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The Science of Corruptology

Corruption, which is dishonest conduct, is widespread, tolerated by most and practiced by many. Behavioral economist Dan Ariely demonstrates that we cheat "up to the level that allows us to retain our self-image," related to the idea of "cognitive flexibility." In an interesting experiment, Ariely also could manipulate people to cheat more or less. Fraud cases (think Enron for example) suggest that as people climb the power and money ladder they become more greedy and more corrupt. Presumably, power means they deserve the big bucks and willing to cut corners or worse. This probably means that more honest people quit early on (think Michael Lewis writing Liar's Poker: investment banking at Salomon Brothers meant ethically-questionable big bucks, but his passion was writing). A wide gray area exists between by-the-book honesty and criminality. I view corruption broadly and it starts somewhere in this gray area; that is, it dos not have to be criminal and may even be culturally acceptable. No doubt millions of people cheat on their taxes within their level of cognitive flexibility and still consider themselves totally honest.

Granted, corruptology is not (yet) a real word, although I would like it to become one. Criminology is defined as the scientific study of crime and criminals, usually based on law enforcement and the criminal justice system, and simultaneously considered a part of sociology. Crimes have to be committed; it's not just unethical behavior, there must be a violation of some law on the books of a legal jurisdiction. Murder, robbery, or assault are obvious examples where the perpetrator can expect and arrest and likely jail time. More difficult are crimes such as insider trading or tax evasion. Corruptology is the scientific study of corruption, associated with ethical violations rather than criminal acts (although the two may be correlated). Hopefully, sociology and philosophy would be willing to include these are viable areas of analysis, or perhaps political science and business. So far, I haven't convinced any college to establish a department of corruptology (although professors of ethics courses on this subject seem to be common; ethics became a big deal at Texas A&M after the Enron debacle in 2001).

One issue is civil versus criminal law. The Securities and Exchange Commission (SEC), for example, can only bring civil actions against firms and individuals; criminal actions would have to be filed by the Justice Department. Being fined by the SEC, it is argued, is not criminal especially without an admission of guilt. However, it certainly is corrupt.

Once kings proclaimed rules such as the Code of Hammurabi, they were violated almost immediately--even when violations could mean death. Certainly bribery and smuggling were widespread at the start of recorded history; justified by considering the rules a form of extortion. Add capitalism to the mix with the mantra of self interest and what I'm calling corruption becomes part of the entrepreneurial game plan. [Immanuel Kant with his focus on duty and categorical imperatives is not part of the economics paradigm, Adam Smith is.] The early American colonies were financed by joint stock companies (early forms of corporations) out to make a buck as only capitalists can--with some proclaiming religious freedom. Not finding gold, they had to grow crops and make money through annoyingly hard work. Slavery actually started before the Pilgrims landed on what was later called Plymouth Rock. Ignoring the original inhabitants, they claimed to own the land. [Slavery and pushing indigenous people off the land count as corruption to me.] The British mercantile system meant lots of rules to benefit the British elites, which the colonists often ignored through smuggling and bribery. That's how John Hancock and other successful merchants got rich.

It's not clear that capitalism or Americans are any more corrupt than others, but the rich folks became masters of the gray area (and worse). Political leaders (early on, mainly appointed rather than elected) were recipients (often instigators) of capitalist largesse. I going focus mainly on business corruptology, although the political equivalent has been equally rampant from the start. Early on, it could be difficult to break the law, when rules were limited. Cornelius Vanderbilt started out as a steamboat captain ignoring Robert Fulton's monopoly. He is most famous for his raid on the Erie Railroad, but lost to the even more corrupt Daniel Drew, Jay Gould and Jubilee Jim Fisk. The post-Civil War period may have been the most innovative and most corrupt in American history, with seemingly everyone on the take. Fortunately, progressive eras started in the late 19th century and emerged periodically, especially the New Deal of Franklin Roosevelt. Corruption stayed fairly quick for decades to reemerge especially by the 1980's, with hostile takeovers, insider trading, the savings and loan scandals, and the mushrooming compensation of executives--big corruption could mean big pay. This culminated with Enron early in the 21st century and the subprime crisis of 2008. The capitalist overloads felt no shame.

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