies can identify successful reforms (DfID 2015: Chapter 5), they tend to be exceptional. The most common outcome is that governors go through the motions of adopting new measures while withholding ‘the political commitment and tools they need to complete the job’ (Joutsen 2011: 317).
Spend more money. From an economic perspective, scarcity in the supply of services in high demand such as education and health care should encourage people to offer bribes to get what they want and public officials expect bribes. This logically implies that bribery would fall if public spending was increased enough to provide enough school and hospital places for everyone. This policy is consistent with the views of those who regard social welfare as a basic right and with statistical analyses of the positive correlation between public spending on social services and the state of the national economy. Contrary to expectations, increasing the supply of social services has no significant effect on people having contact with a service or paying a bribe to get it (Table 2 in Chapter 5). It is not the quantity of public services that affects corruption but the informal standards that public officials apply when the service is delivered.
An alternative way to spend money to reduce corruption would be to boost the low pay of public employees who have the opportunity to collect bribes in countries where bribery is widespread, such as India. Since the possibility of collecting bribes varies greatly between public-sector occupations, to be most efficient increases in pay should be targeted at front-line public employees who are in daily contact with people wanting to use public services and not on back-room staff who do not have such contacts (cf. Reiner 2010; Goel et al. 2016). This approach is consistent with the correlation between low levels of bribery in high-income countries and a high level of bribery in low-income countries. Superficially, this correlation would appear to support the prescription that paying public officials more would reduce the incidence of bribery. However, there is little evidence to support this proposition. In low-income countries, a salary boost that lifted grass-roots officials just above the poverty line would still leave them poor. Among high-level officials allocating capital-intensive benefits, any salary increase would be far below what would be paid as a bribe by a multinational corporation wanting a contract.
Free-market economists theorize that increasing the amount of money the government spends on public services will also increase the number of people who pay bribes, since this will increase contact with corrupt public officials (Becker 1968). The evidence in preceding chapters shows that increased public expenditure does not necessarily increase corruption. Notwithstanding uncertainties about the direction of causation, there is a strong correlation between a high level of national income and a low level of corruption (Treisman 2015: Table 7.1). Nor are countries receiving large royalties from enterprises exploiting valuable natural resources significantly more likely to be corrupt than governments that lack such an economic boon (Table 1 in Chapter 3).
An influx of money to government through foreign aid is associated with corruption when aid money is a significant portion of the revenue of a low-income country (Table 1 in Chapter 3). In such a context, foreign assistance is spent not only on public benefits such as dams, roads and hospital buildings but also to the private benefit of officials controlling aid money. Many countries whose population has big needs also have high levels of corruption. National governments high on the list of recipients of British aid money include places characterized by internal strife, such as Afghanistan, 169th among 176 countries on the Corruption Perceptions Index and the Democratic Republic of the Congo, 150th on the Index. They also include countries such as Bangladesh (145th), where many subjects live in poverty and a small proportion profit from corruption (National Audit Office 2015: 17).
Make trade-offs. Reformers make getting rid of corruption an unconditional goal. However, like all public policies, anti-corruption measures must compete with other priorities. These include public spending on capital-intensive projects such as roads and hospitals that benefit many ordinary people as well as the firms that supply them and the public officials who authorize the contracts. Under some conditions, governments are prepared to trade off fighting corruption for other goals.
Trade-offs are particularly stark in the field of national security. National governments can give money to foreign governments for political ends. For example, in 2006 the British government quashed an investigation of BAE Systems paying large bribes to Saudi Arabians, holding that it would be ‘against the wider national interest’ to enforce laws involving a country with which Britain wanted to maintain strong security and trade ties. The principle—my enemy’s enemy is my friend—is used to justify the provision of expensive military equipment and money with little concern with how the money is handled. During the Cold War, the United States provided more money to corrupt governments that took its side than the Soviet Union did because it had more money to give. Today, countries in the Middle and Near East take money from foreign governments with an interest in influencing the outcome of strife in the region.
