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Flipping the corruption myth
February 3, 2014 4:48 AM   Subscribe

Dr. Jason Hickel, LSE lecturer who was born and brought up in Swaziland, writes on Transparency International's latest Corruption Perception Index and its eyecatching global map. Here's a tiny snippet to encourage you to read the rest of the article on Al Jazeera:
Many international development organisations hold that persistent poverty in the Global South is caused largely by corruption among local public officials. In 2003 these concerns led to the United Nations Convention against Corruption, which asserts that, while corruption exists in all countries, this "evil phenomenon" is "most destructive" in the global South, where it is a "key element in economic underperformance and a major obstacle to poverty alleviation and development". There's only one problem with this theory: It's just not true.
Corruption in US is only slightly less blatant. Whereas congressional seats are not yet available for outright purchase, the Citizens United vs FEC ruling allows corporations to spend unlimited amounts of money on political campaigns to ensure that their preferred candidates get elected, a practice justified under the Orwellian banner of "free speech".

The UN Convention is correct to say that poverty in developing countries is caused by corruption. But the corruption we ought to be most concerned about has its root in the countries that are coloured yellow on the CPI map, not red.
posted by infini (46 comments total) 51 users marked this as a favorite

 
Nicholas Shaxson's excellent book TREASURE ISLANDS also talks about this issue: he too makes the point that the network of offshore jurisdictions and the major financial sectors in London and New York facilitate corruption elsewhere in the world by providing places for local elites to store their ill-gotten gains behind a veil of anonymity.

He too makes the point that measures of "freedom" and "corruption" by many high-profile organisations are utterly misleading and politicised, or hyper-aware of the motes in every non-Western eye - and blind to the beams in the eyes of the governments of America, the UK and Western Europe.

I found the book very informative and convincing: it helped to explain why, despite massive amounts of aid money being poured into developing countries, they struggled to "develop" much at all. The answer seems to be that the money rockets straight back out again.
posted by lucien_reeve at 5:14 AM on February 3 [7 favorites]


Interesting and convincing points on the 'trade mispricing' being a larger contribution of GDP loss in developing countries than corruption - that seems to be confirmed by solid data points.

However I thought the second half of the article was a bit too 'witch-hunty' about the IMF and the World Bank. And haven't so far seen convincing data that these institutions are harming developing countries. The traditional argument about lost GDP in countries that were helped by the IMF suffers from pretty intense 'survival' bias, and books written about it seem a bit ideological. If anyone has a good source on this I'd be interested.
posted by Riton at 5:18 AM on February 3 [1 favorite]


And haven't so far seen convincing data that these institutions are harming developing countries.

Might I recommend Nobel Prize winner Joseph Stiglitz' book Making Globalization Work for starters?
posted by infini at 5:28 AM on February 3 [6 favorites]


The Corruption Perceptions Index ranks countries and territories based on how corrupt their public sector is perceived to be. Not how corrupt they actually are.

"With the City of London at the centre of the global tax haven web, how does the UK end up with a clean CPI?"

Crony capitalism is not corruption because it's legal. And because of that you don't see the USA at the top of the list of the most corrupt public officials in the world. Because the corruption - which is on a massive scale - takes place amongst top officials. And it's all legal. Mostly. (And if you get caught actually doing something illegal there's always a outgoing president to grant you a pardon.) But it's all on the up and up. Nothing corrupt about Bill Clinton. Corrupt leaders are only in those African countries where you have to pay bribes to get a building permit.
posted by three blind mice at 5:35 AM on February 3 [7 favorites]


And haven't so far seen convincing data that these institutions are harming developing countries.

