I’ve had many questions about what I think of the PhARMA meeting with the new administration, but I haven’t written about it yet. That’s largely because it’s been difficult to figure out what it actually accomplished – statements about it have been all over the place, and I get the impression that different people took different things away from the meeting. The same goes for all the talk of who the new FDA commissioner will be. So many names have been floated, and so much speculation has already been loosed, and we still don’t have an actual person with actual policies we can talk about. The current administration does not (or does not yet) seem especially disciplined and cohesive, probably because the person at the head of it is neither of those things, and that makes it hard to guess what might come next or when.
So in lieu of that, let me make a general point that may turn out to be of use over the next four years. I wrote briefly about this on the blog a few years ago, but it seems worth bringing up again. I think that there are, broadly speaking, three levels of corruption, and that they can be ranked in order of severity and destructiveness to the social order.
Level One corruption is the least damaging. I’m not saying that it causes no damage at all, but wait until you see the next two categories before judging too harshly. Level One is when you’re paying someone to do something that they wouldn’t ordinarily do. This is “Hey buddy, can you get me a good seat” stuff. You’re asking someone to do you a favor, something out of the usual run of things, and you will do something for them in return. That return might be a twenty-dollar bill applied immediately to the palm, or it might be (on a larger level) an expectation that you will be willing to bend the rules in turn at some future date to balance things out. It’s actually very close to the completely legitimate tiers-of-service business model, where you pay more to get faster internet service, or to get your US passport issued more quickly – the difference is when you’re asking someone to bend the existing rules. This sort of thing happens everywhere, and I’m willing to stipulate that it’s human nature.
Level Two corruption, though, is when you’re paying someone to do what they’re supposed to be doing in the first place. That’s not good. Friends of mine from several different foreign countries have recounted examples of this to me as how things are done back home. The court clerk is supposed to file your papers, but he won’t get around to it unless there’s some extra money for him. The delivery is supposed to take place on Tuesday, but it won’t actually happen close to that date unless you slip in some more cash. And so on. Now you’re bribing people just to stay even, not to get something extra. The deadweight loss to the economy and to society should be clear.
And that shades into Level Three, which is the most harmful of them all. This is where you’re paying them not to hurt you. It’s when a business or government turns into a protection racket. Nice little business you’ve got there – be a shame if we actually enforced the provisions of the tax code. Or if things turned out to require a Permit #81Q, which you haven’t heard of until now, have you? Now you’re not getting favors, and you’re not even just getting what the law or the contract says you should get. You’re actively trying to avoid harm, and thus you exist at the sufferance of whoever has the leverage on you. At this point the rule of law has truly broken down; the government is using its power as a stick with which to beat money and compliance out of its own citizens.
Different people have different thresholds about that last one. The literary critic Edmund Wilson seemed to feel that the US income tax was just such an outrage and went for many years without paying any, which worked out about as well as you’d imagine. (Watching someone who’d once been an admirer of Lenin turn libertarian when it came time to pay his taxes must have been quite a spectacle). Now, the coercive power of the state is a real thing, in any country you can name, but I still think that there’s a difference between the IRS and the way that business seems to be working in, say, Russia. The problem is that all three of these levels exist on a sliding scale.
Consider business/government relations. It is natural enough for a business to not have deliberately hostile relations with the government of its own country. It also makes sense that a business would lobby for favorable legislation, and to impede bills and rulings that they would see as unfavorable. These things can be done in a legal fashion, a legal-but-smelly fashion, or outright illegally. At the far end of the scale, if you’re having to propitiate a third world autocrat, then you’re going to be in those second two bins right from the start, by (for example) making one of the Big Man’s relatives a highly-paid consultant. In many countries around the world, this way of doing things is so entrenched that it’s just seen as the natural order of things and perhaps even a part of what government is for. Reading Chinua Achebe’s A Man of the People many years ago gave me an insight into this that I’d never had until then. You’d see these horribly run kleptocracies and wonder how they keep going for so long, but one answer is that as long as running the country is mainly a chance to extort, twist, and squeeze, then you might get your chance to do some of it someday. What a shame, then, if things were ever to get cleaned up before you and your group had made it to the trough!
The bottom-of-the-barrel examples are (or should be) well known. Read up on Macías Nguema or Niyazov, and there are plenty more where they came from. It’s been this way for a long time: Gore Vidal’s essay on the first twelve Roman emperors is a good illustration of that. But you don’t have to go all the way to these hair-raising histories to see vast amounts of harm being done. Adam Smith was right when he said that “there is a great deal of ruin in a nation”, but people tend to read that quote in two different ways. The glass-half-full way, which is how Smith himself meant it, was that it takes a lot to really ruin a place, and that a single act or a single politician can rarely manage it. The glass-half-empty way, though, is to realize that the ruination can just drag on and on.
The antidote is the rule of law. To stick with that company/government relations example above, if companies know what the rules are and why they exist, and if the rules bind both them and the government that regulates them, chances of a good outcome are far greater than if everything depends, ultimately, on the whims of the Big Man. The more people worry about the latter and make that the focus of their activities, the worse things will be. Something to look out for.