Does corruption cause poverty?

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We often hear politicians accusing each other of corruption. Those accusations may be genuine, but sometimes they paper over deeper structural problems in the economy which are less sensational but which may have an even greater impact on the poor.

First, let me say that most Malaysians correctly recognise that the billions of ringgit lost through corruption and wastage and rent-seeking could have been used to provide more budget allocations to assist the poor.

But do corruption and wastage alone result in poverty?

It is so easy to talk of good governance alone. What about the impact of privatisation and neo-liberal policies, which favour Big Capital at the expense of the poor? Why don’t more politicians talk about replacing neo-liberal policies with pro-people policies? Why were the Red Shirts really protesting in Thailand?

Economist Walden Bello provides food for thought. He argues that in Thailand and elsewhere, clean-cut technocrats (through their anti-people policies in favour of Big Capital) have probably been responsible for greater poverty than the most corrupt politicians. “The corruption-causes-poverty discourse is no doubt popular with elites and international financial institutions because it serves as a smokescreen for the structural causes of poverty, and stagnation and wrong policy choices of the more transparent technocrats.”

In other words, you can be a clean-cut, corruption-free leader, but your policies could be aimed mainly at helping Big Business – often at the expense of the poor. (Think regressive taxation or lower taxes for the rich and corporations followed by cuts in social spending and the introduction of GST to compensate for the lower tax revenue, and the privatisation of essential services to large corporations). You are a servant of Big Capital rather than the people.

“Bad economic policies create and entrench poverty,” says Bello. “Unless and until we reverse the policies of structural adjustment, trade liberalisation, and conservative macroeconomic management, we will not escape the poverty trap.”

See Bello’s full article here.

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niera varicella

can someone give me the hot issues related to the poverty..such as is’t poverty rate is really low? brim or anything

Siddhartha Bandyopadhyay

Nearly all the communities in India, such as Bengali, are succumbed in ‘Culture of Poverty’ (a theory once introduced by an US anthropologist Oscar Lewis), irrespective of class or economic strata, lives in pavement or apartment. Nobody is really at all ashamed of the deep-rooted corruption, decaying general quality of life, worst Politico-administration, immature mother language, continuous absorption of common space(mental & physical, both). Becoming parents only by (blindfold) self-procreation, simply depriving their (the incoming children) fundamental rights of a decent, caring society. Do not ever look for other positive alternative behaviour (values), i.e. deliberately co-parenting of those children who… Read more »

stoney

Nick Leeson’s biggest battle in his ambitious changes is expected to be the assorted parasites, deadwood and toadies in civil service straining to maintain the status quo. The religion of Big Money shows no sign of imminent collapse despite its financial devastation hitting billions of voters worldwide. Politicans must be very happy with this thing called democacy.

Gan

Ganesh, you said it right. They give the contracts to their nephew’s sister in law’s brother, and then, they themselves, get a big fat chunk of commission from there, otherwise how can a few screws cost thousands of Ringgit??? And the AG reported that billions of Ringgit had been missing, but they swept under the carpet, what can we Rakyat do??? Idris, what is the point of imposing severe punishment when the judges can choose whom to punish and whom to let go… Just look at Anwar’s Sodomy’s cases (Serials One & Two) and Beng Hock’s death, etc. You can… Read more »

ghazaly idris

Kicking the corrupt in the next GE is not good enough.The next guys will also be corrupt.It has become a culture.The best thing to do is to impose severe punishment .Example:Anybody found guilty of corruption of more than 1000 ringgit :Death Penalty.The punishment aspect of the law must be reviewed.

nkkhoo

Chinese government imposes death penalty for corruption. Does severe punishment deters corruption in China? The answer is NO if the system itself encourages corruption with absolute power is given to the government officials. BN enjoys 2/3 majority for 50 years is a major factor for the corruption. Then you may ask why Singapore government can be a clean regime under the PAP 2/3 control in the parliament. The answer is still lie with the system. LKY encouraged a corruption free system with high salary “carrot” and effective severe punishment “stick” for the government servants. Bolehland having a low salary and… Read more »

Clarence

I think a lot of people are missing the point here: the question isn’t “is corruption bad?”

That’s pretty obvious.

Beyond that, does excessively pro-capitalist policy also propagate poverty and unequal wealth distribution? There are definitely examples where this is the case.

Thanks for highlighting.

