A Closer Look at History: What Causes Corruption?

This color-coded map of corruption around the world made by Transparency International based on 2013 survey data. Licensed under Creative Commons International 4.0 Share and Share Alike by creator Ruben.2196. The closer to 100 a country’s score is, the closer it is to having zero resources lost to corruption.

With Greece remaining a major issue of our time – and a possible predictor of the behavior of governments around the globe – the question of what causes corruption has become very important.

We are accustomed of thinking of corruption as something that happens to third-world countries, not effecting us in a meaningful way. And yet, corruption in modern European countries appears to be a major cause of economic distress.

Corruption in Greece, both among tax-dodging citizens and pocketing-and-favor-giving government officials prevented the country’s economy from working even remotely the way it should have worked on paper; communism has in many cases become synonymous with corruption, with a long and virtually universal history of communist leaders using their power for their own personal gain despite voicing high-minded ideals.

Some say that corruption follows everywhere that socialism goes; that countries which give governments increasing power to serve the public will inevitably end up giving power to increasingly corrupt rulers – power corrupts, and all that jazz.

And yet, corruption in modern nations seems to have little to do with how capitalist or socialist a country is; most of the world’s 10 least-corrupt nations are first-world countries who provide as many or more social welfare services to their citizens as Greece did at its height.

So, does socializing healthcare and education corrupt? Apparently not. But it seems not to protect against corruption, either.

To help us understand what corruption – and lack thereof – look like, let’s examine Transparency International’s lists of 10 least- and most-corrupt countries:

Least corrupt nations on Earth:

  1. Denmark
  2. New Zealand
  3. Finland
  4. Sweden
  5. Norway
  6. Switzerland
  7. Singapore
  8. The Netherlands
  9. Luxemborg
  10. Canada

Most corrupt nations on Earth:

  1. Somalia
  2. North Korea
  3. Sudan
  4. Afghanistan
  5. South Sudan
  6. Iraq
  7. Turkmenistan
  8. Uzbekistan
  9. Eritrea
  10. Libya

How does your country stack up?

  • United States – in 17th-lowest corruption score. Tied with Ireland, Barbados, and Hong Kong.
  • United Kingdom – 14th-lowest corruption score.
  • Australia – 11th-lowest corruption score. Just missed being in the top 10!

So what can we say about what these least- and most-corrupt countries have in common?

Social welfare programs don’t cause corruption

It has been suggested many a time that welfare programs, high taxes, and the socialization of industries for the public good are causes of inevitable corruption.

Our list of top 10 least corrupt countries clearly illustrates that this is not true. Nine of the ten least corrupt countries have socialized healthcare; the tenth has free market healthcare, but requires individuals to put away a mandatory percentage of their income to pay for their own healthcare costs.

Nine of the ten least-corrupt countries also have higher tax rates than the U.S.; most of them offer free higher education to their students, the costs being paid for by taxpayers collectively.

This has not resulted in a corrupt dystopia – or, similarly, in out-of-control public debt – like we saw in Greece.

And lest we forget that socializing certain industries is not necessarily antithetical to overall market freedom, six of these top ten least-corrupt countries also appear on The Heritage Foundation’s list of the top 20 most free economies in the world. Four are in the top 10.

The bottom line seems to be that you can both provide a high degree of social services to your citizens and have an extremely free market for business, if corruption isn’t redirecting your resources.

Social division does cause corruption

Now, we’ve established what does not cause corruption, based on what the 10 least-corrupt countries in the world have in common. Those things include socialized healthcare, high taxes, free higher education, and free markets.

What do our 10 most-corrupt countries have in common?

For starters, most of them have people who don’t see themselves as one community. Sudan, South Sudan, Afghanistan, Iraq, and Eritrea all famously have semi-ongoing civil wars between communities within their borders.

This may turn out to be very important. The whole point of government, after all, is to be an agreement between the people of a country to abide by a certain set of rules, and contribute resources towards a set of common goals.

That’s what taxation is; individual contributions towards goals that no one individual could accomplish alone, such as roads, law enforcement, education for all children, scientific research, and national defense.

Likewise, government jobs are supposed to be public service jobs; you are elected or hired to provide services to taxpayers in exchange for their tax money.

It is easy to see then, perhaps, how citizens or government employees who don’t feel that the goals of the legal or tax systems are their goals might feel that it’s okay to not pay into them.

If you only care about yourself or your immediate in-group, why wouldn’t you siphon off resources to serve that group whenever you are able? The failure of multiple legal systems to enforce tax and anti-corruption laws shows that fear of punishment is not enough; to have a truly effective, corruption-free system, citizens and government alike must want to contribute to the common good. They must feel that the common good is also their good.

This map shows the United States sharply divided along political lines. Blue areas are mostly multicultural centers of high population density, while the red areas are mostly rural, Christian, and white. Licensed under Creative Commons 3.0 Share and Share Alike by CourtlyHades296.

