Introducing the Karlin Corruption Index (KCI)

Following on the ground-breaking and globally acknowledged Karlin Freedom Index (which is of course by far the most objective, accurate, comprehensive and plain awesome democracy measuring tool available to political scientists today), I’m now revealing the Karlin Corruption Index (KCI) which rates transparency based on my own readings, personal impressions and bigoted prejudices. As with the “democracy indices” (Freedom House et al.), the current corruption indices – the most prominent of which is Transparency International’s Corruption Perceptions Index (CPI) – just don’t do all that of a great job. Let me explain why.

First, let’s have a look at the very language of corruption. Contrary to what one might expect, almost all linguistic terms for bribery are either neutral or even positive and are related to some of (1) “gift”, (2) small “tip” or tip, or (3) “greasing” i.e. a way of making things flow smoother, (4) “understanding”. I suspect the reason is that corruption, as long as it’s systematized, cannot unravel a state by itself, and in some cases even creates positive effects. Arguing to absurdity, a “gift economy” society of the type seen in hunter-gathering societies, kibbutzim or hippie coops would probably be given a 0/10 for transparency by the CPI’s methodology. But does that really mean anything?

Similar critiques can, in part, be extended to states. In highly regulated countries, giving kickbacks may be the optimal way of running businesses, employing people and generating growth (e.g. Russia, Italy). In highly stratified societies, increasing public spending to improve social mobility – even if part of that spending is siphoned off and contributes to more corruption – may be the socially just decision (e.g. Venezuela). In economically backwards nations, purposefully turning a blind eye to copyrights and IP violations may lead to faster development (e.g. 19th C Germany, China)*.

Second, I must stress that corruption isn’t a concrete number, it’s a vague, fluid and opaque-by-definition social phenomenon that can mean any number of different things in different cultures. Relying on the subjective perceptions of “experts” and businesspeople, as in the Corruption Perceptions Index, is suspect, since they come with their own sets of biases and tropes: lack of attention to statistics and opinion polls; very optimistic assumptions about free markets; disregard for cultural context and popular stereotypes; non-appreciation of the fact that “legalized corruption” is still corruption (e.g. what passes for lobbying in the US would be regarded as corruption in many European countries); etc. Check out this comment thread at A Good Treaty’s interview on this blog for a good discussion of the failings of the CPI.

Now I could go on with the caveats, but as they’re all rather boring and self-evident, it’s time for the succulent part: the actual Karlin Corruption Index country rankings themselves. As with the CPI, 10 is best, 0 is worst. The ↑ and ↓ arrows indicate the trend.

10

Only a few countries like Sweden make it here, though so do many small communities strong in Asabiya.

9

Clean countries with relatively little corruption such as Germany (↓), Canada and Australia, as well as US states such as Massachusetts.

8

These are countries where corruption begins to acquire big dimensions amongst the elites, but remains small at the lower rungs. The United States (↓) is here because privileged corporations enjoy extensive government largess, often at the expense of ordinary citizens (especially in the defense, oil, and financial services sectors). For the skeptics, The Quiet Coup by Simon Johnson is required reading.

The trends are negative. Corporate influence (disguised under Tea Party populism) is growing under the “socialist” (LOL) Obama administration: the overturning of corporate funding limits on political campaigns, BP’s requisitioning of Louisiana police to suppress freedom of speech, and the uncontrolled growth of the privatized anti-terrorism sector are just three examples that come to mind. Though these might not make it into the considerations of the experts and businesspeople gauging US “transparency”, I don’t think that makes it any less corrupt for all that.

Though the elites feed off the public trough, corruption is much less prevalent at lower levels. In countries like Russia or Mexico, corruption in institutions like the traffic police is the rule; in the US it isn’t even an exception – it’s practically unheard of. That’s because in rich, socially cohesive nations, corruption is simply too expensive for simple people. For this reason, I think the US is still above a 6 at the very least, and probably above a 7. But as the popular saying goes, the fish rots from the head. If the economy stagnates and corrupt elites continue misleading the public with “spontaneous” Astroturf organizations, then who knows, by 2020 you could be driving down Route 101 when a policeman pulls you ever and asks if you want to “reach an understanding”.

Other countries in this category include the UK (↓), France (↓), Japan and Israel (↓), where things are ostensibly all prim and proper but the elites live by different rules from the rest in the darker corners. US states like Texas, New York, California and Ohio are probably in this category.

7

In this category corruption becomes more brazen amongst the elites and discernible (but far from prevalent) in the lower levels. Examples would include Brazil (↑), Poland (↑) and Korea. Credit where it’s due: Saakashvili might be a semi-authoritarian warmonger, but he’s cut corruption in Georgia from near failed state levels to almost respectable. Most of the Visegrad region, the East Asian tigers, and the American Deep South would be in this category.

6

Corruption amongst the elites is brazen, most government contracts go to the well-connected, and the elites live by laws very *visibly* different from those of the commoners. At everyday levels, corruption becomes hard to miss: traffic policemen can be bribed; grades can be bought. That said, society functions and there certainly remains substantial room for success based on purely meritocratic achievement.

