It is great to have this long-awaited EU report on corruption make the news around the world. Yes, corruption is now visible almost everywhere, from petty officials demanding bribes from anyone to the awarding of major government contracts. We knew that. Now this is an estimate of size. However, when you estimate the magnitude of corruption–something that is illegal–you have only a very rough sense of how big it truly is. Turns out that 120 Billion Euros is only about 1% of the GDP of Europe. From the NY Times:
Ms. Malmstrom said the commission’s estimate that corruption costs Europe €120 billion, or roughly $162 billion, annually was almost certainly too conservative. The figure is equivalent to about 1 percent of the €11.7 trillion gross domestic product of the 28-nation European Union. Ms. Malmstrom did not provide a breakdown of how officials had arrived at the €120 billion figure…
Transparency International, a nonprofit organization that monitors corporate and government corruption, said in a statement that the report was “an important step in the E.U.’s collective effort to scale up its anti-corruption efforts.” But it noted the commission had failed “to issue detailed recommendations in the area of whistle-blowing, access to information and lobbying.”
…A survey of companies by the European Commission showed that 75 percent of businesses said corruption was widespread in their countries. The worst was the construction industry, where four out of five companies said so, including nearly 100 percent of construction companies in Greece, Spain and Italy.
What the reader should not assume is that the problem is “over there”. Here in the US, the stakes are bigger, the wars are larger, government contracting is over the top– (for example, hundreds and hundreds of millions of dollars to build the not-that-complicated healthcare.gov website that still had bugs when I checked it out this morning) and the fines and penalties issued (those rare times when they get issued) for corrupt activities have been insufficient to serve as a deterrent. I suspect that the drag on the economy caused by corruption, in all sectors, is the underlying reason why we cannot get over the recession. The gray money just doesn’t get added to the economy–instead it winds up in offshore accounts. Or sweet deals. Or buys something really expensive, maybe under the wrong name.
Now HHS is going to partner with Pharma to bring us better drugs. Really? Were Pharma’s double digit yearly profits insufficient to fund the search for blockbusters? Unlikely. More likely, this partnering is just another way to spend public funds on healthy private companies that are doing just fine, thank you, so fine they have more lobbyists in DC than any other industry. Of course the industry found a way to tap the public coffers. Why else are those lobbyists there?
What is really needed is using public funds in the US and around the world to fund new agencies that are given the power to investigate all local corruption. I have lots of ideas about the types of investigations that would likely bear fruit. The agencies need major political clout and they need to be protected. Then we might see comparable interst in the subject in the US.