Wednesday, April 1, 2015
Corruption and reform in the US history
In the book edited by Edward L. Glaeser and Claudia Goldin “Corruption and Reform,” the authors and editors claim to analyze how the USA successfully defeated corruption during the Twentieth Century, as a lesson for developing and transition countries that are now struggling to defeat corruption. However, what more recent evidence (see the movie “Inside Job”) shows is that corruption in the US has mutated into new technologies and forms, but not disappeared. It is true that machine politics, bribing and local patronage are less blatant than one hundred years ago, but today instead we have revolving doors, massive lobbying and campaign finance (not only in the US) through which the minorities try to influence the choice of the majorities (that is, trying to buy policies). However, there is much to learn from the book, with good descriptions of machine politics and phenomena like the “Curley Effect.” Curley was the mayor of Boston from Irish origin that was immortalized in the cinema by Spencer Tracy, who preferred to impoverish the city to get rid of those sections of the electorate that would never vote for him. The book reminds us of Tammany Hall and similar machines devoted to providing private goods (mostly jobs) to mobilized political agents, and it tells us why it was forces like the Progressive Movement that pushed many times unsuccessfully for reform, which finally mostly came from the New Deal policies of Roosevelt. A very interesting topic in the book is why corruption is compatible with growth. Although without corruption there would probably be more growth, there is little doubt that for many decades massive local corruption was compatible with economic growth and development. Growth attracts agents looking for rents, and rents are more readily available at the peak of political structures. The corrupt rulers are interested in keeping the machine delivering growth, and then extracting a good fraction of it for their own benefit. When growth is unstoppable for exogenous reasons, for example due to a technological or demographic shock, corruption is not strong enough to derail it (this has interesting microeconomic analogies: FIFA with current globalized soccer?).