Fixing Corruption

Rose-Ackerson, Susan. "The Political Economy of Corruption." Institute for International Economics.
<http://www.iie.com/publications/chapters_preview/12/2iie2334.pdf>.

Corruption is a serious problem throughout the world.  While the idea of totally eliminating corruption might seem ideal, if it causes a mechanical, indifferent, and stiff government, other solutions need to be implemented. The main strategy to fight corruption is to enhance the efficiency of the private sector of the country and also improve the effectiveness and fairness of the government.    The author, Susan Rose- Ackerman, believes that the size and incidence of corruption depends on four things; first, the overall level of public benefits available, the discretionary power of officials, the riskiness of corrupt deals, and the relative bargaining power of the briber and bribee.  She also believes that the most effective anticorruption laws and policies should be similarly categorized under those headings: those which lower the benefits under the control of the officials, those which reduce officials’ discretion, those that increase the costs of bribery, and those that limit the bargaining powers of the officials. 

Reducing the overall benefits of giving and receiving bribes should be the main background for legal reform.  According to Rose-Ackerman, government policies should increase the benefits of being honest, increase the probability of detection and punishment, and increase the penalties for those who are caught.  Governments also need to increase the pay of its officials.  It is assumed that only officials who are willing and looking to accept bribes work in public offices.  Those who are not willing work in the private sector and are paid much more.  By increasing pay, it is possible that officials will not want to accept bribes because they are not willing to jeopardize their high paying careers.  However, higher pay is not always an option because it does take money from other government programs and uses it for pay.  In addition, high pay may also just increase the amount of the bribe, to compensate for the added risk of loosing their high paying job.  So because of these factors, Rose-Ackerman believes civil service reform must include features that are tied to the marginal benefits of accepting payoffs.  Also, the penalties of corruption must be well-known throughout a society.  In addition to be well-known, they must be fairly severe.

A different strategy is to reduce corruption is to increase the economy’s competitiveness which will in turn lower incentives for corruption.  According to Ades and Di Tella, policies that lower controls on foreign trade, remove entry barriers for private industry, and privatize state firms in a way that assures competition will all contribute to the fight of corruption.  When a country deregulates and privatizes, it must make sure that the corruption does not increase else ware.  They also must make sure that the privatized industry stays uncorrupted, because sometimes the corruption may switch over from public to private. 
Another corruption breaking strategy is to make rules more transparent with publicly provided justification. (Rose-Ackerson)  Government might favor simple, nondiscretionary tax, spending, and regulatory laws as a way of limiting corrupt activities. (Rose Ackerson)  Sometimes corruption will need to be tolerated if the program is crucial to the government or the public.  Another strategy is to charge user fees for government services. Rose-Ackerson states that these have the additional advantage of removing corruption incentives by replacing bribes with legal payments. She also states that the sale of water and grazing rights, tradable pollution rights, and the sale of import and export licenses can improve the efficiency of the government while limiting corruption.

The final strategy for fighting corruption is by fighting it starting at the lowest level of officials and moving up to the higher levels of officials.  This is because corruption usually begins with the lower level officials and then spreads upward, eventually to the higher level officials.  However, sometimes the corruption starts with the higher level officials.  They are the ones that develop and organize the corruption system, and usually make the lower level officials do the “dirty work” of the corruption system, often leaving them vulnerable and under arrest.  If the lower level officials stop collecting bribes and aid in corruption, the higher level officials will have to make the choice of either doing everything themselves or not doing it at all.  Chances are they will make the later choice.