Advocates of giving foreign aid justify fighting global poverty in terms of absolute humanitarian values. The World Bank estimates that globally more than 750 million people live in extreme poverty, defined as having an average daily income with a purchasing power of less than $1.90 a day. This is just over 10% of the world’s total population, but it is very unevenly distributed globally. Half of this total live in sub-Saharan Africa and another third live in the Indian subcontinent and other countries of South Asia. Aid can also be justified on security grounds—global society is less subject to trouble if extreme poverty is lower—and on economic grounds—people with rising incomes are more likely to spend more money buying goods in international markets.
Aid given in immediate response to natural disasters is especially justified by universalistic humanitarian standards. The participation of international charities such as the Red Cross gives national politicians a chance to claim credit for doing good free of political controversy. The effects of natural disasters are distributed more or less randomly but they are exacerbated by a disaster striking where bad governance has weakened defences against disaster.
The providers of financial aid to poor countries face a dilemma. If they are to provide financial support to countries where this is palpably needed, they are likely to sustain existing levels of corruption or see them rise. More than one-third of the population of the poor countries of South Asia is likely to pay a bribe each year and in sub-Saharan Africa one in six do so. When Haiti was hit by a hurricane, it was already among the most corrupt countries in the world, and the payment of bribes in Thailand is half again the global average (see Appendix Fig. A.1).
Reducing funding will reduce the funds available for diversion to private benefits of well-connected politicians, but it will also reduce the benefits that are achieved by aid funds that do reach their intended beneficiaries. To reduce funding of programmes where much money is diverted is consistent with impersonal theories of good governance, but doing so also cuts the funding of government aid ministries and the not-for-profit charities and private consultants to whom they make grants. The result is summed up by the verdict of the UK’s Independent Commission for Aid Impact on the work of the UK’s Department for International Development: ‘DFID’s anti-corruption activities have demonstrated certain achievements but have had little success in reducing the effects of corruption, especially as directly experienced by the poor’ (ICAI 2014: 1).
The dilemma of accepting corruption or doing without a benefit is not confined to developing countries. Early in his American political career, Harry Truman was put in charge of the budget of his home county in Missouri as a ‘good government’ front for a notoriously corrupt machine politician. In order to get paved roads built in the rural part of the county, the contracts for the work had to be given as political payoffs to cronies. Truman, whose motto as President was ‘the buck stops here’, had no hesitancy in making a decision. He traded off his official obligation to award contracts through value-for-money procedures in order to help people in his district get the paved roads that they needed (https://www.nps.gov/nr/twhp/wwwlps/lessons/103truman/103facts2.htm).
The challenge of making trade-offs between respect for anti-corruption laws and getting things done is not confined to government departments. Multinational firms engaged in capital-intensive activities in countries with corrupt governance can face demands from public officials for bribes as a condition of doing business there. Enterprises that have invested large sums in developing economic resources, such as oil and mining companies, have historically traded off the cost of a bribe for the mutual benefit of their first-world shareholders and corrupt third-world officials. Within countries where good governance is lacking, individuals face a dilemma. Even if they think services ought to be delivered by the book, if the consequence is to deprive themselves or a family member of prompt hospital treatment, they are prepared to set aside their normative values to get what they want by hook or by crook.
2 Targeting Vulnerable Services
The diagnosis of corruption usually focuses on characteristics that are pervasive throughout the body politic as a whole. This approach is encouraged by the indexes of Transparency International and the World Bank rating countries as a whole. Macroeconomists concerned with the effects of corruption on the national economy and professors of public administration who focus on the administration of national government reinforce this tendency. In consequence, prescriptions for reducing corruption normally do not take into account differences between public services.
When individuals and corporations pay bribes they are not paid for public services as a whole; financing government in general is done through the payment of taxes. Bribes are paid to obtain a specific public service and services differ in what is delivered and how their delivery may be vulnerable to corruption. Public services delivered to individuals at the grass roots are vulnerable to bribes being paid far out of sight of policymakers in the national capital. By contrast, capital-intensive services are delivered by decisions about contracts made by high-level policymakers.
