The Unz Review - Mobile
A Collection of Interesting, Important, and Controversial Perspectives Largely Excluded from the American Mainstream Media
 TeasersRussian Reaction Blog
Pinkerian Effect in Corruption?
🔊 Listen RSS
Email This Page to Someone

 Remember My Information



=>

Bookmark Toggle AllToCAdd to LibraryRemove from Library • BShow CommentNext New CommentNext New Reply
Search Text Case Sensitive  Exact Words  Include Comments
List of Bookmarks

The World Bank Enterprise Surveys are an invaluable source of information on the business climate across both time and space.

In particular, its section on corruption does for businesses what Transparency International’s Global Corruption Barometer does for individuals – it directly asks them whether they are expected to give bribes to bureaucrats to reach understandings on taxes, get permits, utilities connections, and to “get things done” more generally.

Now in general, people love to complain about corruption. It seems to be universal. Opinion surveys almost always show that perceptions of corruption are getting worse everywhere.

Good news! This isn’t really borne out by the statistics. Things really do seem to be getting better. (I excluded countries with information for just one year).

 

gifts-get-things-done

We have basically seen a halving in corporations reporting they need to grease public officials to “get things done.”

gifts-tax

Ergo for dealing with tax officials.

gifts-contract

Curiously, though, there was minimal change in the number of firms reporting needing bribes to secure government contracts.

Still, I don’t think that invalidates the general picture.

(1) Paying bribes to tax officials and to “get things done” is a more coercive form of corruption. I imagine many of these are “cough up or we shut you down” scenarios. Securing government contracts is nice, but not a life-and-death issue for most businesses.

(2) Perhaps the lack of change in securing government contracts merely reflects the fact that more and more countries have been opening up open bidding systems, whereas before they would have just been automatically channeled off to the Minister’s business buddies (without bribes).

Here’s an observation from commenter Twinkie to flesh out these statistics:

I remember the days when American defense contractors used to complain about the FCPA (Foreign Corrupt Practices Act) constraining them in competition against the Europeans in pursuing contracts in less-developed countries (“The Germans can tax-deduct bribes paid overseas!”).

Those days are long gone. It’s not to say that corruption is a thing of the past, but the absolute scale and public acquiescence (or lack thereof) of it have changed dramatically in many parts of the world.

This is evidence for my assumption in Our Biorealistic Future that in the long-term, we can expect institutions everywhere to get better, as different countries adopt established best practices, despite individual cases of backsliding.

 
• Category: Economics • Tags: Corruption 
Hide 11 CommentsLeave a Comment
Commenters to Ignore...to FollowEndorsed Only
    []
  1. Puja says:

    OT: You haven’t written on development economics in a while, and I know you used to write a lot about China. You are probably quite bullish, but I’d wager you’d find this article interesting:

    http://www.sciencemag.org/news/2017/09/one-three-chinese-children-faces-education-apocalypse-ambitious-experiment-hopes-save

    The headline is a (bit) sensationalist, but the underlying issue is serious. China’s urban students do well, including in the latest PISA, but they are less than half the student population. Remember that a significant chunk of the urban population in China are not allowed into public schools due to the so-called ‘Hokou’ system, so the urban student population is proportionally much lower than the overall urban population is in most cases.

    There is a counter-narrative, pushed by Chinese nationalists, and this article(https://mobile.nytimes.com/2017/10/23/opinion/china-education.html?action=click&module=RelatedCoverage&pgtype=Article) is a good example one. But you’ll note in the article that the author only focuses on urban areas. Anyway, off-topic and all that, but I’d be interested in a few posts on development economics and/or on China from you if you find the time.

    Read More
    • Replies: @Anatoly Karlin
    Wait, where the Chinese PISA takers exclusively urban? I don't recall reading that anywhere.

    I also recall an article where it was stated that Shanghai is very good at providing the children of parents without hukou with education anyway, and that yes, they were included in its PISA testing.

    That said, I allow that there might be a sort of IQ-lowering phenomenon in rural China that you seem to get in Moldova, Kyrgyzstan, Puerto Rico due to the absence of parents (internal emigration, but emigration all the same).
    , @Daniel Chieh

    Remember that a significant chunk of the urban population in China are not allowed into public schools due to the so-called ‘Hokou’ system, so the urban student population is proportionally much lower than the overall urban population is in most cases.
     
    Children without houkou can still attend public schools, but have to pay tuition - something which can put it out of range for them. Nonetheless, there are "private migrant schools" which provide education, though usually considered of a lower quality but are improving.

