This usually fails for the reason you posted. I am not really sure how you are supposed to stop corruption once it gets rooted in your society. It is a vile and subversive menace that turns every one into a criminal, preying on their fellow man. A very unpleasant environment to live in.
The best article on corruption I have seen.(if you have time for an hour long power point presentation )
Well, guess what, the exact same thing happened in UK for PPE contracts:
"Within weeks of the company’s incorporation on 12 May 2020, PPE Medpro was awarded contracts worth £203m to supply millions of masks and gowns."
https://www.theguardian.com/politics/2022/jan/07/michelle-mo...
With the typical Western "overpay for a modern tank/gun/piece of equipment by a factor of 2" style you still get a modern tank/gun/piece of equipment in the end.
From what I heard, for example, in Russia you do that but then the quartermaster goes and sells half of your equipment off on the black market and the grunts sell off the other half and replace it with something much inferior.
The first kind of corruption is bad and should be rooted out, but the second type is much more destructive as can be seen in Ukraine right now. Secrecy at all levels and for minor details, as well as "encouragement" from the highest levels of politics for this kind of theft are core ingredients.
Many studies have been done and this isn't really a thing. The government isn't paying 2x (or 100-1000x as is often the rumor) for a given thing. What they're paying is the price of certification and guarantees. If the law requires that a procured item be guaranteed to NOT catch fire in an oxygen-rich environment (because it could be used in space) then the price of that product--no matter how seemingly mundane--is going to be more expensive than if you "just bought it from the store". Because someone had to setup a complicated bureaucracy and certification testing process to cover that product and actually carry out the testing.
There's also product availability guarantees that add to the price of government-procured things: A lot of stuff the government buys must continue to be manufactured for the effective life of the product in the government. This means that companies supplying stuff need to stock and maintain replacement parts for lifespans that would normally be vastly longer that a typical product cycle. They may even need to keep people trained at making and repairing these goods. That costs a lot of money!
If you're looking for corruption in Western governments it's in the form of paying political campaigns (or entire parties) to get specific laws passed or not passed. That's the big one that causes basically all the major problems in Western politics.
To a lesser extent there's also corruption involving decision-making bureaucrats getting hired by the industries they regulated after their time in office is over (this should be illegal) and politicians with insider information trading stocks. Taking direct bribes also does happen but it's rare because it's too easy to get caught and the consequences are high (high risk, low reward most of the time).
Here in the West, there is much less corruption to begin with, but the work gets done for the most part. Result: things work
For example: you don't want to register your neighbor's daughter for taxes just so that she can babysit your child once or twice. That is crazytalk. And yes, a lot of countries make sure that small payments don't require registration or taxes. This was just a quick example to make the point, sometimes the general law is just not applicable to a local event and it is better that everyone ignores it.
But this is like cholesterol. The right amount in your body makes everything better. Too much and you are in deep trouble.
In the UK, it wasn't corruption. These people were paid money for products, they delivered those products, the price paid wasn't excessive.
The UK has an independent auditor that found no evidence of corruption, and that (where product was delivered incorrectly) it was due to problems with contract specs.
Afaik, there is only one case where a person was directly involved in politics and was related to a vendor, they went to great lengths to hide their connection to a vendor, repeatedly lied to civil servants who questioned them, and is now being charged criminally (for some reason, the person who made the original comment about the UK chose not to mention it, it was PPE Medpro).
The issue was that at the start of Covid, the govt called up all their suppliers asked for PPE, and they said they didn't have any. So the govt started using suppliers who often had other businesses that imported product from China (and had to set up new companies). The level of profit on the contract was normal, the price was higher but that was related to the pandemic (how quickly forgotten, in the UK there was literally no PPE for most of 2020, you couldn't buy masks at any price).
So the flexibility already exists...the UK is not corrupt, things happen naturally. Corruption is only necessary where there are supply-side bottlenecks due to politics (i.e. Qatar, Russia, India).