Because a bribe is paid for the delivery of a specific service, it is logical to target anti-corruption measures at those public services that are specially vulnerable to corruption and to change by national government officials. The imposition of anti-corruption measures is high priority for public officials whose job situation offers most opportunities to collect bribes. Whether these services are vulnerable to reform by national government is another matter.
Vulnerability of capital-intensive and retail services. Capital-intensive and retail public services differ in fundamental ways. The most obvious is that they differ in scale. Capital-intensive goods such as airports and electricity generating stations are lumpy not only in physical terms but also economically: A large chunk of money is required to construct them. By contrast, retail public services such as a driving licence or passport are literally pocket-sized and cheap to produce. The scale of capital-intensive projects makes it difficult for outsiders to evaluate whether paying a hundred million or a billion is a fair price or has been inflated to cover the cost of bribes that can be hidden behind opaque entries in a lengthy and complex budget. By contrast, the cost of providing labour-intensive retail services can readily be evaluated by auditors making comparisons with private-sector costs or what different public agencies pay for the same services and products. Costs that deviate most from the mean often do so because of corruption (Picci 2011).
The parties engaged in the supply of and demand for retail services are readily identified individuals. By contrast, capital-intensive contracts are signed by officials of government organizations and private-sector corporations that have the capacity to produce a bribe if required to win a contract. In the payment of a bribe for a retail service, the claimant bears the cost and the public officials reap the benefits. By contrast, the individuals who make the decisions that commit their government to pay millions to a private enterprise do not bear the cost. It is met from tax revenue and borrowing from private-sector sources. In developing countries foreign aid can also bear a portion of the cost.
The institutions that award capital-intensive contracts are normally central government departments concerned with such services as transportation, energy and defence. Centralization makes their spending subject to control through the government’s annual budget and the lumpiness of capital-intensive projects makes many visible politically. The delivery of retail services is in the hands of decentralized authorities acting as agents of the national government, because they must be delivered at the grass roots. The delivery of health care and education is further decentralized to schools and clinics where public employees and claimants of services meet face-to-face and often in private. This facilitates the payment of bribes and obstructs scrutiny by distant policymakers nominally responsible for what is done.
The consequences of capital-intensive and retail corruption differ too. The former affects sums of money running into the billions, whereas retail corruption affects numbers of people running into the billions. When a private enterprise pays a public employee a bribe for a profitable contract, this creates a ‘win-win’ situation. The enterprise makes a profit that more than covers the cost of the bribe, and corrupt public employees receive cash that more than covers the risk of being punished. The effects of shoddy or overpriced infrastructure projects are not always immediately obvious nor are the names and faces of those responsible. By contrast, retail services doubly affect behaviour: An individual must find the money to pay a bribe and if politicians promise to improve these services and then renege on their promises, this can reduce trust in politicians and political institutions.
The supply of many capital-intensive goods is globalized, because of the amount of capital and technical skills required to produce such goods as military aircraft or complex computer systems. By contrast, governments can rely on their national population to deliver public services by the book, by hook, or by crook.
When capital-intensive corruption is transnational, this makes it difficult for a single national government to prevent it. Western governments may adopt laws making it illegal for multinational corporations based in their jurisdiction to pay bribes to foreign government officials. Corporations determined to win contracts if need be by hook or by crook can pay bribes to foreign bank accounts of consultancy firms or family members acting as agents of corrupt policymakers in other countries. Intergovernmental organizations such as the OECD or the UN promote codes of conduct that stigmatize transnational corruption. But such codes normally lack legal sanctions and any notional reputation loss an enterprise incurs for shadowy dealings is more than offset by the profits from getting big-bucks contracts.
3 Changing Services at the Grass Roots
The most effective way to reduce corruption at the grass roots is not by local protests but by national policymakers using their formal powers to disrupt laws and institutions that give corrupt officials opportunities to use their public office for private gain. We set out below nine principles for reducing corruption. Given differences between services, some will apply to multiple services, and some services will be vulnerable to attack in more than one way.