    That said, focusing on the rural regions, is a central part of Xi's platform for better or worse.
    , @anon
    Chinese migrant workers work in the city without permission and their children cannot enter public school there. Mexican workers work in US without permission and their children cannot enter US or US public school.

    So what is the difference ??
    ReplyAgree/Disagree/Etc.
    AgreeDisagreeLOLTroll
    These buttons register your public Agreement, Disagreement, Troll, or LOL with the selected comment. They are ONLY available to recent, frequent commenters who have saved their Name+Email using the 'Remember My Information' checkbox, and may also ONLY be used once per hour.
    Ignore Commenter Follow Commenter
    Sharing Comment via Twitter
    /akarlin/pinkerian-effect-in-corruption/#comment-2089106
    More... This Commenter This Thread Hide Thread Display All Comments
  2. Getting Things Done can mean Speed Money, basically queue jumping, somnot always coercive.

    As I commented on Twitter, Chinese contractors have inventive new ways to get around the tender system.

    Read More
    ReplyAgree/Disagree/Etc. More... This Commenter Display All Comments
  3. In Hungary, twenty years ago I knew a lot of people who were stopped by the police and paid bribes to escape fines or their licences being taken away from them. It was occasionally coercive (extracting some money even if there were no violations, or searching for some problem with the car etc.), but usually just the “getting away with speeding/drinking and driving/etc.” type of thing, mutually beneficial but overall making society shittier. It is no longer widespread. Some ten years ago the police cracked down on corruption in its ranks. They started employing a special unit investigating this type of corruption (they were allowed to speed etc. and then try to bribe the police stopping them), while simultaneously raising salaries, and so this type of everyday corruption just ceased to exist, or at least got greatly reduced.

    There still seems to be a lot of corruption surrounding government contracts, and I’m sure a lot of contracts are awarded to associates of the ruling party. However, I have a friend who is a business partner at an IT enterprise, and they have a lot of government contracts. He told me that a lot of people think they have connections simply because they had numerous contracts, and he suspects that it raised their chances. But they don’t actually know anybody who is anybody. So maybe corruption is now totally indirect: people awarding the contracts try to guess who their bosses want to win, and then try to make it more likely for them to win. But they are not told directly, and the bosses apparently often don’t care (maybe they don’t always have a favorite).

    I have some reasons to believe my friend (other than him being my friend and trusting him).

    Though Hungary used to be only moderately corrupt before WW2, maybe we’re just reverting to where we had been.

    Read More
    • Replies: @Anatoly Karlin
    Date for Hungary:

    Year Gifts_tax Gifts_contract Gifts_things
    2002 29.1 27.8 40.6
    2005 24.2 28.8 32.9
    2009 0.7 30.5 5.4
    2013 0.0 51.8 35.3
     
    Gifts to tax officials essentially vanished; gifts to get things done appear to have stayed steady with a sharply explained downturn in 2009; and gifts to get gov't contracts have risen under Orban.

    You can look up other data (bribes to get water connecton, etc. - there are about ten different corruption indicators) here: http://www.enterprisesurveys.org/Custom-Query

    https://www.unzcloud.com/wp-content/uploads/2016/11/transparency-international-gcb-2016-bribery-in-europe.jpg

    Here is how Hungary compares to the rest of Europe on the (most recent) Global Corruption Barometer, which measures individual experiences of corruption.
    ReplyAgree/Disagree/Etc. More... This Commenter This Thread Hide Thread Display All Comments
  4. @reiner Tor
    In Hungary, twenty years ago I knew a lot of people who were stopped by the police and paid bribes to escape fines or their licences being taken away from them. It was occasionally coercive (extracting some money even if there were no violations, or searching for some problem with the car etc.), but usually just the "getting away with speeding/drinking and driving/etc." type of thing, mutually beneficial but overall making society shittier. It is no longer widespread. Some ten years ago the police cracked down on corruption in its ranks. They started employing a special unit investigating this type of corruption (they were allowed to speed etc. and then try to bribe the police stopping them), while simultaneously raising salaries, and so this type of everyday corruption just ceased to exist, or at least got greatly reduced.

