Amnesty International has just released its annual corruption rankings: here. Most of the Arctic nations score relatively well.
Russia obviously stands out as an exception. The Jamestown Foundation's Eurasia Daily Monitor looks at recent reports on the situation in Russia and speculates about the potential for reform: New Reports Underscore Doubts About Medvedev's Anti-corruption plan.
The U.S. is above the world average, but doesn't show up too well in this exalted company. If Transparency International prepared regional rankings, Alaska might not do as well as the U.S. as a whole. The Anchorage Daily News provides a good overview of the state of play in Alaska's various corruption investigations and trials: The Alaska political corruption investigation. We didn't solve our own problem, we were bailed out by the U.S. Department of Justice.
High levels of corruption don't necessarily prevent economic growth. Indonesia grew very rapidly under the very corrupt Suharto regime (While Suharto was stealing all his money, Indonesia was growing lickety-split).
A lot may depend on how the corrupt organize themselves.
While thinking about China before the communists, when the central government was
weak and bandits and warlords were endemic, Mancur Olson observed that warlords could be popular in their neighborhoods.
At first, this situation was puzzling: Why should warlords who were simply stationary bandits continuously stealing from a given group of victims be preferred, by those victims, to roving bandits who soon departed? The warlords had no claim to legitimacy and their thefts were distinguished from those of roving bandits only because they took the form of relentless tax theft rather than occasional plunder.
He found an answer in the different incentives faced by bandits and warlords.
Suppose the
countryside is controlled by a single warlord who can suppress minor bandits. This person is just a “large” bandit with
no special interest in the people; he views them as small scale bandits would, they’re a source of loot. He wants to get the most loot possible.
The warlord has an incentive to balance the increase in loot from a given theft with the increase in the productivity of the countryside by leaving something behind. As Olson saw, when the warlord reduces thefts from 95% to 90% of the community’s annual product, he doubles the incentives of the community to produce (from 5% to 10%). The availability of loot depends on community productivity, and the warlord would recognize that there was some intermediate level of theft that would maximize his loot. The warlord might even have incentives to invest in his community, so long as the increased loot from the investment was greater than the cost of that investment.
A small-scale bandit, in a countryside infested with bands of bandits, also wants to maximize his loot. But this bandit doesn't have any incentive to leave anything behind; if he does some other bandit will get it. All the small-scale bandits think this way. The way for each of these bandits to maximize loot is to steal as much, as quickly, as he can. These bandits won't invest in the countryside, they'll tend to strip it bare. Bandit theft in aggregate would therefore be larger than the level that would maximize aggregate loot.
The answer to the puzzle was that the people in the countryside were likely to be somewhat wealthier under a warlord than under small-scale bandits.
In this regard, the Eurasian Daily Monitor story has an interesting quote:
Likewise, Georgy Satarov, the former Yeltsin aide who is president of the INDEM Foundation, which has studied the issue of corruption extensively, said that there has been a loss of control over Russia’s bureaucracy over the last eight years. “And when bureaucrats remain without supervision, they start to work for themselves,” Satarov told Novye Izvestia. “And naturally, corruption grows.”
This sounds like a "bandit" rather than a "warlord" model.
I've simplified Olson's story, but his book is a good read, Power and Prosperity.
Minor edits September 25.
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