The Causes and Cures of Corruption

CHICAGO: In recent years, allegations about corrupt public officials have toppled or greatly weakened governments in many nations, and diminished public support for the transition from communism in many parts of the former Soviet empire. There is no sure fire way to eliminate corrupt behavior, but certain steps would certainly reduce the temptations.

Elected and appointed government officials sometimes betray the public trust when they deal with companies and unions through regulation of business activities and labor markets, and government purchase and sale of goods and services. Temptations arise because these transactions often greatly exceed the salaries of government employees. Extensive and continuing scandals in Mexico, Colombia, Cuba, Panama, and parts of Asia are related to payoffs from drug cartels and other distributors of illegal drugs. But most instances of corrupt actions involve bribes or other illicit payoffs to officials to obtain government contracts, for laws to be passed that keep out competition, for loans on favorable terms, or to ease the enforcement of pollution and other costly regulations.

With inefficient government regulations and extensive government management of banks and other enterprises, corrupt officials may unknowingly serve a useful function by reducing arbitrary public decisions, and by helping business people and others get around harmful legislation and regulations. But widespread corruption of officials leads to a mistrust of all government officials, and discourages honest and able persons from working for the government. It also directs the energy of talented entrepreneurs toward gaining access to government power instead of engaging in directly productive activities.

The only way to reduce corruption permanently is to drastically cut back government's role in the economy. High priority should go to eliminating the thousands of petty, nuisance regulations and laws on the books in most countries which do more harm than good, and that also encourage bribery and other efforts to unfairly influence government officials. Corruption scandals have in fact strengthened the deregulation movements in both South Korea and Japan.