Or alternativly, might I recommend Nobel Prize winner Joseph Stiglitz' book Globalisation and Its Discontents?
posted by marienbad at 5:49 AM on February 3 [3 favorites]


This is interesting: good post, and thanks.
posted by the quidnunc kid at 5:54 AM on February 3


Based on the 2012 figures for comparison, it seems no one else in the cleanest 25 has dropped as far or as fast as the government of Canada. I beg your pardon -- the Harper government.
posted by ricochet biscuit at 6:16 AM on February 3 [5 favorites]


So, to be clear: 1) my convictions are absolutely left leaning and anti Wall Street and I'm not trying to push some pro-globalization agenda here and 2) Stiglitz was whom I was referencing when I was talking about ideological books. He makes great points, but the point about the IMF loans to developing countries I never could be convinced as to the 'bad intent' of the IMF.

More precisely, the conditions that western countries impose to developing countries for loan reimbursements are the same that they impose to themselves (typically european union membership, loans to european governments following the financial crisis, etc...). They may, or may not make sense in themselves, (and I actually think they don't) but the fact that western countries impose the same financial 'sanity' requirements to developing countries which they loan money to and to themselves, make me think that it's not driven by 'wall street bias' but by a mistake in economic policy judgement.

Also, it has to be clear that even if the loans' attached conditions strip the country of a large portion of their growth, let's be clear that the developing countries which do contract the loans would fare much worse without them... The only good alternative would be to not loan but actually give money to these countries. This would totally be doable (increasing taxes in western countries and the government's corresponding developing country aid programs) but absolutely not within the power of the IMF. They don't have the resources for that.
posted by Riton at 6:42 AM on February 3 [2 favorites]


FP: Misunderestimating Corruption, and from them (in a different piece) I learned of the DoD's Encyclopedia of Ethical Failure[DOC]
posted by the man of twists and turns at 7:02 AM on February 3 [3 favorites]


Heh. Tax havens.

For a long time they were a curiosity, weren't they? A place you and your money moved to so you could rub shoulders in these funny little rocky enclaves or sandy islands where there was nothing much to do but drive your Ferrrari at 20mph and eat $30 club sandwiches in expensive hotels.

They barely entered the public consciousness as the entire modern economy globalised and digitised and the opportunities to funnel cash exploded. And now they're sort of in the public consciousness but we're stuck in a panic that we might kill the golden goose if we reform the absurd nature of the modern financial services industry and attempt to redress the growing transfer of wealth from poor to rich.

I don't think we're there yet. Neither the US or the UK has channelled public disgust from the financial downturn into effective action. 1970s era taxation is still characterised as a form of economic apocalypse even though Sweden, Denmark and others managed to have survived OK. The elites of Brazil, Russia, India, China and others still need to fill their noses at the trough before they shut the door.

Because tax havens are a game of beggar thy neighbour it is impossible to really address the issue until the main players choose to address the issue. When they do, we might face threats from the large standing armies of Monaco, Bermuda, Luxembourg, Jersey and the Cayman Islands as they try to defend their economies but hopefully the combined forces of the US, China and their allies can prevail.
posted by MuffinMan at 7:03 AM on February 3 [8 favorites]


no one else in the cleanest 25 has dropped as far or as fast as the government of Canada

I assume Quebec's alleged corruption issues (and maybe Ford?) are a big factor there - is that Canadians' perception/guess?

(Note: that is not to say that Harper is a wonderful guy, or whatever).
posted by the quidnunc kid at 7:06 AM on February 3 [1 favorite]


Corrupt leaders are only in those African countries where you have to pay bribes to get a building permit.

Local officials in most US cities and counties who directly take money for favors run a pretty high risk of getting caught. (It's not universal, though: New York and Chicago are both famous for having an open culture of payoffs for permits and inspections, though things may have been cleaned up since that reputation was established.) But things, especially at one or two removes, obviously still happen, and word gets around about which commissioner goes on trips to Vegas on the developer's private jet and why so-and-so got the controversial variance.

