CORRUPTION is unquestionably one of the leading drivers of poverty in the developing world. However, contrary to popular belief, not only is the West more corrupt than the developing world but it is also a major source of corruption in poor nations.
While it may be true that you typically don’t have to bribe your postman to deliver your mail in Europe or America, in many key ways Western political and financial practices make it, in absolute terms, far more corrupt than the usual suspects in the developing world.
Transparency International’s Global Corruption Index portrays developing nations as hopelessly corrupt and Western nations as paragons of incorruptible virtue. Transparency International’s Index draws upon a narrow and selective definition of corruption, whereby common practices in the rich nations that could reasonably be labelled corrupt are excluded; common practices in the poor nations are emphasized.
A staggering one trillion dollars flows out of developing nations every year due to corruption. The World Bank estimates that bribery and theft by government officials constitutes only 3 percent of these illicit outflows of money. Despite the West providing $130 billion in foreign aid, Western countries’ multinational companies steal more than $900 billion from developing countries each year through tax evasion and other corrupt practices.
For every dollar of aid provided by rich countries to developing nations, approximately ten dollars flow back, under the table, towards rich nations and their offshore satellites. Not only is the West more corrupt than the developing world, but it is also clearly a major source of corruption in poor nations.
Among the sources used by Transparency International to compile its index are the World Bank and the World Economic Forum. Relying on the World Bank to accurately assess corruption is rather like asking Pol Pot to lead the United Nation’s Human Rights Council.
The World Bank’s Eurocentric conceptions of corruption are part of a long-standing tradition that depict corruption as an issue confined to developing nations, who are in desperate need of “reforms”. “Reforms” have always been imposed by colonial powers and, more recently, bodies such as the World Bank and the IMF; they consist of privatization, deregulation, and austerity.Advertisement
Since 1980, these neoliberal policies have cost developing nations $480 billion annually, and have caused per capita income growth rates to collapse by almost 50 percent; all the while transferring wealth from the poor and into the hands of Western oligarchs.
Paying for government services that should be universal is called “bribery” in the Third World. It is called “privatization” in the West, where it is widely practiced and applauded. Such practices are only bad in developing countries because it goes into the pockets of underpaid officials, rather than “transparent” corporations who pay shareholders dividends and large CEO salaries.
Poverty in the Global South is not as a result of petty bribes and corrupt government officials, but the corruption caused by the global financial system and the tax haven network, with the City of London at the very heart of it.
Corruption is as British as afternoon tea. Think of the list of recent corruption scandals in Britain – banks accused of rate-fixing; major defence contractors investigated over suspect arms deals. Members of Parliament cooking the books; police accused of being paid off by tabloids, pension mis-selling, endowment mortgage fraud, the payment protection insurance scam, one hundred billion pound Libor rigging, and insider trading, to name but a few. The global reach of this kind of corruption makes petty bribery and theft in the developing world seem insignificant by comparison.
London School of Economics lecturer Jason Hickel reminds us that corruption is woven into the fabric of British society. After all, in Britain, a feudalistic royal family owns 120,000 hectares of the nation’s land and sucks up around $65.7 million of public funds each year. Then, there’s Parliament, where the House of Lords is filled not by election, but by appointment, with 92 seats inherited by aristocratic families, 26 set aside for the leaders of the country’s largest religious sect, and dozens of others divvied up for sale to multi-millionaires.
The City of London is the global financial capital of the world and the home of the most inherent corruption. The City is not subject to parliamentary oversight or even several of Britain’s democratic laws. Mr. Hickel explains how, “the City of London has maintained a number of quaint plutocratic traditions. Take its electoral process, for instance: more than 70 percent of the votes cast during council elections are cast not by residents, but by corporations – mostly banks and financial firms. And the bigger the corporation, the more votes they get, with the largest firms getting 79 votes each.”
Only America trumps Britain when it comes to corruption. As the American political system already allows for private citizens to give money to someone running for public office, the U.S. political system is, by definition, corrupt. What others call “bribery,” America calls “campaign contributions” or “lobbying”. You can give it a different name, but the function is still the same.
In fact, over the last few years, the top thirty American companies spent more money on lobbying politicians than they paid in federal taxes, according to a report from the non-partisan reform group Public Citizen. According to Public Citizen, between 1998 and 2006, the majority of all members of Congress took lobbying jobs after leaving Congress, landing positions with an average annual salary of $2 million. Congress, is now a rich, predominantly white males’ club that consists of 245 millionaires.
If “lobbying” took place in any other sphere of life it would rightfully be called corruption and politicians would write laws against it. In fact, lobbying itself was treated as illegal for much of the nation’s history. In the 1874 case of Trist v. Child, for example, the Supreme Court reasoned, “if individuals were allowed to hire lobbyists, the next thing you’d know corporations would be doing so, a practice every right-minded man would instinctively denounce”.
Corruption is inevitable when a nation requires someone to raise one billion dollars to run for the American Presidency. During Presidential campaigns, rich donors act as gatekeepers, determining who runs for office in the first place, long before voters have their say at the polls. Corruption is designed so that the candidate who accepts the largest amount of campaign funds, routinely wins 80-90 percent of congressional races.
Can it be merely a coincidence that we have plenty of lawyers and business owners in Congress, but hardly any teachers or electricians? It helps to have rich friends and associates to get your campaign off the ground.
According to Gallup’s surveys, people in richer countries are more likely than are citizens of poorer countries to report that their own political parties and Western media are corrupt or very corrupt. In America, 76 percent of the public thinks American political parties are corrupt, a greater percentage than in Ghana, Pakistan, or the Democratic Republic of the Congo.
Income inequality is one of the most pungent signs of corruption in America. The U.S. is now the single most unequal nation in the developed world. Four hundred American billionaires are worth $2 trillion, which equals the net wealth of 150 million Americans. The world has never seen this kind of wealth inequality; it is worse than any period in ancient Rome or the age of the American robber barons in the nineteenth century. Extreme corruption defined these eras.
No senior figure has been held criminally liable or has even been disqualified for the practices that helped trigger the 2008 global financial crisis; and yet, nine hundred and seventy two people were arrested for speaking out about it. Partly because the laws that should have restrained bankers from corrupt practices were slashed by successive administrations. Corruption nowadays is perfectly legal. The simple fact that authorities chose not to prosecute the chief villains of the 2008 meltdown, is itself a form of corruption. Thus, political corruption enables financial corruption and in many cases legalizes it.
The Western financial elite has built its wealth and power on the systemic corruption of various eras from slavery, to colonialism, and to the modern age of U.S. imperialism; all of which exploit the people and resources of the Third World. It is little wonder that Western institutions invert the definition of corruption. The fact of the matter is that developing countries are not poor because they are corrupt; rather rich nations impoverish developing countries through centuries of Western elite corruption.
Garikai Chengu is a scholar at Harvard University. Contact him on email@example.com