Breaking the Rules - Clientelism and Corruption Flashcards
How does democracy promote broader development?
- Accountability for politicians in enforcing the rules and delivering development
- Credibility for the protection of (property) rights
Problems of democracy for development
- A short-term bias
- An electoral cycle
- A “concrete” bias
A short-term bias (problems of democracy for development)
- Even well-meaning politicians need to worry about re-election in 4 years’ time
- Less attention to climate change, pensions for aging populations
- Commitment problems: why invest now if my successor might cancel it?
– Especially as successors prefer to claim credit for their own ideas
An electoral cycle (problems of democracy for development)
- Voters remember recent events more sharply
- So politicians concentrate their investments and stimulate the economy just before an election
- Unpaid electricity bills spike by 3% in election years in Uttar Pradesh, India
– Favors (forbearance) to consumers and businesses for electoral support
A “concrete” bias (problems of democracy for development)
- Development requires many “hidden” inputs, eg. teacher training, management, oversight, maintenance
- But politicians invest only in what voters can see and reward: concrete buildings, ribbon-cutting events
- Democratization in Africa led to the abolition of school fees and many more children in schools, but no investment in quality
Definition of clientelism
The contingent exchange of material benefit for political support
How does clientelism work?
- Rules for neutral distribution exist on paper
– eg. everyone has a right to healthcare - But are broken/twisted in practice
– Bureaucrats, politicians use discretion to control access
– Access to healthcare depends on who you vote for - A “quid pro quo” between patron and client; an unequal exchange
- Local brokers monitor who you support/vote for
Varieties of clientelism
- Patronage
– Distributing public jobs (the opposite of autonomy/meritocracy) - Vote-buying
– Gifts, cash, or services for votes - Relational
– Long-term ties of trust between parties and voters
How does clientelism harm public services?
- Private goods over more efficient public goods
– Handouts instead of infrastructure - A patronage bureaucracy has less autonomy
– In Brazil, students’ scores get worse when a new party replaces temporary teachers - A lack of accountability
– Voters must vote for their patron, not the best candidate
– Inverts democratic accountability - Property rights protection is less credible
– In Cote d’Ivoire, land rights depended on who you voted for
Are voters to blame for clientelism?
Voters often demand clientelism
- So are voters to blame?
- Where’s my money for my vote?
- I’m going to go pressure the politician to help me with my hospital bill
Why is it that voters may prefer clientelism?
Politicians often break their promises so voters are almost smarter/safer to accept the money as it’s more certain
What is the opposite of clientelism?
The opposite of clientelism is “programmatic” politics
What is programmatic politics?
- Politicians offer distinct programs: policies and public goods
- Can target groups of citizens, eg. women, the poor
– Based on the objective socioeconomic characteristics
– Not their political behavior
Comparison of Mexico’s social development programs
Pronasol
- 1989-1996
- Clientelist
- Did not benefit the poor
- Won many votes for the incumbent
Progresa
- 1997-
- Not clientelist
- Does benefit the poor
- Does not win the incumbent many votes
How does democracy affect clientelism?
- Democracy encourages programmatic parties and broad appeals using public goods
– eg. the PAN in Mexico
– eg. the Workers’ Party in Brazil
OR - Democracy creates “competitive clientelism”
– eg. Nigeria, Kenya
– An incumbency advantage in resources for clientelism
How did democracy affect clientelism in Mexico?
In Mexico democratization led to more programmatic social policies
- The state had the capacity to deliver and monitor (Progresa/Opportunidades)
- Threat of violence if clientelism continued (Zapatista rebellion)
- The opposition controlled the legislature so could constrain the government’s discretion
Definition of corruption
The misuse of public power for personal gain
Examples of corruption
- Bribery
- Extortion
- Fraud
- Kickbacks
- Collusion
Petty corruption
- Bribes to police to pass a roadblock
- Bribes to get a driving license faster
– Average payment is twice the official price in India
– Drivers don’t really take the exam -> unsafe drivers
Grand corruption (examples)
- Carwash (Lava Jato) in Brazil
– Contractors for Petrobras colluded on how much to bid, raising prices and channeling >$2bn to politicians - Goldenberg in Kenya
– Fake importing of $1bn of gold and diamonds paid for by Central Bank to finance election campaign - Anglo-Leasing in Kenya
– $740m in up-front payments for security services never delivered; redirected to politicians - 1MDB in Malaysia
– $4.5bn laundered from government development corporations, channeled to Prime Minister Najib Razak and his party UMNO
How does corruption harm development?
- Wasting scarce resources
– $3.6tr per year, 5% of global GDP
– Uganda 1991-1995: only 13% of budgeted funds reach schools - Discouraging investment and merit
– Corruption demands prevent construction being completed (or started)
– Bureaucrats pay for jobs where they can be corrupt - Weakening institutions
– By definition, corruption is rule-breaking
– How you’re financed -> how you govern - eg. Kenya’s government blackmailed into giving more favors to its financers
- Undermining trust
– eg. Barcenas scandal, Spain (2013)
What could corruption be instead of a cause of poor development?
Corruption may be a symptom of weak institutions and a weak state rather than a root cause
How can corruption be useful?
Corruption is useful for citizens in developing countries to address systemic problems
- Corruption can help protect property rights
– Paying off the police secures your investment
- Corrupt politicians have more power for enforcement
– Being tough/corrupt can help deliver projects where there’s no embedded autonomy
– Voters support corrupt candidates
– If 10% of budget is stolen, what happens to the 90%?
- Corruption in electoral campaign financing
– Essential to political competition where there’s no public funding
– Goldenberg scandal: financed food distribution to voters and cars to bribe politicians
- Corruption is an informal institution that becomes normalized
– More than a third of people in Mexico and Nigeria say that other people believe it is ok to pay a bribe
What happens if corruption is systemic and a system of deeper problems?
- Anti-corruption efforts mostly will not work
– Strict formal rules don’t change systemic norms/incentives
– Can a corrupt system reform itself?
– Strong incentives for isomorphic mimicry - Targeting corruption may do nothing to strengthen the underlying institution/state