ECONOMIC CORRUPTION

“Truth is the cry of all but the game of a few.”  George Berkeley

“Human kind cannot bear very much reality.”  T. S. Eliot

“There was a time when thrift was a virtue….But in America, circa 2005, thrift came to be regarded no longer as a virtue, but as a mental disorder.” Bill Bonner and occupy-wall-street-political-cartoon-obama-stick-it-to-the-manAddison Wiggin, Empire of Debt, 243

“Economic differences are largely the result of people’s capacities and motivations.  This is evident in open societies, and also where societies are not open, nor yet completely closed or caste-bound.  A disproportionate number of the poor lack the capabilities and inclination for economic achievement, and often for cultural achievement as well.  Weak members of a society need to be helped.  But large-scale penalization of productive groups for the benefit of the materially and culturally less productive, and for the benefit of those who administer wealth transfers, impairs the prospects of a society.  This outcome is especially likely when the less productive receive support without stigma and, indeed, as of right; and even more so when those who are more productive are made to feel guilty on that account.  These are precisely the stances and attitudes prominent in the advocacy and practice of redistribution.”  P.T. Bauer, Equality, the Third World, and Economic Delusion, 19, 20

“The plight of the world’s poor can be summed up in three truly ugly C-words:  corruption, collusion and cronyism.  All three may be kissing cousins but each in any language makes a mockery of both capitalism and justice.

“Some 20 years ago economists began asking why so many countries, especially in Africa, never get better, even amid periods of global growth.  An enormous body of economic literature now exists confirming that corruption keeps the poor down.  A survey of this work for the International Monetary Fund concluded that countries get stuck in a ‘vicious circle of widespread corruption and low economic growth.’

“Corruption suppresses growth because citizens in time recognize that honest work produces a lower return than spending one’s energies gaming the system.  And, they’ve also found, the vicious circle worsens when real productivity falls alongside an inexorably expanding public [governmental] sector.

“Global poverty persists because corruption kills capitalism.  History’s most recent exhibit is the Arab Spring, a product of economic exasperation, especially in Egypt.  In time, corruption accelerates political instability, erodes democratic order if it exists, and someone from the outside has to clean up the mess.  Think Syria or Mali.

“If a pope, or even an American president, were to visit a country and talk bluntly about ruinous effects of bribery, collusion and cronyism, he would be talking about real people.  The corrupt know who they are, and their impoverished victims know who they are.

“Yes, we know it’s hard.  Recall the famous case of Paul Wolfowitz, who on becoming World Bank president in 2005 made withholding loans to corrupt government an explicit goal of the bank.  Like a swamp’s toxic gases, the banks’ bureaucracy, abetted by amoral Western governments wanting access to corrupt, but lucrative foreign markets, joined to expel Mr. Wolfowitz.”  Daniel Henninger, “Capitalism’s Corruptions,” The Wall Street Journal, April 4, 2013, p. A13

Editor’s Note:  P. T. Bauer’s work Equality, the Third World, and Economic Delusion (published by Harvard University Press) is a classic on why the third world’s poor are poor. Must reading for all interested in a profound defense of capitalism (private ownership of property, rule of law regarding contracts, profit motive, thrift, charity, etc.), and what economic system has lifted millions out of poverty.

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