Corruption in the Wealthy World
Miriam A. Golden
Professor
University of California, Los Angeles
Compared with third-world nations, the world’s wealthy democracies have
it easy. Governance, while hardly a trivial process, is usually relatively unproblematic. Public officials can anticipate what it will take to enter office and when
and in what matter they are likely to depart; when holding office, they have
trained civil servants to do their bidding; and when legislation is approved, there
is some reasonable expectation that implementation will follow in due course.
Citizens, for their part, vote, sign petitions, protest, and publicly complain but,
by and large, do not reject the basic principles of the political system. None of
this works perfectly, automatically, or without any conflict, but on the whole,
politics and law making in the wealthy democratic world are routinized and
heavily predictable.
All of this takes place, moreover, without elected officials stealing most of
the country’s wealth from the public treasury and secretly shipping it abroad or
spending most of their time in public office conspiring with other elites to gain
additional privileges and income. Rent-seeking—a term used to describe any
additional undeserved income that politicians may gain from holding public
office above and beyond their official salaries—as well as political corruption are
comparatively modest in wealthy democracies compared with the extent of elite
plunder that afflicts some of the world’s poorest nations. However, even if it is less
frequent and less politically or economically intrusive, political corruption still
takes place in the world’s wealthiest countries. Elected officials disobey the laws
they are entrusted to enforce, and they use public office for illegal personal gain.
But should we care, and, if so, how much, and why? We may find political
Miriam A. Golden is Professor of Political Science at the University of California, Los Angeles
and for 2011–2012 Visiting Senior Research Scholar at Princeton University. Her areas of expertise
include issues of political accountability and corruption in wealthy and less developed countries.
Copyright © 2012 by the Brown Journal of World Affairs
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Miriam A. Golden
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corruption morally offensive. We may be surprised and disturbed when the press
uncovers illegal dealings on the part of an elected official, and we may suspect
that the problem goes deeper than what has been made public. We may worry
that political corruption causes misallocations of economic resources and that it
provides unfair political advantages to those who participate in corrupt activities.
But does political corruption impinge on governance? Does it affect the basic
operation of democratic political institutions in the world’s wealthiest nations?
My answer is that it does not. In stable wealthy democracies, the effects of
political corruption on governance are modest at best. What corruption does
occur is usually part of an attempt by an elected official to retain his or her office
rather than an attempt to amass personal financial wealth. Perhaps as a result,
voters typically reelect public officials charged with or even convicted of corruption, abuse of office, or accepting illegal kickbacks in exchange for government
contracts. If the average voter appears not to mind corruption and continues
to endorse democratic institutions (and even the very officials whose actions
may have violated the legal order), then it is hard to argue that corruption is
consequential. If most voters do not care, then why should we?
The political corruption that transpires in wealthy democracies is different from what takes place in third-world nations. The latter is characterized
by more frequent and often quite routine illegal actions on the part of public
officials. These actions are typically aimed at attempts to increase one’s salary or
amass a personal fortune. They interact with government regulations to impede
economic growth and to reinforce existing political and economic inequities.
Citizens often have little recourse when confronting requests for bribes by public
officials since elections are often not fully competitive or contested. It may be
impossible to “throw the rascals out,” as the saying goes.
Just how frequent is political corruption in different countries? Because
the activities that we are interested in by definition involve illegal behavior, the
persons involved try to hide them. It is therefore difficult to determine with
precision the levels of corruption in various nations. We can use data available
from Transparency International to get a rough idea. The data presented in Figure
1 shows Transparency International’s Corruption Perceptions Index (CPI) in
relation to current per capita GDP for 168 of the world’s countries in 2010.1 The
CPI is an index that is based on an aggregation of the results of surveys of experts,
international business people, and regular citizens that ask how much corruption
respondents believe exists. The relationship between perceived corruption and
GDP is strong and negative, meaning that as countries become wealthier, the
perception of corruption declines. The world’s wealthiest countries—those with
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Corruption in the Wealthy World
per capita GDP of more than approximately $20,000—are dispersed across the
lower values of the corruption index, whereas the world’s poorest nations are
located in the top quarter of the index. The data clearly documents that wealthy
countries suffer less from perceived corruption than poor ones. It accords with
our intuition that corruption is more common in less developed countries than
in their wealthy counterparts.
