Persisten corruption and the 'me too' mindset

Siwage Dharma Negara, Economic Researcher, Indonesian Institute of Sciences (LIPI), Jakarta

In the March 18 edition of this newspaper, Kornelius Purba discussed widespread corruption and joked about the chance of Indonesia getting recognition in the Guinness Book of World Records, given the complexity of the problems and the weird way in which our legal institutions tackle the issue of corruption.

What has gone wrong with the attempts to combat corruption? Hong Kong-based PERC consultancy has rated Indonesia as the most corrupt country in Asia.

The evidence suggests that corruption undermines economic growth and development. Corruption leads to misallocation of scarce resources as it causes less effective targeting of social programs, leads to a lower level of investment, distorts the economy, lowers income and worsens inequality and poverty.

Massive corruption causes the poor to receive fewer and poorer social services, such as health and education. Indeed, improvement of the quality and distribution of education and other resources in general are neglected by corrupt officials.

Corrupt regimes tend to lead to policy bias, by diverting resources from the poor to the rich. A cross-country empirical study by the World Bank has indicated that corruption more adversely affects the poor than the rich.

Poor households must spend more, as a share of their income, on bribes, than that of higher income households, for access to public services. Therefore, widespread corruption has a correlation with wider inequality and higher poverty levels.

As a consequence of longtime bloated and spoiled bureaucracies, all spheres of society are overburdened by red tape and the rent-seeking behavior of corrupt officials. In the absence of checks and balances on officials' commitment to good governance and the rejection of corruption, it is not surprising that corruption has become a plague on the economy.

The business sector is often cited as one susceptible target of corrupt officials. A firm engaging in administrative bribery does not necessarily benefit from its conduct: Worse still, it is more likely to harm the business community or society.

The "conditional morality" of our bureaucrats partly explains corruption here. A bureaucrat may indeed believe in the immorality of corruption and the harm it can inflict, but that he would lose out if he did not follow suit.

In brief, our bureaucrats may think that it would not be in their own best interests to control corruption if others did not do so or if the public's passive acceptance of it persisted. So, the prospects of pulling the nation out of corruption seem pretty gloomy.

However, as most individuals do adhere to some basic norms of morality, there is scope for coordinated action that could lead to greater public control of corruption.

Although it is not easy to reform the inefficient and corrupt administrative system, it is not impossible. As corruption is a symptom of deep and systemic institutional malaise, to combat corruption we need to tackle all these weaknesses.

The professionalism of civil servants has been recognized as the key determinant to combating corruption. Improving civil servants' professionalism cannot be achieved simply by increasing their salaries. It has to be combined with, among other things, recruitment and promotion based on merit and the creation of a professionalized civil service based on proper testing of ability.

The overall strategy to combat corruption must consist of an independent judiciary, the strong rule of law, good institutional and public sector management, protection of political and civil liberties, active participation by civil society, continuous deregulation, and legal, budgetary and financial reforms.

A more holistic and integrated approach to development that considers institutions and the development of human capital is badly needed. The key is how to speed up regulatory actions in tandem with economic growth and development.