Corruption, Development-in-a-Box, and Global Resilience

Stephen DeAngelis

July 13, 2006

Peter Schaefer, a businessman and consultant with extensive experience working overseas in both the commercial and development sectors, recently posted a TechCentralStation article on the pervasiveness of corruption in the developing world [“When ‘The Law’ Means ‘Corruption,'” 05 July 2006]. One of the first points that Schaefer makes is that efforts to instill “democracy” without first tackling the corruption problem will never succeed. In fact, he insists, development will never occur as long as pervasive corruption exists.

The fact is that all developing countries are governed by autocrats, even when they are elected. Some are thugs, some are benign, even well-intended reformers, but all are autocrats. They have no choice because it is impossible to govern by the rules if there is no rule-set. In fact, it is nearly impossible to get elected without systemic corruption; so in a way, our emphasis on democracy often contributes perversely to a rise in corruption. This prevails for two reasons. First, the nearly total disconnect between people and the government means they don’t much care about the election, and so their votes are for sale. But secondly, election technology is now worldwide and high tech. TV is about as expensive in Manila as it is in New York and someone must pay. Every dime in fees that James Carville is paid by a politician in a poor country is money stolen from the mouth of some poor person, directly or indirectly. Rule of law, adjudicated by even-handed justice, simply does not exist anywhere in the developing world and this is the real culprit that stifles development and condemns the poor to live in zero-sum societies.

Mikhail Gorbachev made a similar point during an interview with ABC reporter Claire Shipman aired today on Good Morning America. The rampant corruption in Russia that followed on heels of the fall of the Soviet Union demonstrated the problem even in a more developed country. With that undoubtedly in mind, Gorbachev said that U.S. style democracy won’t work in Russia and that the world shouldn’t be so concerned about Putin’s autocratic tendencies. He added, however, that he had chided Putin for not holding elections.

 

The problem is that there are few autocrats who aren’t also corrupt. Philosopher kings are hard to find. That is why an approach like Development-in-a-Box™ is so important. A standards-based approach that can be adapted to local conditions and then monitored by appropriate organizations until those standards become a way of life is the only way to break the chains of corruption. I’m not so naive that I believe all corruption can be eliminated (look at the current state of affairs in Washington), but it can be reduced to a level that can be handled by local law enforcement and judicial systems. That should be the goal. Schaefer continues:

All developing countries are failed states to one degree or another and most of their citizens are miserably poor. In fact, calling them “developing” is misleading because it suggests an upward spiral. But these people are the great grandkids of folks who were poor a half century ago when we started giving out foreign aid in large chunks. Without laws — and the institutions to administer them fairly — people make up their own rules. Society requires predictability to function and so absent national law they create informal rule-sets. But rules without the force of law can only be sanctioned through bribery or physical force. If the beat cop has no rules, he follows the local norms, the neighborhood rule-set. But to use his monopoly of force on behalf of the neighborhood rule-set he will extract a price. A bribe. When that happens, the law comes to mean corruption. And since this system is not just accepted but actively reinforced by a network of beneficiaries, corruption becomes the organizing principle of society. At that point, demands by aid donors that governments control corruption are not just impossible to meet, but could even be dangerous and destabilizing for recipient governments and so are largely ignored.

In other words, without replacing functioning informal rule sets with rule sets that work better(and command respect), things are best left alone. Development-in-a-Box aims to provide those better rule sets. Because those rule sets include best practices as well as tried and true principles of governance, they instill confidence in both indigenous populations and, just as importantly, in private and public sector organizations whose investment dollars are critical for development. Schaefer asserts that governments aren’t the best agents for making positive change happen.

Traditional diplomacy (including foreign aid) has not and, I suspect, cannot effect meaningful change at such a fundamental level. After all, the responsibility of diplomats is to maintain state-to-state relations; being the agent of fundamental change is often subversive to their main responsibility. We are getting to be more forceful in our demands over governance issues now but not nearly enough. … Western culpability does not end with ineffective diplomatic protests. The system of corruption is global and the flow of money in both directions has exceeded a trillion dollars in this new century alone. With that sort of money on the table, the crumbs that fall on the floor can keep legions of bankers, lawyers, real estate brokers, luxury car salesmen and, yes, politicians, turning a blind eye to the corruption. We need to find another way. Only the rule of law can supplant corruption, but writing law and living in a lawful society are very different things.

The communities of practice approach that we recommend for implementing Development-in-a-Box suffers from no such cognitive dissonance. When implemented correctly, it tackles challenges holistically, i.e., both the rule sets and the society they affect are involved simultaneously. Schaefer’s frustration is palpable in his article. He goes so far to insist that “it is the global system of sovereign states which impedes new solutions.” Although I am a bit more sanguine, the reason that our Development-in-a-Box concept emerged in its present form is because we understood that a purely governmental approach would be stillborn. There are individuals like Schaefer who work in government agencies and want to see the right things get accomplished. Working with them as well as with likeminded individuals working in international organizations, non-governmental organizations, and the commercial sector, we are sanguine that good things can be accomplished and at a faster pace than in the past.

 

Of course, one can conceptualize all one wants but that rarely is a good substitute for experience. Schaefer is highly experienced in the areas about which he writes. Fortunately, he doesn’t just whine about the state of things, he does offer some concrete recommendations.

Realistically, the corrupt will continue to plunder. Now, frankly, if it was just their countries’ money they were stealing, I would let them. A pox on them all. But it is trillions of dollars of our money — my money — they are taking. Foreign aid is a gift that just keeps on giving. Sunlight is the real trick to solving this. We should expose these thugs by name and freeze their funds since every one of them ships their money to a country with secure banks as soon as they get it. We have the power, backed by law, to do this now. We just lack the will. Also, there are a number of corruption watchdog NGOs; Transparency International and Global Witness are two of them. They do report court actions and press reports that name names but don’t themselves generate information on the crooks’ identity. They should, and to do it, they need to actively solicit names and data from those who know. Find out show steals from those who are robbed. These organizations should put together a list of all senior officials, crony business leaders and multinational corporations who either pay or accept bribes. How? Well, they must cultivate businessmen, diplomats, intelligence officers, other watchdog organizations and whistle blowers in the countries themselves and ask them to “leak” the names or provide confirmation of others’ leaks. Unlike many rich European and Asian countries which calculate bribes into their business plans, most American government and business officials hate corruption and would be delighted to expose the miscreants if there was a safe way to do it. Yes with trillions at stake, the list would be controversial and some officials would, no doubt, sue the publisher. But so what? We have more money than they do at least as long as we stop giving it to them.

Sounds to me like Schaefer is advocating an anti-corruption community of practice which involves governments, NGOs, and businesses. In the meantime, shutting off the money is not answer — finding more appropriate ways to get those funds to those who need it while keeping them out of the hands of corrupt leaders should be the task at hand until Development-in-a-Box can be implemented.