But what that means is that corruption is visible, but not something most people will directly interact with themselves -- you can get a building permit or go to court and not need to hand someone cash, unlike what happens in many of the countries colored bright red on the map -- but because the corruption is there in the air, just a level or so up and inaccessible to a regular citizen, it's still corrosive and disheartening. It gives a tinge of "the system is biased" to all kinds of processes and a clear sense of one rule for us, another rule for those on the inside.
posted by Dip Flash at 7:12 AM on February 3 [3 favorites]


Africa paying a heavy cost for tax havens

“Africa loses more money every year through tax avoidance than it receives in international development assistance.” Kofi Annan Africa has lost its tolerance for being exploited. I urge G20 leaders to tackle issues such as transfer mispricing

At yesterday’s UN Security Council debate on natural resources and conflict prevention, Kofi Annan called for greater transparency in the extractive industries.

Annan told a Security Council meeting on natural resources and conflict that tax avoidance and "murky" deals result in a loss of state revenue that fuels the wars over natural resources that have bedeviled Africa for decades.

"When foreign investors make extensive use of offshore companies, shell companies and tax havens, they weaken disclosure standards and undermine the efforts of reformers in Africa to promote transparency," Annan said on Wednesday.

The former UN leader said the Africa Progress Report panel, which he chairs, had found "anonymous shell companies" were used in five deals that cost the Democratic Republic of the Congo nearly US$1.4 billion from 2010 to 2012.

That sum is almost double the impoverished but resource-rich country's annual budget for health and education.

posted by infini at 7:15 AM on February 3 [8 favorites]


Corruption across EU 'breathtaking'
posted by DreamerFi at 7:17 AM on February 3 [3 favorites]


I'm not trying to push some pro-globalization agenda here

Then what are you doing?
posted by AElfwine Evenstar at 7:23 AM on February 3 [1 favorite]


Then what are you doing?

As I said I 100% agree on the tax haven part of the article. Insightful and could be fixed if the political motivation was there.
I'm looking for more evidence on the second part of the article on the IMF loans.

The Stiglitz arguments always seemed a little weak to me, for the reasons I mentioned above, and I think that better help for developing countries could be had, not by knocking on the IMF but by having governments donate tax money to developing countries.

I'll push the oxfam stat again: 85 of the richest people in the world have wealth equal to that of the bottom 50% of the population. I think that this doesn't get fixed by demonizing the IMF's aid to developing countries. The IMF, it seems to me, acts in good will, within its restrictions, to developing countries. This gets fixed by a better taxation system.
posted by Riton at 7:35 AM on February 3 [1 favorite]


I never could be convinced as to the 'bad intent' of the IMF

World Bank - IMF support to dictatorships
posted by AElfwine Evenstar at 7:42 AM on February 3 [2 favorites]


“Africa loses more money every year through tax avoidance than it receives in international development assistance.” Kofi Annan

The UK loses more money every year through tax avoidance than it gives in international development assistance. About 4 times as much in fact. £35bn against £8.6bn.
posted by biffa at 7:53 AM on February 3 [1 favorite]


World Bank - IMF support to dictatorships

This article's thesis is that the IMF loans are made in support of the countries, i.e. that the loans actually profit the countries (or their rulers): the IMF loans are a net positive for the countries.

The OP's article thesis is opposite i.e. the countries who get loans by the IMF fare much worse due to the restrictions in the policies implied by the loan, and the loans reimbursements.

If I put the 2 together, I get that the IMF, by actually making the loans to dictatorships, are actually trying to throw these regimes down ?
posted by Riton at 7:56 AM on February 3 [3 favorites]


Aelfwine, always look under the bridge before you cross with the billy goats gruff
posted by infini at 8:01 AM on February 3 [1 favorite]


Also I agree with your posted article that the IMF's choice of countries is biased and politically charged.

I just disagree with the single point that IMF loans are hurting the countries that they make the loans to, due to 'wall street' influences. They might be hurting the country, but due to bad economic policy choices (that I argue western countries are also imposing on themselves)
posted by Riton at 8:01 AM on February 3 [1 favorite]


If I put the 2 together, I get that the IMF, by actually making the loans to dictatorships, are actually trying to throw these regimes down ?