Logan Palanisamy

>>The links between corruption and poverty affect both individuals and businesses, and they run in both directions: poverty invites corruption, while corruption deepens poverty. Corruption both causes and thrives upon weaknesses in key economic, political and social institutions.

Every country has corruption, even affluent democracies. Corruption does not explain all that is bad–or negate all that is good–in any society >>

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nkkhoo

No doubt, corruption is a vital part of the poverty equation.

I think access opportunity to good education and business loan are playing more role in poverty eradication.

Small loans for Bangladesh’s poor women in the rural is a good example.

ghkok

In my opinion, corruption AND bad policies (neo-liberal or otherwise) lead to poverty. Usually they go hand-in-hand. In most 3rd world countries, the politicians who are corrupted usually are facilitated by the people who run big business. This symbiotic relationship tend to produce policies that work against the poor and further enrich the rich. Yes of course it’s possible that clean, honest politicians with good intentions may also craft policies that work against the poor. It happens. But they also craft many other good policies. On the balance, I think that they are much more beneficial than corrupt ones.

christine yong

Absolutely, corruption is the root of all evils ! Eradicate corruption to channelled the money to improve the living condition of the POOR, the real poor and not the UMNO kind of poor !

LBJ

I have not seen it from this angle. Yup. We have enough Oxford, Cambridge, Harvard and Princeton graduates in this country to screw things up for everybody.

Ken

Corruption has a direct effect on causing poverty. There is no question about it. It’s not about having less for poverty reduction programs. Corruption increase the cost of public utilities through bloated contracts. This cost must be recovered from the public through higher charges. Inflated toll concessions result it higher toll. Sweetheart IPP contracts result in higher electricity charges. Get it? Think the RM500 million lost in submarine commission doesn’t affect you? Depleted govt coffers will result in higher taxes. Everytime someone skims something off public money the buck is passed until it reaches the man in the street who… Read more »

Yang

Corruption will enrich the few corrupted politicians and leaders but will caused poverty to the majority of the people. It will make the poor even poorer. And this is what the current PM and government is. The next best thing is to get rid of them, Kick them out in the next GE

mut

BN policies have always favoured the capitalists at the expense of labour (the rakyat). What does it mean to achieve economic growth when it means practical serfdom for the rakyat? Who does BN represent? Since the 70s labour has been on the receiving end from BN and this has continued through the 90s till now. The influx of cheap foreign labour and its attendant problems is an extension of such policy. Amidst all this, we don’t even have minimum wage while talking about being developed and having the GST in the pipeline. Does anyone remember how NUBE was suspended while… Read more »

Sean

Not GST again – it’s in your articles like subliminal advertising! You still haven’t made a credible case against GST. You’re just repeating the propaganda of people who don’t pay taxes the way the working class do, so don’t want a tax regime that costs *them* money. I imagine as an ‘independent journalist’ your income tax isn’t deducted at source, and so you too are being tempted by the Money God to hire an accountant to ‘reduce your tax burden’? I haven’t had an income in years – it’s not a state I can endure much longer, however. I am… Read more »

Bigjoe

If you have never made anything work, its easy to just make make new extrapolation of problems and argue that its the cause. Capitalism has always admitted its imperfection and since the 1980s it has gotten more aggressive and innovative enabled by new technologies. But that is a function of innovation rather than the fault of capitalism. Artificially controlling capital has always been proven disastrous and nothing that has happen suggest that today or in the future it will solve anything but rather create more problems. The fact capital is more aggressive and more merciless ONLY ADDS to the urgency… Read more »

Gerakan K

corruption causes poverty

low income job causes poverty

low fdi causes poverty or not ???

“Ketuanan Islam” causes poverty or not ???

“Ketuanan Melayu” causes poverty or not ???

rocket in Penang causes poverty or not ???

Jaz O causes poverty or not ???

Ganesh

Don’t forget cronyism. Corruption must go hand in hand with cronyism and is often forgotten. In Malaysia, there is immense amount of cronyism going around and it is draining the govenrnment big time. It is draining the public too as tax payers money is being spent to enrich the cronies. Go to any place, especially the government departments and you can see how someone’s relative or abang or kakak ipar is doing the catering or gardening contract for instance for the department. Say to cut the grass of X department, it would cost RM500 per month but because of cronysim,… Read more »

Antares

Bello is on the right track, for sure. Thanks for articulating this very important issue, Anil.