Is there such a thing as too little corruption or too much anti-corruption?

High levels of transparency and low levels of corruption in government and the private sector are critical to the stability of a democratic society. Even the appearance of corruption is known to erode public trust and social cohesion. As a result, populist leaders are continually adopting new policies and accounting practices aimed at reducing corruption or the appearance of corruption. Policymakers face significant pressure not to oppose any such measure for fear of being labeled “pro-corruption”. However, less frequently do people ask whether all anti-corruption policies are beneficial to society, or, for that matter, whether all forms of corruption (no matter how big or small) are detrimental to society.

What if the cost of preventing a particular form of corruption far exceeds the cost of that corruption?

The harms of corruption on government and private institutions are large and can often be quantified with concrete dollar values. For example, a CSIS report on corruption last year estimated its worldwide costs to exceed $1 trillion. Governments have also recognized that even the appearance of corruption can have significant negative impact on societal function, although these impacts are not as easy to quantify. With this uncertainty in mind, the public and policymakers must decide whether it makes sense to implement an anti-corruption policy if the cost of the policy itself may exceed the costs of the corruption it is designed to eliminate.

There are a couple of ways in which this tradeoff can manifest itself. The first is via the direct cost of the oversight. As a hypothetical example, consider an accountant paid 25$ per hour to examine tax returns. If they take an average of 1 week of work to find, audit and recover an average of 800$ of lost revenue from someone cheating their taxes, then they are actually costing the government money (since their salary was 200$ more than the money they save, at 1000$ for the week). Real-life examples of this dilemma include the Duffy Affair, where the costs of prosecuting Mike Duffy far exceeded the ~$90,000 in expenses he misappropriated. These tradeoffs can be found more systemically in many areas of society, including administrative oversight of welfare, and the growing administrations in universities, which are squeezing out the budgets allocated for teaching and research (the two existential functions of universities). Excessive anti-corruption policies can also inflict direct economic harm by deterring even well-intentioned people from participating in legitimate economic activity out of fear of frivolous prosecution. Even if they do nothing wrong, the risk of a costly legal defense to over zealous prosecution can be sufficient to convince them to take their investments elsewhere.

Is it worth trading a little bit of corruption for a lot of public good?

Should the public willfully turn a blind eye when a small bribe is offered to a policymaker and their constituents in order to gain their support for a highly important measure whose implementation they could otherwise block? This is essentially part of the logic behind the earmark system in the US Congress. While a national government is tasked with advancing the best interests of the nation as a whole, individual legislators are elected by small constituencies whose interests do not always align with the national interest. Without mechanisms such as earmarks that add unrelated incentives to balance these conflicts of interest, there are few levers available to secure consensus on important but divisive issues facing the nation.

For example, would it be corruption or fairness if the proceeds from a national carbon tax were directed disproportionally to investments in a few Alberta ridings in order to secure support from MPs whose constituents could see economic harms from these green policies? Some of the most important pieces of progressive legislation this past century would not have passed without earmarks, including the Civil Rights Act of 1964.

If backroom deals have led to the passage of important legislation throughout our recent history, is the converse also true? Are crusades against backroom deals, earmarks and minor corruption likely to lead the legislative process to complete gridlock (because one way to ensure doing nothing corrupt is to not do anything at all)? The US Congress reformed the earmark system in 2010, making it more difficult to engage in this kind of quid pro quo to build coalitions for bills, and this change has been cited as one of the factors enabling the sort of extreme gridlock seen lately on essential issues such as the debt ceiling and the budget. While this certainly only a small piece of the gridlock puzzle, it has been argued more broadly that politically motivated anti-corruption crusading has done much to erode trust between politicians and public trust in government, and is a significant root cause of the current dysfunction in Washington.

The witch-hunt and moral panic: Should excessive, dishonest, or inconsistent moral crusades be considered corrupt or morally abhorrent?

In the past few decades we have seen a significant social change in public discourse that has led us to increasingly embrace egalitarian ideals, empathy for ‘the little guy’, and has at the same time made us less trusting of people in power. This ‘rise of empathy’ has brought many significant positives with it, from an increased social safety net to civil rights to women’s rights to environmental protections. However, if there is perhaps one negative side effect of this change, or where the ‘rise of empathy’ may have gone too far, it is that risk aversion and obstructionism in institutional leadership are now over-incentivized.

The dirty oil that used to keep the gears of partisan and adversarial government working has been disrupted. What is left behind is a political climate that, while maybe appearing more ‘moral’ on the surface, gives political players (e.g. Newt Gingrich as Speaker of the House during the Clinton administration) more incentive to obstruct, moralize and generally crusade ‘against’ things, while placing very little incentive and very real risks on people actually doing anything, particularly anything bold. This obstructionism and moral crusading actually leads to further erosion public trust in government by giving people the impression that nothing is being done while airwaves are flooded with accusations of comparatively minor moral transgressions.

Ironically, we may be learning that the opposite of corruption is obstruction, not utopia. Another way to say that is that we are just starting to appreciate that extremes of ’empathy-based’ political actions (whistle-blowing, anti-corruption, ‘social justice’, those that draw on sentiments of egalitarianism and empathy for ‘the little guy’) can be just as destructive as the extremes of their ‘dominance-based’ counterparts (intimidation, corruption, etc.). A somewhat analogous transformation has also taken place in academia, where there are fears that well-meaning efforts to inject more sensitivity and egalitarian ideals have gone overboard, and have started to erode the institution. Part of the problem in both cases is that our evaluation of public figures and policies are too often framed around questions of intent or principles rather than questions of results. It is tempting to judge a person’s character, and thus their leadership, by the extent to which they appear to abhor corruption, and empathize with ‘the little guy’ and the whistleblowers who purport to speak for them.

Perhaps over time we will begin to consider the act of crusading against corruption or prosecuting those accused of corruption more morally objectionable if it is excessive in magnitude and/or if it is applied inconsistently. If the appearance of corruption has comparable importance to the extent of actual corruption for public cohesion and effective government function, the media also needs to consider the responsibility it has in the public sphere and the part it plays in creating gridlock. Outrage is easy to invoke – and it sells – but it seldom contributes to national unity or the kind of thoughtful debate that form the basis of good policy. We could argue that the media has the responsibility to consider magnitude and proportionality and exercise restraint when publishing pieces aimed at stirring outrage. However, with the increasing democratization of media through the rise of blogs and social media, it may make more sense to argue that this responsibility should rest with the public navigating an open marketplace of ideas.

Like many important issues in society, effectively reducing corruption and the appearance of corruption require the ability to engage in open public dialogue with thoughtful objective analysis of the pros and cons of new policies. Good policy requires more than just good intentions, and policymakers must be judged for the accuracy and completeness of their analysis of an issue and not merely by their perceived empathy for certain stakeholders. Before adopting new anti-corruption policies, we must consider potential adverse impacts on legitimate economic and political activities in addition to the effectiveness of the policies at reducing the corruption in question. While evaluating these tradeoffs, we must also consider the impact that the mere appearance of corruption has on society, recognizing its distinct significance. To minimize the appearance of corruption, we must both strive to reduce and strive not to exaggerate its incidence.