How to diminish corruption

The recent arrest of two more Fifa vice-presidents in Switzerland means that the noose is closing around Sepp Blatter.  The interesting thing about Fifa, though, is that although it was saturated with corruption at vice-presidential level, and the money concerned could have been put to better use no doubt, it didn’t stop Fifa carrying out its principal function perfectly satisfactorily.

This suggests that although Sepp Blatter is probably corrupt, he has also been a superb chief executive.  Now that he’s finally left the scene it’s interesting that the organisation itself continues, seemingly without a hiccup. Sepp Blatter probably allowed, even encouraged, corruption at vice-presidential level but made sure his bureaucracy wasn’t touched by it.

Economists recognize three entirely different types of corruption.  In increasing order of harmful effects on a national economy these are:

1. that of individual sportspeople (or horses, etc) to use drugs or to swing results.  While earnings remain so high, this is probably impossible to prevent;

2. that of Chinese style nepotism whereby a senior politician places a family relative on the board of a business. A more serious variant of this is when a senior European or American politician is promised a board position after he retires if he gives favours while in office;

3. that of an important government department which is saturated with corruption from top to bottom — for example, when a proposed new business takes a long time and multiple levels of bribery in order to be allowed to operate.

As regards 2 and 3 above even the least serious type of corruption is undesirable because, sooner or later, demoralisation spreads downwards and outwards.  Corruption is very much to do with individual greed and will therefore never be extinguished by legislation or moral suasion alone. The only reform that can keep it to a low ebb is to design all our public organisations with maximum visibility of all its operations — transparency.

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