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Why Corruption is Worse Than Robbery – by Asif Zaidi

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Corruption is the abuse of public or private office for personal motives. Its most common forms are embezzlement, bribery, nepotism, and discrimination. Corruption is highly damaging for economic, political, and social development. Corruption suffocates commerce, depraves governments, exploits human vulnerability, undermines justice, and procreates social inequities. Those performing the act of corruption and those inducing it are both equally corrupt. Corruption is both a major cause and a result of poverty around the world. It occurs at every level of society, but the sleaze at government level is its greatest enabler. When corruption abounds, political power means an opportunity to satisfy the hunger for wealth. It is now evident that, in comparable conditions, the countries bedevilled with higher levels of corruption have fared much worse than those with lower corruption levels. It is gratifying for me to see that 2017 has been a tough year for a number of corrupt politicians and rulers in the world from South Korea to Pakistan to Brazil. Hopefully this will stimulate institutional reforms to render governments and leaders more accountable.

 

Corruption is akin to stealing, but it is much worse than theft or even robbery for three main reasons. One, it always involves a betrayal of trust. Two, its impact for a country, society, or organization is much worse than the monetary loss involved. It enables all other crimes, including such heinous acts as human and drug trafficking. Three, corruption is the single biggest cause for reducing efficiency and increasing inequality. By defeating fair competition, corruption not only compromises quality but also deters domestic and foreign investment in a country. It also distorts priorities and policies as the investments are allocated not to the sectors or projects that are most needed but to those that offer the best prospects for corruption. Generally, health and education sectors are less corruption friendly than infrastructure projects or huge procurements and are thus neglected. A number of credible studies have established the inverse correlation between corruption and the quality of government spending and investments. Corruption, thus, delegitimizes the state as it cannot deliver the basic services to its citizens. Corruption also increases income inequality because the resources are shared between rich and well-connected of the society and the poor are left out.

Seven decades of cold war, as two ideologies jostled for world dominance, was probably the most conducive period for the proliferation of corruption. While communism was always highly tolerant of irritants like corruption for the sake of furthering the ideology, the cold war period also saw rich western governments involving in corrupt practices abroad around the globe – propping up corrupt dictatorships, undermining democracies and accountability, and taking resources like oil and minerals. Illegitimate funds generated in the developing world found a warm welcome in the murky banking, corporate, and legal regimes of the developed world. Tax havens and bank secrecy laws offered a sanctuary for tainted money. At the same time, firms from developed countries showed no qualms about suborning rulers and officials from developing countries to gain business contracts. The influence of multinationals served the company ahead of the country as they disadvantaged domestic firms, enabled flight of capital, and twisted decision-making to favour projects benefiting the few rather than the many. Since the end of the cold war, and as the world has become increasingly global, the western countries have substantially reconsidered their tolerance of corruption abroad. However, corruption still remains a major issue, responsible for inequality and poverty. Also, a number of rich countries still have a lot more to do to close their doors to illicit finances and to hold their corporate businesses more accountable for corrupt business practices in the emerging markets countries.

Corruption is worse than theft because it afflicts the weakest and poorest of the society the most, thus exacerbating the plight of those with already little say about their own destiny. It damages trust –the main theme of this essay-, weakens the rule of law, hurts development, and inhibits government from being efficient.

The biggest problem with financial corruption is that it subverts the paramount human value of trust as it destabilises the most significant system of mutual trust ever invented by Homo sapiens – money. Money is not a physical reality, instead it is a psychological model that functions by transforming matter into a collective imagination shared by people. Money is the only trust system fashioned by humans that can bridge almost any social, cultural, or ideological mistrust, as it does not differentiate because of faith, gender, race, or sexual orientation. Even people who cannot agree on anything else can still agree on a monetary belief. Money is the zenith of human tolerance, as even people who do not know, like, or trust one another can nonetheless collaborate for practical purposes. The value of, say, US dollar or Euro in our mind represents our view of their exchange value and, most importantly, our confidence in their issuers to honour their currency. That is how total strangers can easily reach agreement on the worth of a currency. This trust explains why our financial systems are so firmly connected with our political, national, and ideological systems. The trust in, for instance, America’s or Europe’s moneys is so strong that even in the remotest parts of the world far from the confines of America or Europe people are happy to receive payments in USD or Euro.

Therefore, every society on the planet views forging money as a grave crime of deception, bordering on treason, which attracts severe punishments. Counterfeiting money is not just deceit, it’s a violation of sovereignty, an act of sedition against the state and its people. It is because of the shared trust in money that thousands of disparate and often insular cultures have amalgamated into a global village. Financial corruption in this global village is more harmful in its impact than brutal warriors and marauders who would attack and loot merchant caravans in the old world.

Corruption also undermines commerce, which is the single biggest reason for making human intelligence collective and cumulative in a way that has taken place for no other animal. Commerce can transfigure ignoble selfishness into broad munificence. Corruption breeds dependence whereas free markets breed interdependence and therein lies the whole difference. We have seen that rejection of corruption and truly free commerce have coincided with an extraordinary improvement in human sensibility and compassion in the most commercial nations like Germany, Japan, and Holland. In all such countries, the growth in charitable giving unswervingly surpasses the growth of the economy year after year. Whereas rich but corrupt and totalitarian societies, often high on religion, rank much lower on virtues such as universal compassion and giving. We happen to become better humans as we become more hooked on to free enterprise ridded of graft. Some two hundred years ago it was the merchants, as against the landed class, who first worried about and fought for abolishing slavery. And today it is the money of the common citizens and entrepreneurs of the least corrupt rich countries that sponsors noble causes across the planet. This points at a direct link between commerce unspoiled by corruption and virtue. Hence, the last two centuries indicate that liberty, equality, and –to a great extent- prosperity correspond to reduction in corruption.  Therefore, where commerce and competition blossom, creativity and compassion both thrive.

Corruption may be enduring and widespread, but it is not immutable. It is heartening to see increasing political and moral will to fight corruption around the world. However, to deter corruption, more severe punishments need to be meted out to the corrupt.

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