Repeal laws that facilitate the collection of bribes. The quantity and quality of laws and regulations affecting the delivery of public services are variable. The greater the number of steps that must be taken to deliver a benefit, the more officials are involved and the greater the opportunity for a single official or a group of corrupt officials to impose delays in giving a positive response to people seeking a service to which they are entitled. This sends the not so subtle signal to impatient claimants that if they want their claim acted upon they should pay a bribe for removing the delays that officials have created. This tactic is specially relevant in dealing with businesses that import perishable goods or builders for whom delays are costly because of the money they have tied up in land and equipment. It also affects people waiting for medical treatment for a painful condition.
Reducing the number of regulations and official signatures required to deliver a service can be effective in reducing bribery, because people will not pay a bribe for a signature that is no longer needed. It also increases efficiency, for people do not need to spend hours queuing in a government office to get an official document. Repealing laws that define some forms of behaviour as illegal can reduce the opportunity for the police to collect bribes for not enforcing the law, for example, from sellers of soft drugs such as marijuana. As long as its sale is illegal, the police can collect bribes as an informal and illegal way of licensing drug vendors to operate in their jurisdiction.
Increase the use of objective criteria for deciding eligibility for receiving a service. Each public service has criteria that are meant to determine under what circumstances a person is entitled or obligated to use it. The bureaucratic ideal of impartiality, treating people with the same needs the same, is best achieved when the criteria are objective. If this is the case, individuals can be treated impartially, because objective measures provide reliable criteria that different officials will apply in the same way. Objective rules are applied all the time by postal clerks deciding the cost of mailing a heavy parcel and by social security officials calculating how much a retired person should receive as a pension.
The extent to which services are suited to the application of objective criteria is contingent. Objectivity is highest when pupils are given computerized tests in which questions must be answered by making choices between alternative replies that can then be scored the same for all the pupils taking an examination. This method is specially suitable for mathematics tests or in an examination confined to basic historical and institutional facts, such as rules for calculating an election winner or the name of a national president in a given year. The evaluation of written essays is less objective, for teachers can differ in their judgments when grading a student’s interpretation of a poem or novel. The most subjective criteria are used by teachers about the classroom behaviour of individual pupils. In countries where corruption does not affect the education system, it is taken for granted that achievements can be fairly evaluated by a mixture of objective and subjective methods. Where corruption in education occurs with some frequency (Table 2 in Chapter 4), maximizing the use of objective criteria in assessing pupils can reduce opportunities for bribes to be paid by anxious parents.
Use computers to reduce contact with public officials. Because bribery is illegal, the normal method of paying retail bribes is a hand-to-hand transfer of money. This not only requires money to pay a bribe but also a face-to-face meeting between the individual wanting a service and a public official who can deliver it at a price. Computerization removes a necessary condition of bribery, personal contact between a citizen and a dishonest public employee. Making a service such as obtaining a licence for an automobile or making an appointment with a doctor available online eliminates the risk of bribery while maintaining the service. Since websites are accessible at any time, a web-based service is also more convenient for users and is less costly to maintain.
Computerization requires the use of impersonal objective criteria for delivering a service. It also standardizes the criteria nationwide through the use of the same computer programmes in all local offices or, as a further check against local corruption, administering a service at a distant regional or national office. That it also requires people to have access to the internet is no longer a handicap, since more than half the world’s population are now internet users. Moreover, among the five countries with the most internet users, four are developing countries: China, India, Brazil and Indonesia. Moreover, the proportion of their citizens who pay bribes to use public services is well above the global average (see Appendix Fig. A.1).
Monitor the delivery of services electronically. Corruption and fraud often go together. For example, public officials who collect bribes are also more likely to defraud their agency by not being in their office for all the hours that they are meant to be at work. A teacher may be at home providing privately paid tuition for select pupils while most of the class loses lessons because of the teacher’s absenteeism. Traditional methods of time-keeping, such as signing a time sheet or punching a time clock, can be done by friends of an absent employee. Where attendance is slack, a public agency can install online biometric monitors in public offices. Instead of signing in manually, employees must then be physically present to register their biometric data for verification by checking with computerized data at the agency’s headquarters.
