Janine Wedel - Unaccountable - How Elite Power Brokers Corrupt Our Finances, Freedom, and Security

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A groundbreaking book that challenges Americans to reevaluate our views on how corruption and private interest have infiltrated every level of society.
From the Tea Party to Occupy Wall Street, however divergentt heir political views, these groups seem united by one thing: outrage over a system of power and influence that they feel has stolen their livelihoods and liberties. Increasingly, protesters on both ends of the political spectrum and the media are using the word corrupt to describe an elusory system of power that has shed any accountability to those it was meant to help and govern.
But what does corruption and unaccountability mean in today's world? It is far more toxic and deeply rooted than bribery. From superPACs pouring secret money into our election system to companies buying better ratings from Standard & Poor's or the extreme influence of lobbyists in Congress, all embody a "new corruption" and remain unaccountable to our society's supposed watchdogs, which sit idly alongside the same groups that have brought the government, business, and much of the military into their pocket.

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35. Robert Klitgaard, Controlling Corruption. Berkeley/Los Angeles/London: University of California Press, 1988, p. x. Klitgaard also assessed that “corrupt activities are more widespread—and more systematically embedded—in many governments of the developing world than in the West” (p. 10).

36. See, for instance, Nathaniel H. Leff, “Economic Development through Bureaucratic Corruption.” American Behavioral Scientist , vol. 8, 1964, pp. 8-14.

37. Nye considered not only economic development but added a political twist to also examine national integration and governmental capacity (Joseph S. Nye, “Corruption and political development: a cost-benefit analysis,” American Political Science Review, vol . 16, 1967, p. 419).

38. Ibid., p. 427. See also Janine R. Wedel, “Rethinking Corruption in an Age of Ambiguity.” Annual Review of Law and Social Science, vol. 8, December 2012.

39. See, for example, Jonathan S. Landay, “Foreign Aid on the Chopping Block.” The Christian Science Monitor , December 20, 1994 (http://www.csmonitor.com/layout/set/r14/1994/1220/20021.html/%28page%29/2).

40. Julie Bajolle, “The origins and motivations of the current emphasis on corruption: the case of Transparency International.” Presented at Workshop: The International Anti-Corruption Movement, European Consortium for Political Research Joint Sessions of Workshops , April 25-30, 2006, Nicosia, Cyprus, p. 6.

41. James D. Wolfensohn, “People and Development.” Annual Meetings Address, The World Bank, October 1, 1996 (http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/ORGANIZATION/EXTPRESIDENT/EXTPASTPRESIDENTS/PRESIDENTEXTERNAL/0,,contentMDK:20025269~menuPK:232083~pagePK:159837~piPK:159808~theSitePK:227585,00.html).

42. It would be difficult to argue convincingly that corruption scholarship after the Cold War was unaffected by prevailing approaches of the World Bank and TI. See Janine R. Wedel, “Rethinking Corruption in an Age of Ambiguity,” Annual Review of Law and Social Science , vol. 8, December 2012, pp. 453-498.

After the Cold War, political-science, sociological, anthropological, criminological, and legal perspectives on corruption played second fiddle to economic ones. Economists were the most inclined and best positioned to connect scholarship with policy consulting and advocacy. Economists like Klitgaard had a head start. He had already proffered (thoughtful) recommendations in his 1988 Controlling Corruption (with chapter titles such as “Policy Measures” and “Graft Busters: When and How to Set up an Anticorruption Agency”), informed by working with policymakers in developing countries. Robert Klitgaard, Controlling Corruption. Berkeley/Los Angeles/London: University of California Press, 1988.

43. Daniel Kaufmann, an economist at the Bank (from 1999 to 2008 a senior manager or director at the World Bank Institute), was prominently associated with the Bank’s anti-corruption work during the height of its anti-corruption cachet (although, according to sources inside the Bank, he was not a prime mover in its main policy and operational work). Bank-employed economists who were most influential and visible outside the Bank were not necessarily those who were the most influential inside it.

