Studies in Corruption

Poverty and Growth Blog has a Post by Ignacio which outlines the importance of institution quality in the advancement of the economy. The development of a super-rich Elite hampers the growth of institutional quality, as this Elite moves to protect their own interests. One could apply this formula to U.S. law and Court decisions over the last 30 years, but that is another matter. The main detriment to institution quality remains a culture of corruption. A overall government implementation of good governance cannot compete with localized long-term enjoyed advantage of a bribery system.

FINCA International receives a $10 million grant from USAID as part of a $80 rural microfinance project in Afghanistan. Microfinance serves as Watchword this year, ever since a Nobal Prize was given to it’s originator. It might become a powerful tool in alleviating Poverty, though I possess personal doubts. Expansion in war-torn arenas creates greater doubt. War generates vast destruction, nullifying years of effort of natives in capital construction. Aid should be either massive capital reconstruction to reverse the losses, or individual self-reliance to replicate past performance. Microfinance could potentially introduce extensive competition at a time in which financial reserves must be built. All that Glitters may not be Gold!

I rarely agree with Don Boudreaux, but this Post gives me pause. He encapsulates my own basic Thoughts on the Body Politic. Every society becomes entrapped by their own conventions, and Politicians work religiously to assure that this prison is totalitarian. Case in Point: Racism–both overt and covert–cannot even be 5% of what it was when Dr. King first marched, but One could never recognize that fact in the Politics of today. Conservatives rant about the great damage Democrats could cause both to society and the economy; though, if truth be told, their greatest fear is passage into law of an effective Tax system, which would negate their passed-into-law protections of personal Income from taxation. Read Don’s letter, but from the view that a different interpretation could also be written. lgl