Corruption, Killer of Economies

We no longer expect honesty from our politicians.

On a per-capita basis, Singapore is one of the wealthiest nations of the earth excluding those that merely pump oil out of the ground.  This is particularly remarkable given that Singapore is a small city with essentially no natural resources; they don't even get enough water to drink and have to buy it from neighboring Malaysia.  Its people live by adding value to goods that flow through their country and by providing services.

Many explanations such as hard work, lack of racial diversity, and a good education system have been advanced for their success.  We at Scragged agree that these play a part, but having observed the decline in America's economic fortunes which has accompanied our government's toleration of crooked behavior, we've come to believe that the lack of corruption is a major reason for Singapore's success.

The American dream used to be based on the assumption of fair treatment.  The idea was that anyone could be born poor and, through a combination of luck and pluck, rise to greatness.

That's possible, of course, only when the system gives equal opportunity.  America used to offer that.  Over the last half-century, alas, in an effort to right past wrongs, we've had government tilting the scales backwards in favor of various groups.

This emphasis on who you are rather than what you're doing has hurt the economy by destroying any semblance of equality of opportunity, but what's really economically painful is the sort of old-fashioned corruption we're seeing more and more often in Washington.

The Singapore Solution

A Singapore native explained why corruption is relatively rare in Singapore.  It's interesting to contrast his accounts of Singapore governance with what happens in Washington, DC.

He starts out by telling why he wrote the article:

We should strive to improve our wealth by legitimate means and in an honest way. I have been to places where corruption is out of control and see how the nation suffers as a whole.  The living standard is hardly progressing at all, more poor people are on the street and social injustice is rampant.  This deplorable stage has driven the good people to leave the country in search of a better life somewhere.  Corruption is a major threat to a country stability and well being of its people.  [emphasis added]

He observes that corrupt governments impoverish their people.  He then points out that the attitude towards corruption is set at the very top of the government hierarchy:

I have great respect for our first prime minister, Mr. Lee Kuan Yew who is instrumental to change the corrupt infested colony when he took office in 1959 to a well respected country today.  He set good example to lead and could not tolerate any of his party members and government officials to corrupt.

A leader must not only state that corruption is unacceptable and set an example of incorruptible behavior, he must take action to find corruption and root it out:

In the early years of Singapore self-rule, the CPIB [which reported directly to the prime minister] sent out undercover to deliberately commit traffic offense and offered bribe to the policeman.  Once the policeman took the bribe, he would be handcuffed and sent to CPIB office.  This had reduced the number of corrupt practices of the traffic policemen.

There was a time when Americans expected their leaders to follow the law.  On Oct. 10, 2009, the New York Times noted in "On This Day:"

On Oct. 10, 1973, Vice President Spiro T. Agnew pleaded no contest to one count of federal income tax evasion and resigned his office.

The Vice-President of the United States resigned his office when it became known that he'd committed one count of tax evasion.  In recent days, the Times pointed out that Rep. Charlie Rangel, who heads the committee that writes tax laws, remains in office despite numerous violations of our tax laws, disclosure rules, and New York City rent control regulations.

Some conservatives have argued that this shows the operation of a double standard - Mr. Agnew was a Republican and Mr. Rangel is a Democrat.  That's possible, but it seems more likely that we're seeing an overall decline in governmental honesty - after all, the original "Bridge to Nowhere" was Republican corruption in its purest form.

Mr. Obama Understands, but...

President Obama recognized the importance of government keeping the trust of its citizens when he said:

I've got to own up to my mistake, which is that ultimately it's important for this administration to send a message that there aren't two sets of rules.  You know, one for prominent people and one for ordinary folks who have to pay their taxes. [emphasis added]

- President Barack Hussein Obama

Despite knowing that it's important for citizens to be able to trust their government starting at the very top, Mr. Obama hasn't seen fit to do anything about the corruption swirling around his associatesMr. Geithner, a Wal Street tax cheat, remains our Treasury secretary.  When his ACORN friends were found advising would-be brothel owners how to get federal funding to buy a building to be used as a whorehouse and how to claim their stable of child prostitutes as dependents, Mr. Obama was "too busy" to discuss the matter.

