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System Integrity Creates Prosperity by Reducing Waste

Many countries do not enforce their laws. When people find a law inconvenient, they just break it. To the individual, this seems like an effective way to manage things. Yet costs arise in systems where rules are inconsistent, unpredictable, and require continual negotiation. These costs are not obvious, so most people are more aware of what they gain from beating the system than what they lose by living in a system that is easy to beat. With complete information, most people would realize they are better off with a system that enforces its rules.

When systems lack integrity, people invest time and money in efforts to circumvent laws. These resources are wasted because they produce nothing, even though they seem beneficial to the individuals involved. Time spent figuring out how to circumvent a law could have been spent creating value, whether goods, services or leisure. Money spent influencing a corrupt system is waste even if the giver and receiver are satisfied. The cost of bribes and graft is not just the immediate price paid to a corrupt decision-maker, but the cost to the public of covering that expenditure, and then doing without the essential infrastructure it would have paid for. Time and money spent evading rules had to be diverted from other purposes; system integrity frees up these resources for investment in higher purposes.

People who circumventing rules create cultures that justify it. Cultures can glorify law-breaking in ways that mask the obvious self-serving motivations. When people tell themselves "everyone does it," a spiraling of efforts to influence rule-makers and rule-enforcers results. This increases the total amount of waste. People accept this because they are convinced they would lose even more if their attempts to evade the rules fail. When they imagine a better world, it's a world in which they are on the receiving end of the rule-bending negotiations.

Why don't people imagine a system that works with integrity? Why do they not expect and demand it from their leaders? Because no one likes it when a rule is enforced on them. No one like to see others circumvent a law that they are required to obey. People dislike the idea of enforcement because they pre-suppose that it will be unfair. This confines them to living in chaos without the benefit of predictable and consistent rules.

As soon as people expect rules to be enforced, they follow them. Systems can change easily because behavior is shaped by expectations. A system unleashes productivity when it creates the expectation that its rules will be enforced. There are two direct ways to do this:


Lobbying is Different from Bribing

Lobbying is legalized bribery according to many. This is false. The favors a public official can give and receive from a lobbyist are limited in a democracy. Politicians are held accountable if they violate those limits. Humans never stop trying to influence each other, but the waste of public resources is reduced sharply when a country enforces behavior standards on public officials.

In democracies, public officials are held accountable by many overlapping layers of laws, regulations, and social judgments. If you go out of bounds, there are many ways to get caught.

Most important, politicians have restricted decision-making powers. They cannot sell the public interest with impunity because they are held accountable when they exceed their formal powers. Interest groups exert pressure on all sides of every issue, so every decision made by a policy maker appears to aligns with one interest group or another. That is not proof that the public interest has been undermined. If a public official awards favors beyond the clear prerogatives of their office, it is highly likely that they will suffer public disgrace, financial penalties or career setbacks sooner or later.

Cynics do not believe that these systems work. When they hear news that the misuse of public office is being punished, they respond that there's a lot more that doesn't get caught.  They presuppose that everyone is corrupt instead of working only from evidence. Media coverage of government reinforces this view because only bad things get on the news.  There's also a human tendency to project the frustrations of private life onto the public stage.  Opinion leaders are always competing for our attention, and we are responsible for our choice to give them our attention when they express cynical views.  As a result, a single influence-peddling scandal reported over and over takes up more space in our minds than the many public officials who act responsibly, and the many successful prosecutions of improper influence-peddling.

The cynical view is tempting because the public interest is so hard to define. My idea of the public interest often conflicts with yours. And our definition of the public interest is a tiny-bit skewed toward our self-interest, we may notice. A policy is not  necessarily corrupt just because it violates my sense of the public interest. Every policy disappoints some interest groups. If every disappointment is labeled "corruption," we fail to notice the healthy democratic process of mediating among different interests. Government is not like a department store where the customer is always right, even when they return a dress they've already worn. Government is stuck with realities rather than wish fulfillment.

A system that leaks 5% is different from a system that leaks 95%. We must value and preserve systems that leak a little and stop making excuses for systems that leak a lot.

Anti-Corruption Roundtable

Recently I hosted a round-table discussion on anti-corruption strategy. Viewpoints varied with people's life experience, so I decided to report them in the participants' own words.

A Woman from Eastern Europe:
"The people I know are so used to living with corrupt practices that they are not really clear about the alternative. They just assume 'everyone does it' and do not really understand what it is costing them. A country that wants to improve its quality of life will need to give people very clear examples of the corrupt behavior and the system-integrity behavior. People understand the benefit of corrupt practices, but they do not understand the benefit of respecting the rules of public institutions."

A Gentleman from Africa:
"Reform efforts should focus on the people in the middle, since the people at the bottom can barely survive, and the people at the top have resisted change with violence. Middle-level government employees may be tempted by greed, but they can be reached by communication based on their traditional values. Doctors working for a national health care system are often corrupted by the system around them, but they also have pride in their heritage. This pride combined with transparent systems would turn them into role models for people above and below them."

