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Combatting Corruption

Friday, October 12, 2012

Corruption threatens freedom and economic growth around the world.

Frank Vogl has spent more than half his life exposing and fighting corruption — first as a journalist, then with the World Bank, and finally with Transparency International, which he cofounded. His book about his experiences, Waging War on Corruption, does not disappoint.

The book is a history of both those who have fought corruption — the dangers they faced and the obstacles they overcame — and of the people exposed. From Watergate to the Arab Spring, Vogl was either directly writing about or otherwise exposing the corruption involved.

Vogl explains the problem thus:

Corruption is not a single event, but a continuum, perpetrated day in and day out against citizens by crooked politicians and civil servants who enjoy positions of power. They can be heads of state who demand a payoff of millions of dollars on major government contracts. Or they can be lowly civil servants in small towns who have the power to grant building permits or allow access for children to schools or reserve hospital beds, and who use such powers to extort cash payments from poor people.

In any book where the author has so much knowledge, there is a risk that the numerous stories and examples of gross and petty corruption will become tedious, since so many of the cases follow the same lines. But before one is about to think “enough already,” each chapter concludes with some general insight on the problems and how they were overcome.

Under the broad heading of “Villains Everywhere,” Vogl traces corruption in locations such as Chicago, Cuba, China, Indonesia, and Russia. The historical explanation of the early stalling and eventual advance of anti-corruption is the most intellectually satisfying part of the book. During the Cold War, neither the Soviets nor the Americans cared at all about the corruption of the dictators they supported. With the Third World carved up, we had our dictators and they had theirs. Preventing any country from falling under the clutches of communism was enough — worrying about the actions of “our” dictators was never much of a consideration, even when monsters like Mobutu Sese Seko of the Congo essentially impoverished his people.

Only the fall of the Berlin Wall led to the end of the practice and the beginning of real advances against corruption. The origin and advance of Vogl’s obviously beloved Transparency International is also a powerful story, since TI started not that long after the fall of the Wall and could never have succeeded before.

At times, business has been slow to change. The example of Siemens AG, Europe’s largest electronics manufacturer, is the most startling. The company bribed crooked politicians in more than a dozen countries to win contracts to supply often-sensitive electronic equipment. But in 2010, after a lengthy investigation, the directors were eventually “caught and prosecuted and forced to pay the largest-ever fines for corporate international bribery in history, amounting to more than $1.6 billion.”

Of course, not all anti-corruption efforts succeed. Consider the activist group Global Witness, which helped develop the Kimberley Process, designed to monitor the market for diamonds and to prevent diamonds from benefitting corrupt leaders. While the Kimberley Process is still in existence, Global Witness pulled out because the process allowed Zimbabwean diamonds to be sold globally. Yet the Marange areas where the diamonds were mined in Zimbabwe are run by the military and Chinese companies, and the workers suffer terrible abuses.

No one is let off the hook, from kleptocratic African ministers, to CEOs of vast companies, to Western government officials. But this kitchen-sink approach creates a problem for the reader: Vogl targets so many people that it can feel as if he deems them all equally guilty. And his early attempts to explain income inequality in the United States as a result of corruption are rather ham-fisted. Sure, there were the Enrons, Tycos, and WorldComs, which he exposes. But most of the inequality had nothing to do with corruption. In fact, attempts to increase oversight of many areas of business have caused onerous regulations, which are often counterproductive and encourage market manipulation by legal rent-seeking. They probably lower societal welfare as a result.

The real heroes identified by Vogl are the people on the ground in hostile locations who work tirelessly to expose corruption and who risk their lives to have the corrupt brought to justice. Of the few of these heroes that I have met, some are not necessarily the most admirable people in other walks of life, but they have the courage to stand up to these major obstacles to economic growth and freedom, and they rightly deserve the status they attain in Vogl’s writing. This is a good and interesting book, written by an admirable man about an important subject.

Roger Bate is the Legatum Fellow at the American Enterprise Institute.

FURTHER READING: Bate also writes “Phakes and the Cancer Fight,” “Blood Diamonds Are Mugabe’s Best Friend,” “Zimbabwe's Future and the 'Kimberley Process,'” and “Why We Should Keep Funding the President's Malaria Initiative.” Sadanand Dhume discusses “The 'Untouchable.'” Arnold Kling explains “The Challenge of Achieving a Liberal Order.”

Image by Dianna Ingram / Bergman Group

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