Is Corruption Good or Bad?

A college student has asked us if corruption is good or bad. The proposition he has been asked to consider is the following:

Corruption greases the wheels of development; it benefits the rich and poor alike.

This proposition is very easy to disprove by thinking of concrete examples where corruption does not benefit the rich and poor alike.

Let us take examples from the recent earthquakes in Kashmir and China. Many school buildings collapsed killing thousands of children. The Chinese government has admitted there was corruption in the construction of the buildings. Second-rate material was used but approved by supervisors in exchange for bribes. In this case rich contractors and bureaucrats benefited but poor public school students and their parents paid the ultimate  price.

This example shows that whenever corruption creates hazardous conditions, it does not benefit rich and poor alike. The sale of contaminated infant milk in China and the sale of spurious medicines in Pakistan are other similar examples.

When corruption leads to inefficient choices the gains do not accrue to all parties either. Suppose the national airline is in the market for new airplanes and suppose the evaluation committee finds that company A offers the best value. However, the airline awards the contract to Company B in return for a bribe. The individuals who get the bribe gain but the nation as a whole loses because the less efficient planes raise the cost of travel for the ordinary passengers.

When corruption leads to unfair outcomes the benefits are again not equally shared. Suppose in an important examination third rate students are ranked higher than the best students in return for bribes taken by examiners. The examiners and the undeserving students would gain but the deserving students would lose.

A similar situation arises when incompetent people are appointed to important positions as a result of corruption. Not only do the deserving candidates lose but the entire nation loses as well because the incompetent officials run their offices poorly and make bad decisions that are damaging for the economy. In addition to that this kind of corruption undermines the system because people no longer believe that there is any reward for merit or hard work. Instead people begin to devote their efforts to pleasing patrons who would oblige them even if they were not qualified. This slowly undermines the moral fabric of society.

The spectrum of corruption is very wide and there are indeed some types of corruption that can be said to grease the wheels of development and benefit the rich and poor alike. Appropriately, this kind of corruption is known as grease or speed-money. It is common in underdeveloped economies where legitimate transactions take a long time to process because of bureaucratic inefficiencies.

Take the case of a businessman who has imported goods that are being held up at the port. Every day of delay causes a huge loss to the businessman. In such a situation, a little grease can speed up the transaction. It can be said that everyone, the businessman, the corrupt official, and the national economy are better off because of the corruption.

However, this is a superficial analysis. This kind of corruption causes cynicism and a decay of the moral order of society. The officials learn that they benefit from being inefficient. Thus they have an incentive to make the system even more inefficient. Virtually nothing gets done without corrupt dealings.

In such an environment, the honest businessman or official cannot compete with those who are dishonest. Society becomes so sick that the honest person is thought of as a fool. So, while it is true that in the short run everyone seems to gain, in the long run everyone loses because of the decline of morality and the loss of values in society.

It is rightly said that corruption is a cancer that rots societies from inside and leaves them hollow and worthless.

Related posts: Corruption and Development and Corruption: Counterintuitive Conclusions

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5 Responses to “Is Corruption Good or Bad?”

  1. kp Says:

    excellent review! i was having this argument with my friends the other day. glad to know that ur post has settled that.

  2. Rajan Says:

    Despite this pandemic most nations have developed after WWII says UNO.
    It is ubiquitous and popular. It has harmed some but benefited the large majority. Medicines are just the same-they kill a few individuals but heal a lot more than that. Why blame the grease which hastens “progress”
    Let the tribe “C” people increase(!)

  3. Mathew Says:

    Yes. You are absolutely right. I have lived and worked in such environments and seen it all. However, let us do a quick check on the alternative:

    An over regulated, 75%+ services industry, power hungry – and therefore massively taxed, very limited personal freedom, big brother knows what is best for us country like Australia.

    What a monster! Now, does this society really work perfectly enough to justify all that (well intentioned though it be) lock down? Is keeping a population under ever tighter wraps the necessary price for trying to stop corruption?

  4. Irtza Chaudhry Says:

    “in the long run everyone loses because of the decline of morality and the loss of values in society.”
    The one who holds is blinded by the shine of money is not going to be affected EVER. He will be assured of the fact that nothing works without corruption. This will become a teaching for his children when it comes to their observation and the cycle will continue! We need to analyze our deeds at the end of the day to assure what has been done today is not a mark on the stones forever.

    • SouthAsian Says:

      Irtza: EVER is a very strong term. It can be challenged on two counts. First, many who are blinded by the shine of money are actually caught. Second, even those who are not caught have to suffer the degraded conditions that they have caused. Take cheating in exams as a simpler exam. Some do get caught; those who do not have to submit to the increased surveillance that is triggered by incidents of cheating.

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