<mediadc-video-embed data-state="{"cms.site.owner":{"_ref":"00000161-3486-d333-a9e9-76c6fbf30000","_type":"00000161-3461-dd66-ab67-fd6b93390000"},"cms.content.publishDate":1671038637964,"cms.content.publishUser":{"_ref":"00000162-07c3-d172-a563-4feb224a0001","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"cms.content.updateDate":1671038637964,"cms.content.updateUser":{"_ref":"00000162-07c3-d172-a563-4feb224a0001","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"rawHtml":"
var _bp = _bp||[]; _bp.push({ "div": "Brid_71038626", "obj": {"id":"27789","width":"16","height":"9","video":"1205015"} }); ","_id":"00000185-11aa-d9ef-afaf-71bb0bd90000","_type":"2f5a8339-a89a-3738-9cd2-3ddf0c8da574"}”>Video EmbedThe European Parliament was rocked by a corruption scandal this week, with three aides and a senior member of the Parliament charged with accepting Qatari bribes. What can the EU do to confront its corruption challenge?
Less regulation is one answer.
QATARGATE EXPOSES THE GRAVY TRAIN THAT IS THE EUROPEAN UNION
The relationship between money and political power can be a real problem in countries where wealth does not depend primarily on entrepreneurial ideas, but on political influence and access to the levers of power. The more power the state has, the more likely it is that lobbying and corruption will flourish. Countries with overly powerful governments also tend to be countries with rampant corruption. Russia, for instance, ranks a poor 136th (out of 180) in the Transparency International Corruption Perceptions Index. It is clear that we need more (not less) capitalism bound to the rule of law in places where the ties between business and politics are too close.
Many people associate “capitalism” with “corruption.” But as the economist Allan H. Meltzer wrote: “Offenses such as bribery can be either public or private and are common in many nations, but they are most common where government officials have the most authority.” The belief that corruption is especially widespread in capitalist countries is wrong. The opposite is true, as confirmed by a comparison of Transparency International’s Corruption Perceptions Index and the Heritage Foundation’s Index of Economic Freedom.
The Index of Economic Freedom, which has been released by the Heritage Foundation since 1995, is widely regarded as a capitalism ranking. According to the index, the nations that have the lowest corruption levels also have the highest degree of economic freedom. The 10 countries with the least corruption are all, without exception, in the index’s “free” or “mostly free” categories: Singapore, Denmark, Finland, New Zealand, Switzerland, and the Netherlands are among the 10 most corruption-free countries in the world — and they are all among the most economically free countries!
Conversely, countries in the bottom 10 of the Corruption Perceptions Index are also classed as “repressed” in the Index of Economic Freedom. The two worst performers in the Index of Economic Freedom, Venezuela and North Korea, are also among the worst performers in the Corruption Perceptions Index. The more the state intervenes in economic life, the greater the opportunities to bribe government officials. Anyone who wants to limit unethical or even criminal influence on political policy by the wealthy should therefore not support bigger government, but smaller government.
I recently visited Georgia, a country where corruption used to be endemic. I met economist and professor Gia Jandieri, an instrumental figure in the fight against corruption, who said about the most effective anti-corruption measures (apart from dismissing all 35,000 or so police officers in one fell swoop): “At least as important for fighting corruption was that reforms eliminated many superfluous regulations and rules.” This provides a key lesson for other countries: Cutting government regulation also reduces opportunities for corruption. In 2004, Georgia ranked as low as 133rd in Transparency International’s Corruption Perceptions Index. By 2021, it had climbed to 45th out of 180.
What lessons can the EU learn from this? Well, the EU regulates more and more areas of life. As a result, the EU also opens more and more doors to special-interest lobbyists and corruption. It would not be surprising if the corruption that has been uncovered is just the tip of the iceberg. As we have seen elsewhere, less red tape, smaller government, and less power in the hands of politicians would be among the most effective measures for the EU to deploy.
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Rainer Zitelmann is a historian, sociologist, and author of In Defense of Capitalism.
