Corruption and its Three Enormous Harms

Miami, FL/Mexico and corruption are two words that always go hand in glove, or as the Columbians mischievously say, “grab each other’s peepees.”

Corruption in Venezuela is greater, and that of Argentina is not far behind, according to Transparency International, but to judge by what is happening in Chile, Brazil and Cuba, it seems to be a bad Latin American epidemic. The continent, with few exceptions, is a pigsty.

In any case, the Mexican government wants to end corruption. It was about time. Is that possible? When did it start? They tell you, laughing, as soon as you set foot in the country.

The Spanish conquistadors tortured Cuauhtemoc, the Aztec chieftain, to make him reveal where he hid the gold:

“Tell me, you damned Indian, where the gold is,” screamed the torturer, through the interpreter, while he burned the hands and feet of the warrior prince.

“I’ve told you forty times that it is buried 50 steps from the pyramid, under the palm tree,” screamed Cuauhtemoc, writhing in pain.

“He says he does not know, and that if he did know, he would never tell you,” translated the interpreter, secretly rubbing his hands together.

It all started there. Right at the beginning. The confusion between public and private is in Latin America’s DNA and in that of three quarters of the planet. They gave Hernan Cortez a tribute of 20,000 Indians as a reward for the conquest of Mexico. Then they took them away, and the fierce captain ended up in Europe, poor and angry, unable to forget the scorching odor of burned flesh.

Some cynics and pragmatists – sometimes they are the same – maintain that corruption is a form of wealth redistribution and income growth, designed to stabilize society through a web of interests and complicities.

I do not believe it. The harms that unpunished corruption causes are usually devastating. Let’s look at just three from an infinitely greater list.

First, it rots the essential premise of the Rule of Law, making a lie of the principle that everyone is subject to the authority of the law. If the politician or the civil servant steals with impunity, or receives bribes for granting favors, why is the common citizen going to pay taxes? What stops him from lying or cheating? The law establishes that it is a crime to sell cocaine and also to seize public property. Why not sell cocaine if others embezzle the national treasury with impunity? Why not rob a bank? What moral difference is there between stealing from everyone or stealing from a business or an individual person?

Second, it distorts and inflates the whole economic process. The market economy is based on free competition. It presumes that goods and services compete on price and quality. It is the end buyer who decides which businesses succeed or fail. When a politician or an official favors one business in exchange for a commission, this unholy operation forces the consumer to select an inferior and more expensive option, given that the cost of corruption is added to the prices. Moreover, corruption eliminates incentives to innovate and improve the quality of the offer, while it notably reduces productivity, which is the foundation for growth. Why be more productive and lower prices if we have a captive market? Why design a new and better car if the customer is obliged to buy the usual one? Sometimes the businesses themselves distort the market by agreeing among themselves to raise prices. This is another serious form of corruption.

Third, it destroys the ideal meritocratic structure to which all healthy societies should aspire. It weakens the passion to study and curbs the entrepreneurial impulse. In corrupt societies personal connections prevail. “He who has godparents gets baptized.” That is the general order. Ties are more important than effort to compete in an open and free market. What sense does it make to burn the midnight oil studying when, in order to enrich yourself, it suffices to pass an envelope under the table of a corrupt official? Why sweat and toil in the effort to create a successful business if to achieve economic success a combination of personal relations and lack of scruples suffices?

There is no doubt: corruption kills the political and economic system and moral values. Ask the Spaniards who today walk that dark and uncertain road. Of course corruption is a tendency present in our species. That is known, but it is not a good excuse. Either we fight it and defeat it or it devours us. It is that simple.