Falling standards, empires and currencies
Falling standards, empires and currencies

Wikipedia Map of all countries that ever formed part of the British Empire.

More evidence the climate of corruption post was spot on. This time from the Sydney Morning Herald. When reading this bear in mind we are talking about a state of 6.5 million people. Magnify any costs accordingly for all your governments. How much of a dead weight loss does corrupt or improper conduct result in? Corruption undermines the incentives and wealth creating processes inherent to capitalism. Naturally good operators know how to do these things in ways that never result in their going to the slammer.

Methods such as not accepting bribes to allow a development, but accepting them to knock one back. For example the owners of an existing shopping center may pay to to stop a new competitor development going ahead. The proposed development can then be rejected on environmental grounds. In such circumstances it is almost impossible for an an anti-corruption agency to prove anything untoward occurred. Similarly the Mayor might declare that there will be no more cafe’s on the local cafe strip to preserve the character of the area. Naturally the existing cafe’s donate to their re-election campaign. Often corrupt, but again almost impossible to prove.

The examples of corruption detailed below are not proven. I know nothing more about them than the media report. I am posting them because the nature of the allegations ties in so well with the payoff for the politically connected theme that was central to the post on the climate of corruption. Even if these instances are not evidence of corruption, they highlight the nature of the problem. Yep, the old right when wrong line will apply – suck it up lefties, two can play that game. You might yet have to work in a free market rather than getting fat off the taxes and payoffs gauged from companies suckling on the government teat.

Tripodi brother link in $550m port contract: Mr Tripodi has twice been referred to the Independent Commission Against Corruption for actions he took when ports minister.

Former NSW Maritime chief executive Chris Oxenbould claimed Mr Tripodi created a position at the agency and asked for it to be filled by former Labor staffers Patrick Low and Cassandra Wilkinson, wife of disgraced ports minister Paul McLeay. The job was given to Mr Low.

In March 2008, the commission cleared Mr Tripodi over the appointment of his friend Joe Scimone to a $200,000 job with NSW Maritime.

Joe Tripodi awarded the $550 million contract to expand Port Botany to construction firm Baulderstone without disclosing that his brother was an employee of the company….  Baulderstone came under attack by the Greens after winning the contract when it was revealed that the firm was one of the Labor Party’s biggest donors. In the seven years to 1998, Baulderstone Hornibrook, as it was then known, donated $141,200.

Its parent company Bilfinger Berger – chaired by former NSW premier Nick Greiner – donated $22,250 over the same period.

These are the allegations published in one article in one newspaper against one man in one small state. How many unpublished instances are there? How many people have been behaving corruptly? How much of a hidden cost are the decent honest law abiding people paying because of corruption?

Due to the nature of corruption we will never really know. There is no god given reason why a Westerner should earn more than an Indian or Chinese person. The reason we have done so is because we have enjoyed the benefits of capitalism for longer than them. If we step away from the capitalist system toward one where you get ahead through corruption and connections then we will see our relative standing drop fast. It could drop all the way to equality or below. The diminishing of the developed world income differential will be a lot easier to bear if it occurs while incomes are rising or at least stable. If it occurs through an absolute decline in Western wealth then things will not be much fun for the average citizen. No one likes going backwards.

But will the West return to a path of increasing affluence for its citizens if it does not return to a path of integrity? Can the West compete with the likes of Singapore without emulating its culture of clean government? Time will tell. But I expect that a lot of our basic assumptions about the world will get turned upside down as the future unfolds.  After all, it was not long ago that Britain stood astride the world like a colossus. The older generation lived in a time when the Sun never set on the British Empire.When did Britain have to accept it had slipped from the rank of first rate powers:

Opinion: Defense cuts force Britain to punch at a lower weight: Of course, it has been decades since Britain had real sway. Except for its veto at the U.N. Security Council (a vestigial limb that former colonial power France also wields), Britain for all intents and purposes lost its global mojo when the Eisenhower administration forced Britain, France and Israel to withdraw from their attempt to seize the Suez Canal in 1956.

The US forced Britain to withdraw by threatening to collapse the pound by selling their reserves of the currency even if it resulted in their making losses. Has China through its stock of USD gained a similar veto power over American foreign policy? Does Bernanke have the right to enable the creation of such a veto?



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