Law-Evaders Beat Law-Writers

A just deserts economic system, in which everyone is limited to their earned income, has inherent abilities to reduce corruption, largely because of the necessary economic transparency that is implicit in the system.

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Everybody is somewhere on the spectrum between totally opposed to corruption, cronyism, nepotism and the like, and totally committed to tolerating a situation where certain people are using these political means to advance their own goals. You might say the extremes represent the optimists and the pessimists, with most people in between. At certain periods the center rises up to join the optimists, and some new laws get written for whatever system exists that will outlaw or make more difficult some form of corruption that was exposed. Then comes the long period during which the corrupt people figure out ways to evade the laws, come up with new ways for corruption to flourish, and after some time, things are right back where they were before the orgy of anti-corruption activity took place.

Law-writers work with an irremovable disadvantage, and perhaps more than one. Everything they do is open and clear to everyone, so that anyone seeking a loophole in the law can take advantage of them. The law is static and slow to change, but law-evaders can sometimes move quickly. They work in unseen ways, and can try anything they think of to evade the law.

Corruption is sometimes a ‘quid pro quo’ and sometimes direct nepotism. Direct nepotism is where a corrupt person with influence or decision-making authority decides that some individual will gain a benefit, such as a lucrative, do-nothing position, or a high-profit contract, or some other benefit where the personal slice is large. The individual chosen would not have received the benefit except for the actions taken by the corrupt person. In many cases, there would be no such benefit except for the actions taken by this corrupt person; in other words, the lucrative position was created solely for the purpose of satisfying the corrupt person’s wishes. This differs from a ‘quid pro quo’ example in that the person receiving the benefit receives it because of who he or she is, not because of what he or she will provide back to the corrupt person.

The other type of corruption is easily understood as a hidden trade of benefits. In the simplest instances, the corrupt person provides something to a donor, such as a tax break, a waiver of requirements for an activity that increases the profit on it, a pardon of some wrong-doing, a minimization of fines paid or time served, access to someone else corrupt, a re-writing of laws relating to monopolies or cartels or an order to not prosecute these, or any of a myriad of other things; in return the donor provides something to the corrupt person, such as a immense lecture fee, or a book contract with little requirements but a large advance, the ability to participate in a mock investment designed to be lucrative, the elimination of someone either physically or contractually, high-profit contracts for a company owned by a spouse, sibling or child, and many, many other options.

The last of these might be labeled indirect nepotism, especially if the beneficiary is not financially connected with the corrupt person, but it is better to draw the primary line between types of corruption between direct nepotism and ‘quid pro quo’ corruption as the distinction is more clear and more useful.

These are only the simplest options. There can be delayed benefits, such as a lucrative, do-nothing position for the corrupt person himself following his tenure in the decision-making role which affords him the opportunity for corruption. There can be three-way arrangements with a donor providing benefits for corrupt politician 1, who is the donor providing benefits to corrupt politican 2, who closes the loop by writing laws or making regulations or restricting law enforcement relating to the original donor. There is no limit on the variations in these schemes, and therefore, a group of law-writers who are interested in limiting corruption can outlaw some schemes, but more will immediately spring up. Where there are corrupt politicians, there will be corruption. Morality might prevent some individuals from corruption, but corrupt people will use corruption to replace these moral ones with others more amenable to the corrupt schemes.

Fortunately, the economic system of just deserts provides a substantial remedy for this situation. If total income is limited for every individual or household to some small multiple of the average income in the governed region, then there will not be enough in any single person’s pocket to make any substantial corrupt payoff. To see the extent and inherent limitations in this bulwark against corruption, it is necessary to consider how it might be evaded.

First, could there be small instances of corruption, where the amount involved was an almost negligible portion of the average income in the jurisdiction? This is certainly true, and indicates that what is done by a just deserts income limitation does not change morality, only the practical, over-all effects of it. Large corrupt contributions make the disparity between those only receiving their earned income and those who arrange systems within the economy to provide them with ten, a hundred, or a thousand times as much as any human being could rightfully earn. Morality is something effected by teaching people, often the young, about what is considered right and wrong within the society. Efficiency in the society is effected by establishing laws limiting income to earned income.

Second, could there be cabals which get together to amass enough resources for a large bribe, or its equivalent, which would allow them to receive some benefits beyond, perhaps far beyond, their earned income? The amassing of resources could certainly occur, but with a limitation of income to earned income, there are no avenues for moving large amounts of benefits to the members of the cabal. There are no avenues because to enforce a limitation of income, income must be known, as well as other data. This means economic transparency has to be universal.