It smells very bad.
No, the priority list wasn't. To approve a vendor through the normal process would have taken years, the fast track process was created to get PPE quicker than normal. I believe all but one person was unrelated to the Tories, the only person who wasn't (as I have said) repeatedly lied about their connection to the vendor, and is now facing criminal charges.
And the 50% is profit. Obviously.
The reason they got special treatment was because of the speed. That was what the priority list was for - "establishes that presence on the high priority lane did not confer any advantage at the decision-making stage of the process", what you have linked me is exactly what I was just told you. The award wasn't unlawful, the govt did not report on the detail of the contracts within the time period required...that was unlawful, but a function of the process (again, the contracts were awarded outside the usual process so all the information wasn't gathered...the NAO conducted a full audit of the contracts, iirc, before the contract details were reported in the public database).
There are companies that made no upfront investment, ordering equipment from China without any understanding of what they are ordering, any relevant experience, and huge quantities fo PPE had to be destroyed because it was not fit for purpose and did not meet regulatory requirements. Most of the companies contracted had no experiece of dealing with medical equipment ever before. I personally know people who have experience in the industry and government passed them up for contracts in favour of the shitsters that were chosen.
And the fact that companies were treated the same when they were assessed doesn't alter the fact that being assessed sooner rather than later is a massive advantage.
Which I think is a fair point but does raise some questions about the competency of the civil servants and politicians we trust with a fairly large chunk of our income.
My point is that well run, non-corrupt, systems tend to have exemptions to make everything sane and reasonable. If these exemptions don't exist, you can believe that it is because the system is corrupt and not because they are trying to stop corruption.
A government-run system--presumably--would take care of withholding the correct amount of taxes and also making sure the business/person paying a salary never has to worry about running afoul of the law (having the IRS or equivalent) come after them.
Now, you could call the national money system to be a public service provided by the government (and indirectly by private businesses).
If you were to issue your own money what would it's liquidity premium be? It would be very low to be sure because barely anyone accepts it.
So, the holders of money effectively own a free subscription to this public service. If they lend out money, they will obviously charge a fee in proportion to the liquidity premium. This fee is included in the interest rate.
The borrower is now paying for the liquidity premium, the cost has been fully internalized and the problem is gone right?
The problem is that the liquidity premium that is part of the interest rate is erroneously calculated as the cost of capital. It is not, it is the cost of liquidity.
Now, things will get very strange. When the borrower spends his money, he will be obligated to pay the subscription fee, the cost of liquidity, even though he no longer has the money and he is no longer benefiting from the liquidity services. What this means is that the money system constantly screws over people who use money as a medium of exchange and rewards those who sabotage it. It will look as if those who "save" money will be rewarded for their frugality and "moral" behaviour and those who are in debt are being rightly punished for their unsustainable and and "sinful" behaviour.
Now imagine if private households all follow this strategy of selling more than they buy and saving and lending the rest. There must be another sector that earns less than they spend and accumulates debt though borrowing. The government is forced to avoid austerity at all costs. It must become the "immoral sinner" that spends in excess to shield the private sector.
If you want to solve the problem you would have to make buying and lending symmetric. Lending passes the cost of liquidity onto someone else which is in theory ok but only if buying also passes the cost of liquidity onto the seller so that no liquidity premium accrues to the lender. He will pay a liquidity premium and earn liquidity premium which then zeroes. The only one who then collects the liquidity premium is the central bank that issues the money.
The problem with this is that the interest rate on cash would be negative and paper technology isn't advanced enough to calculate and display a dynamically changing face value. It isn't some conspiracy by a cabal, it is actually an engineering problem that originates from our historical and cultural attachment to cash. Humans aren't evil bribe collecting monsters, they are just in a rationality trap that is difficult to escape.
More disturbing (to me) is how easy it is to eliminate corruption in any given area - without any brutality or anything else extraordinary. Just setup the process correctly, incentivize workforce - and the same people who were building roadblocks to milk money will switch to earning money by helping you get your task done.