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Data Source: GDP per capita, PPP (current international dollars) from World Bank; CPI from Transparency International
How economic development drives down corruption is complex. Economic development expands the literate and politically informed portion of
the population, which is more vigilant in monitoring politics and politicians
and more sensitive to the appropriate use of fiscal resources. Nonetheless, we
are all familiar with the occasional public scandal involving illegal behaviors
by elected officials in Europe and the United States. In addition to the 2009
scandal that caught dozens of British Members of Parliament misusing public
funds to pay for their own personal expenses, in 2011 Austria saw the exposure
of networks of corruption between politicians and entrepreneurs, and French
prime minister Nicolas Sarkozy was linked to arms sales to Pakistan that were
said to have generated kickbacks to be used for political campaigns. In early
2012, the president of Germany was forced to resign over pending corruption
charges involving financial improprieties, the first major scandal in that country
since the 1999 revelations that Germany’s Christian Democratic Party had for
many years been illegally receiving funds for political campaigns.
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Miriam A. Golden
Italy is an interesting case study in political corruption. Perhaps because
Italy has experienced particularly high levels of political corruption over many
decades, corruption there has been especially well documented and detailed.
As a result, we have more good information and hard data about corruption
in Italy than in any other country in the world. A series of political scandals
involving high-level and very extensive corruption brought down almost all
of the country’s political parties in the early 1990s, and these events were
exhaustively dissected and scrutinized
The “Clean Hands” investigations by journalists, academics, and public
of the early 1990s exposed a investigators. Even today, revelations of
political corruption in other European
higher level of corruption in Italy countries usually invoke comparisons
than in any other wealthy democ- with what came to be called the “Clean
racy in the world at that time. Hands” investigations, which are used
to benchmark the extremes exposed
in Italy. Starting in Milan in early 1992, Italy’s public prosecutors uncovered
evidence of chronic corruption, especially involving kickbacks in public works
contracts. The judicial investigations that took place over the next two years
ultimately implicated a third of the members of the country’s lower house of
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representatives, six former prime ministers, and several thousand local politicians and civil servants. Ultimately, the Clean Hands investigations of the early
1990s exposed a higher level of corruption in Italy than in any other wealthy
democracy in the world at that time.
We learned from these judicial investigations that political corruption in
one of the world’s wealthiest democracies had become widespread, entrenched,
and systematic thanks to high-ranking politicians associated with multiple
political parties who colluded and even conspired to cover it up. The judicial
papers that were sent to Parliament to request that that body lift immunity for
hundreds of its members in order to proceed with investigations repeatedly
indicated preliminary evidence of collusive networks of political officials who
arranged kickbacks in exchange for public works contracts and for a percentage
of each kickback being passed up the party hierarchy to the national offices. Investigations revealed just how important these networks had become in allowing
corruption to seep into almost all aspects of Italian political life. In electorally
competitive environments, if public officials associated with one political party
engage in political corruption, they risk being exposed and denounced by partisan
rivals—unless they can induce officials associated with rival parties to engage in
similar illegal activities. When, instead, multiple officials associated with all or
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Corruption in the Wealthy World
most of a country’s political parties become mired in political corruption, those
associated with each fail to denounce the others during electoral campaigns in
fear of retaliation. In the case of Italy in the 1990s, all of the political parties—
except the Italian Communist Party, which remained politically isolated and
frozen out of the networks of national political power—were deeply implicated
in taking kickbacks and other forms of abuse of office.2
The Italian events also illustrate not only how corruption begins and then
penetrates a political system, but also the motives of those involved. In Italy, the
initial impulse came from the small Italian Socialist Party (PSI), which aspired to
inclusion in governing coalitions but, having more or less severed its ideological
links with the Communist Party, could no longer rely on an ideologically loyal
reservoir of activists and voters. Facing the loss of traditional grassroots militancy
as well as the rising costs of political campaigns characteristic of a more modern
society, in the 1980s PSI leaders began to rely on illegal kickbacks—especially
kickbacks connected to public works construction—to fund their campaigns.
