On corruption in Italy

\”For as long as I can recall, sociologists and economists have made a connection between levels of corruption and prosperity. For a long time this seemed to be borne out by the rankings. Squeaky-clean societies such as Sweden, say, had high per-capita GDPs.\”

Erm, might be worth finding out what economists actually say about corruption really.

1) Yes, corruption is bad, it reduces economic efficiency and thus makes a place poorer than it would otherwise be (all that rent seeking etc).

2) However, over prescriptive regulation and a throttling bureaucracy are also bad for growth because they reduce economic efficiency (all that rent seeking etc.).

Which leads to the conclusion that *if* the bureaucracy and the State are too prescriptive then corruption, by by passing that logjam, increases economic efficiency even given the costs that corruption itself imposes.

For example, a general conclusion often reached is that corruption was the only reason the Soviet state of the 70s and 80s worked at all: it added to living standards. At the other end a place like Sweden is a very liberal and open economy (no, really, it is, whatever the tax levels) and thus corruption would be a diminution of economic efficiency because there isn\’t that bureaucracy stifling activity.

Where you put Italy on that scale is of course up to you…..but a number of the studies of the subject have said that at least mused that the Mafia style corruption of Southern Italy is an increase in efficiency, not a decrease.

5 thoughts on “On corruption in Italy”

  1. So Much For Subtlety

    Giving the long term poverty of southern Italy I would tend to think this is a stretch. After all, is Northern Italy richer? Is it less corrupt?

    Tim adds: Yes and yes….but the peeps looking at this are also taking account of the very different backgrounds. Southern Italy (Kingdom of Naples/Kingdom of the Two Sicilies) was feudal until the unification of Italy in the 1860s. Indeed, Basilicata was largely so until the 1950s. The North, the city states, Savoy and so on, very different institutional background.

  2. Tax in Sweden is high but the amount of it that is redistributive is lower than the UK. It is not therefore distorting as much as the UK system .
    I doubt there are general rules

  3. Actually Tim, I think you’ll find there is a good argument for saying that Unification was the worst thing that happened to Naples and the South. Yes, it was feudal before, but in a pretty benevolent way. It was only after the House of Savoy unleashed its carpetbaggers on them that things got really bad. Naples under the Bourbon-Parma’s was a substantial economic, cultural and political power in its own right; post the Risorgimento it became the large, crumbling and irrelevant backwater it now is.

    Who knows? The South could be like Catalonia is today if Garibaldi and his northern paymasters hadn’t had their way.

  4. All tax is redistributive per definition. You take money from someone who has earned it and spend it on something else.

  5. When you come down to it I guess you just have to decide which set of bastards you want to get screwed over by.

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