There was a “widely known in narrow circles” libertarian setup in Troitsk, Russia - of all places. The setup was related to the topic of the original post - registration of businesses. The post-Soviet business registration law was rather liberal. The amount of documents needed was not zero, but doable. But there was a catch - businesses should have been registered locally, and each locality was allowed to add their own requirements on top of federal ones.
You can imagine what followed. Our own city, the I was a counsel member was: just prove to us (“us” in reality means -a clerk) that your business will be useful to the city - and we will register you. But there was a small city named Troitsk, home to some physics scientific institutions, which elected a libertarian mayor, Gennady Lebedev. The city council decided not to ask for any additional documents and just register any business that complied with federal guidelines.
But - any clerk has any good intention in his own hands, right? Mayor said: register everyone? but I am too busy, come tomorrow, and by the way go to… uhm police station, do a background check on yourself for me, I feel a sudden need to be extra cautious in your case. Why not? Seen it everywhere, like you’ve said.
Here comes handy a proper construction of checks and balances:
1. Salary for registration office clerks was paid from a percentage of the (federally fixed) registration fee, nothing else, no safety cushion. If you delay an application- your salary will be delayed too. In the starving Russia that percentage created a - potentially - extremely well paying job.
2. The clerk will be fired if he asked - not just for any unnecessary documents, but just for asking any legally unnecessary question.
3. The clerk will be also fired if he accepts a registration that does not confirm to federal guidelines.
So clerks have the incentive to work fast, help people correct their documents to comply with the federal law and the opportunity for any additional “milking” was too risky and simply not worth it. In short time - small Troitsk had more businesses registered than any other small city in Russia, and comparable to Moscow. Imagine a tax base they’ve got?
First-hand account by Gennadi himself here (in Russian): http://www.sapov.ru/g_v_lebedev/texts/gvl1992_12_troitsk01.h...
>3. The clerk will be also fired if he accepts a registration that does not confirm to federal guidelines.
Fired by whom? Who is in charge of checking this? How do you ensure that the clerk isn't just accepting false businesses and giving a percentage to whoever's above? On its face this system doesn't seem to cure a culture of corruption to me
What do you mean by a “false business”? Here in the US the state of Nevada have not asked me anything except Articles of Incorporation (the state of California later found my file and… also has not asked me anything except $800 a year - which exactly what I was hoping to avoid by filing in Nevada, lol). Number of federally required papers was 0 (zero).
Federal regulations in Russia required much more paperwork. But the libertarian city council in Troitsk just deliberately didn’t care to add anything to the pile. Bad documents - it was actually a problem for the business being registered. If federal regulators caught a discrepancy- the business will be in a huge trouble. So checking the documents- it was nothing more than a service provided by a city council to the company being registered. If the documents were inconsistent - the business will complain.
This setup really worked, as I said in the original post. It’s not a theoretical suggestion.
In Norway this road fund fee is collected automatically by the insurance company. This is obviously easier for the user (zero paperwork), less work for the state, and prevents scam artists from duping people.
And back on the subject of registering a company: in Norway this is done online and takes minutes.
Well, assuming that all people are roughly the same as each other, the answer would be to adopt traditions and systems from countries that aren't corrupt. Attempt the sisyphean task of convincing people that giving power to the middle class is going to lead to a better future.
As your comment reveals, the instinct when confronted with corruption is ... centralise power and try to force it to be used for good. That doesn't work, so try to convince people to decentralise power. Political and bureaucratic elites are regularly revealed to be corrupt, so stop making them the bottleneck for handing out the "allowed to run a business!" stamp. Centralising power just gives corrupt people a target to aim for and increases the blast radius when they worm their way in to a position.
How you convince people to do the sensible thing and decentralise power is beyond me though. The instinct to push power to a single leader is remarkably strong in humans.