Corruption in India is exacerbated by large-scale illiteracy and a lack of basic records for identification; individuals can make multiple claims for benefits and officials pocket payments in the name of beneficiaries who do not exist. To deal with these problems the Indian government has enrolled a billion people in Aadhaar, a unique system of biometric identification based on computerized evidence of an individual’s fingerprints and eye scans. The data is being used to authorize payments of cash benefits and to monitor whether public employees show up for work (Nilekani and Shah 2016; Muralidharan et al. 2016).
Give citizens access to public records about themselves. The great majority of ordinary citizens are not interested in gaining access to information about how their government makes decisions about capital-intensive contracts remote from their lives. However, they do have an interest in gaining access to public records about how public officials go about delivering retail services that they want. Public officials routinely create computer files about requests they receive from individuals and the action that has or has not been taken. Opening up access to personal files can enable people to learn what is happening while they are kept waiting in a long queue or denied a permit to build a house. If the record indicates that sloth is the cause, then an aggrieved person may issue a wake-up call to prompt action by a dilatory public servant. If there is a strong suspicion that bribery was the cause, then a person faces the choice between accepting rejection or paying a bribe.
Estonia has pioneered measures that give individuals access to their personal records held in government files. Each Estonian is assigned a unique identity number at birth and all residents over the age of 15 have electronic identity cards. The cards can be used to obtain public services such as health care or to pay for riding on a public bus. In addition, an individual can use their card to examine files about themselves in public offices. The Estonian system is thus not only about preventing favouritism and corruption, which is low by the standards of ex-Communist states. It is also about securing the efficient and fair delivery of retail services to citizens.
Match the supply of services to entitlements and obligations. The logic of bureaucratic administration is that laws determine who is entitled to receive public services, and the government provides the resources to ensure an adequate supply of teachers, nurses and other public services. Insofar as this happens, then problems of scarcity do not arise. Even if there is competition for admission to the best schools, everyone entitled to further education can be given a university place. However, if there is a gap between the demand from all entitled and the supply of a service, the resulting scarcity undermines the principle of bureaucratic allocation. Queuing is an impartial way to allocate services when demand exceeds supply. It is used in bus queues at rush hour and in retail shops.
Because people needing health care or education want the government to provide these services, there is an incentive for politicians to promise that all demands will be met. The consequences can be acute in developing countries that create universal entitlements to social benefits without being able to provide an adequate supply. Contrary to theoretical expectations, statistical analysis in Chapter 5 found no statistically significant evidence of a shortage in the supply of education and health care reducing contact with these services or increasing bribery to get them (Table 2 in Chapter 5). This implies that overpromising reduces the quality of the affected service. Class sizes can be doubled but there is not an adequate supply of desks, books and online facilities for every pupil. Doctors can reduce the time they spend examining patients, thereby increasing the proportion of inadequate diagnoses, and overburdened nurses can make patients wait for hours for attention. While such activities do not violate formal standards of corruption, they violate informal standards. The quality of the service is corrupted and the politicians responsible have corrupted their reputation for trustworthiness in pursuit of votes by promising an expansion of social services. In especially corrupt systems, money that could be used to upgrade social services is instead spent on capital-intensive goods, such as military equipment that not only defends the hold that governors have on power but also may lead to capital-intensive bribes for their private benefit.
Expand choice. Government has a monopoly of a limited number of services, such as the authorization of official documents and law enforcement. The public services that citizens make most use of, such as health care, education and pensions, can also be supplied by not-for-profit civil society institutions and by private-sector enterprises. Egalitarians oppose giving individuals a choice of institutions in the belief that the monopoly supply of social benefits promotes social cohesion and keeps standards up by making those with more income and education engage with rather than exit public services (cf. Hirschman 1970; Rose and Peiffer 2016). Public-sector unions oppose privatization for reasons that public-choice economists characterize as self-interest (Buchanan and Tullock 1962). Most contemporary welfare states, including social democratic Sweden and social market Germany, fund multiple providers of education and health care; some providers are public institutions and some are not.