Although the House and Senate voted to stop spending taxpayer money on ACORN, a number of legislators voted against cutting them off.  The Justice Department hasn't seen fit to investigate their aiding and abetting violations of federal tax law.

Rather than dragging the miscreants off in handcuffs as in Singapore, our leaders are hoping the storm will blow over so that ACORN can get back to its usual business of registering fraudulent Democrat voters.

Even China, where corruption appears to have originated some 5,000 years ago, has leaders who recognize the importance of honest governance:

There is this anecdote about Mr. Zhu Rongji, ex-premier of China, visiting a customs department in a city.  The first thing he did was to get all the officers to place their watches and cigarette lighters on the table.  Those who had expensive items were taken away for questioning.

Our government, in contrast, doesn't even say "Boo!" to those who aid and abet breaking our laws, and Mr. Obama's Justice Department undid the conviction of some Black Panthers who'd been videotaped intimidating voters.

Corruption has huge economic costs.  The African continent has vast mineral resources and much fertile land, but nobody would speak of the "African Dream."  Despite all their resources and in spite of all the billions of dollars in aid and other investment that African countries have received over the years, they can't seem to overcome their longstanding culture of corruption which holds their economies back.

The Liberal Myth

Liberals who want to raise taxes and provide government benefits to "share the wealth" forget that wealth must be produced before it can be shared.  No matter who pays, there's no way for anybody to have cars, or clothes, or anything else unless someone is willing to work to produce the goods.

The Weekly Standard points out that Mr. Obama doesn't understand the American Dream:

Obama knows people who make laws, and people who teach law, and people who depend upon help from the government, but few people who make things, or run things, or work in the market economy; in other words, he doesn't know his own country, and has no sense where its center of gravity lies.  [emphasis added]

Mr. Obama has never participated in the productive part of our economy.  He doesn't understand how our economy works; he has no clue how badly his policies will damage the sources of economic success on which his dreams of helping the poor depend.  How can he provide health care, for example, unless health care workers make enough money after taxes to make curing people worth their while?

The American system for producing goods was to set up rules whereby anyone who worked hard and provided something people wanted could become extremely rich.  Did government planners decree that we needed PCs?  Or iPods?

Or did greedy businessmen who wanted to make a buck work hard to put them on the market?

Our system of letting people become as rich as they like so long as they add value to society worked so well that it became known as the "American Dream."  The liberal myth is that we can make everybody prosperous by taxing the rich.

Liberals forget that when taxes went too high during the Depression, wealthy people stopped investing.  When capital went on strike, the economy stayed flat until WW II.

Unfortunately, as Confucius wrote long ago, government bureaucrats find it easiest to get the resources to support a life of ease by lobbying for more regulations which businesses must meet.  They more rules they can enforce, the bigger their budgets.

The more rules businesses have to meet, however, the higher their costs, the less efficient our economy becomes, and the fewer goods are available for consumption.  When government costs more than society can afford, society falls.  We've described this as "sliding into the abyss of the Confucian cycle."

Any regulations which allow bureaucrats to determine what businesses can and cannot do provide opportunities for corruption, of course.  Our bureaucrats are no more and no less honest than Singapore's bureaucrats, the difference is that the Singapore leadership tends to lop heads when they find corruption whereas our leaders promote tax cheats to high office and ignore cheaters who attain high office before their crimes come out.

Most African countries have never had honest governments and we know what corruption costs African economies.  We once had a reasonably honest government, a vice president resigned over one charge of failing to pay his taxes, but we're becoming visibly more and more corrupt at the highest levels of government.  Must we go the way of Africa?

Will Offensicht is a staff writer for and an internationally published author by a different name.  Read other articles by Will Offensicht or other articles on Economics.
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