There's not much to stop a crook being both officially well paid and totally corrupt.
A fish rots from the head down.
and
Power corrupts and absolute power corrupts absolutely.
and
Nothing disinfects better than sun light.
IMHO they all apply when dealing with public servants in unchecked positions of power.
Is it true? Well, maybe. From Van Rijckeghem and Weder (2001):
> ... we find evidence of a statistically and economically significant relationship between relative wages and corruption.... While economically significant, the relationship, nevertheless, implies that a large increase in wages is required to eradicate corruption solely by raising wages... The relationship between wages and corruption is not found in regressions with country-fixed effects which points to ineffectual wage policy in the short run...
I haven't found much better evidence than that, though there is Di Tella & Schargrodsky (2004) with a detailed study on a hospital.
The knee jerk reaction against corruption is to centralize power: "X institutions are corrupt, we will give more power to this candidate who demonstrated to be a good person, so he will vanish those institutions and saves us fron corruption".
That's what Bolsonaro did in Brazil. In his campaign, he demonstrated to be a good christian and a person of faith. In Brazil, people strongly associate that with being a good person.
Guess what happened after.
Wasn't Bolsonaro elected because the previous president and his main opponent (Lula?) was so corrupt that he even landed in jail, which is a rare event for a prominent politician?
> Guess what happened after.
Care to explain to non Brazilians?
Al the cases were dismissed because a new law was passed that created a new court and said every case like Lula's should be judged only on that new court.
I couldn't understand why our news in Germany was pretending that a guy convinced of corruption would be a saviour of Brazil against the evil Bolsonaro.
That highlights one of the main problems in our societies. We just accept information served to us by our governments without much checking. Either because we don't care about every topic, or because we don't have a means to actually check.
Simplifying, it's like this: If the road to presidency is corrupt, you either become also corrupt (on a varying degree) or stay as one of those parties with no more than 1% of the votes. But then, there's a pact of silence between cronies. And those who are accused of corruption are the ones that either went too far or went against powerful people in the government.
I take all those trials with a grain of salt.
[1] https://www.axios.com/2022/09/13/us-treasury-department-torn...
Deregulation is the best cure for corruption, because it makes the gatekeepers obsolete. There would be no reason to bribe them because you don't need their approval in the first place.
For example, during British Raj almost any British who could, got a job to move these papers in India. India inherited that machinery and hasn't moved to economical right yet. The current government is trying but you can read how it is a bad government in western media since it came to power. The corruption in government allows foreign interference so of course.
- unhappy Indian
<blockquote>But the government is as complete a bureaucracy as that of Russia.</blockquote>
The British Raj kept creating more and more bureaucracy paid for taxes exacted by causing famines, increasing in frequency and intensity. This system was inherited by Nehru and Congress. They were socialists so they increased bureaucracy but they didn't increase corruption - independent India has not seen a famine caused by taxes even in the direst of times.
Paperwork really isn't to blame here because even if everything was digital, the people behind the operation and the policies that govern their behavior is still the same. The problem isn't the interface between citizens and the government, it is the backend source code of the government.
You are all barking at the wrong tree.
Automated systems can be quite awful (original research: Spain) but neither paper or digital systems would officially state the human factors involved in turning them over. There's simply less opportunity for these human factors in more automated digital systems.
I've had employees (in Brazil) who don't ever claim reimbursement on personal expenses because if their paycheck varies too much their bank freezes their funds (in the name of preventing money laundering) and then the employee has to go to the bank and bribe someone to get the funds unfrozen. Just showing the cause for the variation in payroll doesn't cut it. As the employee puts it, every requirement to show up in front of an official for anything requires a bribe.
Corruption is everywhere, it's just on different levels. Usually in more "developed" (I don't like that word) countries you see corruption on the highest levels, and people actually get away with it.
This isn’t about a particular political party.
Even the much hated fauci was a career bureaucrat under numerous administrations, of both parties.