That these new and more instrumentally oriented party leaders themselves came
from modest backgrounds also contributed to their propensity to use ill-gotten
gains; without family financial resources to fund their campaigns, they moved
to fundraising illegally.3
Political corruption thus entered the Italian political system when a startup party confronted a longstanding monopolist (Italy’s dominant governing
party, Christian Democracy) and urgently needed financial resources to make
electoral headway. But why not fundraise using legitimate avenues? One reason is that campaign contributions in Italy are, as everywhere else in Europe,
limited by law. Broadly speaking, campaign contributions in the United States
are private, unlimited, and transparent—that is, funds are collected from private sources, they are virtually unlimited, and recipients are required by law to
disclose the source of donations over a certain amount. In Europe and Latin
America, by contrast, many campaign costs are covered by public sources and
private campaign contributions are regulated, often by the imposition of ceilings
on campaign expenditures. The goal of limiting expenditures is to prevent the
excessive intrusion of money into politics and to level the playing field across
parties. But this can backfire. If the limits are unrealistic, as is perhaps inevitably
the case, rather than reducing campaign spending, legal limitations encourage
candidates and parties to engage in illicit and illegal activities for campaign
fundraising. Perhaps the shift in campaigning from television and radio to the
Internet will drive down costs in the future, but for many decades the costs of
political campaigning have grown as parties shifted from deploying loyal rank-
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Miriam A. Golden
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and-file activists in direct interactions with voters (e.g., door-to-door canvassing and neighborhood rallies) to advertising through mass media. Regulations
regarding campaign expenditures in this increasingly expensive market have
inevitably been too restrictive, and one inadvertent byproduct has thus been
to encourage political corruption. If the only way to spend enough money to
win an election is to spend more than is legally permitted, winners are almost
by definition engaging in illegal and corrupt activities. Thus, prohibitive campaign spending regulations may criminalize the inevitable costs of competitive
democratic politics. The example of Italy suggests the possibility that restrictive
legal environments in wealthy countries create incentives for using illegal activities to fundraise.4 It is therefore not surprising that most revelations of political
corruption in Europe in the last thirty or more years involve diverting funds to
political campaigns.
That does not mean that politicians never embezzle for personal gain, of
course. In wealthy countries, politicians are usually paid adequate salaries. Even
so, incumbents may line their own pockets or in other ways inappropriately
and illegally benefit from office, especially if they feel a little too secure in their
jobs.5 The 2009 parliamentary expense scandals in the United Kingdom, like
the 1992 House banking scandal in the United States, revealed extensive (and in
the British case, illegal) misuse of legislative prerogatives for personal monetary
benefit. Scandals that reveal illegal or privileged access to special prerogatives by
elected officials degrade politics, humiliate the individual politicians involved,
and elicit widespread disgust with the political system. They often remain
splashed across the front pages of the newspapers for weeks or months on end,
and perhaps in consequence they elicit considerable public disapprobation. From
what we know, however, instances of misuse of public office for personal gain
are much less common than instances of misuse of public office in order to gain
an electoral advantage.6 This type of corruption allows experienced politicians
to raise campaign funds despite punitive and restrictive legislation regulating
campaign expenditures.
How do voters in wealthy democratic nations respond to corruption charges
against elected officials? In the United States, multiple studies document that
political candidates charged with wrongdoing experience some loss of their
expected vote shares, but not enough to lose their seats; in consequence, voters
by and large reelect politicians charged with wrongdoing.7 Research finds that
Japanese and Spanish voters behave similarly.8 In Italy, voters had been dutifully reelecting politicians implicated by the judiciary in illegalities for 40 years
prior to the Clean Hands investigations.9 In fact, the implosion of the Italian
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Corruption in the Wealthy World
party system on the heels of the Clean Hands investigations is the only known
historical instance in any democratic nation of the electoral repudiation by
voters of an entire corrupt national political elite. There has been almost no
systematic research since then that would allow us to know whether corruption
has been permanently eradicated or whether instead it has reemerged in Italian
political parties.
Although there are, to the best of my knowledge, no studies of how voters
respond to corruption charges in wealthy nations other than the United States,
Italy, Spain, and Japan, the findings for these four countries are entirely—and
surprisingly—consistent. Despite variations in the electoral systems and political institutions in these four nations, most politicians who are publicly exposed
as engaged in illegal corrupt practices nonetheless gain reelection even when
they are convicted of criminal wrongdoing (which occurs only rarely). This is
the reverse of what we would expect. We expect voters in wealthy countries to
hold public officials to exceptionally high standards of behavior and to penalize
incumbents who undertake illegal activities by ejecting them from office. We
expect them to use their democratic rights to “throw the rascals out.” Why do
they not?
