On March 30, 2023, I participated in the Technology and Anti-Corruption panel at the 2nd Summit for Democracy: Indo-Pacific Regional Meeting in Seoul. The summit focused on the challenges and progress in addressing corruption.
I prepared these remarks for the summit.
Why do people hire corruption?
In an attempt to solve any problem, we must first ask why the problem exists in the first place? What causes it? In other words, we must understand its nature. The problem of corruption is no different.
So, I think we must wrestle with this simple question: why do people hire corruption? Or why do they engage in it? In asking this question, there is a temptation to brush it aside and say things like, they are bad people and corruption must be stopped at all costs; or, we don’t care why people engage in it, it is simply wrong. That would be too simplistic, unfortunate, and unscientific.
We would not say the same of cancer. We would not be so cavalier about our assessment of the problem. And corruption is a cancer that is severely impacting society. And to mitigate this cancer, we must understand it.
In our research, we have learned that one of the main reasons people engage in corruption is because of scarcity.
Here’s what I mean. The vast majority of us want to make progress in our lives. From the poorest to the richest, we all want to gain more status, improve our financial, social, and emotional well-being. We want to save money, buy homes, start businesses, get an education, run for office, and stay in office.
When society offers us few legitimate options to make progress, corruption becomes more attractive. And as corruption becomes more attractive, it also becomes part of the culture of a place. It’s important to note that this is a process. And the more you practice it, the more it gets ingrained into your system.
This phenomenon is more apparent in poor countries because their scarcity is so much more visible. In wealthy countries, the phenomenon still holds, it simply looks different.
And so, here we learn that corruption evolves in societies in a fairly predictable manner.
The first phase is overt and unpredictable. This is where most countries in the bottom of the Transparency International Corruption Perception Index reside. The next phase, after the country begins to grow, is covert and predictable. Here, corruption is seen as a cost of doing business. The third and final stage is transparency. This is where governments work hard to be transparent and accountable to the citizens.
In the first phase, countries are poor. In the second, they are becoming wealthier. In the last phase, they are often rich.
So, the question is: how do countries evolve from overt and unpredictable corruption to transparency?
They evolve as products, services, and opportunities become less scarce and more abundant.
When technology is deployed in a society where there is much scarcity and little abundance, it can even lead to more corruption.
Consider this. Over the past couple of decades, the world has seen an explosion in technology. However, we have made little progress in fighting corruption. Here’s how Transparency International, the global corruption watchdog, puts it.
“The global average remains unchanged for over a decade at just 43 out of 100. More than two-thirds of countries score below 50, while 26 countries have fallen to their lowest scores yet. Despite concerted efforts and hard-won gains by some, 155 countries have made no significant progress against corruption or have declined since 2012.”
So, all the technological advancements over the past two decades have done little to mitigate corruption. That’s because technology doesn’t exist in a vacuum. It exists in a system of norms, culture, and practices.
Solving corruption then must be about people, even as we use technology. It must be about empowering and helping people. Helping them become less corrupt by providing them with viable alternatives to corruption.
So, the role of technology then must be to increase abundance and reduce scarcity. One particular type of technology called market-creating technology is able to create abundance.
Market-creating technologies transform complicated and expensive products into products that are simple and affordable so that many more people in society can access them. Organizations that invest in market creation attack scarcity, create jobs, and generate taxes for governments to reinvest in their economies. When this happens on a country-wide scale, it can revolutionize nations.
This incredibly beautiful country, South Korea, provides a perfect example.
In the 1950s, this was a desperately poor and very corrupt country. Bribery and embezzlement were widespread. Many economists at the time said South Korea was trapped in poverty and referred to it as a lost cause.
But as companies such as Samsung, Kia, Hyundai and others invested in innovations that made products more affordable to so many more people, even while the country struggled with corruption, South Korea became prosperous.
As the country grew prosperous, it invested to improve its institutions. This has paid off immensely and today, it ranks 31 out of 180 in the Transparency International Corruption Perception Index.
Notice also that the countries at the top of the list are wealthy countries. And the ones at the bottom are poor. If nothing else, this lets us see that: Technology alone will not solve corruption; progress will.
Corruption in society is like vapor or smoke in a room.
It’s incredibly difficult to remove vapor or smoke once it’s in a room. It’s also very expensive. Also, if we successfully remove the smoke but don’t get at the source, we will only solve the problem temporarily. That’s how it is with many anti-corruption efforts even when we use technology.
Technology can help us solve corruption in the short term. But if we don’t, as a society, decide to solve the scarcity problem, we will not make long-term progress.
Market-creating technologies at a societal level give us the best chance to solve corruption. That’s because they target scarcity and create prosperity. When more people in society are prosperous, the government generates more taxes, builds better institutions, and ultimately drives down corruption.