This just in...D&S Reads the News (#4)

by Dollars and Sense

by Dollars & Sense

The fourth in a new series of blog entries by D&S collective member Larry Peterson.

I had really hoped to avoid posting an entry on embattled World Bank President Paul Wolfowitz. Honestly, I did. To me, the idea of an "anti-corruption" crusading Wolfowitz constituted something of a sick joke even before allegations concerning his efforts in getting his girlfriend a job in the State department (with a salary larger than that of Condoleeza Rice, no less) started to filter in maybe a week ago; after all, this is the guy who was our ambassador to Jakarta under the supercorrupt dictator Suharto.

But then I came across an article in the April edition of the Far Eastern Economic Review in which Shaomin Li and Judy Jun Wu attempt to distinguish Chinese corruption (which allows for economic benefits) from the Filippino variant (which results in net losses to the society with no efficiency gains). While mildy interesting, if generally wrongheaded (the analysis attempts to reduce incentives to the one-dimensional ones characteristic of game theory, rather than operating under the assumption that this kind of behavior is more often the product of the intersection of competing and sometimes clashing sets of incentives) the piece got me thinking about the nature of the kind of corruption that exists in our society.

It seems to me that the type of corruption engaged in by Wolfie and friend reflects a mentality on the part of the elite, operarative for some time now, but perfected under this administration, that society owes more, far more to its public servants, who, after all, could be making a killing in the private sector. But this is to overlook the fact that so much public policy these days takes place in the grey area between the private and public sectors, and that this has made use of the revolving door the indispensible nexus of the legislative craft these days. And it is also to overlook that these people tend to feel they are entitled to extra percs for devising and implementing policies which are, all too often, extremely unpopular, and use that very knowledge of policymaking they think they should be rewarded extra for to cover up their tracks from anyone who would point out the differences between the effects of such policies and the official spin.

And yet, the unchallenged persisitence of such behavior has served to increase public cynicism to the point where such behavior is all-too-often considered normal. Hence, not only is it the case that people like Wolfie, Gonzales and all the others continue in their positions long after they should have been thrown out, and perhaps prosecuted; indeed, it is considered incomprehensible that anyone else in the position would behave differently. And this makes the next scandal almost certain to be more brazen and costly to society.

Though I am hesitant to steal a concept from the great Thorstein Veblen, it really does seem to me that we have a kind of conspicuous corruption that has become the standard operating procedure in this administration, and that the cost of this kind of corruption is having a dangerously corrosive effect on public finances and the economy in general. Nobelist George Ackerlof has characteriized this administation's policies as "a form of looting". Furthermore, as others have noted, this underscores the real scandal here: that even if Wolfowitz were kicked out, he'd probably be replaced by someone just as bad, if not worse.

Labels: Alan Blinder

 

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4/15/2007 02:25:00 PM