There are a number of possible reasons, some of which might simultaneously be true. These include:
1.
2.
3.
Some voters might not know their elected representative is suspected
of wrongdoing. In line with this argument, various studies show that
electoral penalties for malfeasance increase with press coverage, and
that less-informed voters are more likely to vote for corrupt incumbents than more-informed members of the electorate.10 But lack of
information is only one reason why voters systematically reelect corrupt incumbents, since we observe that this occurs even when voters
have clear and relevant information.
Some voters might condone corruption if it is associated with the
delivery of material benefits in the form of pork and patronage. This
might pertain in particular to pockets of poor voters in rich countries. However, it seems unlikely that political corruption in wealthy
countries today necessarily carries with it much meaningful “pork”
or patronage (except perhaps to those in the construction industry
who are paying off politicians in exchange for public works contracts),
especially since so much corruption seems linked to illegal fundraising.
Some voters might condone corruption if it seems economically irrel-
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Miriam A. Golden
4.
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5.
evant; that is, voters might believe that some degree of illegal political
fundraising by extracting kickbacks for public works is acceptable as
long as the economic consequences are limited. This might be more
likely to be the case where regulations regarding campaign contributions and activities are widely regarded as unrealistic or excessive.
Political campaigning costs money, and often lots of it, and voters
may be aware of this and be sympathetic to the needs of politicians
to secure more money than is legally available. After all, much of the
money is used to provide voters with more information about the
nature of their choices.
In complex electoral environments, especially those associated with
the multiparty systems observed under proportional representation
(PR), which elect multiple representatives from the same constituency,
voters may have strategic incentives to retain corrupt incumbents.
For instance, when multiple political representatives are elected from
the same constituency, if all of them are enmeshed in illegal activities, ejecting a single one from office may result in the election of an
untried junior legislator who not only does not know the ropes, but
also is incapable of getting anything done because of his or her lack
of involvement in illegal political networks.
Some voters might discount malfeasance on the part of their elected
representative because of their attachment to the incumbent’s party,
ethnic group, or programmatic agenda. Some evidence for this
comes from the United States, where Democratic voters, some of
whom were for many decades especially loyal partisans because of
their party’s commitment to civil rights, withdrew electoral support
from incumbents charged with wrongdoing at lower rates than their
Republication counterparts.11
Each of these reasons pertains to some subset of voters. Taken together, they
account for the fact that public officials charged with involvement in illegal
activities nonetheless tend to gain reelection. Only the most well-informed,
highly educated, independently minded, and economically secure voters with
the highest standards for those in public office consistently throw out corrupt
politicians. It is not surprising that even in very wealthy countries, some voters don’t know about, do not care about, or actually benefit from the spillovers of corruption.
Well-informed and nonpartisan voters are the most likely to include
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Corruption in the Wealthy World
considerations of public honesty in their voting calculus. As education and
information levels rise, and as ideological commitments decline, we will continue to experience improvements in the levels of honesty of public officials.
But in the meantime, the modest levels of political corruption that affect the
world’s wealthiest countries are, by and large, incidental to the operation of
their political systems.
This is by no means the case in poor nations, where public affairs are deeply
mired in political corruption. In these countries, teachers fail to show up to their
classrooms, ordinary people must pay bribes to obtain the most basic public
services, and civil servants too must pay off elected officials to escape punitive
transfers or receive promotions. In these countries, as a result, governance is
indeed impeded by political corruption. In the world’s wealthiest nations, by
contrast, teachers can be counted on to show up to work, public services are
delivered impartially and without side payments, and civil service regulations
guide recruitment, promotions, and transfers.
