News Release

Elite Corruption: A “Violation of Public Trust”

unaccountable_bookJANINE R. WEDEL, jwedel at gmu.edu, @janinewedel
Wedel is an anthropologist and professor at George Mason University’s School of Policy, Government and International Affairs. She is the author of several books, including the recently released Unaccountable: How Elite Power Brokers Corrupt our Finances, Freedom and Security.

In her most recent piece “Beyond Bribery,” she states: “Last month Greeks delivered a sharp blow to the European Union by voting in the left-wing Syriza Party, which has vowed to end years of painful austerity policies. But Syriza owes much of its popularity for its opposition to something else: elite corruption. As one news report put it, ‘Many in Greece feel slashed public spending has hit the most vulnerable hardest, while leaving… corruption of the apparent elites untouched.’

“This sense that something on high smells bad has galvanized protesters in recent years in countries as different as Brazil, Turkey, Ukraine, and the United States. They seem to share an intuitive sense that the system is gamed against them, that it compromises their livelihoods and futures, and that it makes it harder to have their voices heard, let alone discover who is responsible.

“Petty corruption, such as having to pay a bribe to a bureaucrat or customs official, also leads to discontent around the world. Some scholars call this ‘need corruption,’ because it is driven by everyday people trying to navigate an impossible system to receive basic goods and services. And since corruption became a ‘hot’ issue in the 1990s, global efforts to combat it have concentrated largely on this need corruption, with major players like the World Bank and Transparency International at the forefront.

“But it’s often the corruption of elite insiders, not petty bribery, that most foments distrust of leaders and public institutions. As I describe in my new book, this ‘new corruption’ may be less visible, but it is practiced on a wide scale by a set of global power brokers who have rigged the system to their advantage in innovative ways. The worldwide protests triggered by this form of corruption are proof that a growing number of people have turned into disaffected outsiders, all too aware that they stand squarely apart from this system of power and influence. This is the most damaging and far-reaching form of corruption that exists today. And this ‘new corruption’ — difficult to detect, but insidious — deserves our attention.

“The essence of this new (legal) corruption –- the violation of public trust – harks back to ancient notions of corruption. Yet its practitioners follow a thoroughly 21st-century playbook, written over the past few decades as privatization, deregulation, the end of the Cold War, and the advent of the digital age have transformed the world. These developments have broken down barriers and created new openings for elites to exercise their power and influence in a system that is more complex and opaque than ever, enabling them to use the levers of power to their own advantage while, at the same time, denying responsibility. (Many bankers, for example, trade in derivatives so complex that even they can plausibly deny understanding them.)

“Practitioners of the new corruption assume a tangle of roles that fuses state and private sectors. They abrogate public trust by working on behalf of their own, instead of those on whose behalf they purport to act. Just think of Goldman Sachs, often derided as ‘Government Sachs’ for its seamless enmeshing of Wall Street and Washington. In the years leading up to the financial crash of 2008, Goldman routinely pushed the envelope — such as the notorious ABACUS case, in which the bank sold investments it knew were bad to one client at the behest of another. Yet the company apparently broke few or no laws along the way. Goldman also famously helped Greece (and possibly other struggling European countries) hide debt in the early 2000s. When the day of reckoning came for Greece, it wasn’t Goldman Sachs, elite insiders, or national leaders who paid the price of slashing austerity measures.

“That the system is rigged in new ways resounds worldwide, even in the West. There’s a documented loss of confidence in formal institutions: governments, parliaments, courts, banks, corporations, the media. A 2014 research project attempted to quantify how gamed the system is in the United States. Two political scientists looked at 1,779 policy issues hashed out from 1981 to 2002 and found that policies widely supported by economically elite Americans were adopted about 45 percent of the time. If these same privileged Americans didn’t support particular policies, then their rate of acceptance dropped to 18 percent. The scholars write: ‘The central point that emerges from our research is that economic elites… have substantial independent impacts on U.S. government policy, while mass-based interest groups and average citizens have little or no independent influence.’

“In the United States and many European countries, then, the new corruption appears to have surpassed the old. How can it be that bribes and blatant illegality have come to matter more than insider elites who betray our trust but go mostly unscrutinized, let alone unsanctioned?”