Social division is not the only cultural cause

Daniel Treisman’s cross-national study of causes for corruption turned up a few other interesting predictors of a country’s level of corruption. Some of these seem to confirm stereotypes, while others may be quite surprising:

  1. Countries with Protestant traditions tend to be less corrupt.

    This applies to most of the entries on our top ten list; virtually all Scandinavian countries were Protestant before they were secular, as was Canada.

    It’s difficult to say why this should be so. Many of the countries on the top 10 list, while historically Protestant, are currently among the world’s most atheist.

    It is possible that Protestantism, with its famous beliefs including the “Protestant work ethic,” which teaches that God rewards those who work hard, and the fear of punishment by hellfire for any unrepentant sin, might have established traditions of personal responsibility, honesty, and fear of wrong-doing that remained after the original religious justifications for these feelings became less widespread.

    Some social psychology findings have suggested that religious people, especially Christians, people are less likely to cheat due to fear of punishment.

  2. Countries with histories of British rule also tend to be less corrupt.

    It is possible that this is a carry-over of point #1: Protestant Britain had possibly the epitome of the teachings mentioned above, with an added sense of nationalism whereby it was a person’s responsibility to represent their family and their country by behaving with honesty and concern for the public good.

    Obviously these standards were not adhered to in all cases, but the fact remains that, when all other factors are controlled for, formerly British-controlled nations are on average less corrupt than those controlled by other European countries.

  3. More developed economies tend to be less corrupt.

    This also applies to most items on our top 10 list, and quite noticeably does not apply to our bottom 10.

    There are a few possible reasons for this. In his studies of 70 societies at all stages of economic development and their values, Ronald Inglehart found that people who have less fear for their material well-being tend to be less motivated by personal wealth.

    While this conclusion may seem blindingly obvious when you put it like that, the implications are quite significant: contrary to becoming more materialistic due to higher standards, Inglehart found that after a certain point in a society’s development, the younger generations became progressively more generous and less motivated by personal economic gain.

    In short, people who feel like they’re pretty secure and satisfied will generally not feel a need to steal, cheat, or otherwise work against the common good in favor of their own success.

  4. Countries with federal governments (those that divide power between a state and national government) tend to be more corrupt.

    It is difficult to say exactly why this is. It is possible that by dividing their nations into regions with different governments, these governments are in some way pitting their people and rulers against each other.

    In the United States, for example, a citizen or government official of Michigan is less likely to think of someone from Texas as being “us.” Texans, by the same token, are likely to feel less connected to the public good of Michiganders.

    One wonders whether Americans would behave differently if they all thought of themselves as simply “Americans.”

  5. The longer you have had democracy, the less corrupt you are likely to be.

    This may explain a great deal about the failed experiment that was mid-20th century communism.

    While these nations attempted to go completely cold-turkey on that most addictive substance, self-interest, they had almost no tradition of rule by and for the people prior to their attempt. This probably had several consequences.

    People from un-democratic backgrounds likely had little concept of fear of punishment for failure to promote the public good; they likely had an image of leadership more characteristic of feudal society, where positions of power were appointed and one’s job performance was judged from above, not below.

    Countries with long histories of democracy, on the other hand, are likely accustomed to several principles that would not appear in feudal-to-communist revolutions.

    The idea of a citizen as a willful contributor to a society in which they have a say, for example, would not be a firm establishment in a recently-feudal nation. The idea that the whole point of positions of power is to serve the public would have been quite alien!

    And, lacking a sense of a society in which they have a real say and responsibility to contribute to the public good – lacking, indeed, a sense that the public good is one’s own good – it is easy to see how citizens at all levels may fail to cooperate at the extremely high level demanded by communism.

Laws have little to do with it

If there is one thing the European experiment has shown us, it is that a country’s laws have remarkably little correlation to its outcome.

Most EU and northern European countries, after all, have similar tax rates. Most provide similar levels of social services. Yet a few have ended up in dire tax straights due to un-explained costs, likely resulting from corruption; others are the world’s most prosperous on virtually every measure, including low corruption.

This may be part of the reason for the American inability to agree on how to prevent corruption. We are a people who thinks in terms of laws. Something is wrong? Make a law to fix it!

That clearly doesn’t work when it comes to preventing and fixing corruption.

And corruption is clearly a very, very important issue for us to tackle in the coming decades.

Can we raise our citizens’ standards of living to unprecedented heights, providing free high-quality healthcare and public education, ensuring that no one ever goes homeless or hungry?

Yes.

Can we become one of the most unfettered markets in the world, rewarding entrepreneurship, investment, and hard work?

Yes.

Can we do both of those things at the same time with no conflict between the two?

Yes.

We just have to fix our culture, before we fix our laws.

In one of the only images I could find of two American political figures who weren’t both members of the same party shaking hands, Martin Luther King, Jr. shakes hands with Lyndon B. Johnson over the passage of the Voting Rights Act of 1965.

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One Response to A Closer Look at History: What Causes Corruption?

  1. Janski says:

    A very well-written, interesting analysis.

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