Economic transparency has been the bane of corrupt people ever since there was central data systems which allowed it to be possible. There have been litanies of protest against economic transparency, by invoking trigger words such as ‘privacy’, but they do not amount to anything other than pleas to allow unearned income to be received without anyone being aware of it. Transparency does no good unless there is some means of using it for detection of prohibited income, and then taking some sort of action, judicial or otherwise, which overturns the forbidden process and reverses its effects. This means that there must be some agency which has the power to access this data, meaning that transparency is available at least to this agency if not to everyone, and which is motivated to find and reverse the results of prohibited activities.

It must be very obvious that if there is only one such agency, and only this agency has the authority to inspect economic data, they would be immediate targets for corrupt offerings. Once the agency concerned with ensuring has been ‘fixed’, then there is no further barriers to non-earned income enriching those who cause this corruption, as well as others. The situation would seem to be dependent on the degree of transparency, but it may not work that way. If the ability to examine income and other economic data is more widespread than just the agency charged with enforcing the economic rules of the society, and that agency does not take action, the population will very quickly come to realize that these rules are simple paper only, and have no meaning in the actual activity that underlies the society. The number of pessimists, as defined at the beginning of this post, will soon rise as more people become tolerant of what has become the unwritten rules of the economic life of the society.

So, if this agency is the keystone of any barrier against, not only corruption, but against any usurpation against the economic rules of a just deserts socio-economic system, how might it be shielded against corruption offers, as well as threats of a more diverse type? How might it also be protected against apathy, born of years of success in imposing these rules, both on the part of the enforcers, and on the part of the population? When a population passes through a revolution or a large change in the economic system, it might be largely enthusiastic about the new system, for a period of time, but then, as difficulties arise, or simply as years pass by, the enthusiasm dies away, and corruption begins to find a way to slowly infiltrating the system. Those who are in charge of enforcing the new rules grow tired of their tasks, and begin to think of the pleasures that a little unearned income might provide them. Thus, the aspects of disparity that were so striking and unappealing, which led to the imposition of a just deserts economic system, would fade away, and the very local considerations of a small amount of corruption seep in and begin the process of undermining the rules.

Thus, the problem of maintaining a just deserts, non-corrupt economic system may be just as difficult as the process of setting one up in the first place. Any effective socio-economic system must have some processes, like rotation of personnel, that militate against the boredom that would inevitably set in.

Corruption and its Cures

There are three main categories of corruption: political coruption, accepted small corruption, and individual corruption. Each can be mitigated.

It seems like a nice courtesy to define clearly and explicitly what it is you are writing about, as words are so slippery and full of alternate meanings. When a reader comes upon something that appears interesting, he/she may be carrying some baggage in experience, so that the meanings of the words, especially the topic words, may have different nuances or even serious differences in meaning from what the author intended. This means there is wasted time on both the author’s and the reader’s part, and we all despise wasting time.

By corruption I mean an individual with a hierarchical job to do, a job in a hierarchy, where he/she has a specific task to accomplish, altering his behavior so that some personal benefit will accrue to him/her or some one or some group that he/she favors. Consider some examples:

Example 1: A politician has input into tax laws and can insert a special clause favoring some tiny subset of people if he chooses, and it will most likely pass due to the methods by which laws are checked before being passed. The politician, in return for a contribution to his favorite charitable foundation, will insert a tax clause as requested.

Example 2: A judge in criminal cases has to choose amounts for fines for guilty parties involved with financial crimes. The amount could be equal to the amount gained or more, or with the right inducement, somewhat less, leaving a surplus for the benefit of the convicted criminal or his family, partners, friends, or whoever else was the recipient of the largess of the criminal before he was caught.

Example 3: A bureaucrat is responsible for completing forms for the public, relating to some function, like driver’s licenses, or registering a deed, or any of the hundreds of things a citizen might have to do. The bureaucrat ordinarily finishes his task within a month, or within a day if there is a gift included, such as a box of candy or a bottle of vodka.

Example 4: A building inspector has a long list of technical points that can be used to hold up construction projects, some for a long time and some expensive to change. For a bit of work on the inspector’s friends’ property, or some materials for such work, these technical points might be waived as insignificant or not safety-related or discretionary.

Example 5: A mid-level manager in a supply department of a large corporation has a selection of which supplier to use for some large purchases, but they are comparable. With the provision of an arrangement for a free dinner for the manager’s family in a top-level restaurant, the choice becomes straightforward.

