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Thursday, December 6, 2007

The Unspoken Economy.

Corruption plays a larger part in the day to day life of the average person than any overreaching economic theory ever has. In supposedly "free" markets cozy price fixing, the use of economic clout and political dependence on private sources for campaign finance rig the game in favor of the hyper rich elite. Cronyism and bribery cooks the system of resource allocations in all known socialist nations.

The wonder is that no economist I've ever read factors in corruption as a major economic force in their systems analysis. Corruption trumps credit, ownership of property, and banking in most societies, and is a constant threat to those who have more open societies. India could almost double their rate of growth if corruption could be held in check, according to their own research. China could cut their output of pollutants by half if the district cadres were not taking bribes from industrialists to ignore existing environmental laws. Nigeria gets billions of dollars in oil royalties, but their citizens see none of it. Venezuela, after bringing the oil wealth to the poorest classes, has seen fit to close critical news outlets and turn the oil wealth into a tool of crony socialism.

Peruvian Hernando DeSoto is the most visible economist advocating quick legal titling of real property to the poor squatters who occupy the land. Desoto is right in as far as the squatters' ownership would take them out of the bribery cycle that requires kickbacks to local cops, but overestimates the capital that would be unlocked in the form of collateralizable equity. Land reform often means dispersion of property to the well connected. After Somosa fled the country the Sandinistas, with jungle mud still on their boots started dividing the Nicaraguan plantations among their leadership. Such blatant corruption, coupled with tens of millions of dollars of CIA money given to the opposition, cost them the election, and set back the cause of social equity in Nicaragua for thirty years.

Corruption poisons democracy. We have a large number of could be voters who point to the role of big money and lobbyists in government. Libertarianism is worshiped by these folk. Agencies are manned at the top by political hacks, and money is siphoned off to friends of the elected politicians. Corruption is a bigger threat to America than Islamic Nukes, bird flu and "Fox News" combined. Corruption is a soul killing cancer of the body politic. Corruption grabs the innocent and honest and turns them into hacks and toadies.

Gordon Gecco has never been proven more wrong than by a stroll down K street in Washington DC.

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