Getting Lost Trying to Quantify Corruption

Last week the New York Times exposed that Wal-Mart de Mexico bribed local officials $24 million to hurry permitting for new stores. Most of the subsequent reportage has focused on stateside implications for Wal-Mart, which may include violations of the Foreign Corrupt Practices Act. The company’s stock is down over 7% since the story broke.

Panning out, Time economics editor Rana Foroohar took a stab at the relative cost of corruption around the world, noting in her column an anecdote that, “In China, you might pay 20 cents on the dollar to get your project done, and it will get done quickly. In India, it’s 40 cents, and it will get done in a few years. In Russia, it’s 80 cents—and you may get shot before it gets done.”

But why do we always try to quantify corruption? Transparency International’s Corruption Perceptions Index is the most thorough attempt at this, but the organization admits its methodology is, well, based on “perception”—never mind that it looks at public not private sector corruption.  My first objection is that corruption is by definition a shadowy enterprise; it is typically extralegal if not downright illegal, and so any attempt to quantify a sum merely wraps subjectivity in the cloak of scientific authority.

Second, our preoccupation with quantifying corruption masks draws important qualitative distinctions. Consider counterfeiting, which thrives in large part because of government’s willingness to look the other way when it comes to enforcing intellectual property rights. A 2010 survey by the American Chamber of Commerce found that more than half of the pirated goods bought by Mexicans were music CDs. By contrast, in 2009 counterfeit malls in the cities of Nanjing and Shenzhen gained international media attention, as did a plethora of fake Apple stores. Fake aircraft equipment, cell phones, laptops and other tech devices are hocked in China, and exported. Anyone who cares to go to Ebay can readily glean that India is a world leader when it comes to the manufacture of knock-off veterinary medicine.

So, why don’t we give less stock to trying to quantify this illicit phenomenon, and instead try to stamp out those corrupt practices that pose a serious threat to society?