    There still seems to be a lot of corruption surrounding government contracts, and I'm sure a lot of contracts are awarded to associates of the ruling party. However, I have a friend who is a business partner at an IT enterprise, and they have a lot of government contracts. He told me that a lot of people think they have connections simply because they had numerous contracts, and he suspects that it raised their chances. But they don't actually know anybody who is anybody. So maybe corruption is now totally indirect: people awarding the contracts try to guess who their bosses want to win, and then try to make it more likely for them to win. But they are not told directly, and the bosses apparently often don't care (maybe they don't always have a favorite).

    I have some reasons to believe my friend (other than him being my friend and trusting him).

    Though Hungary used to be only moderately corrupt before WW2, maybe we're just reverting to where we had been.

    Date for Hungary:

    Year Gifts_tax Gifts_contract Gifts_things
    2002 29.1 27.8 40.6
    2005 24.2 28.8 32.9
    2009 0.7 30.5 5.4
    2013 0.0 51.8 35.3

    Gifts to tax officials essentially vanished; gifts to get things done appear to have stayed steady with a sharply explained downturn in 2009; and gifts to get gov’t contracts have risen under Orban.

    You can look up other data (bribes to get water connecton, etc. – there are about ten different corruption indicators) here: http://www.enterprisesurveys.org/Custom-Query

    Here is how Hungary compares to the rest of Europe on the (most recent) Global Corruption Barometer, which measures individual experiences of corruption.

    Read More
    • Replies: @reiner Tor
    The worst case is healthcare. During communism, doctors' salaries were low, so people picked up the habit of giving some gifts (usually an envelope with some cash) to doctors (usually only specialists in hospitals, not general practitioner family doctors, though there could be exceptions). It has never really been a requirement. I know people who didn't or couldn't pay, and the only consequences were the doctor giving them some looks, or surprisingly often not even that. A lot of people don't give it in advance, only after the treatment (even if the treatment lasts for weeks), so I'm not sure this is really a bribe. Still, for most people, there's a lingering fear that unless they pay, they'll get inferior treatment. Who wants to risk it with one's (or one's loved ones') health?

    People who give in advance and a lot sometimes get some advantages. There's also the case that a number of doctors have private practice on the sides, and they occasionally treat their private patients using government infrastructure. Some specialists (like radiologists) get no such money, and so hospitals had to find tricks to pay them more (or else they'd leave to Western Europe). So perversely radiologists often make more money (on paper) than surgeons. Older doctors usually are the main beneficiaries, while young doctors often leave the country instead of waiting for their turns. It's estimated that a high ranking doctor could often make more money than his Western European counterpart. But the young doctor works for peanuts. The whole system is rotten, and it's very difficult to change it because the older doctors dominate the lobbies and organizations.

    This is the worst case of everyday corruption in Hungary, and has been so for a long time, an invention of communism.

    ReplyAgree/Disagree/Etc. More... This Commenter This Thread Hide Thread Display All Comments
  5. @Puja
    OT: You haven't written on development economics in a while, and I know you used to write a lot about China. You are probably quite bullish, but I'd wager you'd find this article interesting:

    http://www.sciencemag.org/news/2017/09/one-three-chinese-children-faces-education-apocalypse-ambitious-experiment-hopes-save

    The headline is a (bit) sensationalist, but the underlying issue is serious. China's urban students do well, including in the latest PISA, but they are less than half the student population. Remember that a significant chunk of the urban population in China are not allowed into public schools due to the so-called 'Hokou' system, so the urban student population is proportionally much lower than the overall urban population is in most cases.

    There is a counter-narrative, pushed by Chinese nationalists, and this article(https://mobile.nytimes.com/2017/10/23/opinion/china-education.html?action=click&module=RelatedCoverage&pgtype=Article) is a good example one. But you'll note in the article that the author only focuses on urban areas. Anyway, off-topic and all that, but I'd be interested in a few posts on development economics and/or on China from you if you find the time.

    Wait, where the Chinese PISA takers exclusively urban? I don’t recall reading that anywhere.

    I also recall an article where it was stated that Shanghai is very good at providing the children of parents without hukou with education anyway, and that yes, they were included in its PISA testing.

    That said, I allow that there might be a sort of IQ-lowering phenomenon in rural China that you seem to get in Moldova, Kyrgyzstan, Puerto Rico due to the absence of parents (internal emigration, but emigration all the same).

