TCS Daily

Iraq and the Corruption Trap

By Arnold Kling - December 7, 2005 12:00 AM

"...political competitors who are unable to make credible promises to most voters will, upon taking office, underprovide public goods, overspend on transfers to narrow groups, and engage in significant rent-seeking. That is, the behavior of such politicians can be characterized as highly clientelist. However, politicians in older democracies have had greater opportunity than their counterparts in younger democracies precisely to build up policy reputations across a wide swath of the electorate. To the extent that credibility and age of democracy are related, though, younger democracies should exhibit the same behavior -- under-provision of public goods, over-spending on transfers to narrow groups of citizens and high rent-seeking -- predicted to emerge in countries where politicians are credible to only limited numbers of voters."
-- Philip Keefer, Development Research Group, The World Bank

If I were to pick one indicator to track in order to predict success or failure in Iraq, it would be the following:

The percentage of Iraqi government officials who abide by the law in their work

The World Bank's Philip Keefer says that young democracies are fragile because governments are weak. Weak governments, unable to sustain broad-based power, turn to corruption in order to retain narrow-based power. However, corruption discredits the government, making broad-based power even less available. This makes the government even more dependent on corruption for survival. I call this the Corruption Trap.

Why Bad Governments Stay Bad

The corruption trap helps explain why bad government tends to stay bad. Russia and other former Soviet republics appear to be caught in the corruption trap. The corruption trap may explain the perennial disappointment in many African and Latin American countries. Conversely, economic growth in Asia may reflect an escape from the corruption trap.

On the other hand, good government tends to stay good -- not perfect, but good. Once the public comes to expect honesty, this expectation becomes self-reinforcing. Corrupt officials are exposed and denounced. Periodic reforms and house-cleanings address the worst offenses.

Readers may recall that in my essay What Causes Prosperity? I speculated that a public service ethic -- the opposite of corruption -- is one of the three ethics necessary for economic growth. The others are a learning ethic and a work ethic. The public service ethic means that officials are more likely to obey the law than to act as bandits.

A new book, "Corruption and Reform: Lessons From America's Economic History," edited by Edward L. Glaeser and Claudia Goldin, suggests that the United States was lucky to escape the corruption trap. The book is recommended by economic journalist David Warsh and, in an email, by the too-honest-for-his-own-good economist Bruce Bartlett. The book's thesis is consistent with Keefer's view that it is young democracies that are most at risk.

I am somewhat skeptical of the view that the United States was a typical young democracy. A different thesis, offered by James Bennett in The Anglosphere Challenge, is that the characteristics that check government corruption are part of a culture that goes back to our origins in the British Isles.

Regardless of which thesis one finds attractive, Iraq faces a challenge. Iraq is neither an experienced democracy nor an inheritor of British culture.

Iraq and Vietnam

Recently, it has been fashionable to try to compare Iraq with Vietnam. I can present my argument for tracking the corruption indicator in that context.

The opposition to the Iraqi government, the so-called insurgency, strikes me as inferior to the opposition in Vietnam. The Viet Cong was a military force. It fought battles, held territory, and was often in control of the tempo of operations. The terrorists in Iraq can do none of this. Their tactics reflect weakness and desperation. They fail more often than not, and our own strategy and tactics are far more effective than those used at the height of the Vietnam War. If the casualty rate and other military indicators that we find today in Iraq had been at similar levels in Vietnam in 1967, President Lyndon Johnson would have been re-elected in a landslide as the successful architect of a victorious war.

Nonetheless, there is a valid parallel with Vietnam that is sobering. Ultimately, the United States depends on the local government for success.

From 1963, when President Kennedy increased our involvement by sending advisers, to 1975, when we evacuated in disgrace, the attitude of most Vietnamese people toward the government of South Vietnam ranged from indifference to hatred. Had South Vietnam been able to escape the corruption trap during this period, my guess is that the Communists would have been defeated. On the other hand, with South Vietnam caught in the corruption trap, there was almost no way for the United States to achieve durable success.

My guess is that, in many cases, the fastest way to get something done in Iraq is to bribe an important local tribal leader. Americans, in a hurry and looking for "can-do" help, will be very tempted to play this game. However, the long-run consequences may be adverse. Bribing an official to get something done is like paying ransom to a kidnapper -- what looks like a good short-term fix is a disastrous long-term policy.

To have a durable government that is capable of dealing with terrorists on its own, Iraq will have to escape the corruption trap. That may be a very difficult objective to achieve on a timetable.

If we are lucky, the first elected government in Iraq will include leaders who fire corrupt officials and reward public servants who do their job. Should that happen, my guess is that many positive results will follow, including our ability to draw down troops. If that fails to occur, and Iraq gets caught in the corruption trap, my guess is that the U.S. military will indeed find itself in a quagmire, stuck policing never-ending factional strife.


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