Corruption

Public corruption is conventionally discussed in moral terms: integrity, trust, the character of public life. Those concerns are real, and an earlier essay, Corruption at the Summit, addressed them on constitutional grounds. Corruption is, however, also an economic event, with a price, a transmission mechanism, and a payer. The payer is neither the official who accepts the favor nor the magnate who purchases it. The payer is everyone else. The argument of this essay is that public corruption functions as a tax that no legislature ever enacted: it misallocates capital, raises the cost of borrowing, diminishes the revenue the state can collect, and erodes the voluntary trust on which every modern economy depends. None of these effects requires an assumption that anyone has committed a crime. Much of the corruption that matters most is perfectly legal, and that is precisely what makes it expensive. ...

Corruption at the highest levels of government is not merely a matter of bribery, scandal, or personal disgrace. It is a constitutional danger. When public office becomes a means of private enrichment, partisan revenge, selective enforcement, or protection for the powerful, the damage reaches far beyond the official who abuses power. It teaches citizens that law is negotiable, truth is ornamental, and public service is only another marketplace for influence. ...