Gabriella Cook Francis & Christopher Sabatini
Opposing corruption in international forums is easy. Nobody is openly for it, and popular sentiment is strongly against it.
Global public opinion surveys show that corruption is a primary concern of citizens all around the world, and a host of public ills can be attributed to it, from economic stagnation, to the global decline of trust in democracy and a range of other societal challenges.
And corruption does play a role in these issues, which is why it makes for such a convenient target. Major leaks exposing corruption have grabbed public attention and inspired a raft of policies aimed at calling out and sanctioning individuals, governments and business that have engaged in bribery, kickbacks, embezzlement, money laundering and a host of other abuses of public and private power.
But is the international community devoting too much attention to corruption, at the expense of other structural and more difficult-to-tackle concerns? Have we oversold the benefits of tackling corruption, even making the wildly optimistic assumption that this global scourge can be eliminated or significantly reduced?
The focus on anti-corruption may be one of the last holdovers of the neoliberal agenda that was pushed by multilateral development banks, bilateral donors and the financial community throughout the 1990s.
This agenda, called the Washington Consensus — probably one of the worst attempts at branding ever — encouraged governments to use market incentives, public sector streamlining, privatisation, fiscal restraint and, later, accountability and transparency in public management to address three problems: inflation, stagnant growth and inequality.
For the first two, Washington Consensus policies worked, at least for a while. But improvements on the latter — inequality — never fully materialized, notwithstanding reductions in poverty in the developing world during the late 1990s and early 2000s, which were more closely tied to a commodities boom.
The causes of economic growth, poverty and inequality were deeply embedded and stubborn in the face of market incentives and state reforms. Similarly, the goals of improving economic development, public trust in institutions, democratic stability and social and economic equality will require more than merely holding corrupt actors accountable through domestic or even international anti-corruption policies.
The obsession with corruption as a modern cause of all evils — and the corollary that addressing it will cure them — has become a convenient distraction from many of the problems that development banks, governments, the financial and business communities and the Davos set are too reluctant to address.
Corruption is a symptom, not a cause.
Many of the ills attributed to it really stem from broader structural and often historical issues like the unequal distribution of resources, insufficient social safety nets, regressive taxation, institutionalised ethnic marginalisation and racism, and fractured labour markets.
These are the real challenges to economic growth, poverty reduction, equality, political stability and peace.
Directing public and financial attention to on-the-books malfeasance is convenient for those who are responsible for — or benefit from — global inequality and democratic decline, and those who would have to make hard choices to reverse those trends. It’s no wonder why so many in elite spaces have joined the anti-corruption chorus.
Growing Inequality
Corruption, officially defined as the use of public office for private gain, is a far cry from a primary cause of inequality in economic development.
Before COVID-19, GDP per capita in modern economies increased from an average of US$6,800 to more than US$11,000. This growth actually broadened economic disparities within countries and between developed economies and developing ones.
The result has been the most uneven distribution of wealth globally since the 1920s.
The obsession with corruption as a modern cause of all evils has become a convenient distraction from many of the problems that the Davos set are too reluctant to address.
In his 2017 book Capital, Thomas Piketty this historic concentration of wealth occurred in part because economies were shifting from production to capital accumulation. At the same time, labour markets have also shifted toward work in the informal sector or self-employment.
According to the International Labour Organisation, in 2020, there were more than two billion informal sector workers — most of them in developing countries, although developed economies also experienced a similar boom in gig workers.
COVID-19 has created a windfall for the world’s richest. The top 10 richest men have seen their wealth double in the past two years. Simultaneously, low-income and informal-sector workers have lost the most. According to the World Bank, more than 100 million people globally have fallen into extreme poverty — living on less than US$1.90 per day — as a result of the pandemic.
Although this lopsided income growth is rooted in market distortions, labour market trends and the shift toward capital accumulation, any efforts to address it must begin by restoring progressive taxation.
According to the Organisation for Economic Co-operation and Development, “tax policy has a particularly important role in addressing inequality and boosting economic growth” — important not only in smoothing out income distributions, but also in funding investments in social safety net programs and sectors key to productivity growth, such as education.
But in the past four decades, global tax rates have only been declining.
All this is conventional wisdom among economists, and yet the global glitterati’s attention has focused on other matters when it comes to what is ailing the global economy and democracy — especially corruption.
Just to take one example, at the annual confab of the world’s rich and famous at the World Economic Forum in Davos — admittedly a skewed, but not unrepresentative sample of the global elite and their passions and outrages du jour — there have been panels and discussions on corruption as a global threat in 2015, 2016, 2017, 2019 and 2020, with titles like “Ending the Corruption Crisis” and “Corruption and Democracy”.
In contrast, the one rare exception when taxation was raised directly was in 2019, when, in an exchange with former Yahoo! CFO Ken Goldman, economist Rutger Bregman criticised the lack of discussion of the topic — though even in this case, the subject raised was tax evasion, not tax rates.
“Almost no one raises the real issue of tax avoidance, right?” Bregman said. “It feels like I’m at a firefighters conference and no one’s allowed to speak about water.”
Three years and a global pandemic later, the brightest minds at this year’s Davos chose to highlight vague commitments to stakeholder capitalism, instead of discussing the proven way to decrease soaring inequality: taxation.
Difficult Policies
US President Joe Biden’s much-anticipated Summit for Democracy in December provided an almost-too-perfect example of this corruption distraction.
The event was originally intended to broadcast an honest evaluation of the state of democracy globally, including within the United States. But the main policy initiatives the White House unveiled at the two-day virtual summit focused on the convenient.
Three of these big reveals related to anti-corruption: a new State Department office to co-ordinate global anti-corruption efforts; a new State Department and Justice Department programme to advise and aid partner countries in bringing corrupt officials to justice; and a new project to invest in technological solutions for anti-corruption work.
These ventures got top billing in the media release, appearing above six other announcements of initiatives for topics as varied as gender-based online harassment to supporting democratic transitions.
Instead of the anticipated reflection on the United States’ own structural and social democratic fault lines — which many had hoped would set an example that other democrats worldwide would follow — the Biden administration delivered three more tools to attack corruption.
The problem of democratic decline isn’t just or even primarily related to corruption, just as corruption is not the primary challenge to economic growth or equality.
Unless the economically and politically powerful are willing to confront endemic, structural problems like systemic racism, distortions in political representation and insufficient tax regimes, railing against corruption in international forums, including by making promises to prosecute the individually corrupt, will only be a palliative — though it sure will make political and business leaders feel good.
Ultimately, we cannot address the world’s most persistent ills and injustices without confronting deeper structural dysfunctions, vested interests and economic distortions.
Difficult times require politically difficult policies. The current infrastructure of international forums — whether the G-7, the G-20, the International Monetary Fund and the World Bank—has proven that, at least for now, it is not up to the task.
Nor, it seems, was Biden’s Democracy Summit. What comes next? – World Politics Review
The full article is available at https://www.worldpoliticsreview.com/articles/30290/ending-corrupt-politics-won-t-solve-all-global-ills
