Transparency International, a global coalition against corruption, offers this interesting piece about the economic costs of corruption.
According to economist Sanjeev Gupta, national corruption lowers economic growth and per-capital income, despite the argument that a certain amount of corruption can “grease the wheels” of the economy by circumventing bureaucratic regulations.
“Corruption increases the cost of investment for entrepreneurs who need to devote their scarce time and resources to fulfilling government regulations and bribing officials,” Gupta writes. “This cost can be high for small and medium-sized enterprises.”
“Second, corruption acts as a barrier to foreign investment and results in the flight of capital out of a country. The use of public funds to acquire assets abroad shrinks the economy’s savings pool that could otherwise be used for investment. This has repercussions for future generations, particularly in resource-based economies.”
This look at the costs of corruption is timely, as Cleveland remains mired in a 1-year-plus federal corruption probe centered around County Commissioner Jimmy Dimora and County Auditor Frank Russo. I think many of these lessons translate on the local level.
For a case study in the high costs of corruption simply tour Youngstown, Detroit or Cleveland. You can see the signs of neglect and waste.
The Plain Dealer ran an article today about the lavish lifestyles enjoyed by recipients of corruption in the county. The two public officials at the center of this corruption ring–Dimora and Russo–are still in office.
Why do we tolerate corruption in the Cleveland area and does this tolerance permeate the region?