How expensive is corruption? Public Administration I

Every instance where corruption is a topic of discussion revolves around one central question (apart from the obvious immorality of it):  How much does corruption cost society as a whole?  I recently picked up a book in an order to understand the process of public administration better.  Its preface gave at least one, objective estimate as an answer to the question.

The book Public Administration and Public Affairs (By Nicholas Henry) introduces the subject of public administration by justifying how important governments and the bureaucracy are to society.  He points out that though critiques argue that “the best government is the least government”, there are some good governments do good things which are fundamental to human dignity, security and happiness.

He however qualifies this by saying that people equally long for good government (In a global poll, it was found that political corruption is third in people’s minds, after AIDS and crime as a “very big” problem).  He then states the following:

1. According to the World Bank, global corruption costs an estimated US$ 2.3 trillion every year.

2. Political corruption appears to inflate the prices of goods by as much as 15 to 20 percent.

3. Societies with “pervasively corrupt governments” must bribe officials up to an additional 3 to 10 percent of the cost of government services.

4. Countries seen as corrupt have lower levels of foreign investment.  On the other hand, countries with low corruption have higher social indicators.

Of course, these points only give some sort of quantification to the cost of corruption in society.  A larger cost of corruption is the sheer disenchantment it creates within society.  Enough examples of corruption and nepotism abound in India which make this point clear.

The obvious point then is – If costs of corruption can be quantified, why are even strong and upright leaders (rare as they may be) unable to combat corruption?  My argument is that merely being tough on corruption is not enough.  One leader may have a zero tolerance policy on corruption, but that in itself is not enough.  Corrupt people will readily re-surface after the demise of such persons from the political and administrative landscape.  The answer lies in creating a more effective way of organising our government.

The organisation of the government must be such as to reduce an official’s incentive to be corrupt.  This can be a combination of increasing salaries, of ensuring merit-based promotions, of creating expertise within different spheres of administration, and also of ensuring better administrative support for decision-making officials.  There are two other things that must be done: (a) increasing the number of people at the right levels of government where there is a current shortage, while reducing excess numbers at other levels, and (b) creating an effective forum for resolving disputes related to the administration quickly.  Sadly, such steps themselves are going to be opposed most firmly by those already entrenched in their domains of influence.