21 Mar The Broken Windows Theory of Corruption
Kudos to Daniel Chow and Mike Koehler for a wonderful conference last week at Ohio State Law School addressing the FCPA at thirty-five. It’s always a risk to hold a conference that mingles hard-core practitioners with soft and fuzzy academics, but this one seemed to work. The defense and prosecution side of the FCPA bar battled it out with competing panels addressing the merits and demerits of FCPA prosecutions. Charles Duross, the DOJ attorney in charge of FCPA prosecutions, gave a spirited defense of the Obama Administration’s robust enforcement campaign, while the defense side questioned a system that is largely devoid of judicial supervision because of pervasive settlements using non-prosecution agreements (NPAs) and deferred prosecution agreements (DPAs).
Meanwhile the law professors examined various facets of the FCPA that are often ignored by the international legal academy. For example, Michael Van Alstine had a great discussion of treaty-based double jeopardy arguments, Jason Yackee discussed a bribery defense to corporate investment arbitration claims, and Julian Ku wrestled with the parallels between the ATS and the FCPA.
I presented some really fun empirical work I’ve been doing on the broken windows theory of corruption. Based on my initial findings, empirical research reveals a strong positive correlation between corruption and other public goods such as civil liberties, economic welfare, political rights, standards of living, and human development.
For example, if one examines how countries fare on the Transparency International’s Corruption Perception Index with their score on the World Economic Forum’s Global Competitiveness Index, there is a positive correlation coefficient of 0.8473. The y-axis represents Transparency International’s corruption perception index (with 10 being the best) and the x-axis represents the World Economic Forum’s global competitiveness index (with 6 being the best).
Put in plain English, the countries that do the best on twelve key pillars of productivity also do the best in terms of anti-bribery. Conversely, if a country lacks the institutions, policies and other factors necessary to be competitive globally, it will also score poorly on its perceived commitment to combat bribery.
Without making causal claims (at least for now), where one sees problems with corruption and bribery, one also sees a host of other problems, ranging from low U.N. human development scores (education, birth rates, and standards of living), poor Freedom House scores (civil liberties and political rights), low World Economic Forum scores (global competitiveness and productivity) and Polity IV regime scores (democracies vs. autocracies).
In short, there are moderate to strong positive correlations (ranging from 0.3863 to 0.8473) between corruption scores and scores on eight other leading indices that measure various public goods. As outlined in my forthcoming article in the Ohio State Law Journal, it appears that the broken windows theory of corruption has strong empirical support.