Improving the lives of people living in the world’s poorest and most corrupt nations requires, among other things, improvements in the workings of
their political institutions. But doing that requires the growth of an educated,
informed, and vigilant public. And if in the United States we wish to move
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public affairs to Scandinavian levels of honesty (demarcated on Figure 1), improving the literacy of an adult population—30 million of whom are classed
as below basic in their skills—and providing regular channels of information
about public affairs in place of nonstop televised entertainment would be good
places to start.12
In summary, political corruption is largely incidental to the basic operations
of the political system in the world’s wealthiest democracies. When it does occur
in any systematic way at the national level, it is linked to cartels of politicians who
need more money for their political party’s electoral campaigns than allowed by
law. When voters learn
The modest levels of political corruption
that a single politician
is accused of political that affect the world’s wealthiest councorruption, most vote tries are, by and large, incidental to the
to reelect that person
regardless. That corrup- operation of their political systems.
tion in the world’s wealthiest nations is held in check, and remains much below
that experienced by third-world nations, is because of the potential reaction by a
relatively well-educated, sophisticated, and informed public. When, as in Italy,
such a public is made aware of large-scale, ongoing, and widespread political
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Miriam A. Golden
corruption, it has both the means and the incentive to “throw the rascals out.”
Usually, however, there is no need. WA
NOTES
84
1. There is little year-to-year variation in the ranking of countries on the index, and what variation
exists is difficult to interpret. We may therefore take any single year as a reasonably accurate snapshot of
the relative ranking of corruption across countries.
2. Donatella della Porta and Alberto Vannucci, Corrupt Exchanges: Actors, Resources, and Mechanisms of
Political Corruption (Hawthorne, NY: Aldine, 1999).
3. This line of argument is advanced by Donatella della Porta and Alessandro Pizzorno, “The Business Politicians: Reflections from a Study of Political Corruption,” Journal of Law and Society 23, no. 1
(1996): 73–94.
4. I have elsewhere documented that much political corruption in Italy was fueled by a 1974 change
in law regarding campaign contributions by public corporations; see: Miriam A. Golden and Eric C.C.
Chang, “Competitive Corruption: Factional Conflict and Political Malfeasance in Postwar Italian Christian
Democracy,” World Politics 53 (2001): 588–622.
5. An analysis of Japanese data shows that political corruption for campaign funds is more likely when
politicians face stiff electoral competition but that corruption for personal gain occurs on the part of the
electorally safe and powerful. See: Benjamin Nyblade and Steven R. Reed, “Who Cheats? Who Loots?
Political Competition and Corruption in Japan, 1947–1993,” American Journal of Political Science 52,
no. 4 (2008): 926–41.
6. See the data presented in Figure 1 of Nyblade and Reed, “Who Cheats? Who Loots?”, 932.
7. John G. Peters and Susan Welch, “The Effects of Charges of Corruption on Voting Behavior,”
American Political Science Review 74, no. 3 (1980): 697–709; Susan Welch and John R. Hibbing, “The
Effects of Charges of Corruption on Voter Behavior in Congressional Elections, 1982–1990,” Journal of
Politics 59, no. 1 (1997): 226–39.
8. On Japan, see: Steven R. Reed, “Punishing Corruption: The Response of the Japanese Electorate to
Scandals,” in Political Psychology in Japan: Behind the Nails Which Sometimes Stick Out (and Get Hammered
Down), ed. Ofer Feldman (Commack, NY: Nova Science, 1999). Analysis of Spanish data shows that a
corruption scandal reduces the vote share of an incumbent mayor by four percent (and by nine percent
if the scandal receives wide press coverage), which is consistent with estimates from other countries. See:
Elena Costas, Albert Solé-Ollé, and Pilar Sorribas-Navarro, “Corruption Scandals, Press Reporting, and
Accountability: Evidence from Spanish Mayors” (unpublished paper, University of Barcelona, 2011).
9. See: Eric C.C. Chang, Miriam A. Golden, and Seth J. Hill, “Legislative Malfeasance and Political
Accountability,” World Politics 62, no. 2 (2010): 177–220.
10. Marko Klasnja, “Why Do Malfeasant Politicians Maintain Political Support? Testing the ‘Uninformed
Voter’ Argument,” (unpublished paper, New York University, 2011).
11. A comparison of Democrat and Republican responses to revelations of wrongdoing appears in Peters
and Welch, “The Effects of Charges of Corruption on Voting Behavior,” (1980).
12. “National Assessment of Adult Literacy (NAAL)—Demographics—Overall,” National Center for
Education Statistics, http://nces.ed.gov/naal/kf_demographics.asp.
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