A Gentleman from Asia:
"Opportunities for corruption are reduced when services are performed by private organizations rather than government. While there is often the perception that the private sector is corrupt, private companies cannot steal from each other, since they are always accountable for the management of their resources. A private firm could only be corrupt when transacting with the government, since governments are the only place with resources no one is held accountable for. The debate about who is corrupting who is not fruitful because at this point habits have been formed in both directions. The only way to break the cycle is to deprive government agencies of resources if they lack a track record of accountability."

Myself (Loretta G. Breuning):
"Human beings are good at figuring out what they can get away with. Some people would not drive in lanes or pay their electricity bill unless there were serious consequences. Others would notice they're 'getting away with it' and do likewise. This leaves everyone worse off, with unsafe roads and lots of power outages. If you live in a country where people steal electricity and don't drive in lanes, it's easy to take an 'everyone does it' mentality without realizing what it costs you. If you live in a country where there are consequences for violating system integrity, it's easy to complain about enforcements without understanding how you benefit from them."

Corruption and Human Nature

Bribery and corruption have frustrated civilizations as long as there have been civilizations. Watch chimpanzees haggle over shares of food and you will be reminded of the deep roots of human self-dealing. (See Chimpanzee Politics by Frans de Waals.)

Humans have formal rule systems that chimpanzees do not have. Self-dealing becomes corruption when it violates the established rules. Corruption is pernicious because one enjoys the benefits of having rules applied to others without the sacrifice of complying with the rules one's self.

Ordinarily, the solution is simple -- enforce the rules on everyone. Corruption is only possible where an enforcement system is not working.

As much as we benefit from enforcement systems, it's human nature to resent them more than we value them. Imagine you are at a stop sign and decide it's perfectly safe to roll on through. Now imagine a police officer catching you and handing you a ticket. At that moment, many people feel angry at him, angry at the rules, angry at the system.

But turn it around and imagine someone else going through a stop sign. You want them to get caught. You don't feel safe in a world where people can run stop signs with impunity. At that moment you are aware that you benefit from system integrity.

It's human to want the rules applied to others while giving yourself a free pass. This aspect of human nature is deeper than politics, deeper than culture. It's biological. We benefit from a system where the rules apply to everyone, but we overlook that benefit in everyday life.

Human self-centeredness is part of the solution as well as part of the problem. Where there are real consequences for corrupt practices, people stop because it's in their self-interest to stop. Where more people value enforcement systems, those systems work more reliably. The temptation for self-dealing cannot be eliminated, but it can be harnessed to solve the problem.

Cynicism is the Problem, Not the Solution

Cynicism about the state of the world is widespread. People see problems and presume that the bad will of others is the cause. Yet cynicism itself often causes problems by disposing citizens to reach conclusions without seeking evidence.

Strikes are an example. Strikers appeal to the assumption of bad motives on the part of the employer. Strikes seem justified as long as one presumes harms done by employers without seeking evidence, and dismisses evidence of harms done by the strikers themselves. An alternative to cynical premises would be to evaluate each strike individually, based on concrete evidence of harms done by all parties. The mind seeks evidence, but beliefs often rush in and substitute for evidence.

Cynicism creates a sense of entitlement. One feels entitled to misdeeds because one has pre-supposed misdeeds on the part of others. The presumption of bad motives in others renders one's own misdeeds small in comparison. This triggers an unfortunate cycle, where the misdeeds of one party feed the cynicism and sense of entitlement of the next party. In the short run, cynics feel they have gained something. They may not realize what they lose in the long run with a system that rewards disruption more than production.

How can a system reward production more than disruption? Research on jurisprudence suggests that a system of rules works only when voluntary compliance is about 80%. Enforcement measures can achieve compliance among the 20% of potential violators. But enforcement measures fail when the population of potential violators rises. At that point, voluntary compliers notice that others are violating with impunity, and some become violators themselves. Now, enforcement measures are even more inadequate, resulting in more observations of impunity, and an acceleration of rule violations.

This vicious cycle is troubling, but a virtuous cycle is equally possible. When rule violations have predictable negative consequences, violators notice and begin self-policing. Enforcement measures become more successful because there are fewer violators to pursue. This improved consistency in enforcement is observed by potential violators, motivating more voluntary compliance. A virtuous cycle rewards everyone with more production and less disruption. But ironically, people may not notice the benefit, since the short-run rewards of cynical entitlement are more perceptible than the long-run rewards of system integrity.

Any society can enjoy a virtuous cycle. To trigger it, a system must reduce its rules and regulations to those that can be effectively enforced. When a system is pared to only enforceable rules, individuals can see clearly that being productive is more beneficial that being disruptive.

Copyright 2007 System Integrity Resources. All rights reserved.