Category Archives: Obtaining income through the government – rent seeking – corruption

Various terms have been used to describe obtaining income through the government that does not provide a good or service. One of them is corruption. This typically refers to acts that people consider corrupt, such as government officials taking government money that is not theirs. People or firms not in the government can also obtain favorable treatment from the government. Taxes can be avoided, for example. This is sometimes called corruption and sometimes not. Rent-seeking is a more neutral term used by standard economics.

Transparency International defines corruption as the abuse of entrusted power for private gain. Though this definition encompasses corrupt practices in both the public and private sectors, the Corruption Perceptions Index (CPI) ranks 180 countries according to the perception of corruption in the public sector only (2020). With a scale of zero (highly corrupt) to 100 (very clean), more than two-thirds of countries score below 50, with an average score of only 43. It is fair to say that corruption is significant in most countries of the world.

The government is more than just a means of obtaining income through harm. Since the spread of greater democracy, governments engage to some degree in democratic decision-making, including action to reduce harm, such as the establishment and enforcement of anti-trust laws, and devoting a higher percentage of government income to valuable services such as education. Productive and harmful activities are present in varying ways and degrees in the governments of countries in the world.  Unfortunately, in orthodox government economics texts, governments are treated as democratic, without raising at all the possibility of, or the extent to which, there is oligarchic control of government (or other social institutions) .  This completely obscures the centuries-old struggle for democracy, which is far from over. Freedom in the World (2020), Freedom House’s annual global report on political rights and civil liberties covering 195 countries, addresses the question. Separate scores are awarded for political rights and for civil rights which, weighted equally, are used to determine the status of Free, Partly Free, and Not Free. Forty-three percent of the countries of the world are evaluated as free, while 57 percent are classified as either Not Free (25 percent) or Partly Free (32 percent).

Harm through the government 2021

Inside the I.R.S. files of the ultra-wealthy Amanpour & Co June 14, 2021 (Interview audio or transcript)
The journalist Jesse Eisinger breaks down the ProPublica investigation into how little the uber-rich pay in taxes, and what that means for the rest of us.

She exposed the truth about ‘dirty money’: It’s everywhere Mark Schoofs New York Times June 10, 2021 (Opinion)
On the same day that President Biden vowed to make global financial systems more transparent so that individuals and organizations engaged in corruption would find it harder to “shield their activities.” a federal judge imposed prison time on Natalie Mayflower Sours Edwards, a former Treasury Department official who, by providing secret government documents to an investigative reporter, did more to bring transparency to the global financial system than almost anyone else in recent memory.

Biden ramps up fight against corruption Dylan Tokar Wall Street Journal June 4, 2021
Anticorruption push could lead to broader focus among federal prosecutors on corruption and bribery.

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Actions to reduce harm 2021

(Certainly governments do take actions to reduce harm or otherwise improve the lives of the people. This is often, even typically, the result of political action by citizens. This post gives examples.)

Biden ramps up fight against corruption Dylan Tokar Wall Street Journal June 4, 2021
Anticorruption push could lead to broader focus among federal prosecutors on corruption and bribery.

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Corruption Perceptions Index 2020

Transparency International January 28, 2021. This year’s Corruption Perceptions Index (CPI) paints a grim picture of the state of corruption worldwide. Like previous years, more than two-thirds of countries score below 50 on this year’s CPI, with an average score of just 43. Most countries have made little to no progress in tackling corruption. Our research shows corruption not only undermines the global health response to COVID-19, but also contributes to a continuing crisis of democracy.

The index, which ranks 180 countries and territories by their perceived levels of public sector corruption according to experts and businesspeople, uses a scale of zero to 100, where zero is highly corrupt and 100 is very clean.

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Freedom in the World 2020

Sarah Repucci and Amy Slipowitz Freedom House March 3, 2021 See full report. (36 page PDF file.)

Credit: Freedom House

As a lethal pandemic, economic and physical insecurity, and violent conflict ravaged the world in 2020, democracy’s defenders sustained heavy new losses in their struggle against authoritarian foes, shifting the international balance in favor of tyranny. Incumbent leaders increasingly used force to crush opponents and settle scores, sometimes in the name of public health, while beleaguered activists—lacking effective international support—faced heavy jail sentences, torture, or murder in many settings.

These withering blows marked the 15th consecutive year of decline in global freedom. The countries experiencing deterioration outnumbered those with improvements by the largest margin recorded since the negative trend began in 2006. The long democratic recession is deepening.

The impact of the long-term democratic decline has become increasingly global in nature, broad enough to be felt by those living under the cruelest dictatorships, as well as by citizens of long-standing democracies. Nearly 75 percent of the world’s population lived in a country that faced deterioration last year. The ongoing decline has given rise to claims of democracy’s inherent inferiority. Proponents of this idea include official Chinese and Russian commentators seeking to strengthen their international influence while escaping accountability for abuses, as well as antidemocratic actors within democratic states who see an opportunity to consolidate power. They are both cheering the breakdown of democracy and exacerbating it, pitting themselves against the brave groups and individuals who have set out to reverse the damage.

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