Buying Our Way out of Corruption: Performance-Based Incentive Bonuses for Developing Country Politicians and Bureaucrats
Skladany, Martin, Yale Human Rights and Development Law Journal
This Article argues for the establishment of performance-based financial incentive programs in developing countries that would pay politicians and high-level bureaucrats substantial bonuses (ten to twenty times or more of their official yearly salaries) to reduce corruption within their countries. These incentive programs would turn the weapon of greed back on itself by aligning the motivations of politicians and bureaucrats with the stated goals of government and the desires and will of citizens. Paying corrupt public officials to stop stealing may seem distasteful, but the problems that developing countries face and yet cannot overcome because of systemic corruption are staggering and have been largely resistant to other anticorruption strategies. By simply altering the source of funds to public servants, performance-based incentive programs for developing country politicians and high-level bureaucrats can, over the long run, create a culture of clean governance conducive to sustained economic growth and can make all aspects of development, such as improving infrastructure, education, and health care, more manageable.
The trouble with Nigeria is simply and squarely a failure of leadership .... The Nigerian problem is the unwillingness or inability of its leaders to rise to the responsibility, to the challenge of personal example which are the hallmarks of true leadership. (1)
While Prime Minister of India in the 1980s, Rajiv Gandhi publicly stated that he believed 85% of government spending on development within India never reached its intended beneficiaries but was instead lost to corruption (2) at every stage along the way. (3) A 2004 survey in Chad showed that 99% of money earmarked for rural health clinics by the Ministry of Finance never reached its destination. (4) In Uganda, a relatively functional African country, "less than 30 percent of the funds dedicated to primary education was actually reaching schools" in 1998. (5) A poll by Gallup International Associations of 50,000 individuals worldwide revealed that "Africans ... are painfully aware of the inadequacy of their leaders: 8 out of 10 said 'political leaders are dishonest'; three-quarters 'deemed them to have too much power and responsibility'; while 7 out of 10 'think politicians behave unethically.'" (6)
As Heineman and Heimann observe, "Although it is difficult to quantify global corruption, there is little question that huge problems exist. For example, the World Bank estimated in 2004 that public officials worldwide receive more than $1 trillion in bribes each year (and that figure does not include embezzlement)." (7) The above sum is staggering and directly harms the poor, but the larger tragedy is that systemic corruption can destroy most incentives to create wealth and can perpetuate a dynamic in which it is "in most people's interest to take action that directly or indirectly damages everyone else" (8):
The rot starts with government but it afflicts the entire society.
There's no point investing in a business because the government will not protect you against thieves. (So, you might as well become a thief.) There's no point in paying your phone bill because nobody can successfully take you to court (so there's no point being a phone company). There's no point getting an education because jobs are not handed out on merit (and in any case, you can't borrow money for school fees because the bank cannot collect on the loan, and the government doesn't provide good schools). There's no point setting up an import business because the customs officers will be the ones to benefit (and so there is little trade, and so the customs office is underfunded and looks even harder for bribes). (9)
From an economic perspective, systemic corruption reduces the beneficial effects of competition in the market, the quality of goods produced, (10) foreign direct investment (FDI), (11) government revenue, (12) and bank supervision, (13) while raising the prices that the poor pay for goods, increasing the risk premium that developing countries (LDCs) (14) pay when issuing bonds, (15) and swelling the informal economy. …