J.D. Tuccille notes that corruption — at least corruption being brought to our attention — is rising at the same rate as bureaucratic red tape. It’s almost as though there’s a correlation between making things harder to do and officials accepting “sweeteners” to make things easier to do …
At the moment, corruption investigations and trials of political figures are taking place in jurisdictions around the U.S. including Hawaii, Mississippi, and Washington, D.C. These aren’t isolated scandals; the latest edition of an international corruption index finds corruption worsening globally, with the United States earning its worst score to date. Given that corruption involves government officials peddling favors for compensation, it shouldn’t be surprising that evidence suggests the solution lies in reducing the power and role of the state.
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Regulation Breeds Corruption
“EU regulation is not only becoming more cumbersome but it is also pilling in”, Oscar Guinea and Oscar du Roy of the European Centre for Political Economy wrote in 2024. “The amount of new regulation accumulated during the last years has been staggering.”
That matters. In its advice for reducing corruption, Transparency International emphasizes, “there is a broad consensus that unnecessary and excessive administrative requirements for complying with regulations create both incentives and opportunities for bribery and corruption”.
The means by which this occurs is logical enough. Government-imposed permitting and licensing requirements, administrative procedures, prolonged decision-making, and contract awards create a temptation to shorten delays and reduce costs by padding officials’ pockets. In many cases, selling exceptions becomes the real reason for red tape. That phenomenon applies to the entire world, including the United States.
In the U.S., the More Regulations, the More Bribery
In a paper published in the European Journal of Political Economy in 2020, Oguzhan Dincer of the Department of Economics at Illinois State University and Burak Gunalp of the Department of Economics at Turkey’s Cankaya University looked at the relative effects of federal regulations on the corruption levels in U.S. states.
“Power to enforce the regulations gives government officials power to extort bribes”, they wrote. “Government officials have an opportunity to extort bribes from the firms trying to enter an industry because they have the power to issue the industry licenses. They also have an opportunity to extort bribes from the incumbent firms by simply colluding with them and keeping the regulations unchanged and/or strengthening the regulations to increase the costs of entry for new firms. Finally, regulations and the discretionary power given to government officials to extract bribes create incentives for firms to operate in the unofficial economy.”
Specific to the U.S., they examined two decades of data to see how red tape affected the honesty of public officials.
What they found shouldn’t be surprising: “Using the U.S. Justice Department’s data on the number of federal convictions for the crimes related to corruption, and controlling for several economic and demographic variables, we find a positive and statistically significant relationship between federal regulations and corruption.”
