Sunday, January 15, 2006

Iraq and the Corruption Trap :: Arnold Kling

The World Bank's Philip Keefer says that young democracies are fragile because governments are weak. Weak governments, unable to sustain broad-based power, turn to corruption in order to retain narrow-based power. However, corruption discredits the government, making broad-based power even less available. This makes the government even more dependent on corruption for survival. I call this the Corruption Trap.

The corruption trap helps explain why bad government tends to stay bad. Russia and other former Soviet republics appear to be caught in the corruption trap. The corruption trap may explain the perennial disappointment in many African and Latin American countries. Conversely, economic growth in Asia may reflect an escape from the corruption trap.

On the other hand, good government tends to stay good -- not perfect, but good. Once the public comes to expect honesty, this expectation becomes self-reinforcing. Corrupt officials are exposed and denounced. Periodic reforms and house-cleanings address the worst offenses.
If young democracies are most at risk, how do some manage to be drawn into the virtuous equilibrium rather than being sucked into corruption trap? Kling suggests that in the case of the U.S. it was inheritance (rather than mere application) of British culture. I suggest, instead, that the U.S. we were quite fortunate to have a virtuous and widely-respected leader, George Washington, who garnered widespread electoral support and power. Of course, the hypotheses are not mutually exclusive, and together they are reinforcing of the result.

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