Corruption in America

Posted in development, Drama, economic history, economics, institutions, movies, TV by jrahman on December 5, 2012

I was going to write this post in October, as part of the fifth anniversary of the blog.  But ‘real life’ got in the way.  This piece by Shubinoy Mustofi on fire in a garments factory killing over a hundred workers reminded me about the subject, so here we are.

Corruption is our biggest problem.  If not for corruption (or corrupt politicians/bureaucrats/businessmen/army officers), we would be a rich country.  — How often have you heard statements like this?  I often here things like this from Bangladeshis living in rich countries of the west, which is quite ironic because of the history of corruption in these countries.

Let’s take America, for example, which, Martin Scorsese tells us, was born in the streets.

Gang fights, a son seeking to avenge his father’s murder, a beautiful pickpocket with a heart of gold, a charismatic villain — Gangs of New York is the biggest, baddest Bollywood film that anyone has ever made.  See for yourself.

It’s also a very good depiction of political economy of New York in the middle of the 19th century.  Tammany Hall is there, as are corrupt cops, rigged elections, unscrupulous businessmen, and of course, gangsters. 

Now, I like Scorsese, and his takes on New York.  But when it comes to a screen depiction of the founding of the American state, my favourite, by a long shot, is Deadwood


What both the movie and the tv show remind us is that democracy, rule of law, political and economic institutions that are taken for granted (by at least the affluent class) in today’s America were simply not there in the 19th century, even for many otherwise affluent people. 

America, my dear reader, was a very corrupt place.

So, how did America kick its corruption?  Harvard economists Edward Glaeser and Raven Saks explored that question in an article published in the Journal of Public Economics a few years ago.  The full article is here.  The abstract:

We use a data set of federal corruption convictions in the U.S. to investigate the causes and consequences of corruption. More educated states, and to a smaller degree richer states, have less corruption. This relationship holds even when we use historical factors like Congregationalism in 1890 as an instrument for the level of schooling today. The level of corruption is also correlated with the level of income inequality and racial fractionalization, and uncorrelated with the size of government. There is a weak negative relationship between corruption and economic development in a state. These results echo the cross-country findings, and support the view that the correlation between development and good political outcomes occurs because education improves political institutions.


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  1. Diganta said, on December 11, 2012 at 4:47 am

    It goes well with my perception that America’s real growth has happened only in later part of 20th century.

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