It hardly supports the thesis above. Germany is not rotten to the core by corruption. It's not a constant hindrance to someone trying to get things done.
Yeah, and long after that they decided to build a second pipeline (Nord Stream 2).
And before that, they've been received the same gas from the same foreign company over the ex-SU Ukrainian pipelines.
And five years later we will likely see Turkish pipelines (still bearing Russian gas) prolonged to Hungary, from where it will reach Germany once again.
And that foreign company isn't even running those Nord Stream pipelines - they were largely German, due to legislations requiring separation of the pipeline operator and the supplier.
Don't underestimate how much Germany had profited from all the cheap gas and infrastructure investments from the said foreign country, up until they managed to loose it all just for the sake of political appearance and no real substantial win.
I wonder if we would some day see Scholz in some American LNG company for which the nation now has to pay order of magnitude more, than it ever paid to Russia.
But at the large scale, we are absolutely a corrupt nation: our former Chancellor Schröder sold us out to Russia, there have been dozens of millions euros worth of (shockingly ruled legal) corruption during the pandemic, the large companies ("Deutschland AG") have an extremely cozy relationship with almost all parties in Germany, not to mention corporate donations and sponsorship of party gatherings (except far-right AfD whom no one serious wants to donate money to and far-left Linke who refuse to take corporate donations out of principle).
EDIT: Nobody wants to donate overtly to the AfD, that's why they had already multiple investigations into their finances and donations. A large part of which came from Switzerland. They do have those donation scandals in common with the CDU and CSU, those received anonymous donations in cash in briefcases. And Schäuble, who ended up as Finance Minister in the federal government later, got away with, I kid you not, "I do not remember that briefcase containing 100,000 bucks" (emphasize from me). So, it seems all parties in Germany are corrupt, some more than others, with the exact degree of corruption directly proportional to the time in actual power.
Oh that new building code or electrical code just so happens to only be fulfilled by using the latest (patented) product by company X?
Well it's the state of the art, we can't build below that standard anymore.
This is true in most highly industrialised countries. Can you name any where this is not true? I don't know any.
Another way to think about it: What is the polar opposite? "the large companies ... extremely unhealthy / combative relationship with almost all [political] parties". That sounds like the bad old days in 1980s India. Most economies would be a wreck if that were true.
If you follow the law to the letter, and you don't get what you want, the mere threat of hiring a lawyer will get it sorted.
The only issue is the speed. I see people lose their job offer before they even start, because the immigration office is too slow.
For Switzerland, well, a quick search for money laundering gives you all the information you need.
EDIT: Both the FIFA and the IOCI, probably the most corrupt organizations on earth, are having their seats in Switzerland.
I cannot find the word "corruption" anywhere. What am I missing?
Edit: Both, the Spiegel affaire and the Lockheed bribery scandal are mentioned.
Congratulations you aren't one of them.
Interpersonal networks and middlemen routers evolve over time into parallel tracks of shared understanding about how to achieve mundane process flows and solve problems when the official channels are broken.
Corruption is a weird thing. Why do some countries have more of it than others -- holding GDP per capita constant? I cannot explain it. Look at the United States -- "googols" of money spent to influence lawmakers. It cannot be healthy and looks like legalised bribery in comparison to other highly developed democracies.
In the article, the author needs to chase dozens of different bits of paperwork. Quite a few there were no problem. But quite a few incompetent, corrupt, or both. Now, how about a system where you submit one application in one place, and if other departments need to know or collect fees or approve it is the responsibility of the submission point to pay or collect approvals? One desk is held responsible.
the business model of corruption is : 1- slow the process as much as you can 2- some people will have deadlines and will be willing to pay to meet them 3- profit
the slowness is there on purpose, to be able to provide quick process as a paid service
The difference, and it's a major one, is that paperwork does not slow the pace of work in Japan. Once papers are there, progress is usually instantaneous.