Susan Rose-Ackerman, among the most frequently cited economists of corruption, wrote her 1999 book while a visiting research fellow at the institution and remarks that her year was a “transformative experience” (Susan Rose-Ackerman, Corruption and Government: Causes, Consequences, and Reform . New York: Cambridge University Press, 1999, p. xi).

44. These include co-founder Frank Vogl and at least one TI director, Michael Wiehen. Eigen, Vogl, and Wiehen previously served in senior positions at the Bank. (See also Elizabeth Harrison, “The ‘Cancer of Corruption.’” Between Morality and Law: Corruption, Anthropology and Comparative Society , Italo Pardo, ed. Aldershot, U.K.: Ashgate, 2004, p. 140.)

45. Transparency International website: http://archive.transparency.org/news_room/latest_news/press_releases/1997/1997_07_31_cpi.

46. At present its corporate donors include Shell Oil, Ernst and Young, and KKR.

47. Transparency International, “Annual Report 1999.” Transparency International (TI), Berlin, 1999, p. 2 (http://archive.transparency.org/publications/publications/annual_reports/annual_report_1999).

48. The Sampson quotes are from: Steven Sampson, “The anti-corruption industry: from movement to institution.” Global Crime, vol. 11, issue 2, 2010, p. 272.

49. Janine R. Wedel, Collision and Collusion: The Strange Case of Western Aid to Eastern Europe. New York: Palgrave, 2001, pp. 1-43.

50. The issue of political corruption could, however, be raised with savvy and creative leadership on the part of the World Bank. Helen Sutch, a prime mover behind the effort to put corruption on the Bank’s agenda and to make anti-corruption a priority, did just that. As principal economist leading the governance and anti-corruption work in Poland and Latvia from 1997 to 2000 (later Bank-wide sector manager for governance and anti-corruption from 2000 to 2003), Sutch, at the request of the Minister of Finance, conducted a study in Poland that included political corruption. The study drew on opinion polls, parliamentary committee reports, and other relevant available information, as well as some 50 confidential interviews that Sutch carried out with leaders in a variety of sectors. The results of the study were then discussed with public officials, parliamentary representatives, and the media, drawing rare and useful public attention to the issue of corruption (Jacek Wojciechowicz, former World Bank Polish official, e-mail correspondence, July 5, 2012; my personal experience with World Bank office and media in Poland).

51. In The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor (New York: Basic Books, 2013), William Easterly takes on the development enterprise, critiquing the role—and built-in unaccountability—of the foreign expert.

52. Exceptions include works by Kwame Sundaram Jomo (for example, Kwame Sundaram Jomo, “Governance, rent-seeking, and private investment in Malaysia.” Corruption: The Boom and Bust of East Asia , Jose Edgardo Campos, ed. Quezon City, Philippines: Ateneo de Manila University Press, 2001, pp. 131-162); and Mushtaq Husain Khan (for example, Mushtaq Husain Khan & Kwame Sundaram Jomo, eds., Rents, Rent-Seeking and Economic Development: Theory and Evidence in Asia. Cambridge, U.K.: Cambridge University Press, 2000).

53. Johann G. Lambsdorff, “Consequences and Causes of Corruption.” International Handbook on the Economics of Corruption, Susan Rose-Ackerman, ed. Cheltenham, U.K.: Edward Elgar, 2006, p. 4.

54. For a statement about this by TI co-founder Eigen, see: Michael Montgomery, “Interview excerpts with Peter Eigen.” The Cost of Corruption, American Radio Works (http://americanradioworks.publicradio.org/features/corruption/eigen.html).

55. Transparency International, “The Fight Against Corruption: Is the Tide Now Turning?” Transparency International (TI) Annual Report, Berlin, April 1997, pp. 23-54.

56. As I have said, attention was paid to foreign bribe-givers in the countries of the Other. During the same general time frame, the OECD was working on and promoting acceptance of its Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, which targeted the OECD countries.

57. Some indices have as their unit of analysis firms (national or international), sectors, or political institutions, yet still within a country. See this chapter’s section on “Seducing with Numbers” for some of these indices.

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