Even a year ago, I’d have put Russia (↑) into the 4-5 range below. However, the (never-ending) “war on corruption” is no long just talk (as it was under Putin). It is fast producing real results. Regional governors, especially the most entrenched (and corrupt) ones are being fired and replaced by younger technocrats associated with Medvedev’s “civiliki” group, with Luzhkov being just the latest example. There are plans to cut 20% of bureaucrats, replacing them with government e-services. The fast growth in the average bribe size is a positive sign: it indicates that the risk premium for giving and taking bribes is growing.

But wait a second… the situation might be improving, but wasn’t it Zimbabwe-like to begin with, according to the CPI? I really doubt it. Corruption just isn’t that common in everyday life (in 2010 only 15% of Russians paid a bribe, which is roughly comparable to countries like Bulgaria, Turkey and the Czech Republic, but certainly not to sub-Saharan African nations where it’s typically more than 50%). As for the elites, corruption in that world is certainly pervasive and fairly damaging: e.g. about 50% to 2/3 of allocated funds are lost in the road construction sector. But that said, there’s a fair bit of exaggeration towards the apocalyptic side, as with the $8bn Sochi “road of beluga caviar” – which was actually also a railway with dozens of bridges and mountain tunnels. Despite Stanislav Belkovsky’s unsupported assertions, there’s no evidence or reason to believe Putin has amassed a $50bn fortune. Though I’m of the 1988 cohort, I still remember the time when Yeltsin’s “Family” were more or less openly stealing from the state budget. Back then Russia would have scored a 3-4 on this Index. My impression is that the current guys at the very top are relatively clean and that fiscal transparency has come a long way.

This category also includes Italy, though it could be one level higher and there are of course wide regional variations (Sicily: 4-5, the North: 6-8). AFAIK, its one serious attempt to root out structural corruption in the early 1990’s fizzled out, and Silvio Berlusconi – who unlike Putin we actually *know* to be a corrupt billionaire – isn’t exactly the best poster boy for transparency.

My inclusion of China (↑) here will also be controversial, since there are any number of anecdotal tales about the unholy alliances springing up between regional Communist Party heads and ruthless businessmen to dispossess peasants of land, erect shoddy infrastructure, etc. But on the other hand the country still functions well, large-scale corruption is punishable with the death penalty (there’s a little disincentive!) and the central Party is composed of relatively clean technocrats.

Other countries in this category include Turkey, South AfricaRomania and Cuba. Historically, the post-thaw Soviet Union was in this category until its dissolution. I think most of Latin America would be in the 4-6 range.

5

At this level corruption is very brazen amongst the elites and prevalent in everyday life. Social mobility is becoming severely constrained amongst those without good family connections or a particular talent for palms-greasing.

Russia has been in this category since the early 2000’s and has (arguably) only exited it recently. If this article is halfway accurate, Greece belongs here. I think that in the past two years Mexico (↓) has deteriorated from 5-6 to this level because of the subversion of its police force and parts of the political and judicial structure by its narco gangs. As they haven’t seen Russia’s recent high profile anti-corruption campaign, Ukraine and Belarus probably remain at this level. Venezuela (↓) does provide middle-income country type social services and has greatly expanded them in the last ten years (i.e. the majority of money is not stolen as claimed by anti-Chavez critics and neocons). However, there’s been little progress on corruption and the problem appears to be getting worse.

Other countries in this category include India, Iran (↓), India and Kazakhstan.

4

As we move down to this level a kind of neo-feudal world is beginning to emerge, in which doors begin to get fully close to the unconnected. The elites cannot be held accountable by the courts; wealth, power and political connections determine everything . I think Azerbaijan and Egypt belong here, as does 1990’s Russia.

3

The stealing becomes ever more systemic, the elites ever more unaccountable: examples include Saudi Arabia, where corruption is institutionalized in the flow of huge oil rents to privileged members of the House of Saud (even the country is named after them!), and Nigeria, where most of the revenues from the oil boom of the last decade appear to have been diverted to politicians’ bank accounts. Other countries in this category include Iraq (↑), Uzbekistan and Kyrgyzstan.

2

These are the countries run like personal fiefdoms, neo-feudal monarchies in all but name. The best example here is Equatorial Guinea, which is almost the definition of oil kleptocracy – the President and his buddies rake in all the petrodollars to their Swiss bank accounts, normal people live in a squalor undifferentiated from their Cameroonian neighbors. Other countries in this category include Zimbabwe, Turkmenistan and North Korea.

But keep things in perspective. Living in societies with a KCI of 0-3 has been the lot of the vast majority of humans in history.

1

When there’s anarchy, the concept of corruption becomes rather meaningless. This is what it looks like: “In eastern Congo, $1 billion in gold is being extracted and exported annually, yet because the government lacks control over the territory the revenues for the national Treasury last year were a mere $37,000.”

Everything becomes a matter of connections and “understandings” between people, and such is life in Congo, Somalia and Afghanistan.

0

* I recommend the book Kicking Away the Ladder by Ha-Joon Chang on copyrights and IP issue in developing nations.

EDIT: This article has been translated into Russian at Inosmi.Ru (Представляю Индекс коррупции Карлина).

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