Slow down, you are confusing yourself.

I just disagree with the single point that IMF loans are hurting the countries that they make the loans to, due to 'wall street' influences.


Listen, you can ignore the academic literature on the subject if you want, but I would suggest reading some of it. It does not support your decidedly pro wall street opinion.

I suggest you go to a library or use google scholar. Good luck with the reading.
posted by AElfwine Evenstar at 8:07 AM on February 3


I'll push the oxfam stat again

From the blog Poverty to Power, by the strategic advisor to Oxfam GB, Duncan Green:

Is the British development bubble a good thing? Reflections after another session at DFID

The strengths and weaknesses of this British development bubble came home to me last week, as I attended a DFID seminar on ‘beneficiary feedback and the rigour of evidence.’ 50 DFID staff and NGO evaluation wallahs, some great speakers, and a genuine, nuanced and well-informed exchange on the issues.

So what were the downsides? (Hey I work for an NGO, there’s always a downside.) For starters, the title – ‘beneficiary feedback’ made a lot of people cringe. As Robert Chambers argued, words matter, and that phrase establishes a clear frame of them/us, upper/lower. We do stuff to them, then ask them for feedback on whether it was helpful and congratulate ourselves on our inclusiveness. Imagine we used the phrase ‘mutual accountability’ instead, and really meant it.

Second, as panellist Jeremy Holland pointed out, the ‘who’ is often more important than the ‘what’ or the ‘how’. Who provides the feedback? Who do they feed back to –other local people, or experts/donors/academics? Who evaluates the data? Who decides what is good quality and what isn’t?

To which I would add, who is in the room at DFID? Because on a quick skim, I saw 50 white faces, not one black or Asian one (the gender balance was OK). If the British Bubble leads to that kind of skewed ‘voice’, that’s pretty worrying, not least because the of the post colonial baggage that goes with being ‘Great Britain’. Check out the handy map of the very very few countries that the UK has not invaded.

posted by infini at 8:08 AM on February 3 [3 favorites]


Sorry for the trolling. It seems I'm unable to articulate my point correctly.

Thanks for this post though, very interesting.
posted by Riton at 8:13 AM on February 3 [1 favorite]




Guardian - IMF's 4 steps to damnation.

The Globaliser Who Came In From The Cold (more detailed than above article.)

I can't find the exact cite, but when the IMF forced its policies on Indonesia, unemployment jumped to something like 75%.
posted by marienbad at 9:16 AM on February 3 [5 favorites]


Slow down, you are confusing yourself.

Listen, you can ignore the academic literature on the subject if you want, but I would suggest reading some of it. It does not support your decidedly pro wall street opinion.

I suggest you go to a library or use google scholar. Good luck with the reading.


This kind of smug, yet uninformative and disingenuous venting makes too many Metafilter comment threads unbearable to read and actively hurts discussion. If you're writing something that has no purpose except to be a jerk and shut down someone who disagrees with you about 1% of the topic, just be an adult and don't post it. It'd be nice if not every place on the internet became an echo chamber because of this.
posted by Winnemac at 9:22 AM on February 3 [27 favorites]


gen, I was just thinking about that. We are so ossified that we can't even solve something as comparatively simple as a lousy nothing state like Delaware exploiting its incorporation rules to the detriment of the rest of the country. It wouldn't even be particularly hard. There's no reason anyone should recognize bogus incorporation in Delaware for companies that have zero connection to that place. And yet, to my knowledge, not a single state court or legislature has done anything to kick Delaware in the gut as it so richly deserves.

That's a sign of impending collapse - when our political system is so useless that it cannot even properly identify huge obvious problems, never mind taking even tiny steps to fix them.
posted by 1adam12 at 9:51 AM on February 3


Listen, you can ignore the academic literature on the subject if you want, but I would suggest reading some of it.