Example 6: A professor is on the board set up to review new students’ applications, and for many students, a favorable choice by him/her will make all the difference needed between acceptance and rejection. Instead of sticking to academic or other university-related issues, the professor tilts his/her rating based on personal biases.

Example 7: A professional athlete manages to miss some key shots in a championship game, losing the match, which is much to the delight of a gambling syndicate. The syndicate is very generous in their expressions of gratitude.

Example 8: A fireman, finding a shoebox-sized metal container filled with currency, manages to get it away from the scene of the fire while the building burns down. The contents are not returned to the building owner.

These examples are only a few of the hundreds of possibilities for what might be included under the label of corruption. In the process of trying to find a viable new socio-economic theory which has more elements of fairness while not losing the positive aspects of older theories, what should be done about corruption? Which types of corruption should the system be designed to minimize? How should this be done, and what might be the cost to the system of having anti-corruption measures installed within it?

The first level, in the first example, might be referred to as political corruption. The quid pro quo by which a politician might be influenced can range over a tremendous domain, involving third parties in a variety of ways. All would be legal in the absence of a specific agreement to take some political action in return for some other action. Specific laws might be written to control some particular one type of action, but since there are literally hundreds of options, these laws can easily be outflanked. Only by going to the common core can they be controlled as a body. There must be laws of just deserts which control the common core, which is excess inequity of wealth and income, which makes possible political corruption. If wealth of any household is no greater than, say, five or ten times the average, there is no surplus available for corruption. If the income of any household is no greater than a similar ratio from the average, there is no opportunity for the products of corruption to be realized by a household that is a beneficiary of some potential corrupt political act. If these two measures do not exist, then corruption will find a way around any existing structures to make the inequality greater, and the feedback effect will take over and lead to great inequality.

The solution, in fact the only solution, to political corruption is the same as the regulations or laws or what-have-you that relate to income outside of corruption. With investment following a Churchillian directive, and unearned profits being taxed and used for the good of those whose work earned the benefits, and human labor being recognized as impossible to vary in value by more than a factor of five or ten, then corruption would be intrinsically controlled.

Judicial corruption, as illustrated in the second example, is almost eliminated by the same cure as political corruption. When no party to any lawsuit has excess wealth or income to use for corruption, and no defendant in a criminal case has excess wealth or income for use like this, there is little opportunity for corruption to exist. A related question concerns corruption involving corporations. Would the legal counsels for a corporation have motivation to do judicial corruption? Perhaps if their income might be diminished by a factor of two if they did not, they would. A corruption corporation might arrange to have a judge get a delayed promotion in return for a favorable or slanted verdict, so the possibility does not disappear, but only diminishes in range.

Transparency is often described as a mitigation for corporate corruption, including that which occurs around a court case, but just as individual corruption in a world where extreme inequality exists can find clever ways to occur, so might clever ways to disguise payoffs be found. Having independent watchdog agencies to monitor corporate finances and behavior is often touted as another means of curing corporate corruption, but the response to this is to corrupt first the process of monitoring as well as influence the regulations for transparency, thus enabling further corruption to go forward. Perhaps layers upon layers of watchdog organizations, which monitor transparency as well as behavior, might be necessary.

The remaining six examples are simply illustrations of individuals doing small-scale corruption of differing varieties. No high-level formulation of a socio-economic system is going to eliminate the possibilities that exist here, but there is one essential and very important difference. Examples 3 through 6 can exist in small numbers, as exceptions to the general way that people in these positions behave, or they can be the more-or-less accepted way of behavior, that no one quibbles with but just lives with and works around. To have a society that operates efficiently, and in which people are supposed to receive benefits according to the effort they expend and the talent they accumulate, then the routine acceptance of corrupt behavior on a small scale cannot be accepted. This means that not only will there have to be laws regulating it, there needs to be public awareness that such behavior is not accepted. There has to be methods by which it can be reported, and there must be organizations that are held to high standards that investigate it and work to diminish the amount of it until it only exists by exception, not by routine. Once this is done, the socio-economic system will be largely free from corruption.

It is much more important that political corruption be ended, by instituting just deserts taxation of excess capital gains and income, including all devices used to hide it. This type of corruption, once it becomes well-known, is like a poison in society, and would be used to justify all other types of corruption. The role of high-level examples in society can be great, and if there was transparency in this area, so that all political figures were known to be operating with no corrupt payoffs, neither to themselves or to those they favor, then low-level corruption would be easier to have reported and ended. So, from a top-down fashion, corruption is at least viewable as a curable disease, as long as the just deserts medicine can be made to be tolerable.