Freedom of choice is both a political and an economic principle. Proponents of the market argue that giving individuals a choice of suppliers of a given service, whether it is a hospital or a restaurant, provides a better match between individual preferences and what they get, than allowing a monopoly supplier to determine what everyone will have. Where there is a significant degree of corruption in a public-sector institution, a choice of alternatives offers individuals a chance to avoid the risk of bribery by going elsewhere for what they want. However, the number of people who can afford to do so is limited by income, since alternative sources must make charges to recover their costs. Opportunities for choice are also determined by public policies that decide whether public finance only goes to publicly operated institutions or is also made available to not-for-profit and profit-making institutions that meet appropriate standards. One reaction of Anglo-American governments concerned with falling educational standards in state schools has been to charter and help fund schools that are organized outside the conventional state structure.
To enable lower-income people to make choices, public finance can be shifted from the school to the parent by issuing vouchers that can be used to purchase education or health services of the recipient’s choice (Cave 2001). Legislation can obligate individuals to have a minimum of health insurance while leaving it up to an individual or their employer to choose between a public, not-for-profit or profit-making supplier of health care. Bridge International Academies offers a radical alternative: fee-paying education at a low price that African families may be able to pay (www.bridgeinternationalacademies.com). After evaluating criticisms by African governments of this alternative, an expert recommended that the more desirable response to dissatisfaction with public schools would be to improve public provision to ‘ensure that every child receives a better education than Bridge can offer–and drive it out of business’ (Pilling 2017).
Legalize some payments for public services. When proponents defend public services as free of charge to all citizens, they assume that if a service is free in law it will be delivered without public officials collecting a charge on the side. As long as this assumption holds, the debate about charges can concentrate on political values. If bribes are paid to expedite the delivery of services to which individuals are entitled, this illegal charge can be legalized by adopting the principle of discount airlines: Charge for better treatment, as airlines do for wider seats or drinks in a plane that carries all passengers to the same destination at the same time. Charges are selectively made for public services on grounds that are not always normatively clear. Swimming is good for health and reading library books is good for education yet charges are made for the use of swimming pools but not for libraries. To renew a passport quickly rather than wait in a queue Britons do not pay a bribe: They pay a fee to get their passport quickly.
Align public laws and informal standards. By definition, bureaucratic rules governing how public officials ought to deliver public services are legal; however, they are not necessarily fair by informal standards of public opinion. When loopholes in tax laws allow rich individuals and enterprises to avoid the payment of large sums in taxes, such activities are not corrupt in law, but public opinion can regard tax avoidance as corrupt because it exploits public laws for private advantage. Standards are also misaligned when behaviour that is acceptable by private standards is labelled as an unlawful corruption of public morality. In Ireland and Italy for decades after 1945, the Roman Catholic Church had the political power to secure legislation imposing its standards of public morality on the whole population. This misalignment of standards did not prevent women getting an illegal abortion or partners living together without being legally married.
The government of the day has the authority to end misalignments between public laws and public opinion. The Europe-wide fall in church attendance has encouraged politicians to repeal restrictive laws adopted in the name of public morality and allow people to make choices in keeping with their private norms. Repealing laws making soft drugs illegal has the incidental advantage of reducing corruption, since sellers of cannabis no longer need to pay bribes to the police to carry on their business. Instead, like a pharmacist or a pub keeper, they can pay for a licence to conduct a business that is both legal and publicly acceptable. Aligning informal standards with the law is problematic when the standard is the object of political disputes, for example, the scope of anti-discrimination legislation and the definition of minorities that should be protected by such laws. It is also problematic when there is an imbalance between public opinion and political power. Tax laws remain on the books allowing multinational corporations and billionaires to get by with paying trivial amounts on their earnings. These laws are protected by the political influence that beneficiaries have over governors. The influence may be exercised legally but judged corrupt by informal standards and at times it may even be doubly corrupt.