I'm not a big fan of calling people trolls, but it is trollish to dismissively tell someone to read up without either dealing with the substance of their comment nor actually providing details of what they should read up.

GO READ A BOOK is something 13 year old kids shout at one another.
posted by MuffinMan at 9:55 AM on February 3 [6 favorites]


*mails marienbad cookies*
posted by infini at 10:14 AM on February 3


Because tax havens are a game of beggar thy neighbour it is impossible to really address the issue until the main players choose to address the issue. When they do, we might face threats from the large standing armies of Monaco, Bermuda, Luxembourg, Jersey and the Cayman Islands as they try to defend their economies but hopefully the combined forces of the US, China and their allies can prevail.

Genuine LOL.
posted by axoplasm at 10:35 AM on February 3 [1 favorite]


"More precisely, the conditions that western countries impose to developing countries for loan reimbursements are the same that they impose to themselves (typically european union membership, loans to european governments following the financial crisis, etc...). They may, or may not make sense in themselves, (and I actually think they don't) but the fact that western countries impose the same financial 'sanity' requirements to developing countries which they loan money to and to themselves, make me think that it's not driven by 'wall street bias' but by a mistake in economic policy judgement."

That's not actually true, though it has gotten better since 2002. But Structural Adjustment Plans routinely ask for things like decreases in public investment so more money can be sent to debt service, or the honoring of predatory loans entered by dictators, or the decrease in subsidies to domestic industry (most notably hypocritical, those regarding agricultural subsidies).

So, no, they are notably different from what we believe works for "developed" nations, but lower-income states have less ability to push back against the neo-liberal austerity agenda.
posted by klangklangston at 11:15 AM on February 3 [4 favorites]


  is that Canadians' perception/guess?

I'm Canadian, but not born and bred. Corruption is not overt, but there's a miasma of low-level dodginess that pervades government and industry. Business tenders go out, the process is followed to the letter — but there will always be some back channel open to make sure that the right vendor wins, or the process was designed from the outset that there could only be one fully qualified. It's a strange avuncular form of corruption; you kind of know something's a bit off, but hey, we're all family here.

Corruption well pre-dates the current lot. Take a look at Sam Jarvis back in the early 19th century; hardly a beacon of propriety, yet you can't move in Ontario without tripping over something named after him. I think the only reason people thought highly of Canada is because we kept our heads down, and were nice and polite when volunteering to fight in someone else's war.

(yes, I know; not everyone. These are Canadians I admire, flaws and all: Nellie McClung, Pierre Trudeau, Louis Riel, Tommy Douglas, Ursula Franklin, Terry Fox, Norman Bethune, Elijah Harper, David Suzuki, …)

With Canada's colossal resources, there is a fucktonne (metric) of money to be made. The amount of cash that washes about in mining for minerals you've likely never even heard of is staggering. It's reflected in the decor of the offices, law firms and clubs of Calgary and Toronto. Serious wonga. And this all managed by folks who really only have to decide how fast to dig it all up. Repercussions? You'll be gone, I'll be gone. See you next year when I'm the regulator and you're back in private practice again. Turn about is fair play.

When you get to make the definitions, it's not called corruption. It's called the economy.
posted by scruss at 11:19 AM on February 3 [5 favorites]




A couple of buddies and I built a new office building for a fencing company in Houston back in the early '70s. We had to send a case of Chivas Regal to the head city inspector's home as a "Christmas present" if we wanted to get our building okayed in any reasonable amount of time.

Bottom feeders are everywhere and sometimes they rise to the top (I'm looking at you, Chris Christie!).
posted by Mental Wimp at 12:28 PM on February 3


When you get to make the definitions, it's not called corruption. It's called the economy.
posted by infini at 1:28 PM on February 3 [1 favorite]


Hmmm, interesting piece, wish it had been longer. I feel it contains some truths, but not all the truths.

I think it does a good job of talking about corruption in a volume sense, and the way the west outsources and facilitates corruption, but I think it either elides or glosses over a few things as well.

