The Corruption Trap
By Arnold Kling
political competitors who are unable to make credible promises to most voters will, upon taking office, underprovide public goods, overspend on transfers to narrow groups, and engage in significant rent-seeking. That is, the behavior of such politicians can be characterized as highly clientelist. However, politicians in older democracies have had greater opportunity than their counterparts in younger democracies precisely to build up policy reputations across a wide swath of the electorate. To the extent that credibility and age of democracy are related, though, younger democracies should exhibit the same behavior – under-provision of public goods, over-spending on transfers to narrow groups of citizens and high rent-seeking – predicted to emerge in countries where politicians are credible to only limited numbers of voters.
They find that young democracies do indeed tend to be more corrupt than older democracies.
Bryan has coined the term “idea trap” to describe a situation in which low average wealth leads people to prefer bad economic policies, which leads to low averagewealth, etc.
I see a similar possibility in Keefer’s model. The more corrupt the government, the less credible the government, the more it has to rely on corruption for support, etc. Hence, I would call this a corruption trap. The challenge for a young democracy is how to escape the corruption trap. How do you get to a point where leaders can rely on more than pure corruption to remain in power? Many Latin American democracies are no longer young, but they are still in the corruption trap.
Perhaps Haiti and the Phillipines are examples of countries that never have been able to escape the corruption trap, even when they held clean elections. If so, then I wouldn’t be too optimistic about a more recent nation-building effort (not that I want to turn this into a blog about that.
Another question: is it possible for an older, established democracy to fall into the corruption trap? Can the credibility of its leaders erode to the point where they only way anyone can hold onto power is through out-and-out payoffs?
Oh, by the way. The Milken Institute Review gets yet another thank-you, thus time for the pointer.