Jean Cartier-Bresson of the University of
Versailles writes
in the OECD Observer that “Corruption… occurs at those points where the
political, bureaucratic and economic interests coincide.”
What does he mean by this? While there are
a lot of fancy economic terms like “adverse selection”, “moral hazard”, “conflict
of interest” and “rent-seeking behavior” which can be thrown around in
situations like these, it comes down to the fact that “public agents”, meaning
politicians, bureaucrats etc, are in a position where they can exercise discretionary power by allocating items
of value, like contracts, coal, 2G spectrum and so on.
Prof. Cartier-Bresson explains this in very
simple terms. Bribe payers want to maximize their expected gains (eg.by being
allocated a lucrative contract), or to reduce expected costs, (eg. illegal
reductions in taxes). Public officials and politicians would want to maximize
their earnings. This is accomplished through bribery.
I shall give three examples. Two from real
life, and one fictional
The first is the Kids For Cash scandal which broke in 2008 in Luzerne County in Pennsylvania. One of the court judges is alleged to have taken 1 million dollars in bribes from juvenile prisons to fill their cells with children who came before him in court. He was sentenced to 28 years in prison in 2015.
He had apparently sentenced children to
extended stays in juvenile prison for such trivial reasons such as making fun
of a school principal on Myspace, trespassing in an empty building, and
shoplifting DVDs from Wal-mart.
These juvenile prisons were run by private
companies and are becoming more and more popular across the US as private
players claim they can run prisons at a cheaper rate than the state can.
Apparently the judge had used his discretionary
power to dismantle the state-run juvenile prison and allocated a contract
to a private player instead.
The second is the US Air Force Tanker Contract Controversy.
In 2004, a former Pentagon procurement staffer pled guilty to inflating the
price of a contract to purchase aerial refueling tanker aircraft to favour Boeing,
She had asked Boeing to give jobs to her
son-in-law and later took on a job at Boeing herself after retirement, with a
big signing-on bonus. She was sentenced to prison for corruption and had to pay
a fine.
The third example is from True Detective Season 2 (2015). True Detective is an American crime drama series.
The second season is set in the fictional town of Vinci, California, and is
about four police officers and a mafia boss, who are trying to solve the murder
of a corrupt city official.
The mafia boss had paid a substantial bribe
to the dead official so that his company would get first preference to buy the
land that fell under a proposed high speed rail line.
His scheme was to dump toxic waste on the
land to reduce its value, buy it at a low price, and sell it to the federal
government at a higher rate when it started to build the rail line.
The fictional town of Vinci is apparently
based on the town of Vernon, California, which is notorious
for corruption.
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