    Read More
    • Replies: @Stork
    https://www.youtube.com/watch?v=kfY8CMVxUNs i don't know is this a truth, but is definitely interesting.
    ReplyAgree/Disagree/Etc. More... This Commenter This Thread Hide Thread Display All Comments
  6. @Puja
    OT: You haven't written on development economics in a while, and I know you used to write a lot about China. You are probably quite bullish, but I'd wager you'd find this article interesting:

    http://www.sciencemag.org/news/2017/09/one-three-chinese-children-faces-education-apocalypse-ambitious-experiment-hopes-save

    The headline is a (bit) sensationalist, but the underlying issue is serious. China's urban students do well, including in the latest PISA, but they are less than half the student population. Remember that a significant chunk of the urban population in China are not allowed into public schools due to the so-called 'Hokou' system, so the urban student population is proportionally much lower than the overall urban population is in most cases.

    There is a counter-narrative, pushed by Chinese nationalists, and this article(https://mobile.nytimes.com/2017/10/23/opinion/china-education.html?action=click&module=RelatedCoverage&pgtype=Article) is a good example one. But you'll note in the article that the author only focuses on urban areas. Anyway, off-topic and all that, but I'd be interested in a few posts on development economics and/or on China from you if you find the time.

    Remember that a significant chunk of the urban population in China are not allowed into public schools due to the so-called ‘Hokou’ system, so the urban student population is proportionally much lower than the overall urban population is in most cases.

    Children without houkou can still attend public schools, but have to pay tuition – something which can put it out of range for them. Nonetheless, there are “private migrant schools” which provide education, though usually considered of a lower quality but are improving.

    That said, focusing on the rural regions, is a central part of Xi’s platform for better or worse.

    Read More
    ReplyAgree/Disagree/Etc. More... This Commenter This Thread Hide Thread Display All Comments
  7. @Anatoly Karlin
    Date for Hungary:

    Year Gifts_tax Gifts_contract Gifts_things
    2002 29.1 27.8 40.6
    2005 24.2 28.8 32.9
    2009 0.7 30.5 5.4
    2013 0.0 51.8 35.3
     
    Gifts to tax officials essentially vanished; gifts to get things done appear to have stayed steady with a sharply explained downturn in 2009; and gifts to get gov't contracts have risen under Orban.

    You can look up other data (bribes to get water connecton, etc. - there are about ten different corruption indicators) here: http://www.enterprisesurveys.org/Custom-Query

    https://www.unzcloud.com/wp-content/uploads/2016/11/transparency-international-gcb-2016-bribery-in-europe.jpg

    Here is how Hungary compares to the rest of Europe on the (most recent) Global Corruption Barometer, which measures individual experiences of corruption.

    The worst case is healthcare. During communism, doctors’ salaries were low, so people picked up the habit of giving some gifts (usually an envelope with some cash) to doctors (usually only specialists in hospitals, not general practitioner family doctors, though there could be exceptions). It has never really been a requirement. I know people who didn’t or couldn’t pay, and the only consequences were the doctor giving them some looks, or surprisingly often not even that. A lot of people don’t give it in advance, only after the treatment (even if the treatment lasts for weeks), so I’m not sure this is really a bribe. Still, for most people, there’s a lingering fear that unless they pay, they’ll get inferior treatment. Who wants to risk it with one’s (or one’s loved ones’) health?

    People who give in advance and a lot sometimes get some advantages. There’s also the case that a number of doctors have private practice on the sides, and they occasionally treat their private patients using government infrastructure. Some specialists (like radiologists) get no such money, and so hospitals had to find tricks to pay them more (or else they’d leave to Western Europe). So perversely radiologists often make more money (on paper) than surgeons. Older doctors usually are the main beneficiaries, while young doctors often leave the country instead of waiting for their turns. It’s estimated that a high ranking doctor could often make more money than his Western European counterpart. But the young doctor works for peanuts. The whole system is rotten, and it’s very difficult to change it because the older doctors dominate the lobbies and organizations.

    This is the worst case of everyday corruption in Hungary, and has been so for a long time, an invention of communism.

    Read More
    • Replies: @Philip Owen
    Sounds like Russia.
    ReplyAgree/Disagree/Etc. More... This Commenter This Thread Hide Thread Display All Comments
  8. Stork says:
    @Anatoly Karlin
    Wait, where the Chinese PISA takers exclusively urban? I don't recall reading that anywhere.

    I also recall an article where it was stated that Shanghai is very good at providing the children of parents without hukou with education anyway, and that yes, they were included in its PISA testing.

