From 8th July, 2006.
If you want to be rich, you can try to set up a brilliantly successful company. Or you can steal money. Trans-parency International, the corruption watchdog, has estimated that Mohamed Suharto embezzled up to $35bn when he was Indonesia’s president, a figure that is in the same league as the entrepreneurial fortunes of Bill Gates and Warren Buffett. On a humbler scale, we all face the same choice. We can try to earn money by doing something useful, or we can try to steal or extort it from other people. A society where most people are doing something useful has a good chance of being rich; a society full of corruption will be poor.
That is a glib enough explanation of wealth and poverty, but what causes corruption? Many economists believe that corruption is a response to perverse incentives. For example, in Indonesia it takes an average of 151 days to legally establish a small business, according to the World Bank’s “Doing Business” database. This is a large incentive to pay bribes or keep a business unregistered. It is not surprising that there is a strong correlation between red tape and corruption…
Continued at timharford.com.
You may have noticed that this blog has gone rather quiet while I work on my next book – sorry. The FT is going to mothball it, which seems reasonable.
So – thanks for following so far. If you’d like to keep going, here’s what to do:
Here is the FT RSS feed of all my Undercover Economist columns.
The RSS feed of my website, timharford.com is here. The website feed contains columns but also all sorts of other writing, and if I start blogging again when the book’s finished, that’s where the blog will be.
And at the moment I’m far more active on Twitter, where I post links to all my writing and much else besides.
Thanks for reading; I hope the click over to a new format isn’t too inconvenient.
I recently had the dubious pleasure of having to deal with someone who is successful and indeed popular, and yet a stubborn, selfish bully when he thinks nobody is looking. It moved me to speculate on an old question: do nice guys finish first, or last?
The remainder of the article can be read here. Please post comments below.
From 15th July, 2006.
My school used to offer two varieties of food. There was canteen food, which was inedible, and there were chocolate bars from the tuck shop. For two years, I had four chocolate bars for lunch every day.
These days schools are trying to outlaw the unhealthy options, but some markets are irrepressible. William Guntrip is a 13-year-old boy whose Northamptonshire school banished vending machines and tuck shop food in favour of nutritious offerings at the canteen. Guntrip spotted a market opportunity and has been buying soft drinks and sweets and reselling them in his school playground. The school is trying to stop him and claims that most students are happy with the new regime, although if that was true then Guntrip wouldn’t be making £50 a day.
Suppressing a market is a bit like squeezing a balloon – the trade will usually pop up somewhere else. The Soviet Union was full of markets. The factory in north Vladivostok would be allocated too much sheet metal but not enough coal. The factory in south Vladivostok had the reverse problem. Both factory managers would ask for extra resources but in the command-and-control system the incentive was to ask for more of everything, with little hope of success. So the managers would quietly, and illegally, do a deal with each other. Professional expediters would be sent out to barter for scarce inputs and the informal market reached a high level of sophistication…
Continued at timharford.com.