Corruption’s revolving door must be sealed shut before it is too late
Perhaps there is an argument that all human systems are ultimately brought down by corruption. Writing in the 1st century, Tacitus explains how Augustus ended the Roman republic by raising friends and cronies “to the pontificate”, and by seducing soldiers “with gifts”, all men with “the sweets of repose” and nobles with “wealth and promotion”. He compared it to a kind of enslavement. We see similar dynamics across time and space, from the Mayans and Mamluks to the Ottomans and Carthaginians.
But there is an even more intriguing pattern to these epochal episodes: those who lived through them were largely unaware of the cancer growing in their midst. The tumour was hidden in plain sight, metastasising as people looked the other way. This, I think, is what Edward Gibbon had in mind when talking of the last days of the Roman empire in arguably his most famous observation: “It was scarcely possible that the eyes of contemporaries should discover in the public felicity the latent causes of decay and corruption.”
Without wishing to sound alarmist, I think that liberal democracy may have reached a similar stage of historical development. The cancer has been growing for decades, eating away at the quality of public administration, leeching our common lifeblood. You can glimpse the symptoms in a number of ways, from the stagnation of our economies to the rise in inequality. Or take public trust in government, which has collapsed in America from 75 per cent in the 1950s to a mere 19 per cent today, a pattern seen in the UK and across the western world.
Political scholars may balk at my diagnosis of corruption as the underlying disease, pointing to Transparency International’s corruption perceptions index, in which western nations continue to score favourably. And they are, in one sense, right. The US, UK and EU do not tend to engage in the kind of corruption measured by that survey: officials asking for bungs; ministers giving jobs to nieces and nephews; politicians siphoning off funds from state coffers to Swiss bank accounts. One of humanity’s achievements during the slow arc of history from Magna Carta to, say, the Glass-Steagall banking legislation was the steady reduction in “transactional” corruption.
No, what we see in the western world is a different kind of decay: subtler and more insidious. You gain a sense from the sheer number of politicians who pass through the revolving door and earn huge sums of money from companies over which they once had regulatory oversight; how political parties are funded by an ever smaller number of mega-donors; how those who chair public committees and tribunals know that their elevation to the peerage is in the gift of those over whom they sit in judgment.
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This isn’t public figures being offered bungs or bribes or asking for favours and concessions. Rather, it is a covert edifice of nods, winks and reciprocal obligations that has created a parallel system of political power. It is why I am not hugely troubled by stories such as that revealed last week by Lord Mandelson of Tony Blair taking a £1 million donation from an animal rights group not long before the Labour Party banned foxhunting. Mandelson may even have been telling the truth when he said he felt the deal “went too far” and “wasn’t repeated”. This kind of transactional corruption certainly exists in western politics, but it would be overstating things to call it endemic.
No, what should worry us far more is the legalised corruption that operates in plain sight and leads to neither retribution nor obvious shame. The Conservative Party, for example, was so unperturbed by the Greensill affair that David Cameron was offered the job of foreign secretary just a couple of years after the scandal broke. This is a man who allowed Lex Greensill to gain kudos by working in No 10, before taking a job that would earn him a reported £10 million after leaving office and as part of which he frantically petitioned ministers on behalf of his paymaster. It wasn’t a breach of the rules because Cameron had blocked the changes while in Downing Street that would have banned the in-house lobbying from which he later benefited.
This is how it works; how the poison enters and corrupts the system. But it isn’t the specific examples that should concern us as much as the more general debauchment. For what are corporations aiming at when they work hand in glove with politicians and regulators? Thinkers from Milton Friedman to Friedrich Hayek have noted that they are not seeking to enlarge the public interest but to protect themselves from the cleansing power of open competition by advocating sweetheart regulations, covert subsidies and other barriers to entry for insurgent rivals. As the economist Luigi Zingales has noted, the best way to make lots of money is not to come up with brilliant ideas but to cultivate a government ally.
This may offer an insight into the otherwise baffling truth that market economics are seizing up, with dominant companies staying ever longer in the main indices and start-up rates dwindling on both sides of the Atlantic. In his book How Innovation Works, Matt Ridley notes that “of Europe’s 100 most valuable companies, none — not one — was formed in the past 40 years”. The economists Brink Lindsay and Steven Teles say that “the machinery of creative destruction is slowing down”, with “declining new-firm formation and disturbingly increasing stability of the top firms over time”. Free markets have been replaced with rigged markets, capitalism with a cronyish impostor.
The good news is that solutions are not difficult to identify. A ban of at least five years on ministers and regulators working for companies over which they have had oversight could be introduced in a matter of weeks. I would also like to see a voucher system for the funding of political parties along the lines proposed by the political economist Daniel Chandler. Each person would have, say, £50 to contribute to the party or candidate of their choice; the corollary would be a cap on private donations. This would “give everyone an equal opportunity to influence political parties through donations” and “give parties an incentive to engage with the widest possible spectrum of voters”.
I would also significantly increase the salaries of ministers. I know this would be less popular, but the logic is impeccable: we would get higher-quality candidates earning a good living by fearlessly serving the public interest rather than using ministerial jobs in the service of corporate clients from whom the real money is earned after they have left office.
Such reforms should appeal to those on the left, who want more equal access to political power, and the right, who regard the operation of free markets as the most powerful guarantor of rising living standards. Either way, without an urgent reset the body politic risks being fatally harmed by the cancer within. And this would be a tragedy for which we’d have only ourselves to blame.
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