4 Implications for Better Governance
Most principles for reducing corruption are also likely to make them more efficient and more user-friendly, for example, by reducing unnecessary paperwork and offering services online. They are not only relevant in countries where bribery is high but also in countries where it is not. Even if bribery is not a problem, governments everywhere are trying to contain the cost of delivering services. Democratic governments are particularly under pressure to do so in ways that satisfy their citizens. Doing more of the same maintains inefficiencies and opportunities for breaking standards at their current level. Applying principles that result in doing things differently can provide a double boost to good governance.
By contrast with proposals to change national cultures or retrain officials accustomed to taking bribes, the foregoing principles emphasize structural changes within the power of government to enact, such as repealing laws that create opportunities for public officials to collect bribes. Doing so gives citizens the choice about whether they deal with government online or with public officials face-to-face. Increasing alternative sources of supplying a service gives citizens the choice of getting it from a governmental or non-governmental institution, a particularly important point in countries where bad governance is the norm. These actions are within the power of citizens to enforce. People will not go to a municipal office for a permit that is no longer required, nor will they pay a bribe to an official who wants one if they have an effective alternative. Broadening choice by giving citizens vouchers to use when making choices between non-governmental and public suppliers puts power in the hands of citizens rather than public officials.
Given the many differences between public services, it follows that broad-brush one-size-fits-all reforms are unlikely to have a significant impact on reducing corruption, especially changes that concentrate their impact on how central government is organized. These are unlikely to have much impact on the delivery of retail services at the grass roots, where public officials have substantial discretion about how or whether to follow central government directives. To be effective, a reform must change the weakest link in the chain of steps required to deliver the service to its end users.
Attempts by intergovernmental organizations to introduce systemic reforms based on best practices in Western societies can be irrelevant if they do not take into account the extent to which practices of bad government have been institutionalized. Opposition to reforms may be expressed by refusing to adopt anti-corruption policies. More insidiously, it can be expressed by formally adopting anti-corruption measures in order to continue a flow of foreign funds but not enforcing new rules. If they so choose, intergovernmental organizations can exert influence by suspending payments of capital-intensive grants that national governors value as a source of corrupt income. If a recipient government argues that suspending payments would be interference in their national affairs, so too is foreign aid.
Political obstacles to change are inevitable, because what appears to be bad governance by informal national standards or by the universalistic standards of international evaluators is a good thing for high-level politicians who enjoy political power and the benefits of corruption that goes with it. However, low-level public officials who collect retail bribes have less political power than ministers benefitting from capital-intensive bribes. Nor can corrupt local officials easily organize mass protests against making services available more efficiently and honestly. A national leader effective in reducing the extent to which ordinary people are subject to bribery may thereby gain political support.
Breaking the low-level equilibrium trap that maintains a national economy at a subsistence level requires disruptive action to start a progressive journey of improvements (Hirschman 1963). Unbalanced growth can be promoted by such positive measures as raising national education levels above what is needed for a national economy not yet adapted to contemporary economic opportunities. Disruption can also come from a natural disaster or from military defeat.
A strategy to disrupt corruption requires policymakers to make a visible and substantial change that can establish a political momentum leading to more changes. A bonfire of unpopular regulations that public officials may use to extract bribes can stimulate public support and weaken opponents. Introducing online services that people can access using free apps on their mobile phones cuts out public officials entirely. To be effective, disruptive changes must be targeted at particular services. Doing so will not bring about across-the-board abolition of corruption in all services in a world in which bribery is the price that 1.8 billion people pay each year for access to public services. Nonetheless, removing the burden of bribery from little more than 5% of this group will benefit 100 million people. In sum, any measure that reduces bribery and increases access and quality is better than no progress.
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Rose, R., Peiffer, C. (2019). Reducing Corruption. In: Bad Governance and Corruption. Political Corruption and Governance. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-92846-3_9
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