He doesn't talk about daily interaction with corruption. In many developing countries (say Kenya, for example), literally every single thing you interact with in a day will have been touched and altered by corruption. It's difficult I think to convey how it permeates everything until you have it for yourself. Everything you buy, every place you go, how you get there, every single person you talk to, all the work you do. It is omnipresent. The west May have as much or more corruption by volume but not per capita.

Secondly, the cost of living with corruption. Large numbers grow ever larger in the developing world; a hundred dollars for me is a minor annoyance, for a Kenyan it could life-destroying or simply just fantasy. The costs of corruption in the developing world are much higher.

Thirdly, the writer does not touch on a few areas where the difference between less corrupt and more corrupt countries ours stark. Namely, the judiciary; the separation of powers; the limits of how far corruption can take you and what happens when it is exposed; and the level of police and public servant corruption.

Finally, it's very trendy to cast the IMF and the world bank as cartoon super villains, but the reality is far more nuanced and complex than that. this is not top let them off the hook, but his depiction really is one dimensional and shallow.

Of course none of this renders the fundamental points moot, but there's lots more to thought about corruption than saying that the west is just as bad, and its responsible for most of it anyway. It is a very complex issue and had been one of society's thorniest issues since there was a society.
posted by smoke at 2:52 PM on February 3 [2 favorites]


Addendum/tl;dr: I feel that the writer is calling out one aspect of corruption that is frequently not given the attention it deserves, however it remains just one aspect and does not obviate, nor invalidate all the other facets of a tremendously complex issue, and I feel the piece flirts with calling out one aspect as the aspect.
posted by smoke at 2:57 PM on February 3 [1 favorite]


Corruptions:

-Most opiates/amphetamines/benzos/etc. sold for recreational use and for abuse are not stolen straight from the factory. Thus the drug companies basically get both the illegal and legal profits.

-Many individuals on Metafilter probably give "donations" to figures in power, and may even threaten to withdraw their funding if votes or policies go the wrong way.

-DNC & RNC collude to exclude a multipolar system.
posted by save alive nothing that breatheth at 5:29 PM on February 3




I've often pondered whether the endemic "corruption" in the developing world isn't simply the outcome of inadequate infrastructure, obsolete and badly designed systems and processes leftover from teh colonial era, now having to make do for a rapidly changing yet leapfrogging era?

I'll pontificate on this after my commute, comparing a high trust society and one where mistrust is systemic.

Misinterpreted cultural and social behaviours are also often seen as corruption. How many "oily slimy Eastern merchants" have you read about since Kipling?
posted by infini at 10:59 PM on February 3




Corruption across EU 'breathtaking' - EU Commission - "In some countries there was a relatively high number reporting personal experience of bribery.

In Croatia, the Czech Republic, Lithuania, Bulgaria, Romania and Greece, between 6% and 29% of respondents said they had been asked for a bribe, or had been expected to pay one, in the past 12 months.

There were also high levels of bribery in Poland (15%), Slovakia (14%) and Hungary (13%), where the most prevalent instances were in healthcare."
posted by marienbad at 3:54 AM on February 4 [1 favorite]




This kind of smug, yet uninformative and disingenuous venting makes too many Metafilter comment threads unbearable to read and actively hurts discussion. If you're writing something that has no purpose except to be a jerk and shut down someone who disagrees with you about 1% of the topic, just be an adult and don't post it. It'd be nice if not every place on the internet became an echo chamber because of this.

I suggest that next time you make a meta instead of shitting in the thread.
posted by AElfwine Evenstar at 11:22 PM on February 4 [1 favorite]


Venezuela's been coming for a while — Chavez wasn't great about encouraging economic diversification enough to support a broader revenue base for the government. Some of that's understandable, as he did have a tremendous amount of poor people to provide basic social services for, but it happened the last time there was an oil crash too. Chavez just had the good sense to die before the flush times ended.
posted by klangklangston at 12:08 AM on February 5


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