    That said, I allow that there might be a sort of IQ-lowering phenomenon in rural China that you seem to get in Moldova, Kyrgyzstan, Puerto Rico due to the absence of parents (internal emigration, but emigration all the same).

    https://www.youtube.com/watch?v=kfY8CMVxUNs i don’t know is this a truth, but is definitely interesting.

    Read More
    ReplyAgree/Disagree/Etc. More... This Commenter This Thread Hide Thread Display All Comments
  9. @reiner Tor
    The worst case is healthcare. During communism, doctors' salaries were low, so people picked up the habit of giving some gifts (usually an envelope with some cash) to doctors (usually only specialists in hospitals, not general practitioner family doctors, though there could be exceptions). It has never really been a requirement. I know people who didn't or couldn't pay, and the only consequences were the doctor giving them some looks, or surprisingly often not even that. A lot of people don't give it in advance, only after the treatment (even if the treatment lasts for weeks), so I'm not sure this is really a bribe. Still, for most people, there's a lingering fear that unless they pay, they'll get inferior treatment. Who wants to risk it with one's (or one's loved ones') health?

    People who give in advance and a lot sometimes get some advantages. There's also the case that a number of doctors have private practice on the sides, and they occasionally treat their private patients using government infrastructure. Some specialists (like radiologists) get no such money, and so hospitals had to find tricks to pay them more (or else they'd leave to Western Europe). So perversely radiologists often make more money (on paper) than surgeons. Older doctors usually are the main beneficiaries, while young doctors often leave the country instead of waiting for their turns. It's estimated that a high ranking doctor could often make more money than his Western European counterpart. But the young doctor works for peanuts. The whole system is rotten, and it's very difficult to change it because the older doctors dominate the lobbies and organizations.

    This is the worst case of everyday corruption in Hungary, and has been so for a long time, an invention of communism.

    Sounds like Russia.

    Read More
    ReplyAgree/Disagree/Etc. More... This Commenter This Thread Hide Thread Display All Comments
  10. anon says: • Disclaimer
    @Puja
    OT: You haven't written on development economics in a while, and I know you used to write a lot about China. You are probably quite bullish, but I'd wager you'd find this article interesting:

    http://www.sciencemag.org/news/2017/09/one-three-chinese-children-faces-education-apocalypse-ambitious-experiment-hopes-save

    The headline is a (bit) sensationalist, but the underlying issue is serious. China's urban students do well, including in the latest PISA, but they are less than half the student population. Remember that a significant chunk of the urban population in China are not allowed into public schools due to the so-called 'Hokou' system, so the urban student population is proportionally much lower than the overall urban population is in most cases.

    There is a counter-narrative, pushed by Chinese nationalists, and this article(https://mobile.nytimes.com/2017/10/23/opinion/china-education.html?action=click&module=RelatedCoverage&pgtype=Article) is a good example one. But you'll note in the article that the author only focuses on urban areas. Anyway, off-topic and all that, but I'd be interested in a few posts on development economics and/or on China from you if you find the time.

    Chinese migrant workers work in the city without permission and their children cannot enter public school there. Mexican workers work in US without permission and their children cannot enter US or US public school.

    So what is the difference ??

    Read More
    ReplyAgree/Disagree/Etc. More... This Commenter This Thread Hide Thread Display All Comments
  11. Twinkie says:

    “The Germans can tax-deduct bribes paid overseas!”

    In case that was not clear, please allow me to clarify. Even in the bad old days, German companies were NOT allowed to pay bribes (and in fact were prosecuted for doing so) in GERMANY itself. However, bribes paid overseas (say, in Pakistan) were tax-deductible as business expenses. At some point, I believe the U.S. put pressure on the European Union to enact regulations that were similar to the Foreign Corrupt Practices Act.

    Also, I don’t know what the current state of the FCPA enforcement is, but the legislation originally allowed for making “grease payments.” In other words, if a company paid bribes to obtain a contract overseas, it and its officers were liable to be prosecuted. However, payments designed to expedite bureaucratic or routine processes (e.g. getting things through customs inspection) would NOT incur prosecution.

    Read More
    ReplyAgree/Disagree/Etc. More... This Commenter Display All Comments
Current Commenter says:

Leave a Reply - You can also follow this blog from my website *akarlin.com* and/or subscribe to this *feed*. *Comments policy*.


 Remember My InformationWhy?
 Email Replies to my Comment
Submitted comments become the property of The Unz Review and may be republished elsewhere at the sole discretion of the latter
Subscribe to This Comment Thread via RSS Subscribe to All Anatoly Karlin Comments via RSS