24 Dec Corruption: Counterintuitive Conclusions
We never get away from blaming corruption for everything that is wrong in South Asia. Corruption is our biggest problem, it is repeated, and until we can deal with it we will be unable to develop.
No one is a fan of corruption but where is the evidence for such a strong assertion? In two posts (here and here), we have argued for a nuanced perspective. In this post, we put forward some counterintuitive conclusions.
The trigger for the post is the recent high profile incidents of political and financial corruption in the United States. In the state of Illinois, where the previous governor is already in prison, the incumbent is charged with trying to auction off political office in what is being termed as a standard practice – ‘pay for play’. And the financial corruption on Wall Street to the tune of $50 billion is said to have broken all records.
The fact of the matter is that none of this is new to the US which has gone through the periods of the ‘Robber Barons’, the Mafia, and all sorts of political corruption to still emerge as the most developed country in the world. And the same can be said of Italy, Japan, South Korea and Taiwan.
What this tells us is that corruption, bad as it is, cannot stop development. China and India are no less corrupt than Pakistan but China’s economic development has been spectacular. And despite all its corruption and inefficiency, the growth of the software industry in India has been unstoppable.
A number of conclusions can be drawn from this evidence. First, corruption exists in Pakistan despite it being the home of Islam with perhaps the highest number of mosques per square kilometer of inhabited land; in China despite the abolition of religion and the imposition of socialism; and in the US despite the existence of extensive oversight and the rule of law. This more or less confirms that it is not possible to root out all corruption from society.
Second, when the engine of development gets going, it is not brought to a halt by corruption as evidenced by the case of industry in China and software in India. Rather, as development takes off and the size of the economic pie grows, the growth itself invites greater corruption. This explains the paradox of the scale of corruption in a country like the US where the size of the economy can both give rise to and absorb incidents of corruption of the order of $50 billion.
The lesson to take away from this is that instead of obsessing about rooting out all corruption (which would seem an impossibility given the evidence above), one should focus on unleashing the forces of development and on figuring out what it takes to do that.
When one looks at the issue from this perspective one can see that the difference among China, India and Pakistan is not in the level of corruption. It is in the quality of leadership and of human capital and the stability of the social order. One can measure the quality of leadership by the sum of the qualifications of the key decision makers; the degree of stability by the orderliness of transfers of leadership; and the depth of human capital by the extent of illiteracy on the one hand and the number of institutions of higher education that are globally recognized on the other.
These are objective indicators and they tell most of the story about the variation in development in these three countries. Pakistani leadership does not have the competence to unleash the forces of development – it matters little whether it is corrupt or not. Pakistani society is not stable enough to sustain development – it matters little how much potential it has. Pakistani professionals do not have the depth in quality or numbers to manage development – it matters little whether they are honest or not.
Our obsession with corruption stems from its pervasiveness in our daily lives. This is the one major difference between countries like Pakistan and the US. In the latter, citizens do not have to pay bribes for minor services to which they have rights and entitlements like getting a driving license or a passport. This irritation, justified as it is, clouds our judgment – low-level corruption has little impact on the engine of development; it is simply a transfer of income from one pocket to another.
If we wish to unleash the engine of development we have to demand competence in our leadership, learn to recognize competence in our applicants for office, seek out competence in our managers, promote competence in our employees, and nurture competence in our students.
There will always be corruption in society but rapid development in our quality of life would make it more bearable.