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"One could equally point to other large emerging economies, such as Brazil, Russia or China (with India, the BRICs), which all have experienced this combination of rapid growth, rising inequality and corruption.What is the explanation? In all of these cases, the causal mechanism is the same: Unregulated capitalism generates both rapid growth and burgeoning inequality.In the absence of legal channels for influencing policy, such as the lobbying and campaign contributions in the United States, such attempts manifest themselves as corruption. That was true of the American Gilded Age, and it is true of the BRICs now."
Oo I won't spoil the article with more of his quotes, but I think this is a very well written piece quickly establishing his thoughts on what corruption and unregulated market could do for these economies, using the U.S. as an example. What do you all think? What will the long run effects of corruption and lobbying be? How do we fix this problem before it gets out of hand?
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If corruption and unregulated markets continue to exist for these economies I can see the income inequality contiunally increasing, as it has in the U.S.
ReplyDeleteSo capitalism is a self destructing beast that creates cyclical inequality. In the following quote, capitalism could as easily be changed to manufacturing jobs
ReplyDelete"The worst excesses of capitalism were reined in only when a middle class backlash led to legislative change, regulatory reform and anti-corruption rules."
According to the World Bank President Robert Zoellick, “corruption steals from the poor, undermines fair competition, distorts resource allocation, destroys public trust, and undermines the rule of law.” I find that corruption's long term effects also tarnishes a country’s image. This in turn affects the global investment into a country that is marred by corruption. India is trying to take steps to fix the problem as the government and social activist Anna Hazare by passing the Lokpal Bill to deal with the problem.
ReplyDeleteThe Joint declaration that the World Bank is a part of is titled ‘Declaration of Agreed Principles for Effective Global Enforcement to Counter Corruption’. It stresses on technical assistance and international cooperation in managing corruption investigations, as critical inputs to enhance the fight against crime and corruption.
Robert Zoellick goes on to say that, “This declaration can help build momentum for an international coordinated response to counter different forms of corruption that impede economic and social progress in developed, emerging and developing countries.”
I don't know how effective this declaration will be, but at least it's a step in the right direction.
Corruption is a difficult problem to root out, especially when it has been around for a long time and becomes ingrained in the culture. In India for example public offices have been and are considered excellent jobs not because of the given salaries and perks but because it is considered a given that they will make a lot of money from bribes. This is a problem all the throughout different levels of power. Hopefully Ankur is right and this declaration can do some good.
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