The Chilly Mist of Sovereignty

It has been a couple years since I have had a direct window into the inner workings of tools of sovereignty in an emerging market country. But I had the opportunity again this month, and I am as convicted as ever about the "commercial" nature of the enterprise. I find it remarkable how, in every country, there are folks who are instinctively good at grabbing and pulling the levers of sovereign power. No matter how poor, how small, or how newly-emerged from sectarian violence a country, such people exist there, and they make it to the halls of government. They know how to dress, how to speak judiciously, how to demonstrate control over their subordinates - how to exude power. They generally also master the language of serving the best interests of their constituents.

In many places, however, they also know something else. They know how to work behind this imagery in a relentless pursuit of personal or business enrichment. While the public facade is all about subjects that would play well in any IMF consultation, UN General Assembly session, or press conference, discussions behind the scenes can quickly turn quite concretely to the subject of the personal or business "take" for the minister or other official in question. Of course, there should be no surprise in any of that behavior. This kind of "corruption" (as it is termed in the west) is all too-well understood. But seeing it up close and personal can be quite a shock, no matter how many times one has been through it before. It is very easy to become wrapped up in the language of helping a poor population, and considering what can be done legitimately to advance its health, education, and general welfare. Perhaps it is the heat of that excitement which exacerbates the shocking chill of the next part of the discussion. And, in my experience, an unwillingness to engage the chillier topic usually prevents any role in the warmer work.

I harbor no criticism, either of the system that creates the officials who behave this way, or of the system that has molded my thinking and that causes my reactions. I see vast numbers of people suffering deeply under both systems. And I see stark enrichment at the "top" of both systems. I suppose what I lament most is the persistence of the inaccurate mythology about sovereignty. It is fundamentally not about helping others; it is fundamentally about helping ones' self to the national cookie jar, whatever its size or contents, limited only by the strength of domestic political organization. Of course, I would prefer things to be different, and I would welcome global leadership that would work in practical ways to effect change. But until we at least openly recognize the current reality, change will never be possible.

Regulating Corruption

Not all of you were thrilled with my post on corruption in China, where I essentially asserted that corruption IS the market in many places, and businesses and investors would do well to consider it that way. I think corruption may be one of those lightning rod topics where folks' worldview drives a given conclusion. So I am not all that hopeful that skeptics can be swung round. But I was intrigued by an editorial on the subject that I saw in The Moscow Times today (some of you have asked, so here's the link to a soft re-print of the editorial).

The author's gist is that corruption in Russia's Government runs deep, but the leadership has started down a praiseworthy path to address it. That is, the Government has sought to reduce the effects (net cost to the Government's customers) of corruption by consolidating the services whose bureaucrats command corrupt payments. The thought seems to be that a single mafioso pyramid-like power structure is less expensive to the customer than would be a disparate collection of uncoordinated corrupt forces. According to testimony the author cites, businessmen are confirming that the Government's consolidation efforts in this area will indeed be useful.

Somehow the consolidation is a part of President Putin's "dictatorship of law" (think "rule of law" with a Russian flair?). Of course, the Russian leadership's motives and means are not seen as pure, and the author cites the Government's own interference and apparent corruption in the huge Yukos saga. But the author appears philosophical and pragmatic about these dichotomous aspects of the Government's focus on corruption. As I see it, the conclusion appears to be that official corruption IS the market in Russia, and the solutions to corruption-qua-problem should be constructed to be effective within the cultural history and operation of that market. Incremental change in the right direction is a good thing.

I am sure a saner mind could make more sense out of this confused editorial - draw something that is philosophically purer when it comes to eradicating corruption. I just wouldn't want to be in Moscow with the owner of that mind.

"Corrupt" - "Altered from the Model" or "Morally Depraved"?

Caution: if you believe that Western means of government are the best, you will likely find this post patronizing.

China is often said to be corrupt. It is widely agreed that unpublished and therefore unpredictable fees - bribes - must often be paid to government officials if businesses wish to obtain results (e.g., licences, concessions, approvals, etc.). There are laws against this kind of behavior, within China, in the USA, and elsewhere. And violation of these laws in practice is certainly an alteration from the model.

But is it morally depraved? And could the answer to the latter question depend on the culture from which one comes? If one is willing to consider that sovereignty is a commercial enterprise, then how could one consider that a government official - say, one in charge of a particular agency whose approval is needed - should not be able to charge whatever price for the requested approval that the prevalent conditions will bear? In fact, that is just how things have long been viewed and worked in many parts of the world.

But, Western minds generally consider that sovereignty is not a commercial enterprise (query what it is then), and they elevate governments to a different plane. A plane where it is somehow morally depraved to demand a market-clearing price for a requested approval or other service. The best argument that occurs to me for this position is that the government has a kind of monopoly - it sets the requirements and also administers them, and it should not be able to command such concentrated power without published constraint. It is for this reason that no self-respecting Western society would countenance anything close to such a concentration of power in commercial markets, aside perhaps from the odd minor exception like the energy industry or the defense industry.

When the WTO joined the PRC, it took on a cultural integration project, and mutual understanding of longstanding business and bureaucratic attitudes and practices is critical - in both directions - if the team-up is going to work. The PRC states that it wants to tackle "corruption" in the Western sense, though I doubt the Chinese have attributed a "morally depraved" aspect to their definition. As we should well understand by now, that tackling process will evolve very slowly, growing out of the previous system. To expect sudden change to the Western model is silly. And to label thousands of years of customs as "morally depraved" is not constructive.