Deirdre McCloskey On Corruption

Deirdre McCloskey is an economist who is one of the best writers about economics. You should get in the habit of looking over just about everything you come across that she wrote.

This is actually a book review. But it’s an extended and informed one about corruption, and whether it’s a significant problem or not.

I’m not a native, but in living in Utah for two stints covering a bare majority of my adult life, we tend to focus way too much on the corruption of outsiders and way too little on the fairly ample corruption here.*

McCloskey offers some perspective on that; maybe a corrupt system is better than a busybody:

As Will Rogers used to put it, “Be thankful we’re not getting all the government we pay for.”

In macroeconomics, there’s a small-ish line of research looking at government as a stationary bandit:

Both these books are page-turners, if you can handle some 540 pages registering the crimes, follies and misfortunes of humankind. Anyone interested in good government (and bad) would do well to read both. Yet an economist might be inclined to draw a different conclusion from their reporting (and Murray Rothbard and Robert Higgs did so for decades): “Government is a band of robbers into whose clutches we have fallen”—not “thieves of state,” in Ms. Chayes’s way of putting it, but a state of thieves.

But even that is something we need to have perspective about:

Ms. Chayes and Mr. Cost want us to know that corruption matters, that the hour is late and we must do something. But is corruption so important in the grand scheme of things? Mr. Cost, for instance, reckons that his much-reviled pork-barrel projects, Medicare expenses and corporate welfare payout total up to “some extremely large figures, approaching $100 billion per year.” Wait a minute. That’s only half of 1 percent of national income. Americans spend about that much each year on recreational boating.

It’s all about growth, and for the better of us all, corruption isn’t much of a growth industry:

Beyond injustice and inefficiency, is corruption bad for growth? Growth, after all, not equality of distribution or exact efficiency in allocation, is what we seek if we really want to help the poor, rather than simply feeling good as we drink our second cappuccino while perusing the New Yorker. The astounding enrichment out of trade-tested betterment since 1800 has raised the absolute standard of living of ordinary people not by the 5 percent or even, say, the 25 percent achievable one-time by eliminating inefficiency or inequity—as studies of trade unions and governmental transfers show—but by fully 3,000 percent. Until 1800, humans staggered along at $3 a day in present-day prices. Afghans to this day earn less. Yet by now a Japanese or American makes, earns and consumes anything from $90 to $130 a day.

* I’d like to think my perspective is better than most, having spent close to the other half of my adult life in two of the most corrupt states in the Union: Louisiana and New York.