Why is corruption so bad in Eastern Europe? And what can be done about it?
First off, I don’t know to what extent it can be reduced. According to the hbdchick’s theories on the Hajnal Line, ceteris paribus, Southern and Eastern Europe will always be more corrupt than the countries of “core Europe” because they did not undergo its centuries of selection for beyond-kin altruism.
Despite decades of institutional convergence under the aegis of European integration, Italy and Greece remain considerably more corrupt than Germany, Britainn, and Sweden. Poland has improved greatly since the 1990s, but reached an asymptote at around Italy’s level; Romania, at Greece’s. From the outset, this implies that Eastern European countries should keep their ambitions realistic, regardless of the policies that they choose to pursue.
Still, political economic factors do play a large role.
The main concept that I would draw upon is Mancur Olson’s distinction between “roving bandits” and “stationary bandits.”
In unstable polities, the elites can be replaced at any time, often through unpredictable and lawless methods such as coups, or “people power” driven “color revolutions” if the new gang are more pro-Western. The elites know this. As such, they have an interest in maximizing their thievery in the here and now, with corresponding disincentives to large, capital-heavy investments that will only pay in the long-term. Most likely, they will not be around to enjoy the fruits of their labor a decade or two down the line. But a Mayfair apartment and British Virgin Islands cash stash won’t go anywhere.
This describes Ukraine, and Russia in the 1990s.
In polities where the system is more stable, “roving bandits” start to settle down – they become “stationary bandits.” There are relatively greater incentives for long-term investments – if you steal less today, your pie will be greater tomorrow. Although corruption still exists, and may even remain systemic, the more predictable nature of the tariffs levied by “stationary bandits” enables corporations to account for them in their business plans. It’s not even so much the degree of corruption that’s important as its predictability. Furthermore, the bandits at the very top have greater incentives to clamp down on their underlings, since if they get start getting too greedy it will bite into their own profit margins. This in turn can pave the way for the emergence of institutions that can upgrade the war on corruption from manual to semi-autonomous mode.
This describes countries such as Russia, Kazakhstan, and Belarus. (China would also fall into this category).
These ex-Soviet countries, ruled by “stationary bandits,” have been far more successful at economic recovery (and growth) than Ukraine. For all the “Gabon with snow” jokes, Ukraine is still an industrialized country with a well educated population and a respectable average IQ of perhaps 95, with considerable natural resources, access to the sea, and Russian gas subsidies that have totalled approximately $200 billion since independence.
So the Ukrainian economy should be doing MUCH BETTER, given the huge gap between potential and reality (perhaps the biggest gap of any country in the world). But as of 2015, its inflated-adjusted GDP was a mere 60% of the UkSSR’s in 1990 (Russia: 110%; Belarus: 180%), and is now in a neck-and-neck race with Nigeria in terms of Internet penetration.
Telling example: One of the few genuinely bright spots in the Ukrainian economy has been the IT sector. In particular its presence on the video game scene is rather impressive in relative terms – Cossacks, Stalker, Metro 2033.
Why? Because that is what you get when you combine roving bandits with a high IQ population. Few people are willing to build anything substantial like a multi-billion dollar factory. Hence, so far as heavy industry goes, it just continues to coast on the ever depreciating Soviet legacy.
How much capital do you need to launch a middle-sized video game studio? Can’t imagine it’s much more than $100,000. Most of the value is in the brains, and you get some of the best cognitive bang per dollar in the Ukraine. You can sell your game on Steam, and should instability strike, you can just bugger off to someplace warmer and more civilized, like Cyprus or Malta (like 4A games, the creators of Metro 2033, did in 2014).
Incidentally one can see the same thing (if to a significantly smaller extent) in both Russia and Belarus.
How to solve – or at least mitigate – corruption follows naturally from the above observations.
(1) The roving bandits need to be settled down. (Replacing one gang with another under the cover of a color revolution doesn’t do anything – as Ukraine has already proven, TWICE).
In Ukraine’s case, that means it needs to put an end to its never-ending internecine struggles. Broadly speaking, both Novossiya supporters and Ukrainian nationalists have the right idea, even if they are otherwise diametrically opposed. (Nadia Sevchenko represents a curious convergence of these two streams: A Ukrainian nationalist to the core, she has negotiated with LDNR authorities in contravention of official Kiev policy while suggesting that Ukraine needs a period of dictatorship to get itself sorted out).
(2) East Asia furnishes many several examples of non-Hajnal societies that have successfully solved the corruption problem. One approach is greater criminal penalties for corruption (“kill the chicken to scare the monkey,” as the Chinese proverb goes); another is to richly compensate civil servants, so as to reduce the relatice incentive for additional thievery (Singapore government ministers are paid like the CEOs of big corporations, and in tandem with harsh punishments and wealth, this has helped Singapore become one of the world’s least corrupt societies, despite traditional China’s penchant for corruption).
In practice, neither of these is practical for Eastern Europe. European human rights regulations preclude the killing of chickens; and East Europeans themselves are far too populist and demotic to tolerate elitist-technocratic policies like CEO-scale salaries for bureaucrats (with the result that said bureaucrats will unofficially continue to compensate themselves at CEO levels anyway, but with huge markups).
(3) The removal of roving bandits will enable faster economic growth, and greater tax receipts allow you to pay more to develop institutions, while greater per capita wealth leads to money floating about for the development of an indigenous civil society. It also makes e-government, which makes far less demands on face-to-face interactions between citizens and bureaucrats, with all their associated potential for corruption, far more realizable.
(4) To be sure, it can be very frustrating to live in a country that is visibly and strikingly more corrupt than the fairylands of core Europe. It is understandable that people, especially young people without much life experience, want change, and they want it quick. More often than not, the result is a cargo cult approach to combatting corruption, which results in spectacles such as Anti-Corruption Forums to which the participants show up in Mercedes and Lexuses (a most apt metaphor for Euromaidan).
From this perspective, an understanding of the deep gene-cultural underpinnings of corruption might not lead you to forgive everything, but it will at least imbue you with a sense of realism as to what is and what is not possible. A slow, steady convergence over two or three decades to Italy’s or even France’s level of corruption – entirely possible, even likely. A new Sweden overnight through the power of mass lustrations and Lenin statue topplings? Nope.
Going ahead will only set you up for eventual disappointment, but in the meanwhile, you’d have wrecked your own country.
Finally, don’t worry. In the end, corruption just isn’t that important to economic growth! Just compare Chile and China: One by far the cleanest country in South Americat; the other one is far more corrupt, but a standard deviation higher in average IQ. Which of those two is the economic steamroller, and which one has nothing to write home about? Exactly. And corruption tends to diminish with increasing wealth, as the power of institutions and civil society increases. Just don’t smother your economy with regulations and central planning, don’t allow roving bandits to pick the place clean and stymie all long-term development, and the problems should ultimately resolve by itself without any particular further effort on your part.
PS. Daniel Chieh comments: “These days, modern China has moved significantly from executions to pressuring corrupt officials to commit suicide: possibly a return to honor suicides that was the norm in Asia and perhaps part of the entire initiative for Xi’s “return of traditional Chinese virtues.” Honor suicides just doesn’t seem to be a thing in East Europe, that I know of, anyway. Human rights law in Europe in theory wouldn’t stop all methods of “killing the chicken” as there are a number of other “greater criminal punishments” that don’t include capital punishment – which is rarely used these days, to be honest. Mass social shaming, prohibitions on future job-seeking, reduced status opportunities and unfavorable associations that spread even to the family all work just as well.The life of a pariah can be worse than death, imo.“