OK, this may not be the most important thing in the world, but I noticed it and can’t help pointing it out:
Here’s Moses Naim (who humbly describes himself as “an internationally renowned columnist and commentator”) writing in The Atlantic last May about what he sees as the big oversight in Thomas Piketty‘s surprise bestseller on economic inequality, Capital in the Twenty-First Century:
[T]he problem [of inequality] requires a more complete diagnosis [than Piketty provides]. It is not accurate to assert that in countries like Russia, Nigeria, Brazil, and China, the main driver of economic inequality is a rate of return on capital that is larger than the rate of economic growth. A more holistic explanation would need to include the massive fortunes regularly created by corruption and all kinds of illicit activities. In many countries, wealth grows more as a result of thievery and malfeasance than as a consequence of the returns on capital invested by elites….
Corruption-fueled inequality flourishes in societies where there are no incentives, rules, or institutions to hinder corruption. And having honest people in government is good, but not enough. The practices of pilfering public funds or selling government contracts to the highest bidder must be seen as risky, routinely detected, and systematically punished.
Most of the roughly 20 nations from which Piketty forms his analysis classify as high-income countries and rank among the least-corrupt in the world…. Unfortunately, most of humanity lives in countries where … dishonesty is the primary driver of inequality. This point has not attracted as much attention as Piketty’s thesis. But it should.
All well and good. But here are Naim’s thoughts on the global anticorruption movement (from Foreign Policy) in March 2005:
Corruption has too easily become the universal diagnosis for a nation’s ills. If we could only curtail the culture of graft and greed, we are told, many other intractable problems would easily be solved…. [But] putting an end to the bribes, kickbacks, and payoffs will not necessarily solve any of the deeper problems that afflict societies. In fact, this false belief can make it harder, if not impossible, to rally public support for other indispensable efforts. Necessary tax reforms, for example, become impossible to pass when the general assumption is that any new public revenues will inevitably evaporate in corrupt hands.
The corruption obsession also crowds out debate on other crucial problems. A country’s bankrupt educational system, malfunctioning hospitals, or stagnating economy cannot compete with headlines about the latest corruption scandal. These problems may be aggravated by corruption, but they are created by conditions that often have little to do with the behavior of dishonest government officials…. Inevitably, the public’s understanding of what it would take to tackle other national priorities becomes clouded by the corruption obsession….
There is no doubt that corruption is a scourge. But there is also no doubt that many countries crippled by corruption are not sinking…. China, India, and Thailand are not only not sinking, they are prospering despite widespread corruption.
… Simply telling these countries to shake off the shackles of corruption — as foreign investors, politicians, leaders of multilateral institutions, and well-known journalists so often do — is worse than no advice at all….
So, is corruption the elephant in the room that Piketty and others overlook? Or is corruption an “obsession” that has little to do with the fundamental causes of the economic and social problems afflicting many countries? (Oh, and doesn’t simply declaring, in a prominent magazine, that “dishonesty is the primary driver of inequality” and that corrupt practices “must be [made to] be seen as risking, routinely detected, and systematically punished” seem a whole lot like “[s]imply telling countries to shake off the shackles of corruption” — which might be “worse than no advice at all,” especially when the advice comes from a self-described “well-known journalist”?)
Three hypotheses to account for the apparent tension:
Hypothesis 1: Naim’s views changed between 2005 and 2014 due to his careful evaluation of the evidence.
Hypothesis 2: There is in fact no contradiction between his 2005 and 2014 positions, and my belief that there is derives from a misreading of the commentaries.
Hypothesis 3: The consistent principle that runs through both pieces is that whatever ideas are gaining a widespread following must be criticized as shallow, incomplete, and a distraction from the real issues. So: If everyone is talking about corruption, they should be talking about tax reform. And if everyone is talking about tax reform, they